Document:

Exhibit 10.3

 

EXECUTION VERSION

 

ASSET PURCHASE AGREEMENT

 

AMONG

 

CORTENDO AB (publ),

 

AND

 

ASPIREO PHARMACEUTICALS LIMITED

 

AND

 

TVM V LIFE SCIENCE VENTURES GMBH & CO. KG

 

(solely in connection with Sections 6.06, 6.08, 9.10 and ARTICLE VII)

 

Dated as of May 14, 2015

 

 

	
 
    	
 
    	
Page
    
	
 
    	
ARTICLE I
    	
 
    
	
DEFINITIONS
    	
5
    
	
1.01
    	
Definitions
    	
5
    
	
1.02
    	
Other Defined Terms
    	
12
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE II
    	
 
    
	
PURCHASE   AND SALE OF ACQUIRED ASSETS; ASSUMED LIABILITIES
    	
13
    
	
2.01
    	
Purchase and Sale of   Acquired Assets
    	
13
    
	
2.02
    	
Excluded Assets
    	
14
    
	
2.03
    	
Assumed Liabilities
    	
14
    
	
2.04
    	
Retained Liabilities
    	
15
    
	
2.05
    	
Buyer Stock Closing   Consideration
    	
15
    
	
2.06
    	
Withholding
    	
15
    
	
2.07
    	
Non-Assignable Assets
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE III
    	
 
    
	
CLOSING
    	
 
    	
16
    
	
3.01
    	
Time and Place
    	
16
    
	
3.02
    	
Deliveries by the   Seller
    	
16
    
	
3.03
    	
Deliveries by Buyer
    	
17
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE IV
    	
 
    
	
REPRESENTATIONS   AND WARRANTIES OF THE SELLER
    	
18
    
	
4.01
    	
Organization;   Qualification
    	
18
    
	
4.02
    	
Ownership; Subsidiaries
    	
18
    
	
4.03
    	
Corporate Power and   Authority
    	
18
    
	
4.04
    	
No Violation
    	
19
    
	
4.05
    	
Consents
    	
19
    
	
4.06
    	
Financial Statements
    	
19
    
	
4.07
    	
No Undisclosed   Liabilities
    	
19
    
	
4.08
    	
Title to Acquired   Assets; Sufficiency
    	
20
    
	
4.09
    	
Litigation
    	
20
    
	
4.10
    	
Contracts
    	
20
    
	
4.11
    	
Licenses and Permits
    	
22
    
	
4.12
    	
Compliance with Law and   Regulatory Requirements
    	
22
    
	
4.13
    	
Taxes
    	
24
    
	
4.14
    	
Intellectual Property
    	
24
    
	
4.15
    	
Product Data; Product   Specifications
    	
27
    
	
4.16
    	
Indebtedness
    	
27
    

 

 

	
4.17
    	
Absence of Certain   Changes or Events
    	
27
    
	
4.18
    	
Affiliate Transactions
    	
27
    
	
4.19
    	
Solvency
    	
27
    
	
4.20
    	
Brokers’ Fees
    	
27
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE V
    	
 
    
	
REPRESENTATIONS   AND WARRANTIES OF BUYER
    	
28
    
	
5.01
    	
Organization and   Qualification
    	
28
    
	
5.02
    	
Subsidiaries
    	
28
    
	
5.03
    	
Authorization;   Enforcement
    	
28
    
	
5.04
    	
No Conflicts
    	
28
    
	
5.05
    	
Buyer Stock
    	
29
    
	
5.06
    	
Capitalization
    	
29
    
	
5.07
    	
Investment Act
    	
29
    
	
5.08
    	
Registration Rights
    	
30
    
	
5.09
    	
Application of Takeover   Protections
    	
30
    
	
5.10
    	
Absence of Litigation
    	
30
    
	
5.11
    	
Compliance
    	
30
    
	
5.12
    	
Brokers and Finders
    	
30
    
	
5.13
    	
Foreign Corrupt   Practices
    	
30
    
	
5.14
    	
Tax Status
    	
31
    
	
5.15
    	
Intellectual Property
    	
31
    
	
5.16
    	
Permits
    	
31
    
	
5.17
    	
Clinical Data and   Regulatory Compliance
    	
31
    
	
5.18
    	
Property
    	
32
    
	
5.19
    	
Financial Statements
    	
32
    
	
5.20
    	
Changes
    	
32
    
	
5.21
    	
Environmental   Compliance
    	
33
    
	
5.22
    	
Confidential   Information Agreements
    	
33
    
	
5.23
    	
Insurance
    	
33
    
	
5.24
    	
Money Laundering Laws
    	
34
    
	
5.25
    	
OFAC
    	
34
    
	
5.26
    	
Submission of   Jurisdiction; Enforceability of Judgments
    	
34
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE VI
    	
 
    
	
COVENANTS   OF BUYER AND THE SELLER
    	
35
    
	
6.01
    	
Public Announcements
    	
35
    
	
6.02
    	
Further Assurances; Consent   and Approvals
    	
35
    
	
6.03
    	
Conduct of the Business
    	
35
    

 

ii

 

	
6.04
    	
Delivery of Acquired   Assets and Excluded Assets
    	
36
    
	
6.05
    	
Confidentiality
    	
36
    
	
6.06
    	
Non-Solicitation;   Non-Competition; Non-Disparagement
    	
37
    
	
6.07
    	
Certain Tax Matters
    	
38
    
	
6.08
    	
Defense of Claims and   Litigation
    	
39
    
	
6.09
    	
Retention of Records
    	
40
    
	
6.10
    	
Sharing of Data
    	
40
    
	
6.11
    	
Transfer of Permits
    	
40
    
	
6.12
    	
Delivery of the   Tangible Acquired Assets
    	
40
    
	
6.13
    	
Buyer Shareholder Approval
    	
40
    
	
6.14
    	
Preparation of   Financial Statements
    	
40
    
	
6.15
    	
OCS Approval
    	
41
    
	
6.16
    	
Valid Israeli Tax   Certificate and Valid VAT Ruling
    	
41
    
	
6.17
    	
Indemnity Shares
    	
41
    
	
6.18
    	
Value Added Tax
    	
42
    
	
6.19
    	
Lock-Up
    	
42
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE VII
    	
 
    
	
INDEMNIFICATION
    	
43
    
	
7.01
    	
Survival
    	
43
    
	
7.02
    	
Indemnification by the   Seller
    	
43
    
	
7.03
    	
Indemnification by   Buyer
    	
44
    
	
7.04
    	
Indemnification   Procedures
    	
44
    
	
7.05
    	
Third Party   Beneficiaries
    	
46
    
	
7.06
    	
Certain Limitations on   Indemnification
    	
46
    
	
7.07
    	
Exclusive Remedy
    	
47
    
	
7.08
    	
Tax Treatment of Indemnification   Payments
    	
47
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE VIII
    	
 
    
	
CONDITIONS   PRECEDENT; TERMINATION
    	
47
    
	
8.01
    	
Conditions to the   Obligations of Buyer
    	
47
    
	
8.02
    	
Conditions to the   Obligations of Seller
    	
49
    
	
8.03
    	
Termination
    	
50
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE IX
    	
 
    
	
MISCELLANEOUS
    	
51
    
	
9.01
    	
Binding Effect;   Assignment; No Third-Party Rights
    	
51
    
	
9.02
    	
Entire Agreement
    	
51
    
	
9.03
    	
Notices
    	
51
    
	
9.04
    	
Severability
    	
52
    

 

iii

 

	
9.05
    	
Amendment; Waiver
    	
53
    
	
9.06
    	
Governing Law; Consent   to Jurisdiction
    	
53
    
	
9.07
    	
Waiver of Trial By Jury
    	
53
    
	
9.08
    	
Counterparts
    	
53
    
	
9.09
    	
Neutral Construction
    	
53
    
	
9.10
    	
Inducement; Specific   Performance
    	
53
    
	
9.11
    	
Liquidation of Seller
    	
54
    
	
9.12
    	
Interpretation;   Disclosure Schedules
    	
54
    
	
9.13
    	
Expenses
    	
54
    

 

iv

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of May 14, 2015, by and among CORTENDO AB (publ), a Swedish company (“Buyer”), and ASPIREO PHARMACEUTICALS LTD., an Israeli company (“Seller”),and TVM V LIFE SCIENCE VENTURES GMBH & CO. KG, a German limited partnership (“TVM”) (solely in connection with Sections 6.06, 6.08, 9.10 and ARTICLE VII).  Buyer and Seller are collectively referred to herein as the “Parties”, and each individually as a “Party”.

 

RECITALS

 

WHEREAS, Seller is engaged in the manufacture, development, commercialization, promotion, sale, handling, distribution, labeling, storage and/or marketing of the Product (as defined below) (the foregoing activities, and all other activities of Seller relating to or undertaken in connection with the Product, collectively the “Business”);

 

WHEREAS, Buyer desires to purchase and acquire from Seller, and Seller wishes to sell, assign and transfer to Buyer all of the Acquired Assets (as defined below) upon the terms and subject to the conditions of this Agreement;

 

WHEREAS, concurrently with the consummation of the transactions contemplated by this Agreement, TVM will make a cash investment in Buyer in the amount of €4,000,000 (subject to rounding differentials) for shares of Buyer Stock (the “Investment”), on the terms and subject to the conditions set forth in the definitive agreements with respect thereto among Buyer, TVM and such other Persons that are parties thereto.

 

NOW, THEREFORE, in consideration of the mutual covenants, representations and warranties made herein, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.01        Definitions.  For purposes of this Agreement and any Exhibit or Schedule hereto, the following terms shall have the meanings ascribed to them below:

 

“Action” means any claim, action, suit, governmental proceeding, arbitral action, governmental inquiry, criminal prosecution or other investigation.

 

“Affiliate” means, with respect to any Person, any other Person (a) directly or indirectly controlling, controlled by, or under common control with, such Person, (b) directly or indirectly owning or holding fifty percent (50%) or more of any Equity Interest in such Person, or (c) fifty percent (50%) or more of whose voting stock or other Equity Interest is directly or indirectly owned or held by such Person.  For purposes of this definition, “control” (including with correlative meanings, the terms “controlling,” “controlled by” and under “common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Base Consideration Amount” means an amount equal to $30,000,000.

 

 

“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York or in Israel are authorized or required by applicable Law to close.

 

“Buyer Disclosure Schedule” means the Schedules delivered by the Buyer to Seller simultaneously with the execution of this Agreement which are numbered to correspond to the representations and warranties contained in ARTICLE IV.

 

“Buyer Intellectual Property” means all patents, patent applications, trademarks, trademark applications, service marks, service mark applications, tradenames, copyrights, trade secrets, domain names, mask works, information and proprietary rights and processes, similar or other intellectual property rights, subject matter of any of the foregoing, tangible embodiments of any of the foregoing, licenses in, to and under any of the foregoing, and any and all such cases as are necessary to Buyer in the conduct of the Buyer’s business as now conducted and as presently proposed to be conducted.

 

“Buyer Shareholder Approval” means the affirmative vote, with sufficient majority of Buyer Stock represented at the Buyer Shareholder Meeting, required under Swedish law to consummate the transactions contemplated herein as further detailed in Section 6.13.

 

“Buyer Shareholder Meeting” means the annual general meeting (including any postponement and adjournment thereof) of the holders of shares of Buyer Stock to be held on or about June 24, 2015 for the purposes of seeking (among other matters) the Buyer Shareholder Approval, as described in Section 6.13.

 

“Buyer Stock” means shares of the ordinary stock of Buyer.

 

“Buyer Stock Closing Consideration” means the aggregate number of shares of Buyer Stock (rounded down to the nearest whole share) obtained by dividing the Base Consideration Amount by the Buyer Stock Consideration Price.

 

“Buyer Stock Consideration Price” means NOK 9.86.

 

“Buyer’s Knowledge” or any similar phrase means, with respect to any matter, the actual knowledge of each of the chief executive officer, the chief business officer or the chief financial officer and the knowledge that each such individual would have after performing a reasonable investigation and inquiry of such matter.

 

“Claims” means any and all indemnification claims by Buyer or the other Persons entitled to indemnification under Section 7.02 and any and all indemnification claims by Seller or the other Persons entitled to indemnification under Section 7.03.

 

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

 

“Contracts” means any written or oral contracts, agreements, leases, licenses, understandings, arrangements, commitments, sales orders, and purchase orders in effect.

 

“Damages” means any demands, claims, Actions or causes of Action, assessments, losses, damages, Liabilities, obligations, penalties, fines, Taxes, interest, costs and expenses whatsoever (including reasonable attorneys’, consultants’ and other professional fees and disbursements of every kind, nature and description incurred in connection therewith), but excluding loss of profits, punitive or exemplary damages other than if paid to a third party.

 

6

 

“Disclosures of Invention” means any written or visual idea, or invention of Seller or any employee or consultant of Seller, or any Person from whom Seller has obtained Intellectual Property Rights in any manner relating to the Product or the Business, whether or not such idea, concept or invention has been filed as a patent application or submitted by the inventor(s) to any attorney, agent or other representative of Seller for evaluation as to patentability.

 

“Encumbrance” means any mortgage, pledge, security interest, lien, reservation, encroachment, easement, right-of-way, covenant, restriction, licenses (which are material or not incurred in the ordinary course of business), third-party ownership interest, leases (which are material or not incurred in the ordinary course of business) or other similar title exception or encumbrance.

 

“Environmental Laws” means any Laws relating to the environment, preservation or reclamation of natural resources or the management, handling, release or exposure of Hazardous Substances, each as amended.

 

“Equity Interest” means, with respect to any Person, (a) any capital stock, partnership or membership interest, unit of participation or other similar interest (however designated) in such Person and (b) any option, warrant, purchase right, conversion right, exchange right or other Contract which would entitle any other Person to acquire any such interest in such Person or otherwise entitle any other Person to share in the equity, profits, earnings, losses or gains of such Person (including stock appreciation, phantom stock, profit participation or other similar rights).

 

“FDA” means the United States Food and Drug Administration or any successor regulatory agency in the United States.

 

“FDCA” means the United States Federal Food, Drug and Cosmetic Act of 1938, as amended (21 U.S.C. §§ 301 et. seq.) and all regulations promulgated thereunder.

 

“Good Clinical Practices” means the ICH standards for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical trials.

 

“Good Laboratory Practices” means the ICH standards for conducting non clinical laboratory studies.

 

“Good Manufacturing Practices” means the requirements set forth in the quality systems regulations for medical devices of the ICH, and the good manufacturing practice regulations for finished pharmaceutical or drug products of the ICH.

 

“Governmental Authority” means any government, any governmental entity, department, commission, board, agency, authority or instrumentality, any regulatory authority or body, and any court, tribunal or judicial body, in each case whether federal, state, county, provincial, local, foreign or multinational.

 

“Hazardous Substances” means any material presently listed, defined, designated or classified as hazardous, toxic or radioactive, under any Environmental Laws, whether by type or by quantity, and petroleum or any derivative or by-product thereof.

 

“ICH” means the International Conference on Harmonisation.

 

“Indebtedness”  means, with respect to any Person as of any date of determination, without duplication, (a) any obligation or liability of such Person for borrowed money or in respect of loans or

 

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advances; (b) any obligation or liability of such Person evidenced by any note, bond, debenture or similar instrument or other debt security; (c) the maximum obligation or liability for the deferred purchase price of property or services with respect to which such Person is liable; (d) the maximum obligation or liability of such Person in respect of letters of credit, bankers’ acceptances or similar instruments; (e) any obligation or liability guaranteed in any manner by such Person (including guarantees in the form of an agreement to repurchase or reimburse); (f) any obligation or liability of such Person required to be recorded as capital leases in accordance with Israeli GAAP; (g) any obligation or liability secured by an Encumbrance (other than Permitted Encumbrances arising by operation of law) on such Person’s assets; (h) any amounts owed by such Person under any noncompetition, consulting, bonus, incentive or deferred compensation arrangements; (i) any amounts owed to Affiliates of such Person (including intercompany trade and accounts payable and intercompany loans); (j) any obligation or liability of such Person for deferred rent; (k) any obligation or liability of such Person arising from cash/book overdrafts; (l) any obligation or liability of such Person (determined on the basis of actual, not notional, obligations) with respect to interest rate protection agreements, interest rate swap agreements, foreign currency exchange agreements, or other interest or exchange rate hedging agreements or arrangements; (m) all obligations or liabilities for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables incurred in the ordinary course of business which are not past due); (n) all obligations under conditional sale or other title retention agreements relating to property or assets purchased by such Person; and (o) all fees, accrued and unpaid interest, premiums or penalties related to any of the foregoing.

 

“Indemnity Shares” means the aggregate number of shares of the Buyer Stock Closing Consideration (rounded down to the nearest whole share) obtained by dividing $5,400,000 by the Buyer Stock Consideration Price.

 

“Information” means any and all know-how and information, trade secrets, pre-clinical development, non-clinical development, clinical development, manufacturing processes, general processes and systems, and other technical and marketing information related to the Acquired Assets or otherwise in connection with the Business (whether or not confidential, proprietary, patented or patentable), and all tangible embodiments of any of the foregoing in written, electronic or any other form.

 

“Initial Public Offering” or “IPO” means the closing of the Buyer’s initial public offering of shares in the United States.

 

“Intellectual Property Rights” means any and all intellectual property rights, with respect to the Product or the Business, throughout the world, including (a) inventions, whether or not patentable, reduced to practice or made the subject of one or more pending patent applications, (b) national and multinational statutory invention registrations, patents and patent applications (including all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations thereof) registered or applied for in the United States and all other nations throughout the world, and all improvements to the inventions disclosed in each such registration, patent or patent application (including all Disclosures of Invention), (c) trademarks, service marks, trade dress, logos, domain names, trade names and corporate names (whether or not registered) in the United States and all other nations throughout the world, including all variations, derivations, combinations, registrations and applications for registration of the foregoing and all goodwill associated therewith, (d) copyrights (whether or not registered) and registrations and applications for registration thereof in the United States and all other nations throughout the world, including all derivative works, moral rights, renewals, extensions, reversions or restorations associated with such copyrights, now or hereafter provided by law, regardless of the medium of fixation or means of expression, (e) computer software (including source code, object code, firmware, operating systems and specifications), (f) trade secrets and, whether or not confidential, business information (including pricing and cost information, business and marketing plans, marketing methodologies and

 

8

 

frameworks, internal personnel training materials and customer and supplier lists) and know-how (including manufacturing and production processes, techniques, research and development information), (g) industrial designs (whether or not registered), (h) candidate databases and data collections, (i) copies and tangible embodiments of any of the foregoing, in whatever form or medium, (j) all rights to obtain and rights to apply for patents, and to register trademarks and copyrights, (k) all rights in all of the foregoing provided by treaties, conventions and common law, and (l) all rights to sue or recover and retain damages and costs and attorneys’ fees for past, present and future infringement or misappropriation of any of the foregoing.

 

“ITA” means the Israeli Tax Authority.

 

“Law” means any federal, state, county, provincial, local, foreign or multinational law, statute, ordinance, rule or regulation.

 

“Liabilities” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

 

“Licensed Intellectual Property Rights” means all Intellectual Property Rights owned or purported to be owned by a third party and licensed or sublicensed to Seller or for which Seller has obtained a covenant not to be sued.

 

“Material Adverse Effect” means any event, change, circumstance, effect, development or state of facts that has had or would reasonably be expected to have a material and adverse effect on (a) the Business, including any Acquired Asset (and including the value thereof), or the results of operations or condition (financial or otherwise) of Seller (b) the ability of Seller to consummate the transactions contemplated hereby on a timely basis or (c) the business of Buyer, or the results of operations or condition (financial or otherwise) of Buyer, as applicable.

 

“OCS Approval” means a letter, in form and substance reasonably satisfactory to Buyer, from the OCS (a) describing the amount that is payable to the OCS upon the transfer of the OCS Supported Assets outside of Israel plus applicable interest to date of receipt by the OCS (the “OCS IP Transfer Approval Amount”), and (b) providing that, subject to the payment of the OCS IP Transfer Approval Amount the OCS Supported Assets may be transferred in accordance with section 19B(b)(1) of the Encouragement of Industrial Research and Development Law, 1984, and to the effect that the OCS Supported Assets shall be free of any and all contingencies, restrictions and conditions relating to the OCS, and any obligation for the payment of any royalties, the making of any filings or reports, the making of milestone payments or any other restriction pursuant to the R&D Law or any other consideration other than the OCS IP Transfer Amount, all in the form customarily issued by the OCS in connection with a transfer outside of Israel of intellectual property which has been funded, in part or in whole, by the OCS.

 

“OCS Supported Assets” means any of the Acquired Assets developed with the support, in whole or in part, of the OCS.

 

“Office of the Chief Scientist” or “OCS” means the Office of the Chief Scientist of the Israeli Ministry of Economy.

 

“Order” means any order, writ, judgment, injunction, award or decree of any Governmental Authority.

 

9

 

	
“Organizational   Documents” means an entity’s certificate or articles of incorporation or   formation, certificate defining the rights and preferences of securities,   articles of organization, general or limited partnership agreement, operating   agreement, certificate of limited partnership, joint venture agreement or   similar document governing the entity.
    
	
 
    
	
“Owned Intellectual   Property Rights” means all Intellectual Property Rights owned or   purported to be owned by Seller.
    
	
 
    
	
“Permitted   Encumbrances” means (a) Encumbrances for Taxes not yet due and   payable; (b) mechanics’ liens incurred in the ordinary course of   business (i) with respect to which payment is not yet due and payable or   that are being contested in good faith by the Sellers, and (ii) that do   not materially impair the Acquired Assets or the conduct of the Business or   the present use of the affected property; and (c) Encumbrances described   on Schedule 1.01.
    
	
 
    
	
“Person” means   any individual, partnership, firm, corporation, limited liability company,   association, trust, unincorporated organization, Governmental Authority or   other entity.
    
	
 
    
	
“Product” means   any pharmaceutical or biological products comprised of Somatoprim (DG3173,   and also referred to as Cyclo(-y-aminobutyryl-L-phenylalanyl-L-tryptophanyl-D-tryptophanyl-L-lysyl-L-threonyl-L-phenylalanyl-N-carbamoylmethyl-y-aminobutyryl)),   or a salt, analog, free acid/base, solvate, ester, hydrate, anhydrous form,   degradant, stereoisomer, polymorphic form, isotope or crystal form, prodrug,   metabolite or any modification based on the nucleotide sequence of   Somatoprim, for all uses, human and non-human.
    
	
 
    
	
“Product Records”   means and includes any and all of the following used or held for use by or on   behalf of Seller and concerning the Product or the Acquired Assets (in each   case whether such materials are evidenced in writing, electronically or   otherwise): (a) business records (including purchasing records and   regulatory compliance records; (b) regulatory correspondence;   (c) regulatory applications, including all Information submitted with or   incorporated by reference therein, all supporting and background   documentation, and all supplements or amendments thereto;   (d) submissions and reports to the FDA, or other Governmental Authority   (including all supporting and background documentation); (e) manuals and   procedures for assuring compliance with applicable Laws or similar   requirements of third party auditors; (f) data and information relating   to any preclinical, clinical and nonclinical testing or studies   (post-marketing or otherwise) involving the Product, including informed   consents, case report forms, and other records related to all studies;   (g) risk management records; (h) documents, correspondence,   studies, reports and all other books, ledgers, files and records of every   kind; (i) tangible data; (j) all vendor, supplier and service   provider lists (including a description of the underlying commercial   agreements or arrangements with such vendors, suppliers or service   providers); (k) promotional literature and advertising materials in   physical form and camera-ready artwork with support data; (l) catalogs;   (m) research material; (n) statistical information;   (o) technical information; (p) design history files;   (q) correction and removal reports; (r) corrective and preventive   action reports; (s) written memoranda or records documenting decisions   not to file a regulatory application; (t) other product development   records related to past, current or prospective research and development   projects involving the Product; (u) blueprints, technical designs,   drawings, specifications and other books, records and files concerning the   Product; and (v) the Product Specifications.
    
	
 
    
	
“Product   Specifications” means any and all Information (other than immaterial   Information) used or held for use by or on behalf of Seller that describes,   or provides guidance or instructions as to, the design, development,   manufacture and/or testing of, the Product, and such other Information (other   than immaterial Information) necessary for the exploitation of the Product or   any Acquired Asset or the Business, and all copies and tangible embodiments   of the foregoing (in whatever form or medium).
    

 

10

 

“Qualified Financing” means a transaction or series of related transactions, that closes within thirty (30) days from the Closing, pursuant to which one or more institutional Persons makes an investment in Buyer of at least $25,000,000 in the aggregate for shares of Buyer Stock or other Equity Interests convertible or exchangeable into shares of Buyer Stock.

 

“R&D Law” means the Israeli Law for the Encouragement of Research and Development, 1984, and regulations promulgated thereunder.

 

“ SCRO” means the Swedish Companies Registration Office (Sw. Bolagsverket).

 

“Seller Disclosure Schedule” means the Schedules delivered by the Seller to Buyer simultaneously with the execution of this Agreement which are numbered to correspond to the representations and warranties contained in ARTICLE IV.

 

“Seller Taxes” means any Liability of Seller for Taxes, attributable to the Business or the Acquired Assets, and whether or not arising from or related to the transactions contemplated by this Agreement, and that relate to any Tax period (or portion thereof) ending on or before the Closing Date.

 

“Seller’s Knowledge” or any similar phrase means, with respect to any matter, the actual knowledge of each of Messrs. Carsten Dehning and Shaun Marcus and the knowledge that each such individual would have after performing a reasonable investigation and inquiry of such matter.

 

“Settlement Agent” means the bank engaged by the Buyer for transferring Buyer Stock in the Euroclear system.

 

“Subsidiary” has the meaning set forth in Rule 405 of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Tax” or “Taxes” means all Israeli and United States federal, state, local, or foreign income, profits, estimated, franchise, gross receipts, net receipts, capital, capital stock, net worth, sales, use, withholding, turnover, goods and services, value added, ad valorem, registration, general business, employment, social security, disability, occupation, real property, personal property (tangible and intangible), recording, stamp, transfer, conveyance, severance, production, excise, emergency excise, alternative or add-on minimum, payroll, unemployment insurance, premium, environmental, windfall profit, custom, duty, documentary, information reporting, back-up withholding, and other taxes, withholdings, duties, levies, imposts, license and registration fees, and other similar charges and assessments (including all fines, penalties, and additions attributable to or otherwise imposed, assessed or collected on or with respect to any such taxes, charges, fees, levies or other assessments, and all interest thereon, any liability arising pursuant to the application of Treasury Regulation section 1.1502-6 or any similar provision of any applicable state, local or foreign Tax Law, and any liability for the unpaid taxes of any other Person as a transferee or successor, by contract, or otherwise) imposed, assessed or collected by or on behalf of any Taxing Authority.

 

“Taxing Authority” means any Governmental Authority exercising any authority to impose, regulate or administer the imposition of Taxes including the ITA.

 

“Tax Return” means any return, statement, report, filing, estimate, declaration, claim for refund, information return or statement, or form, including in each case any amendments thereto, filed or required to be filed with any Taxing Authority.

 

“Treasury Regulations” means the U.S. treasury regulations promulgated pursuant to the Code.

 

11

 

“Valid Israeli Tax Certificate” means a certificate or ruling issued by the ITA specific to the transactions contemplated herein, in form and substance satisfactory to the Buyer, exempting Buyer from any duty to withhold Israeli tax (other than amounts not exceeding $30,000 in the aggregate) with respect to amounts payable to Seller.

 

“Valid VAT Ruling” means a certificate, ruling or opinion issued by the Israel VAT Authority, in form and substance reasonably satisfactory to the Seller and Buyer, exempting the transactions contemplated by this Agreement from any duty to pay Israeli value added tax (other than amounts not exceeding $30,000 in the aggregate) with respect to amounts payable to Seller.

 

1.02        Other Defined Terms.  The following terms are defined in the sections indicated.

 

	
Acquired Assets
    	
2.01(b)
    
	
Apportioned Obligations
    	
6.07(a)
    
	
Assumed Liabilities
    	
2.03
    
	
Bill of Sale
    	
3.02(b)
    
	
Buyer Indemnified   Parties
    	
7.02
    
	
Business
    	
Recitals
    
	
Business Financial   Statements
    	
4.06
    
	
Buyer
    	
Preamble
    
	
Buyer Closing   Certificate
    	
8.02(a)
    
	
Closing
    	
3.01
    
	
Closing Consents
    	
8.01(c)
    
	
Closing Date
    	
3.01
    
	
Confidentiality   Agreement
    	
6.05(a)
    
	
Excluded Assets
    	
2.02
    
	
Liabilities
    	
2.04
    
	
Non-Assignable Assets
    	
2.06(a)
    
	
Notice Period
    	
7.04(a)(ii)
    
	
Parties
    	
Preamble
    
	
Permits
    	
4.11(a)
    
	
Product Data
    	
4.15(a)
    
	
Product
    	
2.01(b)
    
	
Restrictive Covenant   Agreement
    	
Recitals
    
	
Rights Agreement
    	
Recitals
    
	
Seller
    	
Preamble
    
	
Seller Closing   Certificate
    	
8.01(a)
    
	
Seller Contracts
    	
4.10(b)
    
	
Seller Recipients
    	
6.05
    
	
Seller Registered IP
    	
4.14(a)
    
	
Seller Indemnified   Parties
    	
7.03
    
	
Specified Representations
    	
7.01
    
	
Tax Contest
    	
7.04(c)
    
	
Termination Date
    	
8.03(a)(ii)
    
	
Third Party Claim
    	
7.04(a)(i)
    
	
Third Party Claim   Notice
    	
7.04(a)(i)
    
	
Threshold
    	
7.06(a)
    
	
Transfer Taxes
    	
6.07(a)
    

 

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ARTICLE II

PURCHASE AND SALE OF ACQUIRED ASSETS; ASSUMED LIABILITIES

 

2.01        Purchase and Sale of Acquired Assets.

 

(a)           On the terms and subject to the conditions contained in this Agreement, at the Closing, Seller shall grant, sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase, assume and acquire from Seller, all of Seller’s right, title and interest in and to the Acquired Assets, free and clear of all Encumbrances, other than Permitted Encumbrances against payment in kind with newly issued Buyer Stock, such Buyer Stock to be delivered to Seller as soon as practically possible following registration with the SCRO.

 

(b)           “Acquired Assets” means all assets, properties, rights, titles and interests of every kind and nature owned, licensed or leased by Seller (including indirect and other forms of beneficial ownership) that are used in, necessary for, developed for, or otherwise related to the Product or the Business, whether tangible or intangible, real or personal and wherever located and by whomever possessed , except in all cases for the Excluded Assets, but including the following:

 

(i)            all Seller Registered IP and other Intellectual Property Rights of Seller relating to the Product;

 

(ii)           all historical data and records, rights to data and summaries generated in past trials and the current ongoing trial with respect to the Product, and all other Product Records, Product Specifications and Product Data;

 

(iii)          any inventory of active pharmaceutical ingredient or intermediates thereto or clinical supply relating to the Product;

 

(iv)          all income, royalties, damages and payments due or payable following the Closing Date as a result of sales of or other actions involving the Product or any of the Owned Intellectual Property Rights (including damages and payments for any past, present or future infringement, misappropriation, dilution or other violation of the Owned Intellectual Property Rights, and the right to sue, recover and retain damages for past, present or future infringement, misappropriation, dilution or other violation thereof;

 

(v)           all rights to defend against claims made that the Product or any of the Owned Intellectual Property Rights infringes, misappropriates, dilutes or otherwise violates the intellectual property rights of any Person;

 

(vi)          to the extent legally transferable to Buyer at the Closing, all Permits;

 

(vii)         to the extent legally transferable to Buyer, all warranties, guaranties and indemnities by any manufacturer or supplier to the extent made with regard to the Product or any Acquired Asset and all rights to causes of action, lawsuits, judgments, claims and demands of any nature whether choate or inchoate, known or unknown, contingent or non-contingent, available to or being pursued by Seller or otherwise made with regard to the Product or any Acquired Asset, whether arising by way of counterclaim or otherwise, including the right to recover all proceeds, settlements and damages therefrom;

 

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(viii)        to the extent legally transferable to Buyer, all rights of Seller to enforce any agreement with any employee, consultant or contractor of such Person involving the Owned Intellectual Property Rights; and

 

(ix)          all goodwill, moral rights and other general intangible properties associated with the Product or the Business.

 

2.02        Excluded Assets.  Notwithstanding anything herein to the contrary, Buyer shall not acquire any interest in any assets of Seller or any third party related to Seller other than the Acquired Assets which are expressly excluded from the purchase and sale contemplated hereby and, as such, are not included in the Acquired Assets included without limitation the properties, assets and rights listed below (collectively, the “Excluded Assets”):

 

(a)           Seller’s corporate charter (or similar Organizational Document), qualifications to conduct business as a foreign entity, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books and blank stock certificates and other documents relating solely to the organization, maintenance and existence of Seller as a company (provided, that Buyer shall be entitled to receive a copy of all such documentation);

 

(b)           Seller’s claims for and rights to receive Tax refunds;

 

(c)           the Buyer Stock Closing Consideration and all other rights of Seller under or pursuant to this Agreement and the Schedules attached hereto and any other agreements entered into by the Seller pursuant to this Agreement;

 

(d)           computers (both hardware and software);

 

(e)           bank accounts, cash and cash equivalents;

 

(f)            all other assets and properties of the Seller not related to the Product, the Business or the Acquired Assets; and

 

(g)           all other assets and properties set forth on Schedule 2.02.

 

2.03        Assumed Liabilities.  As of the Closing, Buyer shall assume and agree to pay, discharge or perform, as appropriate, when due only the Liabilities of Seller specifically identified in clauses (a) to (c) below (the “Assumed Liabilities”), and no other Liabilities:

 

(a)           Liabilities for the payment of royalties pursuant to those Seller Contracts included in the Acquired Assets which are set forth on Schedule 2.03(a);

 

(b)           Liabilities in respect of the Seller Contracts (including the performance of outstanding development services thereunder), but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Seller on or prior to the Closing;

 

(c)           Liabilities which are set forth on Schedule 2.03(c); and

 

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(d)           other Liabilities incurred following the date hereof and prior to the Closing in the ordinary course of business in an amount not to exceed $25,000 in the aggregate.

 

Buyer hereby covenants to discharge in full in a timely manner all of the Assumed Liabilities.

 

2.04        Retained Liabilities.  The Parties agree that, except for the Assumed Liabilities, Buyer will not assume or be responsible for the payment or assumption of any other Liabilities or obligations of any kind or nature of Seller or the Business, whether absolute or contingent, known or unknown, liquidated or unliquidated, or due or to become due (collectively, the “Retained Liabilities”).  The Retained Liabilities are, and shall at all times remain, the Liabilities and obligations of Seller.  Seller hereby covenants to discharge in full in a timely manner all of the Retained Liabilities.

 

2.05        Buyer Stock Closing Consideration.  In consideration of the grant, sale, conveyance, assignment, transfer and delivery of the Acquired Assets to Buyer and the assumption by Buyer of the Assumed Liabilities, at the Closing, Buyer shall take all required action for the issuance of, and as soon as practically possible deliver to Seller a total number of shares of Buyer Stock equal to the Buyer Stock Closing Consideration, including that portion of the Buyer Stock Closing Consideration designated as Indemnity Shares.

 

2.06        Withholding.  The Buyer, the Escrow Agent (if and when appointed), and any other applicable withholding agent shall be entitled to deduct and withhold or cause to be withheld from any consideration otherwise payable to or for the benefit of any Person pursuant to this Agreement or the Escrow Agreement (if and when appointed) such amounts that the Buyer determines is required to deduct and withhold with respect to the making of such payment under any provision of Tax Law, unless the Seller provides the Buyer, Escrow Agent or other applicable withholding agent with a Valid Israeli Tax Certificate.  Any amounts withheld in accordance with this Section shall be treated for all purposes of this Agreement as having been paid to the Seller in respect of which such deduction and withholding was made. It is understood between the parties that (i) in the event the Buyer, the Escrow Agent or other applicable withholding agent believes it should withhold amounts exceeding $30,000 in the aggregate from the Buyer Stock Closing Consideration that the conditions to closing of the Seller under Article VIII shall not be deemed to be satisfied and (ii) in the event the Buyer, the Escrow Agent or other applicable withholding agent believes it should withhold amounts from payments other than the Buyer Stock Closing Consideration, then the parties shall use their reasonable efforts to minimize such withholding to the extent possible, and if the parties are not successful in minimizing such withholding to zero, Buyer shall gross up such payments to Seller such that the net amount received by Seller will represents the entire payment that would have been made had no withholding applied.  If the amounts required to be withheld from any amounts payable hereunder exceeds $30,000 in the aggregate, the parties hereto shall cooperate in good faith to determinate an alternative structure for the transactions contemplated herein so as to minimize the amount withheld.

 

2.07        Non-Assignable Assets

 

(a)           Nothing in this Agreement nor the consummation of the transactions contemplated hereby shall be construed as an attempt or agreement to sell, transfer, assign, convey or deliver any asset, property or right to Buyer (provided, that this Section 2.07 shall not affect whether any asset, property or right shall, once any required consent or waiver is obtained, be deemed to be a Acquired Asset for any other purpose under this Agreement) or for Buyer or any of its Affiliates and their respective successors and assigns to assume any Assumed Liability which by its terms or by Law is not transferable or assignable, as applicable, without the consent or waiver of a third party or is cancelable by a third party in the event of such a transfer or assignment without the consent or waiver of such third

 

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party, in each case unless and until such consent or waiver shall have been obtained (collectively, the “Non-Assignable Assets”).

 

(b)           The Seller shall make commercially reasonably efforts to obtain, or to cause to be obtained, any consent or waiver that is required for Seller to sell, transfer, assign, convey and deliver the Acquired Assets to Buyer pursuant to this Agreement.  To the extent permitted by applicable Law, in the event any such consent or waiver cannot be obtained prior to Closing, (i) the Non-Assignable Assets subject thereto and affected thereby shall be held, as of and from the Closing, by Seller in trust for the benefit of Buyer, and the Parties shall make commercial reasonable efforts to cause all benefits and obligations existing thereunder to be for Buyer’s account, (ii) Buyer shall pay, perform or otherwise discharge (in accordance with the respective terms and subject to the respective conditions thereof, and in the name of Seller) all of the covenants and obligations of Seller incurred after the Closing with respect to such Non-Assignable Assets, (iii) Seller shall make commercially reasonable efforts to take or cause to be taken such actions (including actions to enforce its rights) in its name or otherwise as Buyer may reasonably request so as to provide Buyer with the benefits of such Non-Assignable Assets and to, using commercially reasonable efforts, effect the collection of money or other consideration that becomes due and payable under such Non-Assignable Assets, and to pay over to Buyer all money or other consideration received by it in respect of such Non-Assignable Assets, and (iv) Buyer and the Seller shall mutually cooperate to provide any other alternative arrangements as may be reasonably required to implement the purposes of this Agreement.  If and when such consent or waiver is obtained, Seller shall sell, transfer, assign, convey and deliver such Non-Assignable Asset to Buyer for no additional consideration.  In no event shall a Contract that constitutes a Non-Assignable Asset be amended, modified or terminated by Seller without the prior written consent of Buyer.

 

(c)           As of and from the Closing, Seller authorizes Buyer, to the extent permitted by applicable Law and the terms of the Non-Assignable Assets, at Buyer’s expense, to perform all the obligations and receive all the benefits of Seller under the Non-Assignable Assets.

 

ARTICLE III

CLOSING

 

3.01        Time and Place.  The closing of the purchase and sale of the Acquired Assets and the transfer and assumption of the Assumed Liabilities and the consummation of the other transactions contemplated by this Agreement (the “Closing”) shall take place in Philadelphia, Pennsylvania, at the offices of Reed Smith LLP, 1717 Arch Street, Suite 3100, Philadelphia, Pennsylvania 19103 on the date that is two (2) Business Days after satisfaction or waiver of the conditions set forth in Sections 8.01 and 8.02 or at such other date and place as may be mutually agreed by the Parties in writing (the “Closing Date”).

 

3.02        Deliveries by the Seller.  Subject to the conditions set forth in this Agreement, at or prior to the Closing, the Seller shall deliver or cause to be delivered to Buyer:

 

(a)           the Rights Agreement, duly executed by the Seller ;

 

(b)           a bill of sale and assignment agreement, in form and substance reasonably satisfactory to the Buyer (the “Bill of Sale”), duly executed by Seller;

 

(c)           the subscription list in respect of the Buyer Stock Closing Consideration, duly executed by the Seller (the “Subscription List”);

 

16

 

(d)           duly executed assignment and assumption documents or instruments (in form and substance reasonably satisfactory to Buyer and Seller) assigning to Buyer all right, title and interest in and to the Intellectual Property Rights included in the Acquired Assets and pursuant to which Buyer assumes all the Assumed Liabilities;

 

(e)           a certificate, dated as of the Closing Date, executed by an authorized officer of Seller, certifying (i) the incumbency of each officer executing this Agreement or any other documents and instruments to be executed and delivered pursuant hereto on behalf of Seller and (ii) that attached thereto are true and complete copies of all resolutions of the board of directors (or equivalent governing body) and holders of voting securities of the Seller authorizing the transactions contemplated hereby or otherwise relating to this Agreement and the transactions contemplated hereby, and that all such resolutions are in full force and at and as of the Closing Date;

 

(f)            the Seller Closing Certificate;

 

(g)           evidence of the termination and release of any Encumbrance (other than Permitted Encumbrances) on any Acquired Asset, if applicable, in form and substance acceptable to Buyer;

 

(h)           the OCS Approval duly executed by the OCS;

 

(i)            subject to the provisions of Section 6.12 true, correct and complete copies of all Product Records currently possessed by the Seller;

 

(j)            the Valid Israeli Tax Certificate;

 

(k)           a true, correct and complete list of all Contracts that contain nondisclosure or confidentiality obligations that are binding on the Company with respect to the Business; and

 

(l)            such other instruments of conveyance and transfer, in form reasonably satisfactory to Buyer and its counsel, as shall be necessary and effective to transfer and assign to, and vest in, Buyer all of Seller’s right, title and interest in and to the Acquired Assets, and simultaneously with such deliveries, all such steps will be taken by Seller as may be required to put Buyer in actual possession and operating control of the Acquired Assets.

 

3.03        Deliveries by Buyer.  Subject to the conditions set forth in this Agreement, as soon as practically possible following the Closing, Buyer shall (y) irrevocably instruct the Settlement Agent to deliver to the Seller evidence of the issuance of the Buyer Stock to Seller, including that portion of the Buyer Stock Closing Consideration designated as Indemnity Shares, and (z) at or prior to the Closing, Buyer shall deliver or cause to be delivered to the Seller:

 

(a)           the Rights Agreement, duly executed by Buyer;

 

(b)           the Bill of Sale, duly executed by Buyer;

 

(c)           a certificate, dated as of the Closing Date, executed by an authorized officer of Buyer, certifying (i) the incumbency of each officer executing this Agreement or any other documents and instruments to be executed and delivered pursuant hereto on behalf of Seller and (ii) that attached thereto are true and complete copies of all resolutions of the board of directors (or equivalent governing body) and the Buyer Shareholder Approval authorizing the transactions contemplated hereby or otherwise

 

17

 

relating to this Agreement and the transactions contemplated hereby, and that all such resolutions are in full force and at and as of the Closing Date; and

 

(d)           the Buyer Closing Certificate.

 

In addition, at the Closing the Buyer shall:

 

(a)           procure that the auditor of the Buyer or a Swedish authorized public accountant or registered accounting firm, shall issue the relevant auditor’s certificates pursuant to Chapter 13 Section 42 of the Swedish Companies Act indicating: (a) a description of the property transferred to the Buyer as payment in kind and the method employed in valuation of such property; (b) that the payment in kind for the Buyer Stock Closing Consideration has not been ascribed a value higher than the actual value for the Buyer of such property; and (c) that such property may be assumed to become useful in the Buyer’s operations; and

 

(b)           take such measures as are required to apply for registration of the issue of the Buyer Stock Closing Consideration with the SCRO (Sw. Bolagsverket), with best efforts to have the issue registered as soon as reasonably and practically possible following the Closing Date, and take all other measures in connection with the issue that are necessary for its proper implementation. The Buyer Stock Closing Consideration shall be registered with Euroclear at the earliest possible date after Closing and registration with the SCRO.  All documents related to such registration shall be in a form and substance reasonably acceptable to Seller.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

Except as set forth in the Seller Disclosure Schedule, Seller hereby represents and warrants to Buyer as follows:

 

4.01        Organization; Qualification.  Seller is a company, duly formed, validly existing and in good standing under the Laws of the jurisdiction of its organization with the full power and authority to conduct its business as now conducted and, to own and lease the Acquired Assets and its other assets and properties. Seller is duly qualified or licensed as a foreign entity to do business, and is in good standing, in each jurisdiction where the character of the Acquired Assets makes such qualification or licensing necessary, except where the failure to be so qualified or in good standing, as the case may be, would not, individually or in the aggregate, have a Material Adverse Effect.

 

4.02        Ownership; Subsidiaries.  The record holders of all of the issued and outstanding Equity Interests of Seller are set forth on Schedule 4.02.  Other than as set forth on Schedule 4.02, no other Person owns or holds the right to acquire any shares of stock or any other Equity Interests in the Seller or has any obligation to make any investment in the Seller.  The Seller has no subsidiaries.

 

4.03        Corporate Power and Authority.  Seller has the full corporate power and authority to execute and deliver this Agreement and perform its obligations hereunder and under the other agreements and instruments to be executed and delivered by it in connection with the transactions contemplated hereby and thereby.  Seller has taken all necessary action to authorize the execution and delivery of this Agreement and such other agreements and instruments and the consummation of the transactions contemplated hereby and thereby.  This Agreement is, and the other agreements and instruments to be executed and delivered by Seller, in connection with the transactions contemplated hereby and thereby will be, when executed and delivered by all of the parties thereto, the legal, valid and binding obligations

 

18

 

of Seller, enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect affecting the enforcement of creditors’ rights generally.  Seller is not in default under or in violation of any material provisions of its Organizational Documents.

 

4.04        No Violation.  The execution, delivery and performance of this Agreement and the other agreements contemplated hereby to be executed and delivered by Seller and the consummation of the transactions contemplated hereby and thereby do not and shall not (a) conflict with or result in any breach of any of the provisions of, (b) constitute a default under (whether with or without the passage of time, the giving of notice or both), (c) result in a violation of, (d) give any third party the right to terminate or to accelerate any obligation under, (e) result in the creation of any Encumbrance of any kind upon any of the Acquired Assets, or (f) require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or other Governmental Authority, under the provisions of Seller’s Organizational Documents or any indenture, mortgage, or loan agreements to which Seller is bound or affected, any Contract to which Seller is a party, any license, permit, certificate, accreditation or other authorization of Seller, or any Law to which Seller is subject.  Without limiting the generality of the foregoing, except for Buyer’s rights pursuant hereto, there are no agreements, options, commitments or rights with, of or to any Person to lease, purchase or otherwise acquire any of the Acquired Assets or any interests therein.

 

4.05        Consents.  No authorization, consent, approval, order or declaration of, registration or filing with or notice to any Governmental Authority or other Person is necessary for the execution and delivery of this Agreement by Seller or any other agreement or document to be delivered by Seller or the consummation by Seller of the transactions contemplated hereby or thereby.

 

4.06        Financial Statements.  The unaudited balance sheets of the Company as of December 31, 2013 and December 31, 2014, and the related unaudited statements of income for the fiscal years ended December 31, 2013 through December 31, 2014 (and the related notes thereto), each attached hereto as Schedule 4.06 (collectively, the “Financial Statements”) (a) have been prepared from the books and records of Seller and in accordance with Israeli GAAP applied on a consistent basis throughout the periods indicated, except for the absence of footnotes, and (b) fairly present, in all material respects, in conformity with Israeli GAAP applied on a consistent basis and the books and records of Seller, the financial position, assets and liabilities and results of operations as of the dates and for the periods indicated therein, subject to normal year-end adjustments, which were not, individually or in the aggregate, material in amount or significance. Seller maintains a system of internal accounting controls reasonably adequate to ensure that, in all material respects, Seller does not maintain unrecorded accounts in violation of any anti-bribery or anti-corruption Laws applicable to Seller.

 

4.07        No Undisclosed Liabilities.  There are no Liabilities of Seller with respect to the Business, other than:

 

(a)           Liabilities disclosed and provided for in the Financial Statements or in the notes thereto;

 

(b)           Liabilities incurred in the ordinary course of business consistent with past practices since December 31, 2014 that, individually or in the aggregate, are not material to the Business;

 

(c)           Liabilities in accordance with Seller Contracts pursuant to their terms, none of which is a Liability for breach of contract, breach of warranty, tort, infringement, misappropriation, claim or lawsuit;

 

19

 

(d)           Retained Liabilities; and

 

(e)           Liabilities directly incurred under the terms of this Agreement.

 

4.08        Title to Acquired Assets; Sufficiency.  Seller owns good and marketable title to, or a valid leasehold interest in, all of the Acquired Assets, free and clear of all Encumbrances other than Permitted Encumbrances.  The use of the Acquired Assets is not subject to any Encumbrances, other than Permitted Encumbrances.  The Acquired Assets comprise all of the assets, whether tangible or intangible, real or personal, developed for, related to, necessary for, or used in the conduct of the Business as currently conducted by Seller.  Following the Closing, Buyer will be the lawful owner of, and have good, valid and marketable title to, the Acquired Assets, free and clear of all Encumbrances other than Permitted Encumbrances.  All of the tangible assets and property included in the Acquired Assets, whether owned or leased, have no material defects, have been maintained in accordance with normal industry practice and are in good repair and operating condition, ordinary wear and tear excepted. There are no royalty or similar payment arrangements due to third parties relating to the Product other than as set forth in Schedule 2.03(a).

 

4.09        Litigation.  There are no Actions pending or, to Seller’s Knowledge, threatened against or affecting the Acquired Assets, Seller or the Business.  There is no Order binding upon Seller (whether relating to any Acquired Asset, the Business or otherwise) that could reasonably be expected to interfere with Seller’s ability to perform its obligations under this Agreement or any other document or instrument to be executed and delivered pursuant hereto or to consummate the transactions contemplated hereby or thereby, or that would reasonably be expected to adversely affect Buyer’s rights in and to any Acquired Asset following the Closing.

 

4.10        Contracts.

 

(a)           Schedule 4.10 lists all Contracts of the following types to which Seller is a party that are used in, necessary for, or otherwise related to the Business, the Acquired Liabilities or by which any of the Acquired Assets are bound:

 

(i)            Contracts for the employment of any officer, partner, individual employee or other person on a full-time, part-time, independent contractor or consulting basis or providing for the payment of any cash or other compensation or benefits upon the sale of the Acquired Assets or the Business (other than Contracts with Board Members and the Seller’s general administrator);

 

(ii)           Contracts which prohibiting competition or the disclosure of trade secrets or confidential information of or related to the Acquired Assets or the Business or which otherwise prohibits Seller from freely engaging in business anywhere in the world;

 

(iii)          Contracts with respect to the lending or investing of funds;

 

(iv)          Contracts which are leases under which Seller is lessee of or holds or operates any real property owned by any third party, or any personal property owned by any third party;

 

(v)           Contracts for the future purchase of, or payment for, supplies or products, or for the lease of any real or personal property from or the performance of services by a third party;

 

(vi)          Contracts to sell or supply products or to perform services;

 

20

 

(vii)         indemnity agreement with any of its suppliers or under which it is obligated to indemnify such supplier against product warranty or infringement or similar claims;

 

(viii)        any Contract or group of related Contracts with the same party continuing over a period of more than twelve (12) months from the date or dates thereof, not terminable by it upon thirty (30) days’ or less notice without penalty or involving more than $80,000;

 

(ix)          Contracts relating to the marketing, sale, advertising or promotion of the Product or the Business;

 

(x)           Contracts providing for a license, franchise, distributorship, sales agency or other similar arrangement similar to the foregoing, including any contracts requiring royalty or other similar payments to any Person with respect to the Product, the Acquired Assets or the Business;

 

(xi)          Contracts providing for a power of attorney or mandate executed by or on behalf of Seller with respect to the Acquired Assets or the Business;

 

(xii)         Any notes, debentures, bonds, conditional sale Contracts, equipment trust Contracts, letter of credit agreements, reimbursement Contracts, loan Contracts or other Contracts for the borrowing or lending of money (excluding loans to or from officers, directors, members, stockholders of Seller or any members of their immediate families), Contracts or arrangements for a line of credit or for a guarantee of, or other undertaking in connection with, the Indebtedness of any other Person;

 

(xiii)        Contracts relating to Intellectual Property Rights (including license agreements) and all other agreements affecting Seller’s ability to use, license, enforce, or disclose any Intellectual Property Rights;

 

(xiv)        Contracts under which any Encumbrances (other than Permitted Encumbrances) on or with respect to the Acquired Assets or the Business exist;

 

(xv)         Contracts with any Governmental Authority with respect to the Acquired Assets, Business or Assumed Liabilities; and

 

(xvi)        Any other Contract that is material to Seller with respect to the Business, whether or not entered into in the ordinary course of business (other than Contracts with banking institutions).

 

(b)           Each Contract set forth or required to be set forth on Schedule 4.10, together with each other Contract that is required to be so disclosed in each case relating to the Product or the Business and included in the Acquired Assets (each, a “Seller Contract”) is in full force and effect and is valid, binding and enforceable in accordance with its terms, except as such enforceability may be subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity. Each of the Seller Contracts was negotiated and entered into by Seller and the other parties thereto on an arm’s length basis. Seller is in compliance in all material respects with and has not, breached, violated or defaulted under, or received notice that it has breached, violated or defaulted under, in any material respect, any of the terms or conditions of any Seller Contract, nor, to Seller’s Knowledge, exists any event or occurrence that would constitute such a material breach, violation or default (with or without the lapse of time, giving of notice or both) by Seller, and to Seller’s Knowledge, there has not been any material breach, violation or default (with or without the lapse of time, giving of notice or both) by any third party of any such Seller Contract.

 

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The Seller has made available to Buyer in the electronic data room prior to the date hereof accurate and complete copies of all Seller Contracts in existence as of the date hereof.

 

(c)           No Person is renegotiating with the Seller, or has a right (absent any default or breach of a Seller Contract) pursuant to the terms of any Seller Contract to renegotiate, any material amount paid or payable to Seller under any Seller Contract or any other material term or provision of any Seller Contract.  Seller has not received any written or verbal indication of an intention to terminate any Seller Contract by any of the parties to any Seller Contract.

 

(d)           The transactions contemplated by this Agreement will not give rise to any notice or consent requirements or rights of termination under any Seller Contract.

 

(e)           None of the Seller Contracts (i) contains any “most favored nation” or similar provision or providing for minimum purchase or sale obligations, or (ii) limits the freedom of Seller to compete in any line of business or with any Person or in any area or so limit the freedom of Buyer or Buyer’s Affiliates after the Closing.

 

4.11        Licenses and Permits.

 

(a)           Schedule 4.11(a) sets forth a true, correct and complete list of: all licenses, permits, orders, franchises, certificates and other governmental authorizations, consents, rights, exemptions, clearances, registrations and approvals issued by, and declarations, registrations and filings made with regard to any of the foregoing with, any Governmental Authority involving the Acquired Assets or the Business and which are related to clinical trials or orphan drug designation (collectively, the “Permits”).

 

(b)           Seller possesses all Permits necessary for the conduct of the Business (including with respect to Environmental Laws) as currently conducted, all such Permits are valid and in full force and effect, and all information submitted to the applicable Governmental Authority in order to obtain each such Permit was true, accurate and complete in all material respects when submitted, and to the Seller’s Knowledge there is no impediment to any renewal thereof.  Seller currently operates, and to the Seller’s Knowledge, have at all times operated during the past five (5) years, the Business in material compliance with the requirements, terms and conditions of all Permits and with any Order of any Governmental Authority that is applicable to the operation of the Business.  Seller has not been informed by any Governmental Authority of any deficiency with respect to any Permit.  No proceeding is pending or, to Seller’s Knowledge, threatened to revoke or amend any of such Permits.  The execution and delivery of this Agreement will not result in any non-renewal, cancellation, modification, impairment, revocation, suspension or limitation of any Permit, and no Permit by its terms requires the consent of its issuing authority in order to remain in full force and effect after the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement.

 

4.12        Compliance with Law and Regulatory Requirements.

 

(a)           Seller is, and during the five (5) years preceding the date hereof has been, in compliance in all material respects with all applicable Laws relating to the operation of the Business and the Acquired Assets (including, for the avoidance of doubtTitle 5 of the Israeli Penalty Law (Bribery Transactions) and the Israeli Prohibition on Money Laundering Law, 2000), Seller is not under investigation with respect to and has not been threatened to be charged with or given notice of any violation of, any applicable Law, and no notices have been received by and, to Seller’s Knowledge, no claims have been filed against Seller alleging a violation of any Laws.  There is no judgment, decree, injunction, rule or Order of any arbitrator or Governmental Authority outstanding against the Seller.

 

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(b)           Seller has complied in all material respects with all applicable provisions of the FDCA and all applicable regulations promulgated thereunder by the FDA with respect to the Product, and all other applicable Laws governing the regulation of the Product.

 

(c)           Except as set forth in Schedule 4.12(c), all material reports, documents, claims and notices required to be filed, maintained, or furnished to the FDA or any other Governmental Authority by Seller with respect to the Product have been so filed, maintained or furnished.  All such reports, documents, claims, and notices were complete and correct in all material respects on the date filed (or were corrected in or supplemented by a subsequent filing) such that no liability exists with respect to such filing.

 

(d)           All material licenses, approvals, clearances, authorizations, registrations, certificates, permits, filings, notifications and supplements or amendments thereto that Seller, has received from or made to the FDA or any other Governmental Authority with respect to the Product have not been limited, suspended, modified or revoked and, to Seller’s Knowledge, there exists no reason to believe that the FDA or any other Governmental Authority is considering any such action.

 

(e)           Seller is not currently subject to any Action, including any civil, criminal or administrative action, suit, claim, complaint, hearing, demand letter, warning letter, untitled letter, proceeding, inspection, finding, recall, investigation, penalty assessment, audit or other compliance or enforcement, regulatory, or administrative proceeding by the FDA or other similar Governmental Authority, and no review or investigation has been threatened in writing or, to the Seller’s Knowledge, orally, against Seller alleging or asserting noncompliance with any applicable Laws.

 

(f)            Seller has not been convicted of any crime or engaged in any conduct for which debarment is mandated or permitted by 21 U.S.C. § 335a or any similar Law.

 

(g)           All studies, tests and preclinical and clinical trials being conducted by Seller or in connection with the Business are being conducted in material compliance with experimental protocols, procedures and controls pursuant to accepted professional scientific standards and applicable Laws, rules, regulations and guidances, including applicable requirements of Good Laboratory Practices or Good Clinical Practices, as applicable.  The descriptions of the studies, tests and preclinical and clinical trials, including the related results and regulatory status are accurate and complete in all material respects.  To Seller’s Knowledge, there exist no studies, tests or trials the results of which would reasonably be expected to call into question the clinical results described or referred to by Seller when viewed in the context in which such results are described and the clinical state of development. Seller has not received any notices, correspondence or other communication from the FDA or any other Governmental Authority requiring the termination, suspension or material modification of any clinical trials conducted by, or on behalf of, Seller, or in which Seller has participated, except where such action would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(h)           The manufacture of the Product by Seller is to Seller’s Knowledge, being conducted in material compliance with all applicable Laws including current Good Manufacturing Practices.

 

(i)            Seller has not, either voluntarily or involuntarily, initiated, conducted, or issued, or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, warning, “dear doctor” letter, investigator notice or other notice or action relating to an alleged lack of safety or efficacy of the Product.

 

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4.13        Taxes.

 

(a)           Seller has timely filed all Tax Returns that it is or has been required to file in connection with the Acquired Assets.  All such Tax Returns are true, correct and complete in all material respects.  All Taxes owed by Seller in connection with the Acquired Assets (whether or not shown or required to be shown on any Tax Return) have been fully and timely paid. There is no Tax deficiency or proposed Tax deficiency of any Person that could result in an Encumbrance on any of the Acquired Assets or in a claim against Buyer as transferee or owner of the Acquired Assets.  No claim has ever been made by a Taxing Authority in a jurisdiction where Seller does not file Tax Returns that it is or may be subject to taxation by that jurisdiction with respect to any of the Acquired Assets or the Business.  There are no Encumbrances on any of the Acquired Assets that arose in connection with any failure (or alleged failure) to pay any Tax and, to Seller’s Knowledge, there is no proposal by any Taxing Authority to attach any such Encumbrances.

 

(b)           There is no dispute or claim concerning any liability of Seller for Taxes in connection with the Acquired Assets claimed or raised by any Taxing Authority.  The Seller has not received any written notice that it is in violation (or with notice will be in violation) of any Tax Law.

 

(c)           There are no closing agreements in effect and no Tax rulings have been requested or received from any Taxing Authority with respect to the Acquired Assets or the Business.

 

(d)           Seller is not obligated in connection with the Acquired Assets or the Business to pay the Taxes of another Person by contract, as transferee, as successor, or otherwise.

 

(e)           The Seller is duly registered for the purposes of Israeli value added tax and has complied in all respects with all requirements concerning value added Taxes (“VAT”).

 

4.14        Intellectual Property.

 

(a)           Schedule 4.14(a) sets forth a true and complete list of each (i) trademark and service mark registration and application for registration thereof, (ii) Internet domain name registration and Internet domain name application, (iii) patent and pending patent application, and (iv) copyright registration and pending copyright registration application, in each case that is included in the Owned Intellectual Property Rights and the Licensed Intellectual Property Rights (collectively, the “Seller Registered IP”).  Schedule 4.14(a) includes the following true and complete information for each item of Seller Registered IP (to the extent applicable): (A) the jurisdiction in which such item has been issued or registered or, if not issued or registered, in which each such application for issuance or registration of has been filed and is still pending, (B) the application and registration numbers for each such item, and (C) the dates of application and registration for each such item.

 

(b)           Schedule 4.14(b) contains a true and complete list of all agreements (excluding licenses for commercial off the shelf computer software that are generally available on nondiscriminatory pricing terms which have an aggregate acquisition cost of $50,000 or less) to which Seller is a party or otherwise bound and pursuant to which Seller (i) obtains the right to use, or a covenant not to be sued under, any Intellectual Property Right or (ii) grants the right to use, or a covenant not to be sued under, any Intellectual Property Right, and in each case Seller has delivered complete and accurate copies of such agreements to Buyer prior to the date hereof.

 

(c)           Schedule 4.14(c) contains a complete list of all proceedings in which (i) Seller is seeking to cancel, modify, invalidate or otherwise challenge an Intellectual Property Right owned or purported to be owned by a third party or (ii) to Seller’s Knowledge a third party is seeking to cancel, modify, invalidate or otherwise challenge any Owned Intellectual Property Rights or Licensed Intellectual Property Rights.

 

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(d)           The Licensed Intellectual Property Rights and the Owned Intellectual Property Rights together constitute all the Intellectual Property Rights necessary to, or used or held for use in, the Business as currently conducted.  There exist no restrictions on the disclosure, use, license or transfer of the Owned Intellectual Property Rights. The consummation of the transactions contemplated by this Agreement will not alter, encumber, impair or extinguish any Owned Intellectual Property Rights or Licensed Intellectual Property Rights.

 

(e)           Seller has not given to any Person an indemnity in connection with any Intellectual Property Right or that arise under standard form service Contracts of Seller entered into in the ordinary course of business consistent with past practice, copies of which are attached in Schedule 4.14(e).

 

(f)            Seller has not, with respect to the Product or the Business, infringed, misappropriated, or otherwise violated any Intellectual Property Right of any third party.  There is no claim, action, suit, investigation or proceeding pending against, or, to Seller’s Knowledge, threatened against or affecting Seller or any present employee or consultant of Seller (i) based upon, or challenging or seeking to deny or restrict, the rights of Seller in any of the Owned Intellectual Property Rights and the Licensed Intellectual Property Rights, (ii) alleging that the use of the Owned Intellectual Property Rights or the Licensed Intellectual Property Rights or any services provided, processes used or products manufactured, used, imported or sold by Seller do or may conflict with, misappropriate, infringe or otherwise violate any Intellectual Property Right of any third party or (iii) alleging that Seller will infringe, misappropriate or otherwise violate, or has infringed, misappropriated or otherwise violated any Intellectual Property Right of any third party.  Seller has not received from any third party any written communication regarding or an offer to license any Intellectual Property Rights of such third party that could reasonably be perceived as a threat or potential threat of a claim, action, suit, investigation or proceeding.

 

(g)           None of the Owned Intellectual Property Rights or Licensed Intellectual Property Rights has been adjudged invalid or unenforceable in whole or part, and, to Seller’s Knowledge, all such Owned Intellectual Property Rights and Licensed Intellectual Property Rights are valid and enforceable.

 

(h)           Seller solely and exclusively owns all right, title and interest in and to all Owned Intellectual Property Rights. Seller holds all right, title and interest in and to all Owned Intellectual Property Rights and its rights in the Licensed Intellectual Property Rights, free and clear of any Encumbrances, other than Permitted Encumbrances.

 

(i)            Seller has taken all actions necessary to maintain and protect the Owned Intellectual Property Rights and its rights in the Licensed Intellectual Property Rights, including payment of applicable maintenance fees and filing of applicable statements of use.  There are no actions that must be taken by Seller within seventy five (75) days of the date of this Agreement, including the payment of any registration, maintenance or renewal fees or the filing of any responses to office actions by the patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any Intellectual Property Rights set forth on Schedule 4.14(a). To the extent that any Intellectual Property Right has been developed or created by a third party (including any current or former employee or consultant of Seller) for Seller, Seller has a written agreement with such third party with respect thereto, to the effect that Seller thereby either (i) has obtained ownership of and is the exclusive owner of, or (ii) has obtained a valid and unrestricted right to exploit, sufficient for the conduct of its business as currently conducted or proposed to be conducted, such Intellectual Property Right;  and containing confidentiality undertakings from such third parties.  In each case where a patent or patent application, trademark registration or trademark application, service mark registration or service mark application, or

 

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copyright registration or copyright application included in the Owned Intellectual Property Rights is held by assignment, the assignment has been duly recorded with the Governmental Authority from which the patent or registration issued or before which the application for registration is pending.

 

(j)            To Seller’s Knowledge, no Person has infringed, misappropriated or otherwise violated any Owned Intellectual Property Right or Licensed Intellectual Property Right.  Seller has taken reasonable steps in accordance with normal industry practice to maintain the confidentiality of all Intellectual Property Rights that are material to the Business and the value of which is contingent upon maintaining the confidentiality thereof.  None of the Owned Intellectual Property Rights or Licensed Intellectual Property Rights that are material to the Business and the value of which to Seller is contingent upon maintaining the confidentiality thereof has been disclosed to third parties other than third parties who are bound by written confidentiality agreements.

 

(k)           With respect to all patents and patent applications set forth on Schedule 4.14(a): (i) each has been prosecuted in material compliance with all applicable rules, policies, and procedures of the United States Patent and Trademark Office or applicable foreign patent agencies and (ii) to Seller’s Knowledge, there is no material prior art relevant thereto that may render the claims unpatentable, invalid, or unenforceable.

 

(l)            With respect to any pending applications for registration of the Owned Intellectual Property Rights or exclusively-licensed Licensed Intellectual Property Rights, to Seller’s Knowledge there is no reason that could reasonably be expected to prevent any such application for registration from being granted with claims substantially equivalent to the latest amended version of the claims in the pending application for registration.

 

(m)          Any products and services sold by Seller or any of its licensees and covered by a patent, trademark or copyright included in the Owned Intellectual Property Rights have been marked with the notice (applicable as of the date hereof) of all nations requiring such notice in order to initiate proceedings to collect damages for infringement thereof or otherwise maintain and protect such Owned Intellectual Property Rights.

 

(n)           No employee, consultant, contractor or officer of Seller has any claim for consideration, compensation or royalty payments, including without limitation, pursuant to Section 134 to the Israeli Patent Law, 1967 or any claims for moral rights (as defined in the Israeli Copyright Law, 2007) in connection with any Owned Intellectual Property Rights nor has any such employee, consultant, contractor or officer threatened or asserted any such claim.

 

(o)           No funding, facility or resources of any Governmental Authority, university, college, hospital or medical institution, other educational institution or research center was used in the development of any Owned Intellectual Property Rights or Licensed Intellectual Property Rights.  No current or former employee or consultant (or, in the case of Licensed Intellectual Property Rights, no current or former employee or, consultant of Seller or the licensor) who was involved in, or contributed to, the creation or development of any Owned Intellectual Property Rights or Licensed Intellectual Property Rights has performed services for any Governmental Authority or a university, college, hospital or medical institution, or other educational institution or research center during a period of time prior to or during which such manager, officer, consultant or independent contractor was also involved in, or contributing to, the creation or development of any Owned Intellectual Property Rights or Licensed Intellectual Property Rights.  Seller is not required to pay any royalty or make any other form of payment to any Governmental Authority, university, college, hospital or medical institution, other educational institution or research center to allow the use, licensing, assignment or transfer of any Owned Intellectual Property Rights or Licensed Intellectual Property Rights.

 

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4.15        Product Data; Product Specifications.

 

(a)           Schedule 4.15(a) provides a true, correct and complete list of the following (the “Product Data”): (i) all sources of supply for any raw material or component part required or used in connection with the Product, the Business or the Acquired Assets, noting, in each case, whether a supplier is a sole source of supply; (ii) all locations at which tangible Acquired Assets are located (including locations owned or controlled by third parties); and (iii) a purchase item file, including names and addresses of all suppliers, vendors and subcontractors, for all items currently used in connection with the Product.

 

(b)           Schedule 4.15(b) provides a true, correct and complete list of all Product pre-clinical and clinical trials and studies that have been conducted by or on behalf of Seller during the last ten (10) years.

 

(c)           The Product Specifications are complete, current and accurate.  Without limiting the generality of the foregoing, the Product Specifications (i) are sufficient in detail and content to identify and explain the designs, concepts and processes described therein and (ii) include all data and know-how that is proprietary to Seller and is used by Seller in connection with the Product or the Acquired Assets.

 

4.16        Indebtedness.  Schedule 4.16 sets forth a true and complete description of (a) the Indebtedness of Seller relating to or affecting in any way the Acquired Assets or the Business, (b) the Encumbrances that relate to such Indebtedness that encumber any assets of Seller (including the Acquired Assets), and (c) the name of each lender or other holder of such Indebtedness.

 

4.17        Absence of Certain Changes or Events.  Since December 31, 2014, Seller has operated the Business in the ordinary course of business, and no event, change, condition or circumstance exists or has occurred that, individually or in the aggregate, would reasonably be expected to (a) have a Material Adverse Effect, or (b) materially impair or delay Seller’s ability to timely consummate the Closing or otherwise perform its respective obligations under this Agreement.

 

4.18        Affiliate Transactions.  Neither Seller nor or any shareholder, officer, director or employee of Seller (a) is, or has in the past two years been, involved, directly or indirectly, in any material business arrangement or other material relationship with Seller (whether written or oral) (other than relationships arising out of such Person’s capacity as a holder of Equity Interests, director, officer or employee of Seller), (b) directly or indirectly owns, or otherwise has any right, title or interest in, to or under, any material property or right, tangible or intangible, that is used by Seller, or (c) is, or has in the past two years been, engaged, directly or indirectly, in the conduct of the business of Seller (other than in such Person’s capacity as a holder of Equity Interests, director, manager, officer or employee of Seller).

 

4.19        Solvency.  Immediately after giving effect to the transactions contemplated by this Agreement, the Seller will be able to pay its debts as they become due.  Immediately after giving effect to the transactions contemplated by this Agreement, the Seller will have adequate capital to carry on its businesses.  No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Seller.

 

4.20        Brokers’ Fees.  Except as set forth in Schedule 4.20, Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Except as set forth in the Buyer Disclosure Schedule Buyer hereby represents and warrants to the Seller as follows:

 

5.01        Organization and Qualification.  Each of the Buyer and its Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted and as proposed to be conducted. Neither the Buyer nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Buyer and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not, individually or in the aggregate, have a Material Adverse Effect. An English translation of the Buyer’s articles of association is attached hereto as Schedule 5.01.

 

5.02        Subsidiaries. The Buyer has no Subsidiaries other than those set forth in Schedule 5.02. The Buyer owns, directly or indirectly, all of the capital stock or comparable equity interests of each Subsidiary free and clear of any Encumbrance, all the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights, and the Buyer or one of its Subsidiaries has the unrestricted right to vote and (subject to limitations imposed by applicable law) to receive dividends and distributions on all capital securities of its Subsidiaries as owned by the Buyer or such Subsidiary.

 

5.03        Authorization; Enforcement.  Buyer has the requisite corporate authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and under the other agreements and instruments to be executed and delivered by it in connection with the transactions contemplated hereby and thereby. The execution and delivery of each of this Agreement and the consummation by it of the transactions contemplated hereunder and under the other agreements and instruments to be executed and delivered by it in connection with the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Buyer and no further consent or action is required by Buyer, its Board of Directors or its stockholders, subject to the receipt of the Buyer Shareholder Approval.  Each of this Agreement and the other agreements and instruments to be executed and delivered by it in connection with the transactions contemplated hereby and thereby has been (or upon delivery will be) duly executed by Buyer and is, or when delivered in accordance with the terms hereof, will constitute, the valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors rights generally, (ii) the effect of rules of law governing the availability of specific performance and other equitable remedies, and (iii) Swedish company law.

 

5.04        No Conflicts.  The execution, delivery and performance of this Agreement and the other agreements and instruments to be executed and delivered by it in connection with the transactions contemplated hereby and thereby by Buyer and the consummation by Buyer of the transactions contemplated hereby and thereby do not, and will not, (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment,

 

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acceleration or cancellation (with or without notice, lapse of time or both) of, any note, indenture, mortgage, lease or material contract to which Buyer or any Subsidiary is a party or by which any property or asset of Buyer or any Subsidiary is bound, or affected, except to the extent that such conflict, default, termination, amendment, acceleration or cancellation right would not reasonably be expected to have a Material Adverse Effect, (iii) except in accordance with this Agreement and the other agreements and instruments to be executed and delivered by it in connection with the transactions contemplated hereby and thereby, create or impose any Encumbrance, option, security agreement, equity, claim, charge or other restriction or limitation on the capital stock or on any of the property or asset of Buyer or any Subsidiary, or (iv) result in a violation of any Law, order, judgment, injunction, decree or other restriction of any court or Governmental Authority to which Buyer or any Subsidiary is subject, or by which any property or asset of Buyer or any Subsidiary is bound or affected, except to the extent that such violation would not reasonably be expected to have a Material Adverse Effect.

 

5.05        Buyer Stock.  The shares of Buyer Stock to be issued in connection with the consummation of the transactions contemplated by this Agreement when issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable shares of capital stock and subject to no preemptive rights.

 

5.06        Capitalization.  As of the date hereof, the maximum number of shares of Buyer Stock authorized according to Buyer’s articles of association amounts to 175,000,000 shares of Buyer Stock, SEK 1 par value per share, of which 159,080,722 shares were issued and outstanding.  All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance in all material respects with all applicable securities laws.  As of the date hereof, Buyer has issued, resolved to issue or undertaken to issue an aggregate of 14,564,000 warrants for compensatory purposes to employees or consultants, or to vendors in connection with goods or services provided, which as of the date hereof, entitle their holders to subscribe for up to 14,564,000  shares of Buyer Stock.  Other than as set forth in Schedule 5.06, Buyer did not have outstanding any other options, warrants, convertibles, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or entered into any agreement giving any Person any right to subscribe for or acquire, any shares of Buyer Stock, or securities or rights convertible or exchangeable into shares of Buyer Stock, that have not been effectively waived, other than pursuant to that certain Investor’s Rights Agreement to be entered into by investors in connection with the Qualified Financing (the “Investor’s Rights Agreement”) and Section 4.8 (on “repair issue”) of the Investment Agreement between Buyer and HealthCap, among others, dated October 30, 2014 (the “HealthCap Investment Agreement”). Other than as set forth in Schedule 5.06 and save for the new issue resolution contemplated by that certain Securities Purchase Agreement to be entered into by Buyer and certain of Buyer’s investors in connection with the Qualified Financing, there are no resolutions to issue shares, warrants or convertibles in Buyer that have not been registered with the Swedish Companies Registration Office.  There is no valid and outstanding authorization (Sw. bemyndigande) for the Board of Directors to issue shares, warrants or convertibles. Except for customary adjustments as a result of stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or other similar events, there are no anti-dilution or price adjustment provisions contained in any security issued by Buyer (or in any agreement providing rights to security holders) and the issuance of the Buyer Stock will not obligate Buyer to issue shares of Buyer Stock or other securities to any Person (other than Seller) and will not result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset price under such securities, provided, however, that options to purchase Buyer Stock contain Swedish customary price adjustment provisions.

 

5.07        Investment Act. The Buyer is not required to be registered as, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

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5.08        Registration Rights. The Buyer has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Buyer registered with the SEC or any other governmental authority other than those to be granted to certain investors pursuant to the Investor’s Rights Agreement.

 

5.09        Application of Takeover Protections.  There is no control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Buyer’s charter documents or the laws of its state of incorporation that is or could become applicable to Seller as a result of the Buyer and the Seller fulfilling their obligations or exercising their rights under this Agreement, including, without limitation, as a result of the Buyer’s issuance of the Buyer Stock and the Seller’s ownership of the Buyer Stock.

 

5.10        Absence of Litigation. There is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation pending or to the Buyer’s Knowledge, currently threatened (i) that questions the validity of this Agreement and the related transaction documents or the right of the Buyer to enter into them, or to consummate the transactions contemplated by this Agreement; or (ii) that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  Neither the Buyer nor, to the Buyer’s Knowledge, any of its officers or directors is a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality (in the case of officers or directors, such as would affect the Buyer. There is no action, suit, proceeding or investigation by the Buyer pending or which the Buyer intends to initiate. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened in writing (or any basis therefor known to the Buyer) involving the prior employment of any of the Buyer’s employees, their services provided in connection with the Buyer’s business, any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers.

 

5.11        Compliance. Neither the Buyer nor any Subsidiary, except in each case as would not, individually or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect, (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Buyer or any Subsidiary under), nor has the Buyer or any Subsidiary received written notice of a claim that it is in default under or that it is in violation of, any note, indenture, mortgage, lease or material contract to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any Governmental Authority.

 

5.12        Brokers and Finders. Except as set forth in Schedule 5.12, no Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Buyer or the Seller for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Buyer.

 

5.13        Foreign Corrupt Practices. Neither the Buyer nor any of its Subsidiaries nor, to the Buyer’s Knowledge, any director, officer, agent, employee or other Person acting on behalf of the Buyer or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Buyer (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

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5.14        Tax Status. The Buyer and each of its Subsidiaries (i) has made or filed all foreign, federal and state income and all other material Tax Returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all Taxes and other governmental assessments and charges that are shown to be due on such returns, reports and declarations, except those being contested in good faith, (iii) has paid all other material taxes due and payable, except those being contested in good faith, and (iv) has set aside on its books a provision reasonably adequate for the payment of all Taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and to the Buyer’s Knowledge, there is no basis for any such claim.

 

5.15        Intellectual Property. The Buyer owns or possesses or can acquire on commercially reasonable terms sufficient legal rights to all of the Buyer Intellectual Property without any known conflict with, or infringement of, the rights of others. To the Buyer’s knowledge, no product or service marketed or sold (or proposed to be marketed or sold) by the Buyer violates or will violate any license or infringes or will infringe any intellectual property rights of any other party. Except as set forth in Schedule 5.15, other than with respect to commercially available software products under standard end-user object code license agreements, there are no outstanding options, licenses, Contracts, claims, Encumbrances or shared ownership interests of any kind relating to the Buyer Intellectual Property, nor is the Buyer bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other Person. The Buyer has not received any communications alleging that the Buyer has violated, or by conducting its business, would violate any of the patents, trademarks, service marks, tradenames, copyrights, trade secrets, mask works or other proprietary rights or processes of any other Person. The Buyer has obtained and possesses valid licenses to use all of the software programs present on the computers and other software-enabled electronic devices that it owns or leases or that it has otherwise provided to its employees for their use in connection with the Buyer’s business. To the Buyer’s knowledge, it will not be necessary to use any inventions of any of its employees or consultants (or Persons it currently intends to hire) made prior to their employment by the Buyer. Each employee and consultant has assigned to the Buyer all intellectual property rights he or she owns that are related to the Buyer’s business as now conducted and as presently proposed to be conducted.  For purposes of this Section 5.15, Buyer shall be deemed to have knowledge of a patent right if Buyer has actual knowledge of the patent right or would be found to be on notice of such patent right as determined by reference to United States patent laws.

 

5.16        Permits. The Buyer and its Subsidiaries possess such valid and current certificates, authorizations or permits to conduct their respective businesses as currently conducted as may be required by state, federal or foreign regulatory agencies or bodies having authority over the Buyer and/or any of its Subsidiaries or any of their respective businesses or properties (“Buyer Permits”). Neither the Buyer nor any of its Subsidiaries is in violation of, or in default under, any of the Buyer Permits or has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, could be expected to have a Material Adverse Effect.

 

5.17        Clinical Data and Regulatory Compliance. The clinical trials conducted by the Buyer, and to the Buyer’s Knowledge the clinical trials conducted by third parties on behalf of the Buyer were and, if still pending, are being conducted in all material respects in accordance with protocols and procedures filed with the appropriate regulatory authorities for each such trial. Neither the Buyer nor any of its Subsidiaries has received any notices or other correspondence from the United States Food and Drug Administration or from any other U.S. or foreign government agency with jurisdiction over the products being developed by the Buyer (collectively, the “Regulatory Agencies”) requiring the termination, suspension or modification of any clinical trials, and the Buyer and its Subsidiaries have each operated

 

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and currently are in compliance in all material respects with all applicable rules and regulations of the Regulatory Agencies.

 

5.18        Property. The property and assets that the Buyer and its Subsidiaries own are free and clear of all mortgages, deeds of trust, Liens, loans and Encumbrances, except for statutory liens for the payment of current Taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Buyer’s or such Subsidiary’s ownership or use of such property or assets. With respect to the property and assets it leases, the Buyer and each Subsidiary is in compliance with such leases and, to Buyer’s Knowledge, holds a valid leasehold interest free of any Liens, claims or Encumbrances other than those of the lessors of such property or assets. Neither the Buyer nor any Subsidiary owns any real property.

 

5.19        Financial Statements. The Buyer has made available to the Seller its audited financial statements as of December 31, 2013 and unaudited financial statements as of December 31, 2014 (collectively, the “Buyer Financial Statements”). The Buyer Financial Statements have been prepared in accordance with IAS and IFRS applied on a consistent basis throughout the periods indicated. The Buyer Financial Statements fairly present in all material respects the financial condition and operating results of the Buyer as of the dates, and for the periods, indicated therein, subject in the case of the unaudited Buyer Financial Statements to normal year-end audit adjustments. Except as set forth in the Buyer Financial Statements or Schedule 5.19, the Buyer has no material liabilities or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to December 31, 2014; (ii) obligations under contracts and commitments incurred in the ordinary course of business; and (iii) liabilities and obligations of a type or nature not required under IAS and IFRS to be reflected in the Buyer Financial Statements, which, in all such cases, individually and in the aggregate would not reasonably be expected to have a Material Adverse Effect.

 

5.20        Changes. Except as set forth on Schedule 5.20, since December 31, 2014 there has not been:

 

(i)            any change in the assets, liabilities, financial condition or operating results of the Buyer from that reflected in the Buyer Financial Statements, except changes in the ordinary course of business that have not caused, in the aggregate, a Material Adverse Effect;

 

(ii)           any damage, destruction or loss, whether or not covered by insurance, that would have a Material Adverse Effect;

 

(iii)          any waiver or compromise by the Buyer of a valuable right or of a material debt owed to it;

 

(iv)          any satisfaction or discharge of any Lien, claim, or Encumbrance or payment of any obligation by the Buyer, except in the ordinary course of business and the satisfaction or discharge of which would not have a Material Adverse Effect;

 

(v)           any material change to a material contract by which the Buyer or any of its assets is bound or subject;

 

(vi)          any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder;

 

(vii)         any resignation or termination of employment of any officer of the Buyer;

 

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(viii)        any mortgage, pledge, transfer of a security interest in, or Lien, created by the Buyer, with respect to any of its material properties or assets, except Liens for taxes not yet due or payable and Liens that arise in the ordinary course of business and do not materially impair the Buyer’s ownership or use of such property or assets;

 

(ix)          any loans or guarantees made by the Buyer to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

 

(x)           any declaration, setting aside or payment or other distribution in respect of any of the Buyer’s capital stock, or any direct or indirect redemption, purchase, or other acquisition of any of such stock by the Buyer;

 

(xi)          any sale, assignment or transfer of any Buyer Intellectual Property that could reasonably be expected to result in a Material Adverse Effect;

 

(xii)         to the Buyer’s Knowledge, any other event or condition of any character, other than events affecting the economy or the Buyer’s industry generally, that could reasonably be expected to result in a Material Adverse Effect; or

 

(xiii)        any arrangement or commitment by the Buyer to do any of the things described in this Section 5.20.

 

5.21        Environmental Compliance. Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) neither the Buyer nor any of its Subsidiaries is in violation of any Environmental Law relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials; (ii) the Buyer and its Subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements; (iii) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Buyer or any of its Subsidiaries and (iv) to the Buyer’s Knowledge, there are no events or circumstances that might reasonably be expected to form the basis of an order for cleanup or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Buyer or any of its Subsidiaries relating to Hazardous Materials or any Environmental Laws.

 

5.22        Confidential Information Agreements. Each current and former employee, consultant and officer of the Buyer has executed an agreement with the Buyer regarding confidentiality and proprietary information (the “Confidential Information Agreements”). No current or former employee, consultant and officer of the Buyer has excluded works or inventions from his or her assignment of inventions pursuant to such person’s Confidential Information Agreement. The Buyer is not aware that any current or former employee, consultant and officer of the Buyer is in violation of any Confidential Information Agreement.

 

5.23        Insurance. The Buyer and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are customary for companies in the businesses in which they are engaged or propose to engage, and for companies of comparable size and stage of development as the Buyer and its Subsidiaries. All policies of insurance and fidelity or surety

 

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bonds insuring the Buyer or any of its Subsidiaries or the Buyer’s or its Subsidiaries’ respective businesses, assets, employees, officers and directors are in full force and effect. The Buyer and each of its Subsidiaries are in compliance with the terms of such policies and instruments in all material respects, and neither the Buyer nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that is not materially greater than the current cost. Neither the Buyer nor any of its Subsidiaries has been denied any insurance coverage which it has sought or for which it has applied.

 

5.24        Money Laundering Laws. The operations of the Buyer and its Subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Buyer or any of its Subsidiaries with respect to the Money Laundering Laws is pending, or to the Buyer’s Knowledge, threatened.

 

5.25        OFAC. Neither the Buyer nor any of its Subsidiaries nor, to the Buyer’s Knowledge, any director, officer, agent, employee or affiliate of the Buyer or any of its Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Buyer will not directly or indirectly use the proceeds from the sale of the Buyer Stock, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

 

5.26        Submission of Jurisdiction; Enforceability of Judgments. Under the laws of Sweden, the submission by the Buyer under this Agreement to the non-exclusive jurisdiction of any court sitting in Delaware and the designation of Delaware law to apply to this Agreement is binding upon the Buyer and, if properly brought to the attention of a court or administrative body in accordance with the laws of Sweden, would be enforceable in any judicial or administrative proceeding in Sweden, subject to the general discretionary powers of the court and subject to (1) that the recognition of the laws of jurisdictions other than the Kingdom of Sweden by Swedish courts or enforcement authorities does not include those laws which such courts or authorities consider (i) to be procedural in nature, (ii) to be revenue or penal laws, (iii) to involve the exercise of sovereign powers or powers of public or administrative law, (iv) the application of which would (A) amount to an attempt to circumvent Swedish conflict of laws rules, (B) lead to or entail a contravention of mandatory laws of the Kingdom of Sweden, or (C) be inconsistent with public policy, as such term is interpreted under the laws of the Kingdom of Sweden and such courts or authorities may require proof of the relevant provisions of those laws (and the concept of public policy is a dynamic one that is being continuously revisited and developed by statute and, primarily, judicial precedent and that, therefore, no exhaustive enumeration can be given of circumstances that would constitute the public policy of the Kingdom of Sweden); and there is some doubt whether, outside the scope of Article 14 of Regulation (EC) No 864/2007 of the European Parliament and of the Council on the law applicable to non-contractual obligations (Rome II), the parties can agree in advance the governing law of claims which are classified as being non-contractual (tortious or delictal) and (2) Swedish procedural law (whether statutory or on some other footing) will apply in respect of, inter alia, service of process, allocation and taxation of costs for the proceedings, availability of interim or interlocutory proceedings and the evaluation and weighing of evidence.

 

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ARTICLE VI

COVENANTS OF BUYER AND THE SELLER

 

6.01        Public Announcements.  Between the date hereof and the Closing, neither Party will make any public announcement or statement about the terms and conditions of this Agreement or the transactions contemplated hereby, without the other Party’s prior written consent.  Notwithstanding the foregoing, Buyer shall be permitted to make public disclosures in accordance with applicable Laws or stock exchange rules, provided that Seller shall have the right to review and comment on such public disclosures prior to their release.

 

6.02        Further Assurances; Consent and Approvals.  The Seller, on the one hand, and Buyer, on the other, shall at the request of the other Party do and perform or cause to be done and performed all such further acts and furnish, execute and deliver such other documents, instruments, certificates, notices or other further assurances as the requesting Party may reasonably request, from time to time, to consummate the transactions contemplated by this Agreement, including to fully vest in Buyer all of Seller’s right, title and interest in and to the Acquired Assets in accordance with the terms and conditions of this Agreement.  Without limiting the foregoing, the Parties agree to use commercially reasonable efforts to assist, consult with and cooperate with each other in doing all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including the obtaining of all actions, waivers, permits, consents, approvals and authorizations from all third parties and all Governmental Authorities necessary or advisable to consummate, or in connection with, the transactions contemplated by this Agreement.  Each Party shall furnish to the other Parties all information required or reasonably necessary for any filing to be made with any such Governmental Authority, and each Party shall promptly inform the other parties of any communication with any such Governmental Authority regarding any such filings.  In furtherance (but not in limitation) of the foregoing, Buyer and the Seller shall each keep the other apprised of the status of matters relating to actions, waivers, permits, consents, approvals, authorizations, applications, filings and completion of the transactions contemplated by this Agreement.  Subject to applicable Law, Buyer and the Seller shall have the right to review in advance, and, to the extent practicable, each shall consult with the other on all the information relating to Buyer, the Seller, the Business or the Acquired Assets, as the case may be, and any of the Parties’ respective Affiliates, that appear in any filing made with, or written materials submitted to, any Governmental Authority in connection with the transactions contemplated by this Agreement.

 

6.03        Conduct of the Business.  Except as otherwise expressly permitted or required by this Agreement, between the date of this Agreement and the Closing Date the Seller acknowledges and agrees that:

 

(a)           Seller shall conduct the Business only in the ordinary course in a manner consistent with past practices and industry norms;

 

(b)           the Seller shall maintain and service the Acquired Assets consistent with past practice and preserve intact the Business as it is currently organized;

 

(c)           Seller shall, at its own expense, maintain all insurance covering the Business and the Acquired Assets in full force and effect until 12:01 A.M. on the first day following the Closing Date with responsible companies, comparable in amount, scope and coverage to that in effect on the date hereof;

 

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(d)           Seller will use its commercially reasonable efforts to obtain in writing as promptly as possible all Closing Consents;

 

(e)           Seller shall not: (i) incur any Liability which would be an Assumed Liability which is outside the ordinary course of business; (ii) enter into, amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to any Seller Contract or incur any Liability outside the ordinary course of business; (iii) violate or default under, or take or fail to take any action that (with or without notice or lapse of time or both) would constitute a violation or default under any term or provision of any Seller Contract; or (iv) create or permit the creation of any Encumbrance on any of the Acquired Assets, other than Permitted Encumbrances;

 

(f)            the Seller shall comply in all material respects with all applicable Laws, ordinances, codes, rules and regulations;

 

(g)           except in the ordinary course of business consistent with past practice, Seller shall not, without the prior written consent of Buyer, (i) incur any indebtedness for money borrowed (other than advances from Affiliates which constitute Retained Liabilities); (ii) make any capital expenditures or commitments for capital expenditures; or (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; (iv) enter into any employment Contract or hire any new employees, increase the rate of compensation payable or to become payable by it to any officer or any other executive employee or make any general increase in the compensation or rate of compensation payable or to become payable to hourly employees or salaried employees; (v) accrue or pay to any of its officers or employees any bonus, profit-sharing, retirement pay, insurance, death benefit, fringe benefit or other compensation, except as disclosed in the Schedules hereto; or (vi) make any advances to its employees; and

 

(h)           Seller shall confer with Buyer prior to taking any action outside the ordinary course of business with regard to the Business.

 

Notwithstanding anything herein to the contrary contained above, Seller may incur Liabilities in the ordinary course of business in an amount not to exceed $25,000 in the aggregate.

 

6.04        Delivery of Acquired Assets and Excluded Assets.  The Seller shall promptly deliver to Buyer, if and when received, any amounts or other items that shall be received by the Seller after the Closing Date that are Acquired Assets.  Buyer shall promptly deliver to Seller, if and when received, any amounts or other items that shall be received by Buyer after the Closing Date which are Excluded Assets.

 

6.05        Confidentiality.

 

(a)           Notwithstanding anything contained in the Confidentiality Agreement between the Seller and the Buyer, dated as of February 25, 2015 (the Confidentiality Agreement”), or herein, between the date hereof and the Closing, the Buyer shall have the right to make public announcements or statements about the terms and conditions of this Agreement or the transactions contemplated hereby, including in connection with an IPO or private placement of Buyer Stock (whether in a filing with a Governmental Authority, a private placement memorandum or other offering materials, orally to potential investors or otherwise); provided, however, that Buyer will use its commercially reasonable efforts to provide such public announcement or statements, and those portions of the IPO or private placement memorandum documents which relate to this Agreement, to Seller for Seller’s review and comment.

 

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(b)           The Confidentiality Agreement and the Term Sheet, dated as of April 16, 2015 by and among the Buyer and the Seller, shall each terminate as of the Closing and be of no further force or effect.

 

(c)           From and after the Closing Date and for a period of five (5) years, Seller shall inform and cause its employees, agents and representatives (collectively, the “Seller Recipients”) to, keep confidential and not disclose to any third Person or use any information relating to the Product, any Acquired Asset (including the Product Records) and the Business, except for any such information that (a) is available to the public on the Closing Date, (b) thereafter becomes available to the public other than as a result of a prohibited disclosure by Seller or Seller Recipient, (c) becomes available to Seller or Seller Recipient following the Closing Date on a non-confidential basis from a source that to the Seller’s Knowledge is not prohibited from disclosing such information to the Seller or Seller Recipient, (d) is reasonably necessary for advisors, including attorneys, accountants and bankers to perform services on behalf of the Seller or Seller Recipient; or (e) as required in connection with filings with Governmental Authorities or in accordance with applicable Laws.  Should Seller or any Seller Recipient be required to disclose any such information in response to an order or judgment or as otherwise required by Law or administrative process, it shall inform Buyer in writing of such request or obligation as soon as possible after the Seller or Seller Recipient is informed of it and before any information is disclosed, so that a protective order to other appropriate remedy may be obtained by Buyer.  If Seller or Seller Recipient is obligated to make such disclosure, it shall only make such disclosure to the extent to that it is so obligated as advised by its counsel, but not further or otherwise.

 

6.06        Non-Solicitation; Non-Competition; Non-Disparagement.

 

(a)           Non-Solicitation.  Prior to the Closing:

 

(i)            Neither Seller nor TVM shall directly or indirectly make, solicit, initiate, consider, discuss, respond to or encourage submission of proposals or offers from any Persons (A) relating to any liquidation, dissolution, recapitalization, merger, consolidation or acquisition or purchase of all or substantially all of the Acquired Assets of, or any Equity Interest in, Seller or any other similar transaction or business combination, or (B) relating to a transaction that would conflict with or impede the transactions contemplated by this Agreement in any material respect. The Seller and TVM shall cease immediately and cause to be terminated all Contracts, negotiations and communications with third parties with respect to the foregoing, if any, existing on the date hereof and shall promptly notify Buyer of each such termination; and

 

(ii)           neither Seller nor TVM shall participate, directly or indirectly, in any negotiations regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way with, or assist, any effort or attempt by any other Person to do or seek any of the activities referred to in Section 6.06(a)(i) hereof.  Should Seller or TVM receive any proposal, inquiry or contact about the sale of the Acquired Assets or the Business or any of the other activities referred to in Section 6.06(a)(i) hereof, the Seller or TVM, as applicable, shall by the close of the next Business Day give written notice thereof to Buyer and also shall promptly provide Buyer with such information regarding such proposal, inquiry or contact as Buyer may request.

 

(b)           Non-Competition.  Until the third (3rd) anniversary of the Closing, (i)  Seller shall not, directly or indirectly own any interest in, manage, control, participate in (whether as an officer, director, employee, partner, agent, representative or otherwise), consult with, render services for, or in any other manner engage anywhere in the world in any business engaged directly or indirectly in the Business; provided, that nothing herein shall prohibit Seller from being a passive owner of not more than five percent (5%) of the outstanding stock of any class of a corporation which is publicly traded so long

 

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as the Seller does not have any active participation in the business of such corporation, or (ii) Seller shall not, directly or indirectly call on, solicit or service any customer, supplier or other business relation of Buyer or any of its Affiliates (including any Person that was a potential customer, potential supplier or other potential business relation of Buyer or any of its Affiliates at any time during the twelve (12)-month period immediately prior to such call, solicit or service), induce or attempt to induce such Person to cease doing business with Buyer or any of its Affiliates, or in any way interfere with the relationship between any such customer, supplier or business relation and Buyer or any of its Affiliates in a manner harmful to Buyer or any of its Affiliates.

 

(c)           Non-Disparagement.  Neither Party hereto, nor TVM, shall (and Buyer shall cause its Affiliates not to) directly or indirectly (i) make any negative statement or communication regarding the other Party or any of its Affiliates or any of their respective employees with the intent to harm the other Party or any of its Affiliates, or (ii) make any derogatory or disparaging statement or communication regarding the other Party or any of its Affiliates or any of their respective employees; provided, that the foregoing shall not limit any Party’s ability to make true and accurate statements or communications in connection with any disclosure such Party reasonably believes is required pursuant to applicable Law or as done in good faith in any claim, suit, action or proceeding against such Party or any of its Affiliates.

 

(d)           Agreements and Acknowledgements.  Each of Seller and TVM hereby agrees that the covenants set forth in this Section 6.06 are reasonable under the circumstances.  Each of Seller and TVM hereby acknowledges and agrees that it has received sufficient consideration and other benefits hereunder and in connection with the transactions contemplated by this Agreement to clearly justify the restrictions contained in this Section 6.06.  Each of Seller and TVM has carefully considered the nature and extent of the restrictions placed upon it, and hereby acknowledges and agrees that it has been advised by counsel that such restrictions are reasonable in time, scope and geographic area and do not confer a benefit upon Buyer disproportionate to the detriment of Seller and TVM.

 

(e)           Intent.  The Parties recognize that the Laws and public policies of various jurisdictions may differ as to the validity and enforceability of covenants similar to those set forth in this Section 6.06.  It is the intention of the Parties that the provisions of this Section 6.06 be enforced to the fullest extent permissible under the Laws and policies of each jurisdiction in which enforcement may be sought, and that the unenforceability (or the modification to conform to such Laws or policies) of any provisions of this Section 6.06 shall not render unenforceable, or impair, the remainder of the provisions of this Section 6.06.  Accordingly, if at the time of enforcement of any provision of this Section 6.06 a court of competent jurisdiction holds that the restrictions stated herein are unreasonable under the circumstances then existing, the Parties hereby agree that the maximum period, scope or geographic area reasonable under such circumstances will be substituted for the stated period, scope or geographical area and that such court shall be allowed to apply to and to revise the restrictions contained herein to cover the maximum period, scope and geographic area permitted by Law.

 

(f)            No Challenge.  Each of Seller and TVM covenants and agrees that it will not seek to challenge the enforceability of the covenants contained in this Section 6.06, nor will it assert as a defense to any action seeking enforcement of the provisions contained in this Section 6.06 (including an action seeking injunctive relief) that such provisions are not enforceable due to lack of sufficient consideration received by the Seller, as applicable.

 

6.07        Certain Tax Matters.

 

(a)           The Parties hereto agree that all personal property Taxes and similar ad valorem obligations, as well as any special assessments, that are levied with respect to the Acquired Assets or

 

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Business for assessment or Tax periods within which the Closing Date occurs (the “Apportioned Obligations”) shall be apportioned between Seller on the one hand, and Buyer, on the other hand, based on the number of days in any such period falling on or prior to the Closing Date, on the one hand, and the number of days falling after the Closing Date, on the other hand, respectively.  Each of Seller on the one hand, and Buyer, on the other hand, shall be responsible for and shall timely pay (or promptly reimburse the other Party) with respect to its apportioned share of the Apportioned Obligations. The Parties shall cooperate in timely making all filings, returns, reports, and forms as may be required to comply with the provisions of the relevant Tax Laws.

 

(b)           Subject to Section 9.13, Seller shall bear and be responsible for, and shall timely pay (or promptly reimburse Buyer with respect to) all sales, use, transfer, documentary, recording, gains and similar Taxes and fees, and any deficiency, interest or penalty asserted with respect thereof (collectively, “Transfer Taxes”) arising out of the sale or transfer of the Acquired Assets pursuant to this Agreement.  The Parties shall cooperate as to the filing of all necessary documentation with respect to such Transfer Taxes.

 

(c)           Except as otherwise provided in this Agreement as between the Seller, on the one hand, and Buyer, on the other hand: (i) Seller shall be responsible for and shall timely pay all Seller Taxes; and (ii) Buyer shall be responsible for and shall pay all Taxes levied or imposed in connection with the ownership of the Acquired Assets and the operation of the Business during periods after the Closing Date.

 

(d)           The Seller, on the one hand, and Buyer, on the other hand shall not file an amended Tax Return or make an election with respect to periods or portions thereof ending on or before the Closing without the written consent of the other Party if the amendment or election could adversely affect the other Party, the Business or the Acquired Assets.

 

(e)           The Seller shall retain originals (if not turned over to Buyer) and copies of all Tax Returns, schedules, work papers, records and other documents relating to Tax matters with respect to the Business and the Acquired Assets until sixty (60) days after the expiration of the applicable statute of limitations with respect to such Tax matters.

 

(f)            Each Party shall provide each other Party with such assistance as may reasonably be requested by any of them in connection with the preparation of any filings with any Taxing Authorities (federal, state, local or otherwise) and with any Action relating to liability for Taxes, in either case in connection with the operation of the Business or the Acquired Assets.  Such assistance shall include making employees available on a mutually convenient basis to provide information and explanation of any material provided hereunder, and shall include providing copies of any relevant information, data, reports, Tax Returns and supporting work schedules, to the extent such is available.  The Seller, on the one hand, and Buyer, on the other hand, agree to reimburse one another for the reasonable out-of-pocket expenses, such as travel costs, incurred by it, as the case may be, in connection with performing obligations under this Section 6.07(f); provided that such reimbursable expenses shall not include any per diem or other expenses in the nature of salary replacement or overhead absorption measures.

 

6.08        Defense of Claims and Litigation.  Without limiting Buyer’s rights or the Seller’s obligations under ARTICLE VII for a period of three (3) years following the Closing Date, Seller and TVM shall consult, confer and cooperate in good faith on a reasonable basis with Buyer and Buyer’s Affiliates (including the making available of witnesses and cooperation in discovery proceedings) in the conduct or defense of any Action against Buyer or any of its Affiliates by any third Person that relates to any Acquired Asset or any matter that, directly or indirectly, arises therefrom, whether known as of the Closing Date or arising thereafter.  All expenses related thereto shall be borne by the Buyer.

 

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6.09        Retention of Records.  The Seller agrees to retain for a period of at least five (5) years any material books, records, documents, instruments, accounts, financial information, production records, employment records, correspondence, writings, evidences of title and other papers and information involving or concerning the Product and the Acquired Assets (collectively “Records”) as such Person possessed or controlled immediately on or before the Closing and did not transfer to Buyer hereunder. In addition, and subject to the provisions of Section 6.05(c), Seller shall have the rights to keep and retain copies of all Records transferred to the Buyer under this Agreement.

 

6.10        Sharing of Data.  Buyer, at its sole expense, shall have the right to have reasonable access to such material books, records, documents, instruments, accounts, financial information, production records, employment records, correspondence, writings, evidences of title and other papers and information to the extent that they contain information involving or concerning the Product and the Acquired Assets as such Person possessed or controlled immediately on or before the Closing and did not transfer to Buyer hereunder.

 

6.11        Transfer of Permits.  As promptly as possible following the Closing, the Parties shall cooperate and shall take all actions necessary to effect the transfer of any Permits which constitute Acquired Assets and are legally transferrable to Buyer but which were not transferred to Buyer at the Closing, including the submission of notices or filings required to be made to any applicable Governmental Authority regarding such transfer.  Any costs and expenses incurred in connection therewith shall be borne by Buyer.

 

6.12        Delivery of the Tangible Acquired Assets.  The Seller shall cause all material tangible Acquired Assets (including those located at premises owned or controlled by third parties) to be ready and available for delivery to Buyer on the Closing Date.  All other tangible Acquired Assets shall be delivered to the Buyer as soon as practical after the Closing. Notwithstanding the foregoing, Buyer shall determine the manner in which it is placed in actual possession and operating control of the tangible Acquired Assets and any costs and expenses incurred in connection therewith (including shipping costs) shall be borne by Buyer, except to the extent such costs and expenses constitute Retained Liabilities.

 

6.13        Buyer Shareholder Approval.  Following the date of this Agreement, Buyer, through its Board of Directors, shall, in accordance with applicable Law (including Swedish Law) and the Organizational Documents of Buyer, establish a record date for, duly call, give notice of, convene and hold the Buyer Shareholder Meeting and use commercially reasonable efforts to obtain the Buyer Shareholder Approval as soon as practicable.  Buyer will use its commercially reasonable efforts to provide the notice and invitation to the Buyer Shareholder Meeting and the Buyer Shareholder Approval to Seller for Seller’s review and comment.  Buyer shall actively solicit and recommend to its shareholders that they vote in favor of the Buyer Shareholder Approval. As part of the Buyer Shareholder Approval, the shareholders of the Buyer shall inter alia (i) authorize the Board of Directors to issue the Buyer Stock Closing Consideration under this Agreement; and (ii) amend the Articles of Associations of the Buyer, entailing inter alia that the limits for share capital of the Buyer are increased from not less than SEK 43,750,000 and not more than SEK 175,000,000 to not less than SEK 150,000,000 and not more than SEK 600,000,000 and the limits for the number of shares are increased from not less than 43,750,000 and not more than 175,000,000 to not less than SEK 150,000,000 and not more than SEK 600,000,000.

 

6.14        Preparation of Financial Statements.  Seller will provide, and will cause its officers, employees and representatives to provide, such commercially reasonable cooperation in connection with the preparation of audited financial statements of the Seller as may be reasonably requested by Buyer in connection with the IPO (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of Seller), including (a) participation in meetings, presentations, drafting sessions, sessions with rating agencies and due diligence sessions, including direct contact with senior management

 

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and representatives and advisors of Seller, (b) upon request, furnishing Buyer with financial statements and other pertinent information regarding Seller as may be reasonably requested by the Buyer, (c) granting Buyer’s representatives who are subject to confidentiality agreements reasonable access to the books and records of Seller and to any officers, employees or representatives of the Seller knowledgeable about such books and records, in each case, to the extent reasonably requested by the Buyer, (d) using commercially reasonable efforts to furnish necessary financial information for interim periods subsequent to December 31, 2014 and prior to the Closing, (e) providing reasonable and customary management and legal representations to the Seller’s accountants. The costs and expenses of any outside accountant, consultant or representative incurred in connection with this Section 6.14 shall be paid by Buyer. The costs and expenses of any officer or employee of Seller, or any other consultant performing officer responsibilities for the Seller, incurred in connection with this Section 6.14 (i) prior to the Closing, shall be paid by Seller or (ii) from and after the Closing, shall be paid by Buyer. For the avoidance of doubt, the obligations set forth in this Section 6.14 shall survive the Closing until December 31, 2015.

 

6.15        OCS Approval.  Each of Seller and Buyer shall cause their respective Israeli counsel to coordinate all activities, and to cooperate with each other, with respect to the preparation and filing of any application to the OCS and in the preparation of any written or oral submissions that may be necessary, proper or advisable to obtain the OCS Approval.  Seller and Buyer, and their respective representatives and advisors, shall not make any application to, or conduct any negotiation with, the OCS with respect to any matter relating to OCS Approval without prior coordination and consultation with the other party or its representatives and advisors, and Seller will enable Buyer’s representatives and advisors to participate in all discussions and meetings relating thereto.

 

6.16        Valid Israeli Tax Certificate and Valid VAT Ruling .  Each of Seller and Buyer shall cause their respective Israeli counsel and/or other advisors to coordinate all activities, and to cooperate with each other for the purposes of obtaining the Valid Israeli Tax Certificate and the Valid VAT Ruling as promptly as possible following the date hereof.  Seller and Buyer, and their respective representatives and advisors, shall not make any application to, or conduct any negotiation with, the ITA, with respect to any matter relating to the Valid Israeli Tax Certificate, or the Israel VAT Authority, with respect to any matter relating to the Valid VAT Ruling, without prior coordination and consultation with the other party or its representatives and advisors, and Seller will enable Buyer’s representatives and advisors to participate in all discussions and meetings relating thereto.

 

6.17        Indemnity Shares.

 

(a)           The Indemnity Shares shall be issued to Seller at the Closing and Seller shall hold such shares, and shall not, directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any of such Indemnity Shares except as otherwise provided in Sections 6.17(b) through (f), inclusive.

 

(b)           With respect to Damages to which a Buyer Indemnified Party is entitled pursuant to Article VII, if Seller determines to satisfy its indemnification obligations through the liquidation of Indemnity Shares pursuant to Section 7.06(c), then Buyer and Seller shall reasonably cooperate such that Seller may sell a number of Indemnity Shares sufficient to yield net proceeds to Seller (after the payment of commissions and any other fees due in connection with such sale) sufficient to satisfy such indemnity claim.  Such cooperation shall take into account the right of the Buyer to promptly receive the indemnification it is entitled to under Article VII and the desire of the Seller to maximize the price per share obtained in such sale.

 

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(c)           If, prior to the third anniversary of the Closing Date, Buyer redomiciles to a jurisdiction that will allow Buyer to directly take the Indemnity Shares in satisfaction of its indemnity claims pursuant to Article VII, then Seller shall promptly deposit any Indemnity Shares held by Seller at such time into an escrow account with a mutually agreeable escrow agent to be held pursuant to the terms of an escrow agreement reflecting the terms of this Section 6.17 (all which shall be in form and substance reasonably satisfactory to Buyer and Seller).  Seller shall tender the Indemnity Shares in the exchange offer of the Buyer effected in connection with such redomicilation and the shares of stock received in such offer shall become the “Indemnity Shares” hereunder.

 

(d)           If the redomiciliation referred to in clause (c) above has not occurred on or before the 90th day following the Closing Date, then Seller shall have the right to distribute or transfer the Indemnity Shares to the direct shareholders of Seller (and, at its election, commence voluntary liquidation proceedings) provided that, as a condition to such distribution or transfer, each such shareholder agrees to be bound by the terms hereunder relating to the Indemnity Shares pursuant to the terms of a joinder in form and substance reasonably satisfactory to Buyer.

 

(e)           On the date that is 18 months following the Closing Date, Seller shall no longer be subject to the restrictions contained in Section 6.17(a) with respect to a number of Indemnity Shares equal to (i) fifty percent of the Indemnity Shares minus (ii) the number of Indemnity Shares sold pursuant to clause (b) above or otherwise returned to Seller in satisfaction of indemnification claims pursuant to Article VII minus (iii) a number of Indemnity Shares equal to (x) the amount of Damages demanded in good faith in any pending claims for indemnification pursuant to Article VII made by a Buyer Indemnified Party prior to such date divided by (y) the Buyer Stock Consideration Price.

 

(f)            On the third anniversary of the Closing Date, Seller shall no longer be subject to the restrictions contained in Section 6.17(a) with respect to a number of Indemnity Shares equal to (i) the remaining Indemnity Shares minus (ii) a number of Indemnity Shares equal to (x) the amount of Damages demanded in good faith in any pending claims for indemnification pursuant to Article VII made by a Buyer Indemnified Party prior to such date divided by (y) the Buyer Stock Consideration Price.

 

6.18        Value Added Tax.  If any value added tax required to be paid in Israel in connection with the transactions contemplated by this Agreement exceeds $30,000, the parties hereto shall cooperate in good faith to determinate an alternative structure for the transactions contemplated herein so as to minimize the value added tax payable.

 

6.19        Lock-Up.  Seller hereby agrees that it will not, without the prior written consent of Buyer or as expressly provided for by Section 6.17 with respect to the Indemnity Shares, during the period from the date hereof until the date that is 180 days after the Closing Date, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any shares of Buyer Stock or any securities underlying, convertible into or exercisable or exchangeable for shares of Buyer Stock issued pursuant to this Agreement, or exercise any right with respect to the registration of any of the shares of Buyer Stock, or file or cause to be filed any registration statement in connection therewith, under the Act, or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the shares of Buyer Stock issued pursuant to this Agreement, whether any such swap or transaction is to be settled by delivery of shares of Buyer Stock or other securities, in cash or otherwise; provided, however, that Seller shall have the right to distribute or transfer the Buyer Shares (and, subject to Section 6.17(d), the Indemnity Shares) to the direct shareholders of Seller at any time provided that, as a condition to such distribution or transfer, each such shareholder agrees to be bound by the terms hereunder relating to the Buyer Shares pursuant to the terms of a joinder in form and substance reasonably satisfactory to Buyer.

 

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Notwithstanding the foregoing, Seller shall execute and deliver any form of lock-up agreement for any period not exceeding 180 days following the IPO that investors in the Qualified Financing are required to execute and deliver by the underwriters in connection with the IPO and, upon execution and delivery of such lock-up agreement, the restrictions contained in the first sentence of this Section 6.19 shall terminate and be null and void and of no further force or effect.

 

ARTICLE VII

INDEMNIFICATION

 

7.01        Survival.  The representations and warranties of the Seller contained in this Agreement or in any certificate or other writing delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the Closing until the date that is eighteen (18) months following the Closing Date; provided that (a) the representations and warranties of the Seller set forth in Section 4.01 (Organization; Qualification), Section 4.02 (Ownership; Subsidiaries), Section 4.03 (Power and Authority), Section 4.04 (No Violation), Section 4.08 (Title to Acquired Assets; Sufficiency) and Section 4.20 (Brokers’ Fees) (collectively, the “Seller Fundamental Representations”) shall survive for a period of five (5) years following the Closing Date and (b) the representations and warranties of the Seller set forth in Section 4.12 (Compliance with Law and Regulatory Requirements) and Section 4.14 (Intellectual Property)  (collectively, the “Seller Special Representations”, and together with the Seller Fundamental Representations, the “Seller Specified Representations”) shall survive for a period of three (3) years following the Closing Date.

 

The representations and warranties of the Buyer contained in this Agreement or in any certificate or other writing delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the Closing until the date that is eighteen (18) months from the Closing Date; provided that (a) the representations and warranties of the Buyer set forth in Section 5.01 (Organization and Qualification), Section 5.02 (Affiliates), Section 5.03 (Authorization; Enforcement), Section 5.04 (No Conflicts), Section 5.05 (Buyer Stock), Section 5.06 (Capitalization) and Section 5.12 (Brokers and Finders) (collectively, the “Buyer Fundamental Representations”) shall survive for a period of five (5) years following the Closing Date and (b) the representations and warranties of the Buyer set forth in Section 5.11 (Compliance) and 5.15 (Intellectual Property) (collectively, the “Buyer Special Representations”, and together with the Buyer Fundamental Representations, the “Buyer Specified Representations”) shall survive for a period of three (3) years following the Closing Date.

 

The covenants and agreements of the parties hereto contained herein to be performed after the Closing shall survive the Closing indefinitely or for the shorter period explicitly specified therein, except that for such covenants and agreements that survive for such shorter period, breaches thereof shall survive indefinitely or until the latest date permitted by applicable Law.  Notwithstanding the preceding sentences, any breach of representation, warranty, covenant or agreement in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentences, if a claim for Damages in accordance with Section 7.04 shall have been given to the party against whom such indemnity may be sought prior to such time.

 

7.02        Indemnification by the Seller.  To the extent provided in this ARTICLE VII, the Seller and TVM (as provided below) shall indemnify and hold Buyer, and its successors and assigns, and its officers, directors, employees, stockholders, agents and Affiliates (each, a “Buyer Indemnified Party”) harmless from and against:

 

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(a)           any Damages that such Buyer Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to:

 

(i)            any inaccuracy of any representation or warranty of the Seller in this Agreement, or any certificate or other writing delivered by or on behalf of the Seller in connection herewith or therewith;

 

(ii)           any nonfulfillment of any covenant or agreement on the part of the Seller set forth in this Agreement or any other agreement or instrument contemplated hereby or delivered by Seller in connection with the transactions contemplated by this Agreement;

 

(iii)          all Retained Liabilities, regardless of whether or not the Seller disclosed any such Liabilities in the Seller Disclosure Schedule or otherwise, including any Liabilities imposed on Buyer as a result of transferee, successor or similar Liability (including bulk sales, bulk transfer or similar Laws) or otherwise; or

 

(iv)          all Taxes of Seller incurred with respect to the Acquired Assets or the Business, whether as a transferee or successor, contractually or otherwise; and

 

(b)           any and all actions, suits, claims, proceedings, investigations, allegations, demands, assessments, audits, fines, judgments, costs and other expenses (including reasonable attorneys’ fees and expenses) incident to any of the foregoing or to the enforcement of this Section 7.02.

 

7.03        Indemnification by Buyer.  To the extent provided in this ARTICLE VII, Buyer shall indemnify and hold the Seller, and its successors and assigns, and Seller’s officers, directors, employees, stockholders, agents and Affiliates (each, a “Seller Indemnified Party”) harmless from and against:

 

(a)           any Damages that such Seller Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to:

 

(i)            any inaccuracy of any representation or warranty of Buyer in this Agreement or any certificate or other writing delivered by or on behalf of Buyer in connection herewith or therewith;

 

(ii)           any nonfulfillment of any covenant or agreement on the part of Buyer set forth in this Agreement or any other agreement or instrument executed and delivered by Buyer in connection herewith;

 

(iii)          the operation of the Business by the Buyer after the Closing;

 

(iv)          any Assumed Liability; and

 

(b)           any and all actions, suits, claims, proceedings, investigations, allegations, demands, assessments, audits, fines, judgments, costs and other expenses (including reasonable attorneys’ fees and expenses) incident to any of the foregoing or to the enforcement of this Section 7.03.

 

7.04        Indemnification Procedures.  The following terms and conditions shall govern the obligations of the indemnifying Parties to indemnify the indemnified Parties under Section 7.02 or Section 7.03:

 

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(a)           Third Party Claims.

 

(i)            If any claim or demand for which an indemnified Party may claim indemnification pursuant to Section 7.02 or Section 7.03, as the case may be, is asserted against or sought to be collected from the indemnified Party by a third party (a “Third-Party Claim”), then the indemnified Party shall give written notice thereof to the indemnifying Party as promptly as practicable following the receipt by the indemnified Party of the Third-Party Claim (the “Third-Party Claim Notice”); provided that the failure so to notify the indemnifying Party will not relieve the indemnifying Party from any liability it may have to the indemnified Party under Section 7.02 or Section 7.03, as applicable, unless, and then only to the extent, the failure so to notify results in the loss of material rights or defenses.

 

(ii)           The indemnifying Party shall have twenty (20) days from the date on which the Third-Party Claim Notice is duly given (the “Notice Period”) to notify the indemnified Party whether or not the indemnifying Party desires, at its sole cost and expense, to defend the indemnified Party against the Third-Party Claim with counsel of its choice reasonably satisfactory to the indemnified Party.

 

(iii)          If the indemnifying Party notifies the indemnified Party in writing within the Notice Period that it desires to defend the indemnified Party against the Third-Party Claim, then (except as provided below) the indemnifying Party shall defend, at its sole cost and expense, the indemnified Party by appropriate proceedings, shall use commercially reasonable efforts to settle or prosecute the proceedings to a final conclusion in such a manner as to avoid the indemnified Party becoming subject to any injunctive or other equitable order for relief, and shall control the conduct of such defense.  The indemnifying party shall not be entitled to assume the defense of any Third-Party Claim if the Third-Party Claim seeks any relief other than money damages, including any type of injunctive or other equitable relief.  If the indemnified Party shall have reasonably concluded that there are legal defenses or rights available to it that are in conflict with those available to the indemnifying Party, then the indemnified Party shall have the right to select one law firm (in addition to local counsel) reasonably satisfactory to the indemnifying Party to act at the indemnifying Party’s expense as separate counsel, on behalf of the indemnified Party.  If the indemnified Party desires to participate in, but not control, any other defense or settlement, it may do so at its sole cost and expense (subject to the foregoing sentence).  So long as the indemnifying Party is defending in good faith any such Third-Party Claim, the indemnified Party shall not settle such Third-Party Claim without the consent of the indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

(iv)          The indemnifying Party will not consent to the entry of any judgment or enter into any compromise or settlement with respect to a Third-Party Claim without the prior written consent of the indemnified Party, which consent shall not be unreasonably withheld or delayed.

 

(v)           If the indemnifying Party fails to notify the indemnified Party in writing within the Notice Period that the indemnifying Party desires to defend the Third-Party Claim, or if the indemnifying Party gives such notice but fails to defend or settle the Third-Party Claim, or if the Third-Party Claim seeks recourse or relief or would involve proceedings that would affect the indemnified Party in a materially adverse manner other than as a result of monetary damages for which it would be entitled to indemnification hereunder, then the indemnified Party will have the right to defend, at the sole cost and expense of the indemnifying Party, such Third-Party Claim to a final conclusion or to settle such Third-Party Claim at the discretion of the indemnified Party (with the consent of the indemnifying Party, which consent shall not be unreasonably withheld or delayed).  The indemnifying Party may elect to participate in such proceedings, negotiations or defense at any time at its own expense.  The indemnified Party will have full control of such defense and proceedings, including (except as provided in the immediately preceding sentence) any settlement thereof.

 

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(b)           Non-Third Party Claims. In the event an indemnifying Party receives a notice of a Claim for indemnification from an indemnified Party that does not involve a Third-Party Claim and such notice is delivered by a nationally recognized overnight delivery courier and provides that the indemnifying Party must notify the indemnified Party within forty five (45) days following its receipt of such notice if the indemnifying Party disputes its liability to the indemnified Party under this ARTICLE VII, then the indemnifying Party shall so notify the indemnified Party within such period of time.  If the indemnifying Party does not so notify the indemnified Party, the claim specified by the indemnified Party in such notice shall be conclusively deemed to be a liability of the indemnifying Party under this ARTICLE VII, and the indemnifying Party shall pay the amount of such liability to the indemnified Party on demand or, in the case of any notice in which the amount of the claim (or any portion of the claim) is estimated, on such later date when the amount of such claim (or such portion of such claim) becomes finally determined.

 

(c)           Tax Contests. Each Party shall notify the other Party in writing within thirty (30) calendar days of its receipt of written notice of any pending or threatened Tax examination, audit or other administrative or judicial proceeding (a “Tax Contest”) that could reasonably be expected to result in an indemnification obligation under Section 7.02 or Section 7.03 of such other Party pursuant to this Section 7.04(c).  If the recipient of such notice of a Tax Contest fails to provide such notice to the other Party, it shall not be entitled to indemnification for any Taxes arising in connection with such Tax Contest, to the extent, if any, that such failure or delay shall have actually prejudiced the indemnifying Party.  If a Tax Contest relates to any Tax period ending on or prior to the Closing Date or to any Taxes for which Seller is liable in full hereunder, Seller shall at its expense control the defense and settlement of such Tax Contest; provided that (i) Buyer shall be entitled to participate in such Tax Contest at its own expense, and (ii) Seller shall keep Buyer fully informed of any material developments, provide Buyer with copies of all material correspondence, and allow Buyer to observe the conduct of any Tax Contest (through attendance at meetings) at Buyer’s expense, including through Buyer’s own counsel or other professional experts.  Buyer shall control the defense and settlement of all other Tax Contests; provided that, in the case of any Tax Contest that could reasonably be expected to result in liability of Seller pursuant to the terms of this Agreement, (i) Seller shall be entitled to participate (at its own expense) in such Tax Contest and (ii) Buyer shall not settle such Tax Contest without the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed).

 

7.05        Third Party Beneficiaries.  The Buyer Indemnified Parties and the Seller Indemnified Parties are intended to be third party beneficiaries of the rights granted under this ARTICLE VII and to have the right to enforce such rights directly against the applicable indemnifying Party.

 

7.06        Certain Limitations on Indemnification.  The indemnification obligations under Sections 7.02 and 7.03 are subject to the following limitations:

 

(a)           No Claim may be made by any indemnified Party for indemnification pursuant hereto for indemnifiable Damages pursuant to Section 7.02(a)(i) (other than with respect to indemnifiable Damages based on fraud) or Section 7.03(a)(i)  (other than with respect to indemnifiable Damages based on fraud) unless and until the aggregate amount of Damages for which the indemnified Parties seek to be indemnified for such claim exceeds $225,000  (the “Threshold”), at which time the indemnified Parties shall be entitled to indemnification for all Damages incurred including the Threshold, subject to the limitations set forth below.

 

(b)           Notwithstanding anything to the contrary herein, (i) Seller shall not have any liability for Damages pursuant to Section 7.02(a)(i), to the extent Seller’s aggregate liability under Section 7.02(a)(i) would exceed (A) $5,400,000 (minus amounts payable under clauses (i)(B) and (C)) (other than with respect to indemnifiable Damages for any breaches or inaccuracies of any Seller

 

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Specified Representations or based on fraud), (B) $7,500,000 (minus amounts payable under clauses (i)(A) and (C)) (other than with respect to indemnifiable Damages for any breaches or inaccuracies of any Seller Fundamental Representations or based on fraud) or (C) $10,000,000 (minus amounts payable under clauses (i)(A) and (B)) (other than with respect to indemnifiable Damages based on fraud) and (ii) Buyer shall not have any liability for Damages pursuant to Section 7.03(a)(i), to the extent Buyer’s aggregate liability under Section 7.03(a)(i) would exceed (A) $5,400,000 (minus amounts payable under clauses (ii)(B) and (C)) (other than with respect to indemnifiable Damages for any breaches or inaccuracies of any Buyer Specified Representations or based on fraud), (B) $7,500,000 (minus amounts payable under clauses (ii)(A) and (C)) (other than with respect to indemnifiable Damages for any breaches or inaccuracies of any Buyer Fundamental Representations or based on fraud) or (C) $10,000,000 (minus amounts payable under clauses (ii)(A) and (B)) (other than with respect to indemnifiable Damages based on fraud).

 

(c)           With respect to Damages to which a Buyer Indemnified Party is entitled pursuant to this Article VII, the Buyer Indemnified Parties shall first seek recourse for Claims pursuant to this Article VII from (i) the Indemnity Shares (either through the sale of Indemnity Shares pursuant to Section 6.17(b) or a release of Indemnity Shares from the escrow referred to in Section 6.17(c)) and (ii) the Seller (from its assets, if any, other than the Indemnity Shares).  The Seller, in its sole discretion, shall decide whether such indemnification shall be made by the release or sale of the Indemnity Shares, in whole or in part, or by the payment of cash (other than proceeds received from the sale of Indemnity Shares pursuant to Section 6.17(b)).  Only after the Indemnity Shares are exhausted or otherwise released from the escrow account established in accordance with Section 6.17(c), and only after the Buyer has failed to recover Damages from the Seller, or if the Seller has been liquidated, may the Buyer Indemnified Parties proceed to recover the amount of the relevant Damages from TVM directly.

 

(d)           For the sole purpose of determining Damages (and not for determining whether or not any breaches of representations or warranties have occurred), any inaccuracy in or breach of any representation or warranty or certification in this Agreement shall be determined without regard to any materiality, Material Adverse Effect, knowledge or other similar qualification contained in or otherwise applicable to such representation or warranty.

 

7.07        Exclusive Remedy.  Except with respect to claims (i) for specific performance or other equitable relief under Section 9.10 (including with respect to an actual or threatened breach or violation of the provisions of Section 6.05 or 6.06), and (ii) based on fraud, after the Closing, the Buyer Indemnified Parties’ and Seller Indemnified Parties’ sole and exclusive remedy with respect to the subject matter of this Agreement shall be pursuant to the indemnification provisions (subject to all of the applicable terms, conditions and limitations hereof) set forth in this ARTICLE VII.

 

7.08        Tax Treatment of Indemnification Payments. Any payment pursuant to this ARTICLE VII shall be considered an adjustment to the Buyer Stock Closing Consideration for tax purposes.

 

ARTICLE VIII

CONDITIONS PRECEDENT; TERMINATION

 

8.01        Conditions to the Obligations of Buyer. All obligations of Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or waiver by Buyer) prior thereto of each of the following conditions but any particular condition that requires action by any Buyer shall not constitute a condition to the obligations of Buyer:

 

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(a)           (i) Each of the representations and warranties of the Seller contained in this Agreement shall be true and correct on the date hereof, with the same force and effect as if made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date), and shall also be true and correct on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date), in all material respects without taking into account any qualifiers of materiality, Material Adverse Effect or knowledge or words of similar import, (ii) all of the terms, covenants, agreements and conditions of this Agreement to be complied with, performed or satisfied by Seller on or before the Closing Date shall have been duly complied with, performed or satisfied in all material respects, and (iii) since the date of this Agreement, there has been no Material Adverse Effect regarding the Seller, and Buyer shall have received a certificate dated as of the Closing Date and signed by Seller to the foregoing effects (the “Seller Closing Certificate”).

 

(b)           Buyer shall have received from the Seller the agreements, instruments and documents to be delivered by Seller to Buyer at or prior to the Closing as provided in Section 3.02 of this Agreement.

 

(c)           No claim, Action, arbitration, investigation or other proceeding shall be pending or shall have been brought or threatened which (i) if decided adversely to Seller, would reasonably be expected to have a Material Adverse Effect or (ii) seeks to restrain, enjoin or otherwise prohibit the validity or legality of the transactions contemplated by this Agreement.  No Law or Order shall have been enacted, entered, promulgated or enforced by any Governmental Authority that has the effect of making the purchase and sale of the Acquired Assets illegal or otherwise prohibiting the consummation of such purchase and sale.

 

(d)           All consents, approvals and actions of, filings with and notices to any Governmental Authority necessary to permit Buyer and each of Seller and TVM to perform their respective obligations under this Agreement and to consummate the transactions contemplated hereby (i) shall have been duly obtained, made or given, (ii) shall be in substance reasonably satisfactory to Buyer, (iii) shall not be subject to the satisfaction of any condition that has not been satisfied or waived, and (iv) shall be in full force and effect, and all terminations or expirations of waiting periods imposed by any Governmental Authority necessary for the consummation of the transactions contemplated hereby, shall have occurred.

 

(e)           The Buyer Shareholder Approval shall (i) no later than July 15, 2015 have been obtained in accordance with applicable Law (including Swedish Law) and the Organizational Documents of Buyer, (ii) be in full force and effect and (iii) not have been revoked, rescinded or amended.

 

(f)            Buyer shall have received copies of the notices, filings, consents or approvals set forth on Schedule 8.01(f) (the “Closing Consents”) which shall be evidenced by documentation in form and substance reasonably satisfactory to Buyer.

 

(g)           TVM shall have undertaken the Investment.

 

(h)           The Seller shall have delivered to Buyer evidence of the release of all Encumbrances, other than Permitted Encumbrances, with respect to the Acquired Assets, if applicable.

 

(i)            The Buyer shall have received a Valid Tax Certificate.

 

(j)            The Buyer shall have received a Valid VAT Ruling.

 

48

 

(k)           The Buyer has received the OCS Approval, and the OCS IP Transfer Approval Amount is no more than $3,000,000.

 

8.02        Conditions to the Obligations of Seller.  All obligations of the Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or waiver by Seller) prior thereto of each of the following conditions, but any particular condition that requires action by Seller shall not constitute a condition to the obligations of Seller:

 

(a)           (i) Each of the representations and warranties of the Buyer contained in this Agreement shall be true and correct on the date hereof, with the same force and effect as if made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date), and shall also be true and correct on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date), in all material respects without taking into account any qualifiers of materiality, Material Adverse Effect or knowledge or words of similar import, (ii) all of the terms, covenants, agreements and conditions of this Agreement to be complied with, performed or satisfied by the Buyer on or before the Closing Date shall have been duly complied with, performed or satisfied in all material respects, and (iii) since the date of this Agreement, there has been no Material Adverse Effect regarding the Buyer, and Seller shall have received a certificate dated as of the Closing Date and signed by Buyer to the foregoing effects (the “Buyer Closing Certificate”).

 

(b)           The Seller shall have received from Buyer the agreements, instruments and documents to be delivered by Buyer to the Seller at or prior to the Closing as provided in Section 3.03 of this Agreement.

 

(c)           No claim, Action, arbitration, investigation or other proceeding shall be pending or shall have been brought or threatened which (i) if decided adversely to Buyer, would reasonably by expected to have a Material Adverse Effect; or (ii) seeks to restrain, enjoin or otherwise prohibit or questions the validity or legality of the transactions contemplated by this Agreement.  No Law or Order shall have been enacted, entered, promulgated or enforced by any Governmental Authority that is in effect and has the effect of making the purchase and issuance of the Buyer Stock Closing Consideration illegal or otherwise prohibiting the consummation of such purchase and sale.

 

(d)           All consents, approvals and actions of, filings with and notices to any Governmental Authority necessary to permit Buyer and each of Seller and TVM to perform their respective obligations under this Agreement and to consummate the transactions contemplated hereby (i) shall have been duly obtained, made or given, (ii) shall not be subject to the satisfaction of any condition that has not been satisfied or waived, and (iii) shall be in full force and effect, and all terminations or expirations of waiting periods imposed by any Governmental Authority necessary for the consummation of the transactions contemplated by this Agreement shall have occurred.

 

(e)           The Buyer has received the OCS Approval.

 

(f)            The Buyer Shareholder Approval shall (i) have been obtained in accordance with applicable Law (including Swedish Law) and the Organizational Documents of Buyer, (ii) be in full force and effect and (iii) not have been revoked, rescinded or amended.

 

(g)           Buyer shall have received commitments from investors to participate in the Qualified Financing.

 

(h)           The Seller shall have received a Valid Tax Certificate.

 

49

 

(i)            The Seller shall have received a Valid VAT Ruling.

 

(j)            The Board of Directors of the Buyer shall, on the Closing Date, resolve, conditional upon the Buyer Shareholder Approval having been approved: to increase the share capital of the Buyer by a maximum of SEK 150,000,000 by the issuance of a maximum of SEK 600,000,000  shares in the Buyer, with an exclusive right and obligation for the Seller to subscribe for such shares in accordance with the terms and conditions of this Agreement.

 

8.03        Termination.

 

(a)           Grounds for Termination.  The Parties may terminate this Agreement at any time before the Closing as follows:

 

(i)            by mutual written consent of Seller and Buyer;

 

(ii)           by either Buyer, on the one hand, or the Seller, on the other hand, if the Closing shall not have been consummated on or before July 28, 2015 (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 8.03(a)(ii) shall not be available to any Party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before the Termination Date;

 

(iii)          by either Buyer, on the one hand, or the Seller, on the other hand, if a Governmental Authority shall have issued an Order or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such Order shall have become final and nonappealable;

 

(iv)          by either Buyer, on the one hand, or the Seller, on the other hand, if the Buyer Shareholder Approval shall not have been obtained at the Buyer Shareholder Meeting or any adjournments or postponements thereof;

 

(v)           by Buyer (if it is not in breach of its representations, warranties, covenants or agreements under this Agreement so as to cause any of the conditions set forth in Section 8.01(a) not to be satisfied), upon written notice to the Seller, if there has been a violation, breach or inaccuracy of any representation, warranty, covenant or agreement of Seller contained in this Agreement, which violation, breach or inaccuracy would cause any of the conditions set forth in Section 8.02(a) not to be satisfied, and such violation, breach or inaccuracy has not been waived by Buyer or cured by the Seller, within ten (10) Business Days after receipt by the Seller of written notice thereof from Buyer or is not capable of being cured prior to the Termination Date; or

 

(vi)          by the Seller (if it is not in breach of its representations, warranties, covenants or agreements under this Agreement so as to cause any of the conditions set forth in Section 8.02(a) not to be satisfied), upon written notice to Buyer, if there has been a violation, breach or inaccuracy of any representation, warranty, agreement or covenant of Buyer contained in this Agreement, which violation, breach or inaccuracy would cause any of the conditions set forth in Section 8.01(a) not to be satisfied, and such violation, breach or inaccuracy has not been waived by the Seller or cured by Buyer within ten (10) Business Days after receipt by Buyer of written notice thereof from the Seller or is not capable of being cured prior to the Termination Date.

 

(b)           Effect of Termination.  Upon termination of this Agreement pursuant to Section 8.03(a), this Agreement shall immediately become null and void and there shall be no liability or obligation on the part of any Party hereunder; provided, however, that no such termination shall relieve

 

50

 

the Seller of any liability or obligation to Buyer or relieve Buyer of any liability to the Seller by reason of any breach of or default under this Agreement prior to such termination and, upon any such breach or default, the non-breaching Party shall be entitled to all rights and remedies available at Law and in equity.

 

ARTICLE IX

MISCELLANEOUS

 

9.01        Binding Effect; Assignment; No Third-Party Rights.  This Agreement shall be binding upon and shall inure to the benefit of, and be enforceable by, the Parties and their permitted successors and assigns.  This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by Seller or TVM without the prior written consent of Buyer.  Buyer may not assign in whole or in part its rights and obligations pursuant to this Agreement and all other agreements, documents and instruments executed or delivered in connection herewith; provided, however, that (a) Buyer may, in its sole discretion, direct Seller to convey the Acquired Assets, in whole or in part, to one or more of its Affiliates and (b) Buyer may assign this Agreement, all other agreements, documents and instruments executed or delivered in connection herewith, and its rights and obligations hereunder and thereunder in connection with a merger or consolidation involving Buyer or in connection with a sale of stock (or other ownership interests) or assets of Buyer or other disposition of all or any portion of the Acquired Assets; provided, however, that no such assignment will relieve Buyer of its obligations hereunder.  Buyer may assign any or all of its rights pursuant to this Agreement, including their rights to indemnification, and all other agreements, documents and instruments executed or delivered in connection herewith, to any of its lenders as collateral security.  Except as set forth in Section 7.05, nothing herein is intended to, nor shall it, create any rights in any Person other than the Parties and their respective successors and assigns.

 

9.02        Entire Agreement.  This Agreement (including the Exhibits and Schedules and any Annexes hereto), together with the documents incorporated by reference and the agreements to be executed in connection herewith, sets forth the entire agreement and understanding of the Parties in respect of the transactions contemplated hereby and supersedes all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof.

 

9.03        Notices.  All notices that are required or permitted hereunder shall be in writing and shall be sufficient if personally delivered or sent by mail, facsimile message or by a nationally recognized overnight delivery courier.  Any notices shall be deemed given upon the earlier of the date when received at, or the seventh day after the date when sent by registered or certified mail or the third day after the date when sent by overnight delivery courier to, the address or fax number set forth below, unless such address or fax number is changed by notice to the other Party hereto:

 

51

 

	
If to Seller:
    	
 

P.O. Box 880

Raanana,   4310801, Israel

Attention:   Mr. Shaun Marcus

Facsimile:   +972-9-771-4587

 

with a copy to:

 

Gross, Kleinhendler,   Hodak, Halevy, Greenberg & Co.

Azrieli   1

Tel   Aviv, Israel

Attention:   Gene Kleinhendler, Adv.

Facsimile:   +972-3-607-4499
    
	
 
    	
 
    
	
If to Buyer:
    	
Cortendo A.B.

900 Northbrook Drive

Suite 200

Trevose, PA 19053

Attention: Chief Legal   Officer

Facsimile: 215-355-7389

 

with a copy to:

 

Reed Smith LLP

1717 Arch Street,   Suite 3100

Philadelphia, PA 19103

Attention: Brian C.   Miner

Facsimile: 215-851-1420
    

 

or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto.  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. local time on a business day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding business day in the place of receipt.

 

9.04        Severability. If any provision of this Agreement, including any phrase, sentence, clause, section or subsection is inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever.  The Parties agree that the terms and provisions of this Agreement are reasonable covenants under the circumstances, and further agree that if, in the opinion of any court of competent jurisdiction any such term or provision is unreasonable in any respect, such court shall have the right, power and authority to excise or modify such term or provision to effectuate the Parties’ intent and to enforce the remainder thereof as so amended.

 

52

 

9.05        Amendment; Waiver.  No amendment, modification, or waiver hereunder shall be valid or binding unless set forth in writing and duly executed by the Party against whom enforcement of the amendment, modification, or waiver is sought.  Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time.  No waiver by any Party of a breach of or a default under any of provision of this Agreement shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder.  No failure or delay by any Party to enforce any provision of this Agreement or to exercise any right or privilege hereunder shall constitute a waiver of such right or privilege.

 

9.06        Governing Law; Consent to Jurisdiction.

 

(a)           This Agreement will be governed by and construed and interpreted in accordance with the substantive Laws of the State of Delaware.

 

(b)           All judicial proceedings brought against any Party arising out of or relating to this Agreement, or any obligations hereunder, shall be brought in any state court of competent jurisdiction in the State of Delaware, County of New Castle, or any federal court of competent jurisdiction in the District of Delaware.  By executing and delivering this Agreement, each Party, for itself and in connection with its properties, irrevocably (i) accepts generally and unconditionally the exclusive jurisdiction and venue of such courts, (ii) waives any defense of forum non coveniens, (iii) agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to such Party at its address provided in accordance with Section 9.03 hereof or other address in the possession of the sending Party, (iv) agrees that service as provided in clause (iii) above is sufficient to confer personal jurisdiction over such Party in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect and (v) agrees that the rights to serve process and bring proceedings provided above shall be in addition to any other rights to serve process in any other manner permitted by Law and to bring proceedings in the courts of any other jurisdiction.

 

9.07        Waiver of Trial By Jury.  EACH PARTY WAIVES THE RIGHT TO A TRIAL BY JURY AND REPRESENTS TO THE OTHER THAT IT HAS REVIEWED THE FOREGOING WAIVER WITH ITS COUNSEL AND THAT IT HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS RIGHT TO TRIAL BY JURY AFTER CONSULTATION WITH SUCH COUNSEL.

 

9.08        Counterparts.  This Agreement may be executed by facsimile or other electronically-scanned signature pages and in one or more counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

 

9.09        Neutral Construction.  The Parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

 

9.10        Inducement; Specific Performance.  Each of Seller and TVM acknowledges that the covenants set forth in Section 6.05 and Section 6.06 are conditions precedent to the execution of this Agreement and the consummation of the transactions contemplated hereby by the Parties.  In addition, the Parties acknowledge and agree that the covenants contained in Section 6.05 and Section 6.06 are an integral part of the transactions contemplated by this Agreement and are a material inducement for Buyer to enter into this Agreement and to perform its obligations hereunder.  The Parties recognize and

 

53

 

acknowledge that a breach by Seller or TVM or Seller Recipient of Section 6.05 or a breach by either Seller or TVM of Section 6.06 will cause irreparable and material loss and damage to Buyer, the amount of which cannot be readily determined and as to which it will not have an adequate remedy at law or in damages.  Accordingly, in addition to any remedy Buyer may have in damages by an action at law, Buyer shall be entitled to the issuance of an injunction restraining any such breach or any other remedy at law or in equity for any such breach.  The remedy in this Section 9.10 is in addition to, and not in lieu of, any other rights and remedies that Buyer may have.

 

9.11        Liquidation of Seller.  The Buyer acknowledges that subsequent to the Closing Date and subject to Section 6.17, the Seller, in its sole discretion, may commence voluntary liquidation proceedings.  The Buyer further agrees that it shall not take any action to oppose such proceedings.

 

9.12        Interpretation; Disclosure Schedules.

 

(a)           For purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires:  (i) words using the singular or plural number also include the plural or singular number, respectively, and the use of any gender herein shall be deemed to include the other gender; (ii) references herein to “Articles,” “Sections,” “subsections” and other subdivisions without reference to a document are to the specified Articles, Sections, subsections and other subdivisions of this Agreement; (iii) a reference to a subsection without further reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule shall also apply to other subdivisions within a Section or subsection; (iv) the words “herein,” “hereof,” “hereunder,” “hereby” and other words of similar import refer to this Agreement (including the Exhibits and Schedules and any Annexes hereto) as a whole and not to any particular provision; (v) any reference to any federal, state, county, local, foreign or multinational statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise; (vi) the words “include,” “includes” and “including” are deemed to be followed by the phrase “without limitation;” (vii) the words “ordinary course of business,” “ordinary course of the Business” or similar constructions thereof are deemed to be followed by the phrase “consistent with past practices;” (viii) the section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (ix) references to “$” and “dollars” are to the currency of the United States; and (x) The words “neither”, “nor”, “any”, “either” and “or” shall be inclusive and not exclusive, unless the context clearly prohibits that construction.

 

(b)           The Parties hereto agree that any reference in a particular Section of the Seller Disclosure Schedule or the Buyer Disclosure Schedule, as applicable, shall only be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (i) the representations and warranties (or covenants, as applicable) that are contained in the corresponding Section of this Agreement and (ii) any other representations and warranties of the Seller or Buyer, as applicable, that is contained in this Agreement, but only if the relevance of that reference as an exception to (or a disclosure for purposes of) such representations and warranties would be readily apparent to a reasonable person who has read that reference and such representations and warranties, without any independent knowledge on the part of the reader regarding the matter(s) so disclosed.

 

9.13        Expenses.  Each Party shall bear its own costs and expenses (including legal fees and expenses and fees and expenses paid or payable to brokers, finders or agents) incurred in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the aforesaid, and without derogating from the provisions of Sections 6.08, 6.11 and 6.12, Buyer shall bear all costs related to the assignment and transfer to Buyer of all right, title and interest in and to the Intellectual Property Rights included in the Acquired Assets with the applicable Authorities.

 

[Signature Page Follows]

 

54

 

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed by its duly authorized representative as of the day and year first above written.

 

	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
ASPIREO PHARMACEUTICALS   LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Carsten Dehning
    
	
 
    	
Name:
    	
Carsten Dehning
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shaun Marcus
    
	
 
    	
Name:
    	
Shaun Marcus
    
	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
TVM:
    
	
 
    	
 
    
	
 
    	
TVM V LIFE SCIENCE   VENTURES GMBH & CO. KG
    
	
 
    	
 
    
	
 
    	
(solely in connection   with Sections 6.06, 6.08, 9.10 and ARTICLE VII)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
CORTENDO AB (publ)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

[Signature Page to Asset Purchase Agreement]

 

 

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed by its duly authorized representative as of the day and year first above written.

 

	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
ASPIREO PHARMACEUTICALS   LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
TVM:
    
	
 
    	
 
    
	
 
    	
TVM V LIFE SCIENCE   VENTURES GMBH & CO. KG
    
	
 
    	
 
    
	
 
    	
(solely in connection   with Sections 6.06, 6.08, 9.10 and ARTICLE VII)
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Hubert Birner
    
	
 
    	
Name:
    	
Hubert Birner
    
	
 
    	
Title:
    	
Managing Partner
    
	
 
    	
 
    
	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
CORTENDO AB (publ)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

56

 

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed by its duly authorized representative as of the day and year first above written.

 

	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
ASPIREO PHARMACEUTICALS   LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
TVM:
    
	
 
    	
 
    
	
 
    	
TVM V LIFE SCIENCE   VENTURES GMBH & CO. KG
    
	
 
    	
 
    
	
 
    	
(solely in connection   with Sections 6.06, 6.08, 9.10 and ARTICLE VII)
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stefan Fischer
    
	
 
    	
Name:
    	
Stefan Fischer
    
	
 
    	
Title:
    	
Authorized Officer
    
	
 
    	
 
    
	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
CORTENDO AB (publ)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

57

 

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed by its duly authorized representative as of the day and year first above written.

 

	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
ASPIREO PHARMACEUTICALS   LIMITED
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
TVM:
    
	
 
    	
 
    
	
 
    	
TVM V LIFE SCIENCE   VENTURES GMBH & CO. KG
    
	
 
    	
 
    
	
 
    	
(solely in connection   with Sections 6.06, 6.08, 9.10 and ARTICLE VII)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
CORTENDO AB (publ)
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Lutz
    
	
 
    	
Name:
    	
Robert Lutz
    
	
 
    	
Title:
    	
Chief Business Officer
    

 

58Exhibit 10.4

 

	
 
    	
 
    	
Technology licence   agreement

 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Antisense Therapeutics   Ltd (ATL)
   Cortendo Cayman Ltd (Cortendo)
    

 

	
 
    	

    
	
 
    	
 
    
	
 
    	
Level 23 Rialto Towers 525 Collins Street Melbourne Vic 3000
    
	
 
    	
Australia DX 204 Melbourne
    
	
 
    	
T +61 3 8608 2000 F +61 3 8608 1000
    
	
 
    	
minterellison.com
    

 

 

Technology licence agreement

	
 
    	
 
    
	
Details
    	
1
    
	
 
    	
 
    
	
Agreed terms
    	
3
    
	
 
    	
 
    	
 
    
	
1.
    	
Defined terms and   interpretation
    	
3
    
	
 
    	
 
    	
 
    
	
2.
    	
Term
    	
15
    
	
 
    	
 
    	
 
    
	
3.
    	
Licence
    	
15
    
	
 
    	
 
    	
 
    
	
4.
    	
Further Sub-licensing
    	
18
    
	
 
    	
 
    	
 
    
	
5.
    	
Ownership and protection of the   Technology
    	
20
    
	
 
    	
 
    	
 
    
	
6.
    	
Joint Steering Committee
    	
23
    
	
 
    	
 
    	
 
    
	
7.
    	
Exploitation of the Technology
    	
24
    
	
 
    	
 
    	
 
    
	
8.
    	
Technology transfer   arrangements
    	
29
    
	
 
    	
 
    	
 
    
	
9.
    	
Payment
    	
30
    
	
 
    	
 
    	
 
    
	
10.
    	
Initial Shares and Milestone   Shares
    	
33
    
	
 
    	
 
    	
 
    
	
11.
    	
Audits
    	
38
    
	
 
    	
 
    	
 
    
	
12.
    	
Infringement of Intellectual   Property Rights
    	
39
    
	
 
    	
 
    	
 
    
	
13.
    	
Confidential Information
    	
41
    
	
 
    	
 
    	
 
    
	
14.
    	
Publicity
    	
44
    
	
 
    	
 
    	
 
    
	
15.
    	
Representations, Warranties,   covenants and liability
    	
45
    
	
 
    	
 
    	
 
    
	
16.
    	
Indemnity
    	
49
    
	
 
    	
 
    	
 
    
	
17.
    	
Insurance
    	
50
    
	
 
    	
 
    	
 
    
	
18.
    	
Termination
    	
51
    
	
 
    	
 
    	
 
    
	
19.
    	
After termination
    	
54
    
	
 
    	
 
    	
 
    
	
20.
    	
Force majeure
    	
58
    
	
 
    	
 
    	
 
    
	
21.
    	
Goods and services taxes
    	
58
    
	
 
    	
 
    	
 
    
	
22.
    	
Withholding Tax
    	
60
    
	
 
    	
 
    	
 
    
	
23.
    	
Dispute resolution
    	
60
    
	
 
    	
 
    	
 
    
	
24.
    	
Expert determination
    	
61
    
	
 
    	
 
    	
 
    
	
25.
    	
Notices and other communications
    	
62
    
	
 
    	
 
    	
 
    
	
26.
    	
General
    	
63
    
	
 
    	
 
    	
 
    
	
Schedule 1- Technology
    	
67
    
	
 
    	
 
    
	
Schedule 2— Milestones
    	
68
    
	
 
    	
 
    
	
Schedule 3— ATL1103 higher dose study
    	
71
    

 

i

 

	
Schedule 4— Initial press release
    	
76
    
	
 
    	
 
    
	
Signing page
    	
80
    

 

ii

 

Details

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Parties
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name
    	
 
    	
Antisense Therapeutics Ltd
    
	
ABN
    	
 
    	
095 060 745
    
	
Short form name
    	
 
    	
ATL
    
	
Notice details
    	
 
    	
6 Wallace Avenue
   Toorak Victoria 3142
   Australia
   Email: mark.diamond@antisense.com.au
    
	
 
    	
 
    	
Attention: Mark Diamond, CEO
    
	
 
    	
 
    	
 
    
	
Name
    	
 
    	
Cortendo Cayman Ltd, a company incorporated in   the Cayman Islands
    
	
Short form name
    	
 
    	
Cortendo
    
	
Notice details
    	
 
    	
c/o Maples Corporate Services Limited
   P.O. Box 309, Ugland House
   George Town, Grand Cayman, KY1-1104
   Cayman Islands
   Email: SLong@Cortendo.com

 

Copy to:

 

Cortendo AB
   900 Northbrook Drive
   Trevose, Pennsylvania 19053
   United States of America
   Email: SLong@Cortendo.com
    
	
 
    	
 
    	
Attention: Stephen Long, General Counsel
    

 

Background

 

A                                    ATL and ISIS Pharmaceuticals, Inc. (ISIS) entered into an amended and restated collaboration and license agreement dated 8 February 2008 (ISIS Agreement) under which ATL and ISIS agreed to collaborate to enable ATL to develop and commercialise antisense drugs, including ATL1103.

 

B                                    Under the ISIS Agreement, and pursuant to a letter dated 7 September 2009 pursuant to which ATL exercised its right to obtain a Licence to Exploit (as defined in the ISIS Agreement) with respect to the growth hormone receptor (GHR), ISIS has granted ATL an exclusive, worldwide licence under certain patents to Exploit the Technology for certain purposes.

 

C                                    In the course of developing and commercialising antisense drugs, ATL has also developed or acquired additional rights relevant to Exploitation of the Technology.

 

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D                                    Cortendo wishes to obtain an exclusive licence to Exploit the Technology in the Territory within the Field for the Purpose.

 

E                                     ATL grants to Cortendo an exclusive licence to Exploit the Technology in the Territory within the Field for the Purpose, on the terms and conditions set out in this agreement.

 

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Agreed terms

 
    

 

1.                                 Defined terms and interpretation

 

1.1                            Defined terms

 

In this agreement:

 

Acromegaly Indication means the treatment of acromegaly in humans, either as a first line or second line of therapy, or as an adjunctive therapy.

 

Affiliate means, with respect to a particular party, a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with such party.  For the purposes of this definition, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of such entity, whether by the ownership of fifty percent (50%) or more of the voting stock of such entity, or by contract or otherwise.

 

Allowable Deductions means the following items to the extent they are reasonably and actually paid or allowed:

 

(a)                              quantity, trade and/or cash discounts actually granted;

 

(b)                              administrative, distribution and other fees paid to trade customers, retail pharmacy chains, wholesalers, specialty distributors, specialty pharmacies, managed health care organizations, pharmaceutical benefit managers, insurers, group purchasing organizations and national, state, or local government to the extent that such deductions are customary in the pharmaceutical industry;

 

(c)                               charge-back payments and rebates actually made or granted to trade customers, retail pharmacy chains, wholesalers, specialty distributors, specialty pharmacies, managed health care organizations, pharmaceutical benefit managers, insurers, group purchasing organizations and national, state, or local government to the extent that such deductions are customary in the pharmaceutical industry;

 

(d)                              amounts refunded or credited for an ATL1103 Product which was rejected, spoiled, damaged, out of date or returned, including in connection with recalls;

 

(e)                               freight, shipment and insurance costs incurred in transporting the ATL1103 Product;

 

(f)                                direct taxes, tariffs and customs duties applied on the sale, exportation or importation of ATL1103 Products, including VAT, GST, excise taxes and sales taxes;

 

(g)                               if applicable, that portion of the annual fee on prescription drug manufacturers imposed by the U.S. Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, (as amended) attributable to sales of such ATL1103 Product; and

 

(h)                              any other similar or customary deductions in the pharmaceutical industry taken in accordance with generally accepted accounting principles consistently applied in the pharmaceutical industry, and consistently applied by Cortendo, its Affiliates and/or Sub-Licensees (as applicable).

 

Associate has the meaning given in Division 2 of Part 1.2 of the Corporations Act as if section 12(1) of the Corporations Act included a reference to this agreement and ATL were the designated body.

 

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ASTC means ASX Settlement and Transfer Corporation Pty Ltd ACN 008 504 532.

 

ASTC Settlement Rules means the operating rules of ASTC.

 

ASX means ASX Limited or the financial market it operates, as the case may be.

 

ATL FTE Rate means US$200,000 per FTE (being the full time equivalent work of at least a total of 1800 hours per year) for the 2015 Calendar Year. FTE efforts shall include scientific or technical work and shall not include general corporate and administrative overhead.

 

ATL IP has the meaning given to it in clause 5.2(a)(i).

 

ATL Net Sales means the net sales of any products sold by ATL, its Affiliates and sub-licensees, the manufacture, use or sale of which would infringe any of the Cortendo IP and/or the Joint IP, which shall be calculated in the same manner as Net Sales is calculated under this agreement for ATL1103 Products, applied mutatis mutandis to such products.

 

ATL Territory means Australia and New Zealand, as amended pursuant to clause 7.8(e).

 

ATL1103 means the oligonucleotide (also known as [****]) that inhibits production of the growth hormone receptor (GHr) at the nucleic acid level by specifically binding to the coding region sequence of human GHr RNA by base pairing, and is comprised of sequence number [****] claimed in US patent numbers 7,803,781 and US7,846,906 with the following chemistry in [****]: ATL1103 is a [****], with a molecular weight of [****].  It is the [****] of a [****] with a [****] mechanism of action.  The ATL1103 sequence is [****], with the [****] are sometime referred to as [****].

 

ATL1103 Product means any product containing ATL1103 as an active pharmaceutical ingredient and the manufacture, use, supply or sale of which uses any part of the Technology or would, but for the Licence, infringe the Intellectual Property Rights in any part of the Technology, where such product is manufactured, sold or supplied by Cortendo or by any person commissioned or engaged by Cortendo (including any Sub-Licensees).

 

ATL’s Knowledge means to the knowledge of all officers, directors and employees of ATL, as well as [****] and [****], who are consultants for ATL.

 

Business Day means:

 

(a)                              for receiving a notice under clause 25, a day that is not a Saturday, Sunday, public holiday or bank holiday in the place where the notice is received; and

 

(b)                              for all other purposes, a day that is not a Saturday, Sunday, public holiday or bank holiday in Melbourne, Australia.

 

Business Hours means the hours from 9.00am to 5.00pm on a Business Day.

 

Calendar Year means each successive period of 12 months commencing on 1 January and ending on 31 December.

 

CHESS means Clearing House Electronic Sub-register System and has the meaning given to that term in the ASTC Settlement Rules.

 

CHESS Subregister has the meaning given to that term in the ASTC Settlement Rules.

 

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Claim means any claim, proceeding, cause of action, action, demand or suit (including by way of contribution or indemnity).

 

Clinical and Regulatory Milestones means each of the milestones listed in the first column of the table in item 1 of Schedule 2.

 

Combination Product means a therapeutic pharmaceutical product that consists of either:

 

(a)                              ATL1103 and at least one other pharmaceutically active ingredient that is not ATL1103, combined into a single formulation (i.e., a fixed dose combination); or

 

(b)                              any combination of ATL1103, and another pharmaceutical product that contains at least one other pharmaceutically active ingredient that, in each case, is not ATL1103, where such product and ATL1103 are not formulated together but are sold together as a single product and invoiced as one product.

 

(c)                               The other pharmaceutically active ingredient in paragraph (a) or the other pharmaceutical product in paragraph (b) are each referred to as the Other Product(s).

 

Commercial Milestones means each of the milestones listed in the first column of the table in item 2 of Schedule 2.

 

Commercially Reasonable Efforts means, with respect to ATL1103, that level of effort and resources (including funds) commonly dedicated by a pharmaceutical company of similar size and resources as Cortendo to the development of a product from its own research efforts of similar commercial potential at a similar stage in its lifecycle to ATL1103, taking into account safety, tolerability and efficacy, product profile (including method of action, labelling, epidemiology), the proprietary position (including intellectual property protection, data or market exclusivity), the then-current competitive environment in the relevant country or jurisdiction, the likely timing of market entry (including timing of exclusivity), market access (including physician access, market and patient dynamics, unmet need), profitability (including taking into consideration costs of good sold, pricing reimbursement) and the regulatory environment (including the regulatory structure), but specifically excluding any consideration for the Milestone Payments.

 

Confidential Information of a Disclosing Party means:

 

(a)                              the following information, regardless of its form (eg, oral, written, graphic, electronic or physical) and whether the Recipient becomes aware of it before or after the date of this agreement:

 

(i)                                  information that is by its nature confidential to the Disclosing Party;

 

(ii)                               information that is designated by the Disclosing Party as confidential; or

 

(iii)                            information the Recipient knows, or ought to know, is confidential to the Disclosing Party,

 

(b)                              all notes and other records prepared by the Recipient based on or incorporating information referred to in paragraph (a); and

 

(c)                               all copies of the information, notes and other records referred to in paragraphs (a) and (b),

 

and includes:

 

(d)                              all information to be included pursuant to clause 13.7(b);

 

(e)                               in the case of ATL, the Technology;

 

(f)                                in the case of Cortendo, the Cortendo IP; and

 

(g)                               in the case of both parties, the Joint IP and the material terms of this agreement,

 

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but excludes information that:

 

(h)                              the Recipient creates (whether alone or jointly with any third person) independently of the Disclosing Party by personnel who have not had access to the Disclosing Party’s Confidential Information;

 

(i)                                  is known by the Recipient prior to disclosure by the Disclosing Party, as evidenced by internal records or documentation of the Recipient; or

 

(j)                                 is received by the Recipient from an independent Third Party with the lawful right to disclose; or

 

(k)                              is public knowledge (otherwise than as a result of a breach of confidentiality by the Recipient or any of its permitted disclosees).

 

Corporations Act means the Corporations Act 2001 (Cth).

 

Cortendo IP has the meaning given to it in clause 5.2(a)(ii).

 

Data has the meaning given to it in the definition of Technology.

 

Deal means to:

 

(a)                              sell, assign, transfer or otherwise dispose of;

 

(b)                              agree to offer to sell, assign, transfer or otherwise dispose of;

 

(c)                               enter into any option which, if exercised (whether such exercise is subject to conditions or otherwise), enables or requires a person to sell, assign, transfer or otherwise dispose of; and

 

(d)                              decrease or agree to decrease an economic interest,

 

and Dealing has a corresponding meaning.

 

Default Rate means, on any date, the rate per annum equal to the LIBOR plus five percent (5%) (as quoted in The Wall Street Journal or its successor on the day after the payment is due), with interest to accrue from the due date to the date immediately before the actual date of payment calculated daily on the basis of a 365 day year and capitalised monthly.

 

Development Data has the meaning given to it in clause 7.3(c).

 

Development Plan has the meaning given to it in clause 7.1(a).

 

Disclosing Party means a party who discloses or makes available Confidential Information to the Recipient.

 

Disclosure Letter means the letter from ATL to Cortendo dated on or before the date of this agreement entitled “Disclosure Letter”.

 

Dispute has the meaning given to it in clause 23.1(a).

 

Dispute Notice has the meaning given to it in clause 23.1(b).

 

Due Diligence Materials all information and documents provided to Cortendo before the date of this agreement, a list of which is attached to the Disclosure Letter.

 

EMA means the European Medicines Agency or any successor entity.

 

Encumbrance includes any mortgage, charge, lien, restriction against transfer, encumbrance and other third party interest and for avoidance of doubt includes any form of securities lending arrangement.

 

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EU or European Union means the European Union member states as then constituted.  As of the Start Date, the European Union member states are Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and United Kingdom.

 

EU Approval means:

 

(a)                              approval of an ATL1103 Product for marketing in the European Union by the EMA (including Pricing Approval, but excluding Pricing Approval with respect to the achievement of Milestones); or

 

(b)                              if Cortendo seeks approval through mutual recognition in the European Union, the earlier to occur of:

 

(i)                                  approval of an ATL1103 Product for marketing in the European Union by the Ministry of Health (including Pricing Approval, but excluding Pricing Approval with respect to the achievement of Milestones) of at least three of the following countries: the United Kingdom, France, Germany, Italy or Spain; and

 

(ii)                               the date that is six calendar months after such approval by the Ministry of Health of one of the following countries: the United Kingdom, France, Germany, Italy or Spain,

 

whichever occurs first.

 

If an ATL1103 Product can be sold in any of the countries listed above without EMA or Ministry of Health approval, EU Approval will be deemed to have been obtained on the First Commercial Sale of an ATL1103 Product in any three of the five countries listed above.

 

Exploit, in relation to the Technology, means:

 

(a)                              to make, hire, sell or otherwise dispose of ATL1103 or any ATL1103 Product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things;

 

(b)                              to use any method or process that is ATL1103 or an ATL1103 Product or do any act mentioned in paragraph (a) in respect of a product resulting from use of that method or process;

 

(c)                               to research, develop or test any of the Technology; and

 

(d)                              to use or disclose any Confidential Information (including the Data) comprising any of the Technology.

 

FDA means the United States Food and Drug Administration, or any successor entity.

 

Field means the treatment of all diseases or conditions that relate to the endocrine system that are typically treated by endocrinologists as the primary treating physician (determined by reference to relevant statistics in the medical profession); but notwithstanding the foregoing, specifically excludes the treatment of any form of cancer and the treatment of any complications of diabetes.

 

First Commercial Sale means, with respect to an ATL1103 Product, the first sale on a commercial basis for which payment has been received for use or consumption by the general public of such ATL1103 Product in a given regulatory jurisdiction in the Territory after Marketing Approval has been obtained in such jurisdiction for such ATL1103 Product, or such sale is otherwise permitted by the Regulatory Authority in such regulatory jurisdiction, excluding free samples, compassionate use and other similar pre-Marketing Approval programs.

 

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Further Phase IIB Trial means a further phase II trial involving at least 28 patients and a duration of dosing of at least six months, which is required by the FDA or EMA to be conducted by or on behalf of Cortendo, for the treatment of an Acromegaly Indication using ATL1103, ahead of (and not as part of) a Phase III Trial, but does not include any trial of a Combination Product.

 

Governmental Authority means any national, federal, state, local, municipal or other governmental, regulatory, administrative, judicial, public or statutory instrumentality, court or governmental tribunal, agency, commission, authority, body or entity, or any political subdivision thereof, having legal jurisdiction over the matter or party in question.

 

Gross Sales means, with respect to an ATL1103 Product, the gross amount invoiced by Cortendo or by its Sub-Licensees to Third Parties, and where any ATL1103 Products are sold in a transaction that is not arm’s length, then the price of ATL1103 Products sold in that transaction will be deemed to be the price that would have been paid by an independent third party customer in a bona fide, arm’s length transaction.

 

(a)                              To avoid doubt, Gross Sales excludes:

 

(i)                                  the transfer of reasonable and customary quantities of free samples of ATL1103 Product(s) and the transfer of ATL1103 Product(s) as clinical trial materials, other than for subsequent resale;

 

(ii)                               sales or transfers of ATL1103 Product(s) by Cortendo to its Sub-Licensees unless the receiving party is the consumer or user of the ATL Product;

 

(iii)                            use by Cortendo or its Sub-Licensees of ATL1103 Products for any use connected with the securing of Marketing Approval or validating of a manufacturing process or the obtaining of other necessary Marketing Approvals for ATL1103 Products (unless such ATL1103 Products are subsequently sold); and

 

(iv)                           use by Cortendo or its Sub-Licensees of ATL1103 Products for clinical trials, or under early access, compassionate use, named patient, indigent access, patient assistance or other similar reduced pricing programs, at a price that is less than 125% of the fully-burdened cost of goods thereof.

 

(b)                              Gross Sales for a Combination Product in a country shall be calculated as follows:

 

(i)                                  If the ATL1103 Product and Other Product(s) are each already sold separately in such country, Gross Sales will be calculated by multiplying the total Gross Sales (as described above) of the Combination Product by the fraction A/(A+B), where A is the public or list price in such country of the ATL1103 Product sold separately in the same formulation and dosage, and B is the (sum of the) public or list price(s) in such country of the Other Product(s) sold separately in the same formulation and dosage, during the applicable Calendar Year.

 

(ii)                               If the ATL1103 Product is already sold independently of the Other Product(s) in such country, but the public or list price of such Other Product(s) cannot be determined, Gross Sales will be calculated by multiplying the total Gross Sales (as described above) of such Combination Product by the fraction A/C, where A is the public or list price in such country of such ATL1103Product sold independently and C is the public or list price in such country of the Combination Product.

 

(iii)                            If the Other Product(s) is already sold independently of the ATL1103 Product in such country, but the public or list price of such ATL1103 Product cannot be determined, Gross Sales will be calculated by multiplying the total Gross Sales (as described above) of such Combination Product by the fraction [1-B/C], where B is

 

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the (sum of the) public or list price(s) in such country of the Other Product(s) and C is the public or list price in such country of the Combination Product.

 

(iv)                           If neither the public or list price of the Other Product(s) nor the public or list price of such ATL1103 Product can be determined in such country, then the Parties shall agree the amount to be included in Net Sales, based on a reasonable allocation of the relative values of the Other Product(s) and such ATL1103 Product. If the parties cannot reach agreement within 20 days of Cortendo notifying ATL of its proposed amount, then either party may refer the matter to an Independent Expert under clause 24.

 

Growth Hormone Receptor Patent Rights means the Patents listed in item 3 ofSchedule 1.

 

GST has the meaning given in the GST Law.

 

GST Law has the meaning given in the A New Tax System (Goods & Services Tax) Act 1999 (Cth).

 

Holding means, as applicable, the Initial Shares, the Milestone Shares or both the Initial Shares and the Milestone Shares issued to Cortendo under this agreement.

 

Improvement means any modification, enhancement, development or improvement to any part of the Technology that is solely relevant to ATL1103, the Exploitation of which would infringe any Intellectual Property Rights comprised in the Technology.

 

In-Human Trial Milestone means:

 

(a)                              if confirmed as required by, or specifically and expressly recommended by, or provided as non-binding guidance by, the FDA or the EMA after Cortendo has sought approval to proceed directly to a Phase III Trial, and such requirement or recommendation is followed by Cortendo, from the Start of a Further Phase IIB Trial; or

 

(b)                              otherwise, the Start of a Phase III Trial.

 

For the avoidance of doubt, any PhaseIIB trial undertaken by or on behalf of Cortendo in relation to the development of ATL1103 for the treatment of an Acromegaly Indication using ATL1103 (including the Further Phase IIB Trial)  that is not confirmed as required by, or specifically and expressly recommended by, or provided as non-binding guidance by,  the FDA or the EMA after Cortendo has sought approval to proceed directly to a Phase III Trial will not constitute the In-Human Trial Milestone.  Further, if non-binding guidance is provided by the FDA or the EMA verbally, such guidance must be able to be confirmed by ATL, either as a participant in such meeting or other communication with the FDA or the EMA, as applicable, or by obtaining verification from an independent third party who was a participant in such meeting or other communication.

 

In-Human Trial Milestone Date means [****].

 

IND means an investigational new drug application or similar application or submission for approval to conduct human clinical investigations filed with or submitted to a Regulatory Authority or hospital ethics committee in conformity with applicable Regulatory Authority regulations.

 

Independent Expert means an individual independent of both parties who has appropriate scientific, technical, product development, regulatory, financial or commercial expertise to resolve any matter or Dispute referred to him or her under clause 24.

 

Initial Shares means 15,025,075 Shares.

 

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Initial Shares Completion Date means the date that is 5 Business Days after the Start Date, or any earlier date agreed in writing by the parties.

 

Initial Shares Subscription Price means US$2,000,000 (being $0.1675 per Initial Share).

 

Intellectual Property Rights means all intellectual property rights, including the following rights:

 

(a)                              Patents, trade secrets, copyright, designs, trade and service marks (including goodwill in those marks), domain names and trade names and any right to have confidential information kept confidential;

 

(b)                              any application or right to apply for registration of any of the rights referred to in paragraph (a); and

 

(c)                               all rights of a similar nature to any of the rights in paragraphs (a) and (b) that may subsist anywhere in the world,

 

whether or not such rights are registered or capable of being registered.

 

ISIS is defined in paragraph A of the background section of this agreement.

 

ISIS Agreement is defined in paragraph A of the background section of this agreement.

 

ISIS Consent Letter means the letter from ISIS to ATL dated on or around the date of this agreement.

 

ISIS Core Technology Patent Rights means the Patents listed in item 1 of Schedule 1.

 

ISIS Manufacturing Patent Rights means the Patents listed in item 2 of Schedule 1.

 

Issuer Sponsored Subregister has the meaning given to that term in the ASTC Settlement Rules.

 

Japanese Approval means the approval of an ATL1103 Product for marketing in Japan by the Japanese Ministry of Health and Welfare (or any future equivalent process), together with any other approval necessary to make and sell an ATL1103 Product commercially in Japan (including Pricing Approval, but excluding Pricing Approval with respect to the achievement of Milestones).  If an ATL1103 Product can be sold in Japan without Ministry of Health and Welfare approval, Japanese Approval will be deemed to have been obtained on the First Commercial Sale of an ATL1103 Product in Japan.

 

Joint IP has the meaning given to it in clause 5.2(a)(iii).

 

Law means, with respect to a party, any law, statute, code, rule, regulation, by-law, ordinance, subordinate legislation, order, decree, judgment, injunction, notice or binding agreement promulgated or entered into by any Governmental Authority having jurisdiction over such party or such party’s obligations under this agreement, in force from time to time in the relevant jurisdiction, the common law and equity as applicable from time to time and any applicable industry codes of conduct.

 

Licence means the licence granted in clause 3.1.

 

Licensed Patents means the ISIS Core Technology Patent Rights, the ISIS Manufacturing Patent Rights, the Growth Hormone Receptor Patent Rights and the Third Party Patent Rights.

 

Listing Rules means the listing rules of ASX.

 

Loss means any cost (including legal costs on a solicitor and own client basis, whether incurred by or awarded against the relevant party), expense, loss, damage, charge or liability whether direct, indirect or consequential (including pure economic loss), present or future, ascertained, unascertained, actual, prospective or contingent, and including any such cost, expense, loss,

 

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damage, charge or liability that is incurred in connection with a Claim, including the defence or settlement of that Claim.

 

MAA means a marketing approval application or similar application or submission for approval to market and sell a new pharmaceutical product (but excluding Pricing Approval) filed or submitted to the EMA.

 

Major Market means each of the US, Canada, the United Kingdom, France, Germany, Italy, Spain and Japan.

 

Marketing Approval means the act of a Regulatory Authority necessary for the marketing and sale of an ATL1103 Product in a country or regulatory jurisdiction, including any US Approval, EU Approval and Japanese Approval.

 

Milestone Fees means each of the milestone fees applicable to a Milestone, as listed in the second or third column (as applicable) of the table in Schedule 2.

 

Milestone Shares means, subject to clause 10.4, that number of Shares calculated in accordance with the following formula:

 

S = P/VWAP

 

Where:

 

S equals the Milestone Shares;

 

P equals the Milestone Shares Subscription Price; and

 

VWAP equals the 28 day volume weighted average price of the Shares, traded on the ASX up to and including the date that is 1 Business Day prior to the date that the Milestone Shares Condition is satisfied or waived in accordance with this agreement.

 

Milestone Shares Completion Date means the date nominated by ATL being not earlier than 14 days and not later than 40 days after the date on which the Milestone Shares Condition is satisfied or waived in accordance with this agreement, or such other date as may be agreed by the parties in writing.

 

Milestone Shares Condition means [****].

 

Milestone Shares Subscription Price means US$1,000,000.

 

Milestones means the Clinical and Regulatory Milestones and the Commercial Milestones.

 

Moratorium Period means:

 

(a)                              in respect of the Initial Shares, a period of 24 calendar months commencing on the Initial Shares Completion Date; and

 

(b)                              in respect of the Milestone Shares, a period of 24 calendar months commencing on the Milestone Shares Completion Date.

 

NDA means a new drug application or similar application or submission for approval to market and sell a new pharmaceutical product filed or submitted to the FDA.

 

Net Sales means Gross Sales minus Allowable Deductions.  Net Sales shall be accounted for on an accrual basis (ie, on the date the sale is made) in accordance with the selling party’s standard practices, consistently applied, in the relevant country in the Territory.

 

Non-Disclosure Agreement means the non-disclosure agreement between ATL and Cortendo dated 12 August 2014.

 

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Other ATL Rights means all Intellectual Property Rights owned or controlled by ATL at the Start Date relevant to ATL1103 which ATL has the right to license to Cortendo on the terms set out in this agreement, other than the Licensed Patents, solely as such Intellectual Property Rights are relevant to Cortendo’s development and commercialisation of ATL1103 as contemplated under this agreement.

 

Other Indication means a separately defined, well-categorized class of human disease or condition in the Field for which a separate NDA, MAA or comparable application must be filled with a Regulatory Authority, but excluding Acromegaly Indications.

 

Participant has the meaning given in the ASTC Settlement Rules.

 

Patent or Patents means:

 

(a)                              patent applications (including provisional applications and applications for certificates of invention);

 

(b)                              any patents issuing from such patent applications (including certificates of invention),

 

and includes:

 

(a)                              all patents and patent applications worldwide based on, corresponding to, or claiming the priority date(s) of any of the foregoing;

 

(b)                              any reissues, substitutions, confirmations, registrations, validations, re-examinations, additions, continuations, continued prosecution applications, continuations-in-part, requests for continued examination, or divisions of or to any of the foregoing; and

 

(c)                               term extension or other governmental action which provide exclusive rights to a product beyond the original patent expiration date.

 

Phase III Trial means a phase III clinical trial conducted anywhere in the world by, or on behalf of, Cortendo, for an Acromegaly Indication or any Other Indication using an ATL1103 Product, the results of which may establish safety and efficacy of ATL1103 and which may serve as the basis for initial or supplemental Marketing Approval of an ATL1103 Product.

 

Program Transfer has the meaning given to it in clause 19.2.

 

Pricing Approval means such governmental approval, agreement, determination or decision establishing prices for an ATL1103 Product that can be charged and/or reimbursed in regulatory jurisdictions where the applicable Governmental Authorities approve or determine the price and/or reimbursement of pharmaceutical products.

 

Purpose means to develop, make, have made, use, sell, have sold, offer for sale and import ATL1103 Products.

 

Quarter means a period of three months commencing on either 1 January, 1 April, 1 July or 1 October.

 

Recipient means a party who obtains or otherwise becomes aware of Confidential Information of the other party.

 

Regulatory Authority means any applicable government regulatory authority involved in granting approvals for the marketing or pricing of a pharmaceutical product, including the FDA and any successor government authority having substantially the same function, and foreign equivalents of the FDA.

 

Related Body Corporate has the meaning given to that term in the Corporations Act.

 

Share means a fully paid ordinary share in the capital of ATL.

 

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Start:

 

(a)                              when used in the Clinical and Regulatory Milestone descriptions in item 1 of Schedule 2 means the earlier of:

 

(i)                                  dosing of the first patient in a Phase III Trial; and

 

(ii)                               six calendar months after FDA regulatory (IND) approval for a Phase III Trial or the European equivalent if the Phase III Trial is undertaken in Europe;

 

(b)                              for all other purposes, means the dosing of the first patient in a Further Phase IIB Trial or a Phase III Trial (as applicable).

 

Start Date means the date this agreement is signed by the last party to sign this agreement.

 

Sub-Licensee means an Affiliate or Third Party granted a sub-licence by Cortendo of any of Cortendo’s rights under the Licence, regardless of whether or not the sub-licence was granted in accordance with this agreement.

 

Sub-Licensee Income means the following amounts owed to Cortendo by a sub-licensee pursuant to a sub-licence referred to in clause 4.2(h):

 

(a)                              upfront and clinical or development milestone payments; and

 

(b)                              the fair market value of shares or other securities, to the extent and in the amount that such fair market value exceeds the purchase price paid for such securities by Cortendo;

 

and where amounts are owed to Cortendo as a result of a transaction that is not arm’s length, then the amount owed will be deemed to be the amount that would have been paid by an independent third party customer in a bona fide, arm’s length transaction.

 

Subscription Shares means the Initial Shares and the Milestone Shares subscribed for by Cortendo.

 

Tax or Taxes means all forms of taxes, duties, imposts, charges, withholdings, rates, levies or other governmental impositions of whatever nature and by whatever authority imposed, assessed or charged, together with all costs, charges, interest, penalties, fines, expenses and other additional statutory charges, incidental or related to the imposition.

 

Technology means:

 

(a)                              the inventions that are covered or claimed as the subject of any of the Licensed Patents;

 

(b)                              technical and other information (including know-how, trade secrets, research tools, materials, research data, databases, experimental procedures, designs, formulae, process information, clinical data and CMC information) existing as at the Start Date, and owned or controlled by ATL, that has been developed by, or is confidential to, ATL in relation to the inventions referred to in paragraph (a) that is not in the public domain and that is relevant to the Marketing Approval by a Regulatory Authority of ATL1103 in the Territory for use within the Field and solely for the Purpose (Data);

 

(c)                               any inventions or technical and other information comprising the ATL IP or Joint IP licensed to Cortendo under clause 5.2(c); and

 

(d)                              any inventions or technical and other information that constitutes Other ATL Rights.

 

Term means the period commencing on the Start Date and ending on the date on which all of Cortendo’s obligations to pay royalties to ATL under clause 9.2 have expired.

 

Territory means worldwide other than Australia and New Zealand, as amended pursuant to clause 7.8(e).

 

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Third Party means any entity other than ATL or Cortendo or an Affiliate of either of them.

 

Third Party IP Rights means any Intellectual Property Rights owned by a Third Party, but excluding Third Party Patent Rights.

 

Third Party Patent Rights means the Patents listed in item 5 of Schedule 1.

 

Toxicology Milestone means completion of a non-human primate chronic toxicology study using ATL1103 by or on behalf of Cortendo anywhere in the world to support a Phase III Trial.

 

Toxicology Milestone Date means [****].

 

US or United States means the United States of America, including all possessions and territories thereof.

 

US Approval means approval of an ATL1103 Product for marketing in the United States by the FDA (including Pricing Approval, but excluding Pricing Approval with respect to the achievement of Milestones).  If an ATL1103 Product can be sold in the US without FDA approval, US Approval will be deemed to have been obtained on the First Commercial Sale of an ATL1103 Product in the US.

 

Valid Claim means a claim of any examined and issued Patent that has not been revoked or held invalid or unenforceable by final decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and that is not admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

 

1.2                            Interpretation

 

In this agreement, except where the context otherwise requires:

 

(a)                              the singular includes the plural and vice versa, and a gender includes other genders;

 

(b)                              another grammatical form of a defined word or expression has a corresponding meaning;

 

(c)                               a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this agreement, and a reference to this agreement includes any schedule or annexure;

 

(d)                              a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;

 

(e)                               a reference to US$, $US or USD is to United States currency;

 

(f)                                a reference to a party is to a party to this agreement, and a reference to a party to a document includes the party’s executors, administrators, successors and permitted assignees and substitutes;

 

(g)                               a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;

 

(h)                              a reference to a statute, ordinance, code or other Law includes regulations and other instruments under it and consolidations, amendments, re enactments or replacements of any of them;

 

(i)                                  a word or expression defined in the Corporations Act has the meaning given to it in the Corporations Act;

 

(j)                                 the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;

 

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(k)                              any agreement, representation, warranty or indemnity in favour of two or more parties (including where two or more persons are included in the same defined term) is for the benefit of them jointly and severally;

 

(l)                                  a rule of construction does not apply to the disadvantage of a party because the party was responsible for the preparation of this agreement or any part of it; and

 

(m)                          if a day on or by which an obligation must be performed or an event must occur is not a Business Day, the obligation must be performed or the event must occur on or by the next Business Day.

 

1.3                            Headings

 

Headings are for ease of reference only and do not affect interpretation.

 

2.                                 Term

 

This agreement starts on the Start Date and continues for the Term unless this agreement is terminated earlier under clause 18.

 

3.                                 Licence

 

3.1                            Grant of licence

 

Subject to clause 3.2, ATL hereby grants to Cortendo an exclusive, transferable (subject to clause 26.3(a)) licence, with the right to grant sub-licences in accordance with clause 4, under the Licensed Patents and the Other ATL Rights, to Exploit the Technology throughout the Territory for use within the Field and solely for the Purpose for the Term and on the terms and conditions set out in this agreement.

 

3.2                            ATL rights to use Technology

 

(a)                              Cortendo acknowledges and agrees that ATL may Exploit the Technology:

 

(i)                                  in any manner at all outside the Field anywhere in the world; and

 

(ii)                               in any manner at all in the Field in the ATL Territory.

 

(b)                              ATL may grant sub-licences to Third Parties to Exploit the Technology in the manner set out in paragraph (a), provided that:

 

(i)                                  ATL shall be required to obtain Cortendo’s prior written consent to the proposed sub-licensee pursuant to the process set forth in clauses 4.2(b) to (g), applied mutatis mutandis to ATL’s request;

 

(ii)                               ATL shall notify Cortendo in advance before seeking to commence (or authorising any Third Party to commence) any clinical development or commercialisation activities of ATL1103 Products, either in the ATL Territory in the Field, or anywhere in the world outside the Field, together with sufficient information to enable Cortendo to evaluate such clinical development or commercialisation activities, so that the parties may discuss the coordination of their activities; and

 

(A)                            if Cortendo has a reasonable, justifiable, good faith concern that such clinical development or commercialisation activities will have a material negative impact on Cortendo’s business relating to the ATL1103 Products in the Field in the Territory based on: (1) safety grounds, (2) pricing of such other ATL1103 Product, or (3) off-label promotion of such other ATL Product in the Field in the Territory, then  Cortendo will notify ATL of its concerns (including particulars) within 20 days of receiving

 

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notification from ATL, and the parties will meet (either in person or by teleconference) to discuss these concerns, with a view to agreeing a basis upon which ATL can proceed; and

 

(B)                            if the parties cannot reach agreement within 20 days of Cortendo notifying ATL of its concerns, then either party may refer the matter to an Independent Expert under clause 24.

 

(c)                               ATL shall not conduct, and shall specifically prohibit any such Third Party from:

 

(i)                                  marketing or promoting of any ATL1103 Products to medical professionals who are endocrinologists or who work in the field of endocrinology (eg, nurses, nurse practitioners); or

 

(ii)                               marketing or promoting of any ATL1103 Products for use in the Field, and

 

ATL covenants and agrees to use reasonable endeavours to procure the compliance by its sub-licensees with the restrictions in this clause 3.2(c).

 

3.3                            Grant-back Licence

 

(a)                              Cortendo hereby grants to ATL (with effect from the date of creation of the relevant Intellectual Property Rights) an exclusive, transferable (subject to clause 26.4), sub-licensable, royalty-free, fully paid licence under the Cortendo IP and Joint IP to exploit the technology comprised in the Cortendo IP and Joint IP throughout the ATL Territory for use within the Field for the Purpose; provided that:

 

(i)                                  ATL shall be required to obtain Cortendo’s prior written consent to the proposed sub-licensee pursuant to the process set forth in clauses 4.2(b) to (g), applied mutatis mutandis to ATL’s request;

 

(ii)                               such sub-licence provides that ATL shall have the right to provide Cortendo and its Sub-Licensees all data (including pre-clinical, clinical, technical, chemical, safety, and scientific data and information), know-how and other results generated by or resulting from or in connection with the exploitation of the technology by or on behalf of ATL or such sub-licensee thereunder, including relevant laboratory notebook information, screening data, regulatory data and synthesis schemes, and Cortendo will have the right to use such data in filings for Marketing Approvals during the Term for the purpose of exercising the Licence;

 

(iii)                            ATL shall notify Cortendo in advance before seeking to commence (or authorising any Third Party to commence) any clinical development or commercialisation activities of ATL1103 Products in the ATL Territory in the Field, together with sufficient information to enable Cortendo to evaluate such clinical development or commercialisation activities, so that the parties may discuss the coordination of their activities, and:

 

(A)                            if Cortendo has a reasonable, justifiable, good faith concern that such clinical development or commercialisation activities will have a material negative impact on Cortendo’s business relating to the ATL1103 Products in the Field in the Territory based on: (1) safety grounds, (2) pricing of such other ATL1103 Product, or (3) off-label promotion of such other ATL Product in the Field in the Territory, then  Cortendo will notify ATL of its concerns (including particulars) within 20 days of receiving notification from ATL, and the parties will meet (either in person or by teleconference) to discuss these concerns, with a view to agreeing a basis upon which ATL can proceed; and

 

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(B)                            if the parties cannot reach agreement within 20 days of Cortendo notifying ATL of its concerns, then either party may refer the matter to an Independent Expert under clause 24;

 

(iv)                           if the Independent Expert determines that it is not reasonable to withhold consent to such activities on the grounds specified in clause 3.3(a)(iii)(A), then Cortendo shall be deemed to have consented; and

 

(v)                              if the Independent Expert determines that it is reasonable to withhold consent to such activities on the grounds specified in clause 3.3(a)(iii)(A), then Cortendo shall not grant such consent.

 

(b)                              If ATL desires to seek to extend the licence granted in paragraph (a) to expand the licence to include the exploitation of the technology comprised in the Cortendo IP and Joint IP anywhere in the world for use outside the Field for any purpose, then:

 

(i)                                  ATL must notify Cortendo in advance to request such expansion of the licence, and provide in such notice the scope of the expansion of the licence being requested with respect to field and territory, the identity of any Third Party to be granted a sub-licence, the scope of the sub-licence and the territory in which such sub-licence will be granted, and request Cortendo’s written consent to such expansion licence;

 

(ii)                               ATL shall notify Cortendo in advance before seeking to commence (or authorising any Third Party to commence) any clinical development or commercialisation activities of ATL1103 Products anywhere in the world outside the Field, together with sufficient information to enable Cortendo to evaluate such clinical development or commercialisation activities, so that the parties may discuss the coordination of their activities; and

 

(A)                            if Cortendo has a reasonable, justifiable, good faith concern that such clinical development or commercialisation activities will have a material negative impact on Cortendo’s business relating to the ATL1103 Products in the Field in the Territory based on: (1) safety grounds, (2) pricing of such other ATL1103 Product, or (3) off-label promotion of such other ATL Product in the Field in the Territory, then  Cortendo will notify ATL of its concerns (including particulars) within 20 days of receiving notification from ATL, and the parties will meet (either in person or by teleconference) to discuss these concerns, with a view to agreeing a basis upon which ATL can proceed; and

 

(B)                            if the parties cannot reach agreement within 20 days of Cortendo notifying ATL of its concerns, then either party may refer the matter to an Independent Expert under clause 24.

 

(iii)                            if the Independent Expert determines that it is not reasonable to withhold consent to such licence expansion on the grounds specified in clause 3.3(b)(ii)(A), then Cortendo shall be deemed to have expanded such licence to include the scope of the field and territory so determined by such Independent Expert; and

 

(iv)                           if the Independent Expert determines that it is reasonable to withhold consent to such expansion of the licence on the grounds specified in clause 3.3(b)(ii)(A), then Cortendo shall not grant such expansion of the licence.

 

(c)                               In the event of any expansion of the licence granted to ATL under this clause 3.3, at any time before seeking to commence (or authorising any Third Party to commence) selling

 

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any product for use outside the Field that incorporates any Cortendo IP or Joint IP, ATL may notify Cortendo of its proposed royalty to be paid by ATL to Cortendo in respect of ATL Net Sales of that product, based on the relative value of the Cortendo IP or Joint IP (and taking into account Cortendo’s relative interest in any Joint IP) to the overall value of the product.  If the parties are unable to agree on an appropriate royalty rate within 20 days of Cortendo receiving notification from ATL, then either party may refer the matter to an Independent Expert under clause 24 to determine an appropriate royalty based on the relative value of the Cortendo IP or Joint IP (and taking into account Cortendo’s relative interest in any Joint IP) to the overall value of the product.

 

3.4                            Limitation on grant of rights

 

If any applicable legislation in any jurisdiction of the Territory confers rights on a licensee of a patent, to the extent permitted by Law, the parties agree that those rights are not conferred on Cortendo or any Sub-Licensee unless expressly provided otherwise in this agreement.

 

3.5                            Statutory termination of any Patent sub-licence

 

This agreement operates as a separate agreement in relation to:

 

(a)                              each Patent included in the Technology in each jurisdiction in the Territory; and

 

(b)                              such of the Technology that never becomes the subject of a patent,

 

to the intent and purpose that if a party terminates this agreement pursuant to a statutory right to terminate a patent licence under any applicable legislation in any jurisdiction in the Territory, that termination will operate only with respect to the Patent that ceased to be in force, without affecting the continued operation of this agreement in relation to all remaining Patents and such of the Technology that never becomes the subject of a patent.

 

3.6                            Exclusivity

 

ATL hereby covenants that, during the Term, neither it nor its Affiliates will:

 

(a)                              grant or offer any licence or other rights to a Third Party, or otherwise discuss or negotiate with any Third Party the terms of any such licence or rights; or

 

(b)                              conduct any activities, whether independently or with or for the benefit of a Third Party,

 

with respect to the commercialisation of:

 

(c)                               ATL1103 for Acromegaly Indications;

 

(d)                              any pharmaceutical products comprised of a salt, analog, free acid/base, solvate, ester, hydrate, anhydrous form, degradant, stereoisomer, polymorphic form, isotope or crystal form, prodrug, metabolite or any modification based on the nucleotide sequence of, ATL1103 for Acromegaly Indications; or

 

(e)                               any pharmaceutical products for Acromegaly Indications which rely on the same data as ATL1103 for regulatory approval (excluding activities to be conducted by ATL under this agreement).

 

4.                                 Further Sub-licensing

 

4.1                            Restriction on further Sub-licensing

 

Cortendo must not grant sub-licences of any of its rights under the Licence except in accordance with this clause 4.

 

4.2                            Further sub-licensing of rights

 

(a)                              Cortendo may only sub-license all or any part of its rights under the Licence to:

 

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(i)                                  its Affiliates or Third Parties for the purpose of assisting Cortendo with the development of ATL1103 Products; and

 

(ii)                               its Affiliates or Third Parties for the purpose of distributing ATL1103 Products as permitted under this agreement,

 

and, in each case, subject to the requirements of paragraphs (b) through (f).

 

(b)                              In the event that Cortendo wishes to grant a sub-licence to any Third Party, it shall notify ATL of same at the time that a term sheet has been agreed or the financial terms of such sub-licence have been substantially agreed and provide in such notice the identity of such Third Party, the scope of the sub-licence and the territory in which such sub-licence will be granted, and request ATL’s written consent to such sub-licence.

 

(c)                               Within 30 days after receipt of the notice referred to in paragraph (b), ATL shall determine whether ATL will consent to such sub-licence, which consent shall not be unreasonably withheld, delayed or conditioned.

 

(d)                              If ATL does not consent to such sub-licence request, it shall provide a written response to Cortendo setting forth in reasonable detail its concerns about same.  If Cortendo disagrees with ATL’s rationale for not consenting, then Cortendo may refer the matter to an Independent Expert under clause 24.

 

(e)                               If the Independent Expert determines that it is not reasonable to withhold consent to such sub-licence, then Cortendo shall be free to grant such sub-licence.

 

(f)                                If the Independent Expert determines that it is reasonable to withhold consent to such sub-licence, then Cortendo shall not grant such sub-licence.

 

(g)                               For the avoidance of doubt, no consent from ATL will be required to grant a sub-licence to an Affiliate of Cortendo.

 

(h)                              In the event that Cortendo grants any sub-licence pursuant to clause 4.2(a)(ii) to a Third Party that includes distribution of ATL1103 Products in any region that includes either the U.S. or four of the five Major Markets in the EU prior to the Start of a Phase III Trial, then Cortendo shall pay to ATL an amount equal to:

 

(i)                                  in the event that no Further Phase IIB Trial is required, [****] percent ([****]%) of Sub-Licensee Income; or

 

(ii)                               in the event that a Further Phase IIB Trial is required prior to the Start of the Phase III Trial, [****] ([****]%) of Sub-Licensee Income.

 

(i)                                  Each such payment shall be made within 30 days after the receipt of such payment by Cortendo in a manner consistent with clauses 9.7 through and including 9.10.

 

(j)                                 Each sub-licence granted pursuant to this clause 4.2 shall be made pursuant to a written agreement that contains the following terms (Sub-Licensee Required Terms):

 

(i)                                  terms imposing obligations on the Sub-Licensee that are at least equivalent to those imposed on Cortendo under this agreement, to the extent necessary for Cortendo to perform its obligations under this agreement as if acts of the Sub-Licensee were acts of Cortendo;

 

(ii)                               a term providing that the agreement is not capable of assignment by the Sub-Licensee except in events comparable to those provided in clause 26.3;

 

(iii)                            a term providing that the agreement will be automatically novated from Cortendo to ATL in the circumstances set out in clause 4.5;

 

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(iv)                           a term preventing the Sub-Licensee from further sub-licensing its rights in respect of all or any part of the Technology;

 

(v)                              a term excluding and limiting the liability of ATL that is at least equivalent to the exclusion and limitation of liability in clause 15; and

 

(vi)                           a term providing that ATL and ISIS are third party beneficiaries under the agreement,

 

and which is otherwise consistent with the terms of this agreement, the ISIS Agreement and any agreement pursuant to which ISIS obtained its rights in the Third Party Patent Rights.

 

4.3                            Responsibility for acts of Sub-Licensees

 

(a)                              Despite any Sub-licensing of any of its rights under the Licence, Cortendo remains liable for the performance of all of its obligations under, and compliance with, this agreement as if all acts of any Sub-Licensees were acts of Cortendo.

 

(b)                              Cortendo must promptly notify ATL if it becomes aware of any breach of the Sub-Licensee Required Terms by a Sub-Licensee, and take commercially reasonable efforts to cause the Sub-Licensee to cure the breach, or terminate the agreement.

 

4.4                            Cortendo to provide copies of written agreements with Sub-Licensee

 

Cortendo must provide ATL with a signed copy of each written agreement comprising a sub-licence of its rights under this agreement to a Sub-Licensee, within 30 days after that agreement is signed (which may be redacted for financial terms).

 

4.5                            Sub-licence survival

 

In the event of termination of this agreement (other than termination by ATL pursuant to clause 18.5 or termination by ATL pursuant to clause 18.3 where such termination is due to actions by such Sub-Licensee), Cortendo shall promptly inform its Sub-Licensees thereof, and any valid Sub-licence shall, at the Sub-Licensee’s option, and with ATL’s prior written consent (not to be unreasonably withheld, conditioned or delayed), survive such termination and be deemed the grant of a direct sub-licence by ATL to such Sub-Licensee, provided that the Sub-Licensee is not in material breach of any of its obligations under the applicable sub-licence agreement.

 

5.                                 Ownership and protection of the Technology

 

5.1                            Acknowledgment of ownership of the Technology

 

Cortendo acknowledges and agrees that nothing in this agreement assigns or transfers to Cortendo any ownership of any of the Technology (including any Intellectual Property Rights subsisting in the Technology).

 

5.2                            Ownership of Improvements

 

(a)                              As between the parties, all right, title and interest in and to any Improvements (including those made by subcontractors of a party):

 

(i)                                  first conceived solely by employees or subcontractors of ATL shall be owned solely by ATL (ATL IP);

 

(ii)                               first conceived solely by employees or subcontractors of Cortendo (or any of its Sub-Licensees) shall be owned solely by Cortendo (Cortendo IP); and

 

(iii)                            first conceived jointly by employees or subcontractors of ATL and Cortendo, shall be owned jointly by ATL and Cortendo (Joint IP).

 

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Inventorship shall be determined in accordance with US patent laws.

 

Ownership pursuant to this clause 5.2(a) shall include all Intellectual Property Rights subsisting in any and all such Improvements.

 

(b)                              Promptly after any Improvement covered by this clause 5.2 is acquired, conceived or reduced to practice by ATL, Cortendo or any Sub-Licensee (or any of their subcontractors), such party must provide to the other party details of that Improvement.

 

(c)                               ATL acknowledges that, with effect from the date of the creation of any ATL IP or Joint IP, that ATL IP or ATL’s interest in that Joint IP is licensed to Cortendo pursuant to clause 3.1.

 

(d)                              Subject to clause 5.2(e), ATL and Cortendo shall each have the right to:

 

(i)                                  exploit;

 

(ii)                               grant a licence exclusive as to its own interest but not as to the other party’s interest or the other party’s right to grant licences;

 

(iii)                            grant a non-exclusive licence; or

 

(iv)                           transfer and assign its right, title and interest to,

 

any Joint IP, anywhere in the world (including having the right to sub-license through one or more tiers of sub-licences), to the extent each can do so without infringing the other party’s other Intellectual Property Rights or limiting either party’s ability to satisfy its obligations under this agreement, without:

 

(v)                              compensation;

 

(vi)                           prior approval;

 

(vii)                        liability; or

 

(viii)                     other obligation (including accounting or royalty obligations) to such other party.

 

(e)                               For the avoidance of doubt:

 

(i)                                  neither party may grant an exclusive licence (but may grant a licence which is exclusive as to its interest) to any Joint IP without the prior written consent of the other party;

 

(ii)                               the parties acknowledge and agree that in the event any Joint IP is subject to the licence granted by ATL to Cortendo pursuant to clause 3.1, ATL shall not have the right to exploit, grant a licence as to its own interest, grant any licence, or transfer and assign its right, title and interest to, that  Joint IP for applications in the Field in the Territory; and

 

(iii)                            the parties acknowledge and agree that in the event any Joint IP is subject to the licence granted by Cortendo to ATL pursuant to clause 3.3, Cortendo shall not have the right to exploit, grant a licence as to its own interest, grant a non-exclusive licence, or transfer and assign its right, title and interest to that Joint IP for applications outside the Field or in the ATL Territory.

 

5.3                            Protection of the Technology

 

(a)                              Up until the Start of a Phase III Trial, ATL shall have primary responsibility for and must, at its sole cost and expense, continue to prosecute and maintain the Licensed Patents which ATL controls as at the Start Date throughout the Territory in such countries and through outside counsel selected by ATL.

 

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(b)                              Commencing upon the Start of a Phase III Trial, Cortendo shall have primary responsibility for and must, at its sole cost and expense, continue to prosecute and maintain all of the Licensed Patents which ATL controls as at the Start Date throughout the Territory in such countries and through outside counsel selected by Cortendo.

 

(c)                               Commencing on the Start Date, Cortendo shall have the primary responsibility for and must, at its sole cost and expense, control the preparation, filing, maintenance and prosecution of any patents or patent applications comprising ATL IP, Cortendo IP or Joint IP  throughout the Territory in such countries and through outside counsel selected by Cortendo.

 

(d)                              The party with primary responsibility for the filing, maintenance and prosecution of any patents or patent applications pursuant to paragraph (a), (b) or (c) (the controlling party) shall:

 

(i)                                  consult with the other party and keep the other party fully informed of the progress of all Patents referred to in paragraphs (a), (b) or (c), including all issues relating to the preparation, filing, prosecution and maintenance of such Patents;

 

(ii)                               consult with the other party and keep the other party fully informed about the controlling party’s patent strategy with respect to such Patents;

 

(iii)                            provide the other party with copies of all material communications from any patent authority regarding such Patents, and provide the other party, for its review and comment, with drafts of any material filings or responses to be made to such patent authorities a reasonable amount of time in advance of submitting such filings or responses;

 

(iv)                           consider any reasonable comments to such filings and responses provided by the other party, provided that they are delivered to the controlling party in a timely manner; and

 

(v)                              provide the other party with final copies of such documents.

 

(e)                               With respect to Patents being filed, prosecuted or maintained pursuant to  paragraph (a), (b) or (c), if the controlling party elects not to pursue:

 

(i)                                  the filing or further prosecution or maintenance of any such Patent; or

 

(ii)                               the filing of any divisional or continuing patent application (based on a prior patent application or patent) with respect to any such Patent,

 

then the controlling party shall provide the other party with at least 30 days prior written notice of such determination (or such other period of time reasonably necessary to allow the other party to assume such responsibilities).  In such event, the other party shall have the right, at its option, to become the controlling party and control the filing, prosecution and/or maintenance of any such Patent at its own expense without affecting the Licence or any of the other financial terms set forth in this agreement except as provided in paragraph (f).

 

(f)                                With respect to Patents for which Cortendo is the controlling party pursuant to  paragraph (b) or (c), if Cortendo elects not to pursue any such Patent in all Major Markets, and ATL does so, then such Patents shall not longer be included as Licensed Patents under this agreement anywhere in the Territory.  However, if Cortendo pursues such Patent in all Major Markets, but does not elect to pursue in other countries or jurisdictions in the Territory, and ATL does so, ATL shall do so at its sole expense and without affecting the Licence or any of the other financial terms set forth in this agreement.

 

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(g)                               Each party shall provide the other party all reasonable assistance and cooperation, at the other party’s request and expense, in the patent prosecution efforts provide above in this clause 5.3, including providing any necessary powers of attorney, executing any other required documents or instruments for such prosecution, and making its personnel with appropriate scientific expertise reasonably available to assist in such efforts.  Each party agrees to cause its employees, consultants and subcontractors to cooperate with the relevant other party and persons to execute all lawful papers and instruments, to make all rightful oaths and declarations, and to provide consultation and assistance as may be reasonably necessary in the preparation, prosecution, maintenance and enforcement of all such patents.

 

5.4                            No challenge

 

Cortendo must not, and must ensure that any Sub-Licensee does not:

 

(a)                              raise or cause to be raised any objection to the validity of any Patents included in the Technology; or

 

(b)                              challenge or in any way impugn ATL’s or ISIS’ complete ownership of, or rights in relation to, any Patents included in the Technology or any other part of the Technology,

 

before any court, arbitrator, or other tribunal or administrative agency in any jurisdiction provided, however, that if Cortendo or any Sub-Licensee violates this clause 5.4, ATL’s sole right and remedy shall be pursuant to clause 18.3.

 

6.                                 Joint Steering Committee

 

6.1                            Composition of the Joint Steering Committee

 

(a)                              During the period from the Start Date until Cortendo obtains US Approval and EU Approval for the first ATL1103 Product, the parties will use their reasonable commercial efforts in order to properly coordinate all activities performed under this agreement. For that purpose, each party will appoint two representatives to act as a joint steering committee (Joint Steering Committee or JSC).

 

(b)                              Each party may change its representatives at any time during the Term, by giving the other party 14 days’ prior written notice.

 

6.2                            Meetings of the Joint Steering Committee

 

The Joint Steering Committee must hold conferences in person, by teleconference or by video conference:

 

(a)                              on a regular basis, and at least twice  per year; and

 

(b)                              as otherwise reasonably requested by either party.

 

The site, date and proposed agenda of any meeting must be determined by mutual agreement between the members of the Joint Steering Committee in a timely manner. All items discussed during such meetings must be summarised in written minutes.

 

6.3                            Role of the Joint Steering Committee

 

(a)                              The Joint Steering Committee will be responsible for the following:

 

(i)                                  reviewing and providing comments on the Development Plan, and any amendments thereto;

 

(ii)                               reviewing the stage of development that has been reached and what Clinical and Regulatory Milestones have been achieved, provided that the JSC shall not have authority to make any determination that a party is in breach of this agreement or

 

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that a party has engaged or not engaged in acts related to breach or in making a determination about the achievement of Clinical and Regulatory Milestones except by consensus;

 

(iii)                          reviewing the results of any clinical trials conducted pursuant to the Development Plan; and

 

(iv)                         providing for the exchange of information between the parties relating to the Development Plan.

 

(b)                              The Joint Steering Committee shall have no power to amend, modify or waive compliance with this agreement and is merely a mechanism for the parties to exchange and gather information about the development and regulatory activities being undertaken pursuant to this agreement.

 

7.                                 Exploitation of the Technology

 

7.1                            Development activities

 

(a)                              Within 60 days after the Start Date, Cortendo shall prepare a development plan with respect to ATL1103 that includes the projected goals, development activities and estimated target start and completion dates, including the manufacture of ATL1103 Products for conduct of the requisite chronic animal toxicology studies, any Further Phase IIB Trial and the Phase III Trial, the conduct of the requisite chronic animal toxicology studies to support the Phase III Trial, the conduct of the Phase III Trial, the filing of an NDA, the filing of an MAA and the filing of equivalent regulatory submissions in other jurisdictions in the Territory, including each of the Major Markets, and anticipated receipt of Marketing Approval in such countries in the Territory (Development Plan).

 

(b)                              Cortendo shall submit the Development Plan to the JSC for review and comment prior to its finalisation, it being understood that Cortendo shall have final decision-making authority on all development decisions, in its sound business judgment, including all activities to be set forth in the Development Plan.

 

(c)                               Thereafter, Cortendo may make changes to the Development Plan that are not material, which shall be reflected in the updated Development Plan to be submitted to the JSC annually pursuant to clause 7.1(d), which shall not be subject to review and comment.  Material changes to the Development Plan shall be submitted to the JSC for review and comment prior to finalizing the updated Development Plan.  A material change includes a change that significantly modifies the dates set out in the Development Plan for the achievement of Clinical and Regulatory Milestones.

 

(d)                              Cortendo will submit an updated Development Plan to the JSC, at least 30 days before the start of each Calendar Year during the period that the JSC is ongoing, and all material changes not previously reviewed shall be reviewed and commented on by the JSC prior to finalizing the updated Development Plan.

 

(e)                               Cortendo must, at its own cost, undertake all activities set out in the Development Plan, including undertaking all pre-clinical safety studies and human trials necessary to support the filing of applications for Marketing Approvals as contemplated in the Development Plan or otherwise required by this agreement, and otherwise complying with the Development Plan.

 

(f)                                Cortendo shall not implement any early access, compassionate use, named patient, indigent access, patient assistance or other similar reduced pricing programs without

 

24

 

ATL’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.

 

7.2                            Regulatory approvals

 

(a)                              Cortendo must, at its own cost, file for, obtain and maintain all regulatory approvals (including Marketing Approvals) to Exploit the Technology as required by this agreement.

 

(b)                              Cortendo will be solely responsible for all pricing and reimbursement discussions with any Regulatory Authorities in the Territory and shall have sole responsibility for establishing pricing for the ATL1103 Products in the Territory.

 

(c)                               Cortendo will file for, submit and own all filings with Regulatory Authorities (including NDA, MAAs and the like) and regulatory approvals (including Marketing Approvals) required to develop or commercialise ATL1103 Products under this agreement.

 

(d)                              As between the parties, Cortendo (either directly or through its Sub-Licensees) shall be solely responsible for all communications with any Regulatory Authorities in the Territory with respect to ATL1103 Products being developed or commercialised under this agreement.

 

7.3                            Sharing of Data

 

(a)                              Upon request from Cortendo, ATL shall disclose to Cortendo, at ATL’s sole cost, any Data ATL has in its control or possession as of the Start Date required to support Cortendo’s development efforts under this agreement which ATL has not already disclosed to Cortendo in the Due Diligence Materials.

 

(b)                              During the Term, at reasonably frequent intervals, ATL shall disclose to Cortendo, at ATL’s sole cost, all new Data ATL has in its control or possession that is reasonably required to support Cortendo’s development efforts under this agreement.

 

(c)                               All data (including pre-clinical, clinical, technical, chemical, safety, and scientific data and information), know-how and other results generated by or resulting from or in connection with the conduct of the Development Plan by or on behalf of Cortendo, including relevant laboratory notebook information, screening data, regulatory data and synthesis schemes (collectively, the Development Data), shall be owned solely and exclusively by Cortendo.

 

(d)                              Cortendo must, on request from ATL, disclose to ATL, and ATL will have the right to use that subset of Development Data that is included in regulatory approval filings (e.g., an NDA or an MAA) during the Term for the purpose of exercising the rights granted to it under the grant-back licence in clause 3.3 (including obtaining regulatory approvals).

 

(e)                               ATL shall be permitted to use Development Data constituting safety data for purposes of safety data reporting under applicable Laws.

 

7.4                            Compliance with Laws

 

Cortendo must exercise, and must ensure that each Sub-Licensee exercises, its rights in connection with the Technology in accordance with all applicable Laws from time to time.

 

7.5                            Use of patent numbers

 

Cortendo must ensure that all ATL1103 Products and the packaging of all ATL1103 Products includes a reference to the patent number of any Patent included in the Technology that relates to that ATL1103 Product, where the absence of that reference in any manner may detrimentally affect the rights conferred by that Patent or the ability of ATL or Cortendo to enforce those rights.

 

25

 

7.6                            Safety

 

Cortendo must Exploit the Technology, and must ensure that each Sub-Licensee Exploits the Technology, with care and without danger to any person, including ATL and its employees and agents, and the public.

 

7.7                            Promotion and marketing

 

(a)                              Cortendo must, at is own cost, plan and implement commercialisation activities for the ATL1103 Products in the Territory following receipt of US Approval or EU Approval, and such other countries in the Territory as Cortendo elects to do so based on its sound business judgment.

 

(b)                              Cortendo will provide ATL with an up-to-date marketing plan outlining the key aspects of market launch and commercialisation for the sale of ATL1103 Products in the Territory within 90 days prior to the anticipated launch date of the first ATL1103 Product, and thereafter on or prior to 30 days before the end of each Calendar Year during the Term.  ATL shall have the right to provide copies of such plans to ISIS, provided that such plans shall be treated as Confidential Information of Cortendo and ATL shall require ISIS to abide by the terms of clause 13 with respect thereto.

 

7.8                            Performance obligations

 

(a)                              Cortendo must:

 

(i)                                  use, and must cause each Sub-Licensee to use, Commercially Reasonable Efforts to cause each Milestone to be met, and the full amount of each Milestone Fee to be paid, as soon as possible; and

 

(ii)                               without limiting its obligations under paragraph (i), but subject to any extension of time due to a Delay as determined pursuant to clauses 7.8(f) — (h):

 

(A)                            meet the Toxicology Milestone by the Toxicology Milestone Date; and

 

(B)                            meet the In-Human Trial Milestone by the In-Human Trial Milestone Date.

 

(b)                              Cortendo must use, and must cause each Sub-Licensee to use, Commercially Reasonable Efforts to:

 

(i)                                  file for Marketing Approval (excluding Pricing Approval) to sell an ATL1103 Product in each of the US, Canada, the United Kingdom, France, Germany, Italy and Spain within one year of US Approval or EU Approval (whichever occurs first) of that ATL1103 Product; and

 

(ii)                               sell ATL1103 Products in each Major Market within one year of obtaining Marketing Approval in that Major Market.

 

(c)                               If Cortendo does not comply with an obligation in clause 7.8(b)(i) or 7.8(b)(ii) in respect of a market, but subject to any extension of time due to a Delay as determined pursuant to clauses 7.8(f) — (h), and after compliance with clause 7.8(l), as applicable, ATL may notify Cortendo that the Territory no longer includes the relevant Major Market with effect from the date of the notice (or any later date specified in the notice) and such Major Market will form part of the ATL Territory from the date of that notice.

 

(d)                              Cortendo must use, and must cause each Sub-Licensee to use, Commercially Reasonable Efforts to sell any ATL1103 Products  in any country (other than a Major Market) where an existing Marketing Approval allows it to sell such ATL1103 Product in that market (due to mutual recognition laws).

 

26

 

(e)                               If Cortendo fails to sell any ATL1103 Products in any country (other than a Major Market) where an existing Marketing Approval allows it to sell that ATL1103 Product in that country (due to mutual recognition laws) within 18 months thereafter, then:

 

(i)                                  ATL may require Cortendo to provide a written justification for not selling any ATL1103 Products in such country and Cortendo must provide that written justification within 30 days of ATL’s request; and

 

(ii)                               if ATL is not satisfied, acting reasonably, that Cortendo’s justification is reasonable (based on the commercial viability of doing so, taking into account issues of pricing and reimbursement, the size of the market in such country and the potential for parallel importation from such country into other countries in the Territory), but subject to any extension of time due to a Delay as determined pursuant to clauses 7.8(f) — (h), and after compliance with clause 7.8(l), as applicable, ATL may notify Cortendo that the Territory no longer includes that country with effect from the date of the notice (or any later date specified in the notice), and that country will form part of the ATL Territory from the date of that notice, provided that if the parties agree (or, if the Independent Expert determines under clause 7.8(l)(ii)), that the potential for parallel importation from such country into other countries in the Territory is a reasonable concern, then such country shall not be included as a country in the ATL Territory.

 

(f)                                Cortendo will not be in breach of its obligations under clause 7.8(a)(ii), 7.8(b)(i), 7.8(b)(ii) or 7.8(d) to the extent that it does not meet:

 

(i)                                  either of the milestones referred to in clause 7.8(a)(ii) by the relevant milestone date; or

 

(ii)                               any of the filing or sales requirements within the time periods indicated in clause 7.8(b)(i) or 7.8(b)(ii); or

 

(iii)                            the sales requirement in any relevant country within the time period indicated in clause 7.8(d),

 

if such failure is due to the occurrence of any event, action or inaction that is beyond the reasonable control of Cortendo (eg, any action, inaction or response from a Regulatory Authority, any technical or scientific results of the development activities or any supply failure), but excluding financing or funding related issues, which prevents it from meeting the relevant milestone date or time period (a Delay).

 

(g)                               If Cortendo becomes aware of an actual or potential Delay, Cortendo:

 

(i)                                  must immediately notify ATL in writing of that actual or potential Delay (specifying the nature, cause and anticipated duration of the Delay); and

 

(ii)                               may give ATL notice in writing seeking an extension of time for achievement of the relevant milestone or event directly impacted by the Delay (which may be no longer than the extra time required by Cortendo to achieve the relevant milestone or event as a direct result of the Delay).

 

(h)                              If Cortendo seeks an extension of time in accordance with clause 7.8(g)(ii) and ATL agrees to the proposed new milestone date, which agreement shall not be unreasonably withheld, then that milestone date will be amended in accordance with Cortendo’s request. If the parties cannot reach agreement within 20 days of Cortendo proposing such new milestone date, then either party may refer the matter to an Independent Expert under clause 24, provided that the extension of time will be no longer than the extra time required by Cortendo to achieve the relevant milestone as a direct result of the Delay.

 

27

 

(i)                                  Cortendo must keep, and must cause each Sub-Licensee to keep, reasonable documentation substantiating all efforts to achieve the Milestones (the Milestone Information).  Such Milestone Information shall be open to inspection by ATL and its representatives for the purpose of determining the status of attainment of each Milestone.  Cortendo must provide reasonable assistance, and must cause each Sub-Licensee to provide reasonable assistance, to ATL and its representatives in conducting such inspection, without charge, including by:

 

(i)                                  making such documents available for inspection and copying at a site designated by Cortendo or the relevant Sub-Licensee;

 

(ii)                               making its and its Sub-Licensees’ personnel reasonably available for interviews, upon reasonable notice; and

 

(iii)                            making its and its Sub-Licensees’ facilities reasonably available for inspection upon reasonable notice,

 

as may be reasonably necessary to allow ATL and its representatives to perform the inspection (provided that ATL and its representatives comply with all policies and procedures required of visitors to such site and execute confidentiality agreements with Cortendo or the relevant Sub-Licensee). ATL shall be entitled to conduct no more than one such inspection each Calendar Year.

 

(j)                                 If, following an inspection under clause 7.8(i), ATL determines that a Milestone was achieved and had not been reported by Cortendo within the period required for payment of the Milestone Fee relating to such Milestone as provided in clause 9.6, then Cortendo shall be responsible for all reasonable out-of-pocket costs incurred by ATL in connection with such inspection.

 

(k)                              Until the achievement of all Clinical and Regulatory Milestones, Cortendo must provide, and must cause each Sub-Licensee to provide, on an annual basis, a written report to ATL in reasonable detail regarding the status of efforts to achieve each Clinical and Regulatory Milestone that has not yet been achieved (each such report, an Update Report).  If ATL requests a meeting with representatives of Cortendo to discuss such report, Cortendo must, and must cause each Sub-Licensee to:

 

(i)                                  make available for such a meeting at least one officer with operating responsibility for the activities of Cortendo and any Sub-Licensee related to the achievement of any such Clinical and Regulatory Milestone; and

 

(ii)                               for 14 days following ATL’s receipt of an Update Report, make available a qualified, designated employee with appropriate expertise to respond telephonically or electronically to questions posed by ATL concerning the Update Report.

 

(l)                                  If ATL considers that Cortendo has not used Commercially Reasonable Efforts as required in any of clauses 7.8(a)(i), 7.8(b) or 7.8(d), then ATL shall notify Cortendo in writing within 30 days of forming that view, stating in reasonable detail the particular alleged failure, and then:

 

(i)                                  Cortendo and ATL shall meet (by video or telephone conference) within 7 days after the date of such notice to attempt to work out an appropriate and mutually acceptable resolution prior to pursuing other remedies under this agreement;

 

(ii)                               if Cortendo disagrees with ATL’s claim, then Cortendo shall so notify ATL in writing within 14 days after receipt of ATL’s notice stating in reasonable detail its basis for disputing ATL’s claim, in which event either party may refer the

 

28

 

matter to an Independent Expert under clause 24 to determine whether or not Cortendo has used Commercially Reasonable Efforts and (if applicable) a reasonable timeframe within which Cortendo must correct such failure to use Commercially Reasonable Efforts (taking into account the timeframes set out in the Development Plan);

 

(iii)                            if Cortendo does not correct such alleged failure either:

 

(A)                            within 60 days after notice of such alleged failure from ATL in the event Cortendo does not dispute ATL’s allegation of failure to use Commercially Reasonable Efforts in accordance with clause 7.8(a)(i), 7.8(b) or 7.8(d), as applicable; or

 

(B)                            within the period specified by the Independent Expert in the event Cortendo disputes ATL’s allegation of failure to use Commercially Reasonable Efforts in accordance with clause 7.8(a)(i), 7.8(b) or 7.8(d), as applicable  but the Independent Expert determines that Cortendo has failed to use Commercially Reasonable Efforts,

 

then ATL shall have the right to terminate this agreement in accordance with clause 18.4.

 

7.9                            Referral of enquiries

 

Cortendo must promptly refer all enquiries it receives in relation to the Technology or any ATL1103 Products outside the Territory or outside the Field to ATL.

 

7.10                     Costs

 

Cortendo is solely responsible for all costs and expenses relating to Exploitation of the Technology, except as otherwise specifically provided in this agreement.

 

7.11                     Funding Obligation

 

Cortendo shall exercise commercially reasonable efforts to (a) take all necessary actions within one year after the Start Date to effect the listing of either (i) Cortendo’s common stock, par value Swedish Krona 1 per share (the Common Stock), or (ii) American Depository Receipts representing the Common stock (ADRs) on the Nasdaq Global Market or the NYSE or, if listing on neither of these stock markets is available, on the Nasdaq Capital Market, (b) take all actions necessary to register such class of securities under the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, and (c) to the extent applicable, to cause the registration of the Common Stock or issuance of such ADRs, if applicable, and obtain all required approvals for the listing of the Common Stock or ADRs representing the Common Stock with the applicable U.S. trading market.

 

8.                                 Technology transfer arrangements

 

8.1                            Transfer of Technology

 

ATL must:

 

(a)                              introduce Cortendo to ATL’s manufacturer of ATL1103 so that Cortendo can enter into an agreement with that manufacturer to purchase quantities of ATL1103 for all regulatory, clinical, development and commercialisation activities contemplated under this agreement;

 

(b)                              supply to Cortendo any information or documentation reasonably required by Cortendo in order to Exploit the Technology as contemplated by this agreement; and

 

29

 

(c)                               provide Cortendo with reasonable assistance from ATL’s personnel, including technical and scientific personnel, in respect of Cortendo’s Exploitation of the Technology as contemplated by this agreement,

 

as reasonably requested by Cortendo, and provided that ATL can do so without breaching any obligation to any third party (including ISIS) or any Laws, provided that ATL shall use reasonable endeavours to obtain such rights from any such third party.

 

8.2                            Costs of Technology transfer

 

(a)                              Support and assistance to be provided by ATL to Cortendo pursuant to clause 8.1 shall be provided at no cost to Cortendo, up to a maximum of [****] ([****]) hours per week and [****] ([****]) hours in the aggregate, for six (6) months after the Start Date; provided that Cortendo shall reimburse ATL for all substantiated out-of-pocket costs (including Third Party fees for services) incurred by ATL relating to the foregoing assistance and support provided to Cortendo that are approved in advance in writing by Cortendo.

 

(b)                              For any time in excess of [****] ([****]) hours in any given week, or in excess of [****] ([****]) hours in the aggregate, and for any time spent after six (6) months after the Start Date, Cortendo must reimburse ATL for all reasonable costs (including the costs of its personnel’s time, calculated at the ATL FTE Rate) incurred by or on behalf of ATL in providing information, documentation or assistance under clause 8.1.

 

(c)                               Cortendo must reimburse ATL for its out of pocket expenses and all reasonable costs (including the costs of its personnel’s time, calculated at the ATL FTE Rate) incurred by or on behalf of ATL in undertaking the ATL1103 higher dose study described in Schedule 3; and

 

(d)                              Cortendo must reimburse ATL in accordance with paragraphs (b) and (c) within 30 days after ATL gives Cortendo an invoice, together with a breakdown of the time it has spent providing support and assistance to Cortendo under clause 8.1 and its out of pocket costs, which shall not be submitted more frequently than once each Quarter.

 

9.                                 Payment

 

9.1                            Licence fee

 

(a)                              Within 15 days of the Start Date, Cortendo will pay to ATL a licence fee of US$3 million.

 

(b)                              The amount of the fee payable under paragraph (a) is not consideration for a periodical supply, but consideration for the entering into of this agreement, and accordingly, no part of the amount of that fee is repayable by ATL to Cortendo in the event that this agreement is terminated earlier than its anticipated duration, or otherwise.

 

9.2                            Royalty

 

(a)                              Within 45 days after the end of each Quarter, Cortendo will pay to ATL a royalty calculated as follows:

 

	
 
    	
 
    	
Royalty
    	
 
    
	
Net Sales
    	
 
    	
If In-Human Trial
   Milestone was a 
   Phase III Trial
    	
 
    	
If In-Human Trial
   Milestone was a 
   Further 
   Phase II B Trial
    	
 
    
	
For that portion   of Net Sales in any Calendar Year of up to and including US$[****]
    	
 
    	
[****]
    	
%
    	
[****]
    	
%
    

 

30

 

	
For that portion   of Net Sales in any Calendar Year of above US$[****] and up to and including   US$[****]
    	
 
    	
[****]
    	
%
    	
[****]
    	
%
    
	
For that portion   of Net Sales in a Calendar Year of above US$[****] and up to and including   US$[****]
    	
 
    	
[****]
    	
%
    	
[****]
    	
%
    
	
For that portion   of Net Sales in a Calendar Year of above US[****] and up to and including US$[****]
    	
 
    	
[****]
    	
%
    	
[****]
    	
%
    
	
For that portion   of Net Sales in a Calendar Year of above US$[****]
    	
 
    	
[****]
    	
%
    	
[****]
    	
%
    

 

For example, if the In-Human Trial Milestone event is a Phase III Milestone, and if aggregate Net Sales of all ATL1103 Products in the Territory is US$[****] in a particular Calendar Year, then royalties payable by Cortendo will be equal to US$[****] ([****]% of the first US$[****]) + ([****]% of the next US$[****]) + ([****]% of the next US$[****]) + ([****]% of the next US$[****]).

 

(b)                              On a country-by-country and ATL1103 Product-by-ATL1103 Product basis upon the later of (i) the expiration of the last-to-expire Valid Claim of a Licensed Patent; and (ii) the expiration of regulatory exclusivity (e.g., in the U.S., pursuant to Hatch-Waxman Act or the Orphan Drug Act, and in other countries, comparable Laws), the royalty rates set forth in clause 9.2(a) shall be reduced by [****] percent ([****]%) for such ATL1103 Product in such country beginning with sales in the first full Calendar Quarter after such date.

 

(c)                               In addition to any reduction in royalties pursuant to clause 9.2(b), on a country-by-country and ATL1103 Product-by-ATL1103 Product basis upon the sale of a Generic Equivalent of such ATL1103 Product in a country, the royalty rates set forth in clause 9.2(a) (as reduced pursuant to clause (b)) shall be reduced by a further [****] percent ([****]%) for such ATL1103 Product in such country beginning with sales in the first full Calendar Quarter after such date (so if both clause 9.2(b) and 9.2(c) apply, the applicable royalty rates will range from [****]% to [****]%).

 

(d)                              Generic Equivalent shall mean, with respect to an ATL1103 Product, a generic pharmaceutical product that is therapeutically equivalent to such ATL1103 Product, where “therapeutically equivalent” means: (i) for purposes of the United States, an AB rating is assigned to the product’s entry in the list of drug products with effective approvals published in the then-current edition of FDA’s publication “Approved Drug Products with Therapeutic Equivalence Evaluations” and any current supplement to the publication (also known as the Orange Book) referred to in 21 C.F.R. 314.3 and such product is covered by an Abbreviated New Drug Application (as defined in the applicable Laws in the U.S.); and (ii) for purposes of other countries in the Territory, a rating equivalent to the FDA’s AB rating is assigned to the product by that country’s Regulatory Authority.

 

(e)                               In those Calendar Quarters where Net Sales for the Calendar Year reach the sales tier thresholds as outlined in clause 9.2(a), Net Sales (for sales in such country(ies) with the reduced royalty rates as provided in clause 9.2(b) and/ or 9.2(c), as applicable) shall, for the purposes of the royalty rate reduction pursuant to clause 9.2(b) and/ or 9.2(c) be allocated to such country(ies) in any given Calendar Quarter such that half of the Net Sales for such country(ies) in such Calendar Quarter shall be allocated to the lower applicable royalty rate and half the Net Sales for such country(ies) in such Calendar

 

31

 

Quarter shall be allocated to the higher applicable royalty rate.  For example, if the In-Human Trial Milestone was a Phase III Trial, and if for the second Calendar Quarter of a given Calendar Year, the aggregate Net Sales of an ATL1103 Product in the Territory, including Country A where Cortendo was entitled to a credit against royalties of [****]% pursuant to clause 9.2(b), were US$[****] for the Calendar Year and the Net Sales in Country A for such Calendar Quarter were US$[****], the royalty due in Country A would be US$[****] ([****]% of US$[****] plus [****]% of US$[****]).

 

(f)                                The obligation to pay royalties to ATL under this clause 9.2 is imposed only once with respect to the same unit of ATL1103 Product, regardless of the number of Licensed Patents or Other ATL Rights pertaining thereto.

 

9.3                            Third Party IP Rights

 

(a)                              If Cortendo considers, in its reasonable business judgment, that it must obtain one or more licences under any Third Party IP Rights that, in the absence of such licence(s), would be infringed by the exercise of the Licence in any country in the Territory, then Cortendo must notify ATL in writing of the proposed licence of Third Party IP Rights (including details of why it considers that such licence is necessary and the terms on which it proposes to obtain such a licence).

 

(b)                              If ATL agrees, acting reasonably, that such a licence is necessary (and that the terms of the proposed licence are reasonable), then the royalties paid by Cortendo or its Sub-Licensees under such a licence to those Third Party IP Rights in such country shall be deducted from the royalties due to ATL for such ATL1103 Product in such country.

 

(c)                               If ATL does not agree, acting reasonably, that such a licence is necessary (or that the terms of the proposed licence are reasonable), then either party may refer the matter to an Independent Expert for resolution under clause 24.

 

9.4                            Payments under the ISIS Agreement

 

For the avoidance of doubt, subject to clauses 19.3(b) and 19.3(c), ATL shall be solely responsible for all payments to be made under or in connection with the ISIS Agreement relating to ATL1103 and ATL1103 Products, including without limitation all royalties payable to Third Parties and royalties and future milestone payments due to ISIS relating to same.

 

9.5                            Royalty statement

 

(a)                              At the same time that it makes a payment under clause 9.2, Cortendo must give ATL a written statement setting out in detail how the amount payable was determined in the relevant Quarter.

 

(b)                              ATL shall have the right to provide copies of such royalty statements to ISIS, provided that such information shall be treated as Confidential Information of Cortendo and ATL shall require ISIS to abide by the terms of clause 13 with respect thereto.

 

9.6                            Milestone fee

 

Within:

 

(a)                              30 days after the achievement of a Clinical and Regulatory Milestone; and

 

(b)                              30 days after the achievement of a Commercial Milestone,

 

Cortendo must pay to ATL the applicable Milestone Fee.

 

9.7                            Payment without deduction

 

All payments under this agreement must be paid to a bank account provided by ATL or Cortendo (as applicable), and shall be made in U.S. Dollars. If payments are made to Cortendo or ATL (as

 

32

 

applicable)  in another currency than the U.S. Dollar, Cortendo or ATL (as applicable) shall convert them into U.S. Dollars for the purpose of the calculation of royalties or other amounts due by applying the average daily interbank exchange “ask” rate as published on www.oanda.com for the calendar quarter for which payment to ATL is due, or in the case of Sub-Licensees, using the exchange rate methodology such Sub-Licensee generally applies with respect to other products. Such payments shall be made free and clear of and without deduction in respect of any demand, set-off, counter claim or other dispute except as otherwise specifically provided in this agreement (eg, with respect to withholding tax obligations pursuant to clause 22).

 

9.8                            Taxes

 

(a)                              Each party shall be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the efforts of the parties under this agreement.

 

(b)                              The parties agree to cooperate with one another and use reasonable efforts to manage withholding tax or similar obligations in respect of royalties, milestone payments, and other payments made by Cortendo to ATL under this agreement.

 

(c)                               Each party shall provide the other with reasonable assistance to enable the recovery, as permitted by applicable Laws, of withholding taxes, value added taxes, or similar obligations resulting from payments made under this agreement, such recovery to be for the benefit of the party bearing such withholding tax or value added tax.

 

9.9                            Late payment

 

If Cortendo fails to pay an amount due under this agreement on the due date, Cortendo must pay interest on that amount at the Default Rate.  ATL’s right to require payment of interest under this clause 9.9 does not affect any other rights or remedies it may have relating to any failure to pay an amount due under this agreement.

 

9.10                     Accounts and records

 

Cortendo must maintain, and must ensure that each Sub-Licensee maintains, separate and accurate accounts and records containing all data necessary for the calculation of the amounts payable by Cortendo under this agreement.  Cortendo must keep, and must ensure that each Sub-Licensee keeps, those accounts and records for seven years following the end of the Calendar Year to which they relate.

 

10.                         Initial Shares and Milestone Shares

 

10.1                     Application for Initial Shares and Milestone Shares

 

(a)                              The execution of this agreement by Cortendo constitutes:

 

(i)                                  an irrevocable application by Cortendo to subscribe for the Initial Shares on the Initial Shares Completion Date at the Initial Shares Subscription Price; and

 

(ii)                               subject to the satisfaction or waiver (in accordance with the terms of this agreement) of the Milestone Shares Condition, an irrevocable application by Cortendo to subscribe for the Milestone Shares on the Milestone Shares Completion Date at the Milestone Shares Subscription Price.

 

(b)                              The Initial Shares and the Milestone Shares will be issued subject to ATL’s constitution.

 

10.2                     Initial Shares

 

(a)                              On the Initial Shares Completion Date, Cortendo must pay to ATL (in cleared funds) the Initial Shares Subscription Price.

 

(b)                              Subject to receiving the Initial Shares Subscription Price, ATL must:

 

33

 

(i)                                  issue the Initial Shares to Cortendo on the Initial Shares Completion Date;

 

(ii)                               enter Cortendo into ATL’s Issuer Sponsored Subregister as the holder of the Initial Shares on the Initial Shares Completion Date; and

 

(iii)                            within 5 Business Days after the day on which the Initial Shares are issued, give to ASX a cleansing notice under sections 708A(5) and (6) of the Corporations Act.

 

10.3                     Milestone Shares

 

(a)                              On the Milestone Shares Completion Date, Cortendo must pay to ATL (in cleared funds) the Milestone Shares Subscription Price.

 

(b)                              Subject to receiving the Milestone Shares Subscription Price, ATL must:

 

(i)                                  issue the Milestone Shares to Cortendo on the Milestone Shares Completion Date;

 

(ii)                               enter Cortendo into ATL’s Issuer Sponsored Subregister as the holder of the Milestone Shares on the Milestone Shares Completion Date; and

 

(iii)                            subject to clause 10.3(c), within 5 Business Days after the day on which the Milestone Shares are issued, give to ASX a cleansing notice under sections 708A(5) and (6) of the Corporations Act.

 

(c)                               if ATL forms the view, acting reasonably, that it is unable to give ASX a cleansing notice under clause 10.3(b)(iii), due to ATL being unable to include excluded information (as defined in section 708A(7) of the Corporations Act) in an ASX cleansing notice, ATL may elect not to give such a notice and must communicate such decision to Cortendo prior to the expiry of the 5 Business Day period referred to in that clause. For the avoidance of doubt, the failure to give such a notice does not affect the validity of the issue of the Milestone Shares, however Cortendo acknowledges that it will be restricted from any on-sale of the Milestone Shares during the Moratorium Period (in addition to the restrictions imposed by clause 10.7.

 

10.4                     Compliance with the Corporations Act

 

(a)                              In the event that the issue of the Milestone Shares in accordance with this agreement would, in and of itself (but for this clause 10.4), result in any party having a relevant interest in more than 20% of the issued voting shares of ATL or having voting power of more than 20% in ATL, Cortendo must direct ATL to (and if so directed, ATL must as so directed) issue only up to the maximum number of Milestone Shares to Cortendo that could be issued to Cortendo without any party having a relevant interest in more than 20% of the issued voting shares of ATL or having voting power of more than 20% in ATL.

 

(b)                              For the avoidance of doubt, despite the non-issuance of any Shortfall Shares to Cortendo, the parties acknowledge and agree that:

 

(i)                                  on the Milestone Shares Completion Date, Cortendo must pay to ATL (without set off, deduction or requirement for demand) the Milestone Shares Subscription Price; and

 

(ii)                               there shall be no reduction in the Milestone Shares Subscription Price.

 

10.5                     Lodgement of application for official quotation

 

ATL must:

 

(a)                              in respect of the Initial Shares:

 

34

 

(i)                                  on or before the Initial Shares Completion Date, apply to ASX for the Initial Shares to be granted official quotation (as that expression is used in the Listing Rules); and

 

(ii)                               use all reasonable endeavours to ensure that the Initial Shares are quoted unconditionally by ASX as soon as possible following the Initial Shares Completion Date; and

 

(b)                              in respect of the Milestone Shares:

 

(i)                                  on or before the Milestone Shares Completion Date, apply to ASX for the Milestone Shares to be granted official quotation (as that expression is used in the Listing Rules); and

 

(ii)                               use all reasonable endeavours to ensure that the Milestone Shares are quoted unconditionally by ASX as soon as possible following the Initial Shares Completion Date.

 

10.6                     Warranties

 

(a)                              Cortendo represents and warrants to ATL and agrees that on the Start Date and separately on each of the Initial Shares Completion Date and Milestone Shares Completion Date that:

 

(i)                         it is a person to whom an offer of the Subscription Shares for issue may be made without a disclosure document (as defined by the Corporations Act) on the basis that it is a professional investor or sophisticated investor (within the meaning of section 708 of the Corporations Act) exempt from the disclosure requirements of Part 6D.2 of the Corporations Act or otherwise a person to whom an offer of the Subscription Shares for issue may be made without disclosure to investors in reliance on one or more exemptions in section 708 of the Corporations Act;

 

(ii)                      in connection with its entry into this agreement and its subscription for the Subscription Shares under this agreement, it is in compliance with all relevant Laws and regulations (including, without limitation, the requirements of the Foreign Acquisitions and Takeovers Act 1975 (Cth) and Division 3 of Part 7.10 of the Corporations Act) and will not cease to be in compliance by performing its obligations under this agreement;

 

(iii)                   it has made its own enquiries and relied upon its own assessment of the Subscription Shares and has conducted its own investigation with respect to the Subscription Shares including, without limitation, any restrictions on re-sale of the Subscription Shares (including the restrictions in sections 707(2), 707(3) and 707(5) of the Corporations Act) and the particular tax consequences of subscribing, owning or disposing of the Subscription Shares in light of its particular situation, as well as any consequences arising under the laws of any jurisdiction, and has decided to agree to subscribe for the Subscription Shares based on its own enquiries;

 

(iv)                  it is not acquiring the Subscription Shares with the purpose of selling or transferring the Subscription Shares, or granting, issuing or transferring interests in, or options over, the Subscription Shares;

 

(v)                     this agreement does not constitute financial product advice or a recommendation to subscribe for any Subscription Shares and that in negotiating and entering into this agreement ATL has not had regard to its particular objectives, financial situation and needs; and

 

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(vi)                  it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of subscribing for, and acquiring, the Subscription Shares for itself and for each other person for whose benefit it will be subscribing for, and acquiring, the Subscription Shares, and it has determined that the Subscription Shares are a suitable investment for itself and each such other person, both in nature and number of the Subscription Shares.

 

(b)                              Cortendo acknowledges that ATL and its Related Bodies Corporate are entitled to, and will, rely upon the truth and accuracy of the acknowledgements, representations, warranties and agreements given by Cortendo in this clause 10.6.

 

(c)                               ATL represents and warrants to Cortendo and agrees that on the Start Date and separately on each of the Initial Shares Completion Date and Milestone Shares Completion Date that the Subscription Shares can lawfully be offered, issued and allotted to Cortendo under all applicable laws without the need for any registration, lodgement or other formality (including, without limitation, preparation or lodgement of any prospectus or other disclosure document);

 

(d)                              ATL acknowledges that Cortendo is entitled to, and will, rely upon the truth and accuracy of the acknowledgements, representations, warranties and agreements given by ATL in this clause 10.6.

 

10.7                     Escrow restrictions

 

Subject to clause 10.8, Cortendo must not, during the relevant Moratorium Period:

 

(a)                              Deal in all or any part of the relevant Holding or Deal in any interest or right in respect of all or any part of the relevant Holding;

 

(b)                              create or agree or offer to create any Encumbrance over or affecting all or any part of the relevant Holding; or

 

(c)                               do or omit to do any act which would have the effect of transferring effective ownership or control of all or any part of the relevant Holding.

 

10.8                     Holding lock

 

(a)                              On the Initial Shares Completion Date and Milestone Shares Completion Date (as applicable), the relevant Holding will be registered on the Issuer Sponsored Subregister maintained by ATL.  During the relevant Moratorium Period, Cortendo must not request that the relevant Holding be registered on the CHESS Subregister.

 

(b)                              Subject to the ASTC Settlement Rules, ATL will register the Holding in its Issuer Sponsored Subregister subject to a holding lock (as defined in the ASTC Settlement Rules).  Cortendo agrees to the application of this holding lock during the relevant Moratorium Period, including where the last paragraph of clause 10.9 applies.

 

10.9                     Takeovers and merger by scheme of arrangement

 

During the relevant Moratorium Period, ATL will not release Cortendo from the restrictions under clause 10.7 or procure the removal of the holding lock applied under clause 10.8 on all or part of a relevant Holding, except in the following cases:

 

(a)                              in the case of a takeover bid under Chapter 6 of the Corporations Act, where each of the following conditions are met:

 

(i)                                  the offer is for all issued Shares;

 

(ii)                               the purpose of the Dealing is to accept the takeover bid; and

 

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(iii)                            holders of at least 50% of the Shares which are then on issue (excluding the Holding) have accepted the takeover bid; and

 

(b)                              in the case of a merger by way of scheme of arrangement under Part 5.1 of the Corporations Act, approved under section 411(4)(b) of the Corporations Act.

 

If the Dealing occurs under clause 10.9(a) and offers under the takeover bid are not or do not become, free from all defeating conditions, the Shares included in the Holding immediately prior to the Dealing must be returned to that Holding and will continue to be subject to the restrictions under clause 10.7 for the remainder of the relevant Moratorium Period.

 

10.10              Appointment of escrow agent

 

(a)                              During the relevant Moratorium Period, if a holding lock under clause 10.8 cannot for any reason be applied to a Holding, at the request of ATL, Cortendo must procure that the relevant Holding is Converted to a CHESS Holding sponsored by a Participant nominated by ATL (the escrow agent) on the following terms:

 

(i)                                  the escrow agent is agent for Cortendo subject to the terms of this agreement and any agreement entered into under clause 10.10(b);

 

(ii)                               the escrow agent will not initiate, effect, allow, permit or facilitate any Dealing with the relevant Holding inconsistent with the restrictions in this clause 10; and

 

(iii)                            the escrow agent will not comply, and not be required to comply, with any instruction given to it by any party that is contrary to the terms of this agreement and any agreement entered into under clause 10.10(b).

 

(b)                              If clause 10.10(a) applies, at the request of ATL, Cortendo must immediately enter into an agreement with the escrow agent on terms consistent with this clause 10.

 

10.11              Breach and prospective breach by Cortendo

 

If Cortendo breaches this clause 10, or if ATL believes on reasonable grounds that Cortendo may breach this clause 10:

 

(a)                              ATL will take the steps necessary to prevent the breach, enforce this clause 10 or rectify the breach (as the case may be);

 

(b)                              ATL may refuse to acknowledge, deal with, accept or register any sale, assignment, transfer or conversion of any of the Holding (this is in addition to other rights and remedies of ATL); and

 

(c)                               from the date of the breach, Cortendo ceases to be entitled to any dividends or distributions in respect of the Holding while the breach persists.

 

Cortendo acknowledges and agrees that damages may be an inadequate remedy for ATL, and that ATL may be entitled to seek an injunction or other equitable relief.

 

10.12              Application of Listing Rules

 

To the extent of any inconsistency between this clause 10 and the Listing Rules, the Listing Rules prevail.

 

10.13              No Restriction on Acquiring Shares

 

Notwithstanding anything in this clause 10 to the contrary, Cortendo is not prohibited from purchasing or acquiring, directly or through options, warrants, convertible debt or otherwise, any Shares at any time during the term of this agreement or thereafter to the extent that such purchase or acquisition is not otherwise prohibited by law.

 

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11.                         Audits

 

11.1                     Access

 

(a)                              Cortendo must promptly provide access to its (and, as reasonably required by ATL, procure access to its Sub-Licensees’) books and records (including records required to be kept under clause 9.10) to enable an independent certified public accountant selected by ATL or ISIS to conduct audits of any fees, charges, royalties or other amounts paid or payable by Cortendo to ATL under this agreement.

 

(b)                              ATL must promptly provide access to its books and records to enable an independent certified public accountant selected by Cortendo to conduct audits of any fees or other amounts paid or payable by ATL to Cortendo pursuant to clause 3.3(c), 8.2 or 19.1(i).

 

(c)                               Any such auditor shall enter into a confidentiality agreement with the audited party and shall not disclose the audited party’s Confidential Information, except to the extent such disclosure is necessary to verify the accuracy of the financial reports or invoiced furnished by the audited party or the amount of payments due by one party to the other party under this agreement. The auditor will disclose to the other party only whether the royalty reports or invoices, as the case may be, are correct or incorrect, the specific details concerning any discrepancies, and the corrected amount of Net Sales or invoices.

 

11.2                     Rules regarding audits

 

Any audit under this clause 11:

 

(a)                              will be conducted expeditiously, efficiently and during reasonable business hours; and

 

(b)                              will be conducted upon reasonable prior written notice.

 

11.3                     Response to audit report

 

If the auditing party requires, the other party must respond to the auditing party on all matters raised as issues in any audit report produced pursuant to this clause 11 within 30 days after receipt of that audit report (or such longer period as may be agreed in writing between the parties).

 

11.4                     Implementation of audit recommendations

 

Where an audit conducted under this clause 11 establishes a failure to comply with this agreement by Cortendo, and Cortendo does not dispute the findings of the auditor pursuant to clause 23 or 24 (as applicable), Cortendo must implement such recommendations of the relevant auditors (or another solution which rectifies the breach to the satisfaction of ATL) as are necessary to ensure that any breaches are rectified to the extent that they are capable of remedy and that Cortendo can and will comply with its obligations under this agreement for the remainder of the Term.

 

11.5                     Underpayment

 

(a)                              If an audit conducted by ATL or ISIS under this clause 11 demonstrates that any fees, charges, royalties or other amounts paid to ATL as at the date of the audit were incorrect, Cortendo must promptly pay ATL:

 

(i)                                  the amount of any underpayment plus interest calculated at the Default Rate; and

 

(ii)                               if Cortendo has underpaid by more than 5%, ATL’s and ISIS’ costs of conducting the relevant audit.

 

(b)                              If an audit conducted by Cortendo under this clause 11 demonstrates that the amount of any invoices issued to Cortendo by ATL for any fees or other amounts paid to ATL as at the date of the audit were incorrect, ATL must promptly reimburse Cortendo:

 

(i)                                  the amount of any overpayment plus interest calculated at the Default Rate; and

 

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(ii)                               if ATL has over-invoiced by more than 5%, Cortendo’s costs of conducting the relevant audit.

 

12.                         Infringement of Intellectual Property Rights

 

12.1                     Monitoring infringement

 

Cortendo must monitor, and must ensure that each Sub-Licensee monitors, infringement of each Patent included in the Technology throughout the Territory.

 

12.2                     Notification of infringement or Claim

 

Each party must:

 

(a)                              notify the other party immediately if it becomes aware of any:

 

(i)                                  actual or threatened infringement, unauthorized use, misappropriation or ownership claim by a Third Party by reason of the use, manufacture, stockpiling or sale of a product in the Territory that relates to any of the Intellectual Property Rights in the Technology, including any Joint IP (an Infringement); or

 

(ii)                               an allegation or Claim (written or otherwise) by a Third Party, whether raised directly or by way of counterclaim or affirmative defence, that the use of any of the Technology by ATL, Cortendo or any Sub-Licensee, or by the manufacture, use, offer for sale, sale or importation of ATL1103 and/or any ATL1103 Product in the Territory, or the proposed manufacture, use or sale of ATL1103 and/or any ATL1103 Product in the Territory infringes any third party rights (each, an Infringement Claim);

 

(b)                              include in a notification given under paragraph (a) full particulars of the infringement, allegation or Claim, to the extent known by such party; and

 

(c)                               ensure that each Sub-Licensee gives Cortendo such notification and particulars that Cortendo requires to ensure that Cortendo can notify ATL of any event referred to in paragraph (a)(i) or (a)(ii) of which a Sub-Licensee becomes aware.

 

12.3                     Enforcement of Infringement

 

(a)                              As between ATL and Cortendo, Cortendo will have the first right, but not the obligation, at its sole cost and expense, and in its sole discretion, to take action in relation to any Infringement solely related to the Field.  Cortendo shall have a period of 90 days after its receipt or delivery of notice under clause 12.2 to elect to so enforce the Technology in the Territory, and 30 days thereafter to commence such enforcement (or to settle or otherwise secure the abatement of such Infringement).  If Cortendo fails to commence a suit to enforce the applicable Technology or to settle or otherwise secure the abatement of such Infringement within such period, then ATL shall have the right, but not the obligation, to commence a suit or take action to enforce such Technology against such Infringement in the Territory at its own cost and expense; provided that ATL shall consider in good faith all reasonable comments of Cortendo with respect to such suit or action, including with respect to not pursuing any such suit or action.

 

(b)                              The costs and expenses of any Infringement action (including fees of attorneys and other professionals) shall be borne by the party instituting the action. Any award, damages or other monetary awards recovered (whether by way of settlement or otherwise) shall be applied first to reimburse the parties for all costs and expenses incurred by the parties with respect to such action on a pro rata basis and, if after such reimbursement any funds remain from such award, they shall be retained by the party instituting such action; provided that if Cortendo is the controlling party, such remaining amount of such award

 

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shall be included in Net Sales.  The party instituting an action shall incur no liability to the other party as a consequence of any Infringement litigation pursuant to this clause 12.3 or any unfavourable decision resulting therefrom including any decision holding a patent invalid or unenforceable.

 

12.4                     Defence of Patents included in the Technology

 

Cortendo has the first right to control the defence of challenges to the validity, title, or enforceability of any Patent included in Technology (including any Patent included in Joint IP) brought by a Third Party within the Territory (e.g., declaratory judgment actions, nullity actions, or any post-grant proceedings, such as oppositions, inter-partes reviews, post-grant reviews, reexamination requests or interferences) except insofar as such action is a counterclaim to or defence of, or accompanies a defence of, an action for Infringement against a Third Party under clause 12.3, in which case the provisions of clause 12.3 shall govern.  If Cortendo decides that it does not wish to defend against such action, then ATL shall have a backup right to assume defence of such Third Party action at its own expense.  Each party shall be responsible for all reasonable and documented costs and expenses incurred by such party in any defence controlled by such Party under this clause 12.4.  The controlling party shall permit the non-controlling party to participate in the proceeding to the extent permissible under Laws, and to be represented by its own counsel in such proceeding, at the non-controlling party’s expense.  Any awards or amounts received in defending any such Third Party action shall be allocated between the parties as provided in clause 12.3(b).

 

12.5                     Defence of Infringement Claims

 

(a)                              If a Third Party asserts, whether raised directly or by way of counterclaim or affirmative defence, that any Intellectual Property Rights owned by it is infringed by either party’s performance of its obligations under this agreement or by the manufacture, use, offer for sale, sale or importation of any ATL1103 Product in the Territory, or the proposed manufacture, use or sale of any ATL1103 Product in the Territory, or if a party otherwise becomes aware of a potential infringement of a Third Party IP Rights (each, an Infringement Claim), the party first having knowledge of such an Infringement Claim shall promptly provide the other party with notice of same and the related facts in reasonable detail.

 

(b)                              Subject to the indemnification obligations of each party pursuant to clause 16 (which shall, if applicable, control any such Infringement action), each party will be responsible for and will control the defence and/or settlement of its own Infringement Claims.

 

(c)                               Promptly following receipt of notice of any Infringement Claim by any party, the parties shall enter into a mutually agreeable joint defence agreement specifically with respect to such Infringement Claim. Such agreement shall provide for the mutual cooperation of both parties (including making relevant witnesses and documents available), the exchange of information relating to such claims of infringement and the validity of such Third Party IP Rights and how the parties should proceed with respect to the continuation of the manufacture, marketing and sale of the affected ATL1103 Product(s) at issue.

 

12.6                     Settlement of Claims; Cooperation

 

In connection with any action undertaken pursuant to any of clause 12.3, 12.4 or 12.5:

 

(a)                              each party shall execute all necessary and proper documents, take such actions as shall be appropriate to allow the other party to institute, prosecute, and control such action and shall otherwise cooperate in the institution and prosecution of such action (including, without limitation, consenting to being named as a nominal party thereto);

 

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(b)                              each party shall provide to the controlling party reasonable assistance in such action, at such controlling party’s request and expense, including joining such action as a party plaintiff if required by applicable Laws to pursue such action.  The controlling party shall keep the other party regularly informed of the status and progress of efforts in such action and shall reasonably consider the other party’s comments on any such efforts.  The non-controlling party shall be entitled to separate representation in such matter by counsel of its own choice and at its own expense, but such party shall at all times cooperate fully with the controlling party; and

 

(c)                               without the prior written consent of the other party, which shall not be unreasonably withheld, conditioned or delayed, neither party shall settle any suit or action that it brought under any such clause involving Technology in any manner that would negatively impact such intellectual property or that would limit or restrict the ability of Cortendo to sell ATL1103 Products anywhere in the Territory.

 

13.                         Confidential Information

 

13.1                     Use and disclosure

 

A Recipient:

 

(a)                              may use Confidential Information of the Disclosing Party only for the purposes of this agreement (which includes the exercise of any rights or the performance of any obligations under this agreement);

 

(b)                              must keep confidential all Confidential Information of the Disclosing Party except:

 

(i)                                  for disclosure permitted under clause 13.2; and

 

(ii)                               to the extent (if any) the Recipient is required by Law to disclose any Confidential Information; and

 

(c)                               without limiting its obligations under paragraphs (a) and (b), must use commercially reasonable efforts to keep all Confidential Information of the Disclosing Party safe and secure, including all notes and other records prepared by the Recipient or its disclosees based on or incorporating any Confidential Information of the Disclosing Party and all copies of those notes and records.

 

13.2                     Permitted disclosure

 

A Recipient may disclose Confidential Information of the Disclosing Party to:

 

(a)                              officers and employees of the Recipient and its Affiliates, Sub-Licensees, agents, consultants and contractors to allow Exploitation of the Technology in accordance with this agreement (or for such parties to determine their interest in performing such activities);

 

(b)                              Governmental Authorities and other Regulatory Authorities to the extent that such disclosure is reasonably necessary (i) for filing or prosecuting Patents as contemplated by this agreement; in order to obtain approvals to conduct clinical trials, or to obtain and maintain Marketing Approvals, of an ATL1103 Product; or (iii) for prosecuting or defending litigation as contemplated by this agreement;

 

(c)                               to any bona fide potential or actual investor, lender, acquirer, merger partner, or other financial or commercial partner for the sole purpose of evaluating an actual or potential investment, acquisition or other business relationship; or

 

(d)                              if the Recipient is ATL, to ISIS solely as required under the terms of the ISIS Agreement,

 

provided that, before disclosure:

 

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(e)                               in the case of the Recipient’s officers and employees, they have been directed by the Recipient to keep confidential all Confidential Information of the Disclosing Party; and

 

(f)                                in the case of other persons, they have agreed in writing with the Recipient to comply with obligations in respect of Confidential Information at least as stringent as those imposed on the Recipient under this agreement for a period of at least ten (10) years, except in the case of disclosures under clause 13.2(c), the duration of such obligation shall be at least seven years,

 

(each a Direction).

 

13.3                     Recipient’s obligations

 

A Recipient must ensure that each person to whom it discloses Confidential Information under clause 13.2 complies with its Direction.  If a Recipient learns or believes that:

 

(a)                              a person to whom it has disclosed Confidential Information under clause 13.2 has not complied or may not comply with its Direction;

 

(b)                              any unauthorised person has come into possession of any part of the Confidential Information of the Disclosing Party;

 

(c)                               any person has made any improper or unauthorised use of the Confidential Information of the Disclosing Party; or

 

(d)                              any unauthorised person is doing any thing in contravention of rights that attach to and arise from the Confidential Information of the Disclosing Party,

 

then the Recipient must:

 

(e)                               immediately notify the Disclosing Party, including full particulars of the unauthorised possession, use or action;

 

(f)                                take all reasonable steps to prevent or stop the non-compliance or unauthorised possession, use or action; and

 

(g)                               provide to the Disclosing Party all assistance and information the Disclosing Party may reasonably request with respect to the unauthorised possession, use or action.

 

13.4                     Directions of ATL

 

Cortendo must comply, and must procure each Sub-Licensee to comply, with any reasonable directions provided to Cortendo by ATL in writing, at least 30 days in advance of any required implementation of such directions, in relation to preserving the confidentiality of any and all of ATL’s Confidential Information in the course of Cortendo or any Sub-Licensee commissioning the manufacture, supply or sale of any ATL1103 Products.

 

13.5                     Disclosure required by Law

 

If a Recipient determines that it is reasonably necessary, in compliance with applicable Laws, the Listing Rules or by other relevant securities and exchange requirements or other Governmental Authorities, court order, administrative subpoena or order, to disclose any Confidential Information of the Disclosing Party to a third person (including government), the Recipient must:

 

(a)                              before doing so:

 

(i)                                  notify the Disclosing Party; and

 

(ii)                               where practicable, before disclosing such Confidential Information, give the Disclosing Party a reasonable opportunity to take any steps that the Recipient considers necessary to protect the confidentiality of that information; and

 

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(b)                              notify the third person that the information is confidential to the Disclosing Party.

 

13.6                     Acknowledgments

 

(a)                              Without limiting ATL’s obligations under clause 8.1, Cortendo acknowledges that nothing in this clause 13 obliges ATL to disclose any information to Cortendo or update any Confidential Information that has previously been disclosed to Cortendo.

 

(b)                              Each Recipient acknowledges that:

 

(i)                                  the Disclosing Party may suffer commercial or other Loss if the Confidential Information of the Disclosing Party is used by any third party, or disclosed or made available to any third party by the Recipient other than in accordance with this agreement;

 

(ii)                               damages may be an inadequate remedy to protect the interests of the Disclosing Party if the Recipient or any of its permitted discloses breach the provisions of this clause; and

 

(iii)                            the Disclosing Party is entitled to seek and obtain injunctive relief or any other remedy, in any court, against the Recipient for breach of this clause 13.

 

13.7                     Information disclosed under the Non-Disclosure Agreement

 

The parties agree that, with effect from the Start Date:

 

(a)                              the Non-Disclosure Agreement is terminated; and

 

(b)                              all Confidential Information of a party disclosed under the Non-Disclosure Agreement constitutes Confidential Information of that party for the purposes of this agreement.

 

13.8                     Publications

 

(a)                              The obligations in this clause 13.8 do not limit a party’s right to publish or disclose information in the circumstances set out in clause 14.1(a)(ii).

 

(b)                              Each party recognises that the publication by either party of Data and other information regarding ATL1103 and ATL1103 Products, such as by public oral presentation, manuscript or abstract, may be beneficial to both parties provided such publications are subject to reasonable controls to protect Confidential Information.  Accordingly, the other party shall have the right to review and comment on any material proposed for public oral presentation or publication by a party that includes Data or other results of preclinical or clinical development of ATL1103 or any ATL1103 Product that has not previously been published or presented and/or includes any Confidential Information of such reviewing party.  Before any such material is:

 

(i)                                  submitted for publication, the publishing party shall deliver a complete copy to the other party at least 30 days prior to submitting the material to a publisher or initiating any other disclosure.  The reviewing party shall review any such material and give its comments to the publishing party within 20 days of the delivery of such material to the reviewing party; and

 

(ii)                               disclosed via public oral presentation, the disclosing party shall deliver a complete copy of the presentation materials and abstracts to the other party at least 20 days prior to the presentation.  The reviewing party shall review such materials and abstracts, and shall return such items as soon as practicable to the publishing party with its comments, if any, but in no event later than 15 days from the date of delivery to the reviewing party.

 

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The publishing or disclosing party shall comply with the reviewing party’s request to delete references to the reviewing party’s Confidential Information in any such material.  In addition, if any such publication or presentation contains patentable subject matter, then at the reviewing party’s request, the publishing or disclosing party shall either delete the patentable subject matter from such publication or presentation or delay any submission for publication, presentation or other public disclosure for a period of up to an additional 60 days so that appropriate patent applications may be prepared and filed.  In the event that either party needs to publish or present an abstract or other technical publication on a shorter time schedule, the parties shall cooperate to try to meet such accelerated deadline.

 

(c)                               Subject to clause 13.8(b), each party and its contractors, including without limitation clinical research organisations, shall have the right to publish results of all clinical trials of ATL1103 or any ATL1103 Product on such party’s clinical trial register, and such publication will not be a breach of the confidentiality obligations provided in this clause 13.

 

14.                         Publicity

 

14.1                     No statements without agreement

 

(a)                              Neither party may make any public statement or announcement, or issue any publication, press release or like statement, in relation to the subject matter or the terms of this agreement or the ISIS Agreement unless such statement, announcement, publication or press release:

 

(i)                                  is approved in writing by the other party prior to it being issued, published or otherwise distributed, as the case may be; or

 

(ii)                               is required by Law, the Listing Rules or by other relevant securities and exchange requirements or other Governmental Authorities, and, where practicable, before making or authorising it the party has:

 

(A)                            given reasonable prior notice to the other party of the proposed text of such announcement; and

 

(B)                            given the other party a reasonable opportunity to comment on its contents, and the requirement for it (except that in the case of a press release or governmental filing determined by such party, based on advice of counsel, to be required by Law, the disclosing party shall provide the other party with such advance notice as it reasonably can and shall not be required to obtain comments thereon).

 

(b)                              Neither party shall be required to seek the permission of the other party to repeat any information that has already been included in any public statement or announcement, publication, press release or like statement approved or otherwise permitted under this clause 14.1, provided such information remains accurate as of such time.

 

(c)                               The parties acknowledge that either or both parties may be obligated to file under applicable Laws a copy of this agreement with the relevant securities and exchange requirements or other Governmental Authorities.  Each party shall be entitled to make such a required filing, provided that it requests confidential treatment of the commercial terms and sensitive technical terms hereof and thereof to the extent such confidential treatment is reasonably available to such party.  In the event of any such filing, each party will provide the other party with a copy of this agreement marked to show provisions for which such party intends to seek confidential treatment and shall reasonably consider and incorporate the other party’s reasonable comments thereon to the extent consistent with

 

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the legal requirements, with respect to the filing party, governing disclosure of material agreements and material information that must be publicly filed. The filing party shall provide copies of any responses from any Governmental Authority or securities and exchange body to such confidential treatment request, and provide the other party with an opportunity to review and comment on any further responses thereto.

 

(d)                              The parties agree that on or after the Start Date, each party will issue a public statement or announcement in the form set out in Schedule 4.

 

(e)                               In the event that ATL is required to file a copy of this agreement under applicable Laws, ATL agrees to request confidential treatment in the form mutually agreed to by both parties prior to the Start Date.

 

14.2                     Advertising and other materials

 

Without limiting clause 14.1, and except as otherwise specifically permitted in this agreement, Cortendo must obtain ATL’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed,  before publicly using any advertising, written sales promotions, press releases or other publicity materials in which ATL’s name or ISIS’ name is used.

 

15.                         Warranties, covenants and liability

 

15.1                     No express warranties

 

Cortendo:

 

(a)                              acknowledges that, except as set out in clause 15.2 and clause 15.3:

 

(i)                                  ATL makes no express warranties under this agreement; and

 

(ii)                               neither ATL nor any person acting on its behalf has made any warranties,

 

including by way of example, no warranties in relation to:

 

(iii)                            the validity of any patent (except as expressly set forth in clause 15.3);

 

(iv)                           the performance or capabilities of the Technology;

 

(v)                              the potential profits from Exploitation of the Technology; or

 

(vi)                           the likelihood of obtaining any Marketing Approval;

 

(b)                              warrants to ATL that Cortendo has carried out its own investigations concerning the Technology and the potential for its Exploitation in the Territory and in the Field, and has not relied on any representations or statements made by or on behalf of ATL in that regard, except as expressly set out in clause 15.2 and clause 15.3;

 

(c)                               acknowledges and agrees that any statement, representation, term, warranty, condition, promise or undertaking in relation to the Technology or the potential for its Exploitation in the Territory and in the Field that has been made, given or agreed to by ATL or any person acting on its behalf of or associated with it in any prior negotiation, arrangement, understanding or agreement has no effect except to the extent expressly set out or incorporated in this agreement; and

 

(d)                              acknowledges that the warranties set out in this clause 15 are given subject to and are qualified by the matters that are disclosed in this agreement, the Disclosure Letter, the Due Diligence Materials and the independent searches conducted by Cortendo in relation to ATL and ATL1103 as part of its due diligence process on or before the Start Date.

 

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15.2                     Mutual warranties

 

Each party hereby warrants to the other that, as of the Start Date:

 

(a)                              it is a company or corporation duly organized, validly existing, and in good standing under the Laws of the jurisdiction in which it is incorporated; and

 

(b)                              it has the power to enter into this agreement, and that the execution and performance of this agreement by it has been duly and validly authorised by all necessary action for this agreement to be binding upon it.

 

15.3                     Additional warranties and covenants of ATL

 

ATL hereby (1) warrants to Cortendo that, as of the Start Date, and (2) where expressly stated, covenants to Cortendo that, during the term of this agreement:

 

(a)                              Title; Control; Encumbrances.  ATL is:

 

(i)                                  the sole owner, or the exclusive licensee, in respect of Exploitation in the Field throughout the Territory for the Purpose, of the entire right, title and interest in and to all Licensed Patents in existence as of the Start Date, and has not granted, assigned or conveyed to any Third Party any rights under any Licensed Patents in existence as of the Start Date that would be inconsistent with the rights granted to Cortendo under this agreement; and

 

(ii)                               to ATL’s Knowledge, ATL is the sole owner of the entire right, title and interest in and to all Other ATL Rights in existence as of the Start Date, and has not granted, assigned, or conveyed to any Third Party any rights under any Other ATL Rights in existence as of the Start Date that would be inconsistent with the rights granted to Cortendo under this agreement,

 

in each case, free and clear from any mortgages, pledges, liens, security interests, conditional and instalment sale agreements, encumbrances, charges or claims of any kind.

 

(b)                              Right to Grant Licence.  ATL has the full and legal right and authority to grant the Licence to Cortendo.

 

(c)                               Schedule 1.

 

(i)                                  Schedule 1 is a complete and accurate list of all patents and patent applications owned or controlled by ATL as of the Start Date that claim ATL1103 and the Technology in the Territory; and

 

(ii)                               To ATL’s Knowledge, all Patents listed in Schedule 1 are valid and enforceable.

 

(d)                              Other ISIS Patents.  There are no other patents licensed to ATL pursuant to the ISIS Agreement, including without limitation, the ISIS Formulation Patent Rights, Research Target Patent Rights or any other ISIS Patent Rights (as such terms are defined in the ISIS Agreement) that are necessary or useful to Exploit the Technology in the Field in the Territory for the Purpose.

 

(e)                               Good Standing. To ATL’s Knowledge, all official fees, maintenance fees and annuities for the Licensed Patents have been paid and all administrative procedures with Governmental Authorities have been completed for such Patents such that the Patents are subsisting and in good standing.

 

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(f)                                Infringement/Misappropriation.

 

(i)                                  To ATL’s Knowledge, Cortendo’s exercise of the rights granted under the Licence as permitted under this agreement will not infringe any Third Party’s Intellectual Property Rights.

 

(ii)                               ATL has not received any written notice from any Third Party asserting or alleging, nor to ATL’s Knowledge is there, any basis for any assertion or allegation, that any use, research, manufacture or development of ATL1103 by ATL prior to the Start Date infringed or misappropriated the Intellectual Property Rights of such Third Party.

 

(g)                               No Conflicts.

 

(i)                                  ATL has not entered, and ATL covenants that it shall not knowingly enter, into any agreement with any Third Party that is in material conflict with or would materially adversely affect the rights granted to Cortendo under this agreement, and

 

(ii)                               ATL has not taken, and ATL covenants that it shall not take, any action that would in any way prevent it from granting the rights granted to Cortendo under this agreement, or that would otherwise materially conflict with or materially adversely affect Cortendo’s rights under this agreement.

 

(h)                              Third Party Infringement.  To ATL’s Knowledge, no Third Party is infringing or has infringed any Licensed Patents as they apply to ATL1103 or has misappropriated any know-how comprising the Other ATL Rights.

 

(i)                                  No Proceeding.  There are no pending or, to ATL’s Knowledge no threatened, adverse actions, suits or proceedings (including interferences, reissues, re-examinations, cancellations or oppositions) against ATL involving the Technology.

 

(j)                                 Disclosure.  ATL has disclosed to Cortendo all information in its possession or control that is material, in the good faith opinion of ATL, to evaluating the development and commercialisation of ATL1103 and the Technology as contemplated under this agreement (including information relating to the novelty, validity or sufficiency of the Licensed Patents and any challenges thereto) and, to ATL’s Knowledge, all such information disclosed by ATL is materially accurate and complete.

 

(k)                              No Debarment.  In the course of the development of ATL1103, ATL has not used any employee or consultant who has been debarred by any Regulatory Authority, under 21 U.S.C. 335a or other equivalent laws, rules, regulations or standards of any Regulatory Authority, or, to ATL’s Knowledge, is the subject of debarment proceedings by a Regulatory Authority.

 

(l)                                  Compliance.  ATL has complied in all material respects with all applicable Laws in the development of ATL1103 as of the Start Date, where failure to comply would materially adversely affect the rights granted to Cortendo under this agreement or Cortendo’s ability to develop or commercialise ATL1103 Products as contemplated under this agreement.

 

(m)                          Third Party Patent Rights.

 

(i)           To ATL’s Knowledge, it is not in breach of any agreement pursuant to which ATL (through ISIS) obtained its rights in the Third Party Patent Rights, and nothing contained in this agreement is in material conflict with or shall constitute a material breach of, any agreement pursuant to which ATL (through ISIS) obtained its rights in the Third Party Patent Rights.

 

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(ii)          It has obtained all the consents necessary from the owners of the Third Party Patent Rights (through ISIS) to grant the Licence with respect to the Third Party Patent Rights, as may be required under any agreement pursuant to which ATL (through ISIS) obtained its rights in the Third Party Patent Rights.

 

(n)                              ISIS Agreement.

 

(i)                                  To ATL’s Knowledge, it is not in breach of, nor do any circumstances exist upon which ISIS might claim that ATL is in material breach of, the ISIS Agreement, and nothing contained in this agreement is in material conflict with or shall constitute a material breach of, the ISIS Agreement (when read in conjunction with the ISIS Consent Letter).

 

(ii)                               It has obtained all the consents necessary from ISIS to grant the Licence and transfer all data and information required by ATL under this agreement to Cortendo, including pursuant to Section 6.3 of the ISIS Agreement.

 

(iii)                            ATL has provided Cortendo with a true, accurate and complete copy (redacted solely for financial terms and other provisions that do not relate to the Licence of Cortendo’s rights under this agreement) of the ISIS Agreement.

 

(iv)                           ATL1103 is in Active Development, as such term is defined in Section 1.2 of Exhibit 1 of the ISIS Agreement.

 

(v)                              ATL further covenants and agrees that:

 

(A)                            it will satisfy all of its obligations under (including making all payments), and take all steps reasonably necessary to maintain in full force and effect, the ISIS Agreement as it relates to the development and commercialisation of ATL 1103 by Cortendo under this agreement for the term hereof, provided that the ATL is not in breach of the ISIS Agreement as a result of Cortendo’s breach of this agreement;

 

(B)                            it will not assign (except to a Related Body Corporate or to a Third Party to which this agreement has been assigned as permitted under clause 26.4), amend, restate, amend and restate, terminate in whole or in part, or otherwise modify the ISIS Agreement in any way that could materially adversely affect Cortendo’s rights under this agreement without the prior written consent of Cortendo;

 

(C)                            it will provide Cortendo with prompt notice of any claim of a breach under the ISIS Agreement which would, if uncured, give ISIS  the right to terminate the ISIS Agreement, or any notice of termination of the ISIS Agreement, made by either ATL or ISIS (or any party acting on behalf of such counterparty);

 

(D)                            it will promptly send to Cortendo copies of all other material correspondence to or from ISIS pursuant to the ISIS Agreement specifically relating to ATL1103 that may adversely impact on Cortendo’s rights under this agreement; and

 

(E)                             where ATL does not cure any breach by it of the ISIS Agreement which would, if uncured, give ISIS the right to terminate the ISIS Agreement within a reasonable timeframe, Cortendo will have the right to cure such breach, in which case, ATL shall reimburse Cortendo for the reasonable costs incurred by Cortendo to so cure such breach provided that Cortendo notified ATL in advance of incurring such costs of its estimated costs and

 

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ATL consented thereto, which consent shall not be unreasonably withheld, delayed or conditioned.

 

15.4                     Exclusion of implied obligations

 

Except to the extent prohibited by law, all conditions, warranties, guarantees, rights, remedies, liabilities or other terms that may be implied by custom, under the general law or by statute are expressly excluded under this agreement.

 

15.5                     Limitation of liability

 

Except for:

 

(a)                              each party’s confidentiality obligations under clause 13;

 

(b)                              each party’s indemnification obligations under clause 16; and

 

(c)                               to the extent prohibited by law,

 

each party excludes all liability to the other party for any loss of contract, loss or damage of the character of loss of profit or revenue, loss of opportunity, loss of production, loss of customers or goodwill, production stoppage, loss or corruption of data, loss of use of data, loss of privacy of communications, or any special, indirect or consequential loss or damage arising directly or indirectly under or in connection with this agreement or the performance or non-performance of this agreement and whether arising under any indemnity, statute, in tort (for negligence or otherwise), or on any other basis in Law.

 

16.                         Indemnity

 

16.1                     Indemnification by Cortendo

 

Cortendo hereby indemnifies and holds harmless and will keep indemnified, defend and hold harmless ATL, its Affiliates, ISIS and each of their respective agents, employees, officers and directors against all Loss that ATL, its Affiliates, ISIS or any of their respective agents, employees, officers and directors may sustain or incur, to the extent arising out of or related to, directly or indirectly:

 

(a)                              the Exploitation of the Technology by Cortendo or any Sub-Licensee, including any loss of or damage to any property or injury to or death of any person in connection with the Technology or its use;

 

(b)                              a breach of any of Cortendo’s obligations, representations, warranties or covenants under this agreement by Cortendo; or

 

(c)                               any negligent, unlawful, fraudulent or wilful act or omission of Cortendo in connection with this agreement,

 

except to the comparative extent that the Loss was directly caused by any negligent, unlawful or fraudulent act or omission of ATL.

 

16.2                     Indemnification by ATL

 

ATL hereby indemnifies and holds harmless and will keep indemnified, defend and hold harmless Cortendo, its Affiliates and Sub-Licensees, and each of their respective agents, employees, officers and directors against all Loss that Cortendo, its Affiliates and Sub-Licensees or any of their respective agents, employees, officers and directors may sustain or incur, to the extent arising out of or related to, directly or indirectly:

 

(a)                              the Exploitation of the Technology by ATL prior to the Start Date, including any loss of or damage to any property or injury to or death of any person in connection with the Technology or its use prior to the Start Date;

 

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(b)                              a breach of any of ATL’s obligations, representations, warranties or covenants under this agreement by ATL; or

 

(c)                               any negligent, unlawful, fraudulent or wilful act or omission of ATL in connection with this agreement,

 

except to the comparative extent that the Loss was directly caused by any negligent, unlawful or fraudulent act or omission of Cortendo.

 

16.3                     Procedure

 

In the event that any person entitled to indemnification under clauses 16.1 or 16.2 (an Indemnitee) is seeking such indemnification in respect of a Third Party claim, such Indemnitee shall:

 

(a)                              inform, in writing, the indemnifying party of the claim as soon as reasonably practicable after such Indemnitee receives notice of such claim;

 

(b)                              permit the indemnifying party to assume direction and control of the defense of the claim (at the indemnifying party’s sole discretion and cost, including the sole right to settle it at the sole discretion of the indemnifying party; provided that such settlement does not constitute an admission of liability of the Indemnitee or the other party, or impose any obligation on, or otherwise adversely affect, the Indemnitee or other party);

 

(c)                               cooperate as requested (at the expense of the indemnifying arty) in the defence of the claim; and

 

(d)                              undertake all reasonable steps to mitigate any loss, damage or expense with respect to the claim(s).

 

Each Indemnitee shall have the right, at its option and sole expense, to participate in the defence of any claim, suit, or proceeding through counsel of its own choosing.

 

16.4                     Enforcement of Indemnification

 

All costs and expenses reasonably incurred by an Indemnitee in connection with enforcement of clauses 16.1 or 16.2 shall also be reimbursed by the indemnifying party.

 

17.                         Insurance

 

17.1                     Appropriate insurances

 

(a)                              Cortendo must, at its cost, take out and maintain until:

 

(i)                                  in the case of insurances issued on a claims made basis, seven years after the end of the Term; or

 

(ii)                               otherwise, the end of the Term,

 

all appropriate insurances at an adequate level for the Exploitation of the Technology pursuant to this agreement, including:

 

(iii)         up until the first commercial sale of an ATL1103 Product by Cortendo or any of its sub-licensees anywhere in the Territory, commercial general liability insurance of at least US$1 million per incident, and US$2 million in the aggregate, and such other types (including clinical trial insurance) and amounts of insurance coverage as is appropriate, customary and prevailing from time to time in the biopharmaceutical industry in light of the nature of the activities to be performed by Cortendo under this agreement through that period; and

 

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(iv)                           from the first commercial sale of an ATL1103 Product by Cortendo or any of its sub-licensees anywhere in the Territory, commercial general liability insurance, and such other types (including product liability  insurance) and amounts of insurance coverage as is appropriate, customary and prevailing from time to time in the biopharmaceutical industry in light of the nature of the activities to be performed by Cortendo under this agreement at such time,

 

which covers all activities to be undertaken by or on behalf of Cortendo under this agreement (including the development and commercialisation of ATL1103 Products).

 

(b)                              ATL must, at its costs, take out and maintain until:

 

(i)                                  in the case of insurances issued on a claims made basis, seven years after the end of the Term; or

 

(ii)                               otherwise, the end of the Term,

 

all appropriate insurances at an adequate level for the Exploitation of the Technology pursuant to this agreement, including:

 

(iii)                            up until the first commercial sale of an ATL1103 Product by ATL or any of its sub-licensees anywhere in the ATL Territory, public liability insurance of at least US$1 million per incident, and US$2 million in the aggregate, and such other types (including clinical trial insurance) and amounts of insurance coverage as is appropriate, customary and prevailing from time to time in the biopharmaceutical industry in light of the nature of the activities to be performed by ATL under this agreement through that period; and

 

(iv)                           from the first commercial sale of an ATL1103 Product by ATL or any of its sub-licensees anywhere in the ATL Territory, public liability insurance and such other types (including product liability  insurance) and amounts of insurance coverage as is appropriate, customary and prevailing from time to time in the biopharmaceutical industry in light of the nature of the activities to be performed by ATL under this agreement at such time.

 

(c)                               Each such insurance policy must provide that all terms and conditions (other than policy limits) operate in the same manner as if there were a separate policy of insurance covering each party comprising the insured.

 

17.2                     Reputable insurer

 

The insurance taken out by Cortendo under this clause 17 must be with a reputable insurance company.

 

17.3                     Evidence of insurance

 

If a party requests, the other party must promptly provide current relevant confirmation of insurance documentation from its insurance brokers certifying that it has the insurance required under this clause 17.

 

18.                         Termination

 

18.1                     Termination for material breach

 

A party may terminate this agreement by giving notice to the other party if:

 

(a)                              the other party breaches an obligation to pay any amount due under this agreement and fails to remedy that breach within 30 days after receiving notice requiring it to do so, which subsequent notice shall be effective immediately;

 

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(b)                              the other party materially breaches an obligation (other than an obligation to pay any amount due under this agreement) and fails to remedy the breach within 90 days after receiving notice requiring it to do so, which subsequent notice shall be effective immediately; or

 

(c)                               the other party materially breaches this agreement where that breach is not capable of remedy, which notice shall be effective 15 days after the date of such notice,

 

provided, however, that this clause 18.1 shall not apply to any failure by Cortendo to comply with clause 7.8 (which right is governed by clause 18.4), or any failure by Cortendo to comply with clause 5.4, which is governed by clause 18.3.

 

18.2                     Termination for insolvency

 

(a)                              A party must notify the other party immediately if:

 

(i)           it ceases to carry on business;

 

(ii)          it ceases to be able to pay its debts as they become due;

 

(iii)         any step is taken by a mortgagee to take possession or dispose of the whole or part of its assets, operations or business; or

 

(iv)         any step is taken to enter into any arrangement between it and its creditors;

 

(v)          any step is taken to appoint a receiver, a receiver and manager, a trustee in bankruptcy, a provisional liquidator, a liquidator, an administrator or other like person of the whole or part of its assets, operations or business; or

 

(vi)         having regard to its legal structure, any event analogous to an event in sub-paragraphs (i) to (v) happens to it.

 

(b)                              Subject to applicable Laws (including those referred to in paragraph (c)), a party may terminate this agreement with immediate effect by giving notice to the other party if any event referred to in clause 18.2(a) happens to the other party.

 

(c)                               All rights and licences to exercise Intellectual Property Rights granted under or pursuant to this agreement are and shall otherwise be deemed to be, for the purposes of Section 365(n) of Title 11, of the United States Code (the U.S. Bankruptcy Code) and any similar law or regulation in any other country, licences of rights to “intellectual property” as defined in Title 11 of the U.S. Bankruptcy Code.  The parties shall retain and may fully exercise all of their respective rights and elections under the U.S. Bankruptcy Code.  The Parties agree that all intellectual property rights licensed hereunder are part of the “intellectual property” as defined under the U.S. Bankruptcy Code subject to the protections afforded to the non-terminating party thereunder, and any similar law or regulation in any other country. Upon the bankruptcy of any party, the non-bankrupt party shall further be entitled to a complete duplicate of, or complete access to, any such intellectual property, and such, if not already in its possession, shall be promptly delivered to the non-bankrupt party, unless the bankrupt party elects to continue, and continues, to perform all of its obligations under this agreement.

 

18.3                     Termination for patent challenge

 

ATL may terminate this agreement with immediate effect if Cortendo breaches clause 5.4, and Cortendo fails to cease or withdraw such challenge, or fails to cause its Sub-Licensee to cease or withdraw such challenge, within 60 days after receiving notice from ATL requiring it to do so.

 

18.4                     Termination for failure to meet performance obligations

 

If Cortendo:

 

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(a)                              fails to meet any performance obligation in clause 7.8(a)(ii), 7.8(b)(i) or 7.8(b)(ii), after taking into account any extension of time due to a Delay as determined pursuant to clauses 7.8(f) — (h); or

 

(b)                              fails to use Commercially Reasonable Efforts or does not correct a failure to use Commercially Reasonable Efforts with respect to any obligation under clause 7.8(a)(i), 7.8(b)(i) or 7.8(b)(ii) within the applicable period specified in, or determined in accordance with, clause 7.8(l)(iii),

 

ATL may  terminate this agreement with immediate effect by written notice to Cortendo.

 

18.5                     Termination of ISIS Agreement

 

ATL may terminate this agreement with immediate effect by giving notice to Cortendo if its Licence to Exploit ATL 1103 under the ISIS Agreement terminates or expires provided, however, that ATL shall use reasonable efforts to provide Cortendo with as much notice as practicable regarding any termination or expiration in advance of the effective date of such termination or expiration.

 

18.6                     Termination for unfeasibility

 

(a)                              Cortendo may terminate this agreement upon 90 days’ prior written notice to ATL if, in Cortendo’s reasonable business judgment, further development and commercialisation of ATL1103 Products is no longer feasible from a development, regulatory and/or commercial perspective due to a material change from the data provided to Cortendo and identified in the Disclosure Letter which is beyond the control of Cortendo and its Sub-Licensees in (i) the safety, tolerability or efficacy of ATL1103 Products, (ii) cost of manufacturing of ATL1103 Products, and (iii) the regulatory approval process or the regulatory profile of ATL1103 Products.  Such notice shall specify Cortendo’s basis for such termination, including a reasonable description of such concerns.

 

(b)                              If Cortendo  notifies ATL that it intends to terminate this agreement under clause 18.6(a) and ATL disagrees with Cortendo’s  basis for such termination, ATL may notify Cortendo in writing within 20 days  after receipt of Cortendo’s  notice stating in reasonable detail its basis for disputing Cortendo’s basis for such termination, in which event the parties shall promptly refer the matter to an Independent Expert in accordance with clause 24 to determine whether Cortendo has a right to terminate this agreement pursuant to clause 18.6(a).

 

(c)                               In the event that ATL  notifies Cortendo that it disputes Cortendo’s  right to terminate as required pursuant to clause 18.6(b), and has initiated dispute resolution pursuant to clause 18.6(b), then any right to terminate under clause 18.6(a) shall be stayed, and any termination shall be stopped, which stay and stopping shall last until the Independent Expert has made a determination.

 

(d)                              If the Independent Expert determines that Cortendo does have the right to terminate this agreement pursuant to clause 18.6(a) then this agreement will terminate with effect from the later of the date of the Independent Expert’s determination and the date upon which Cortendo’s notice of termination under clause 18.6(a) would have taken effect.

 

(e)                               If the Independent Expert determines that Cortendo does not have the right to terminate this agreement pursuant to clause 18.6(a), then the notice given by the Cortendo pursuant to clause 18.6(a)  shall be deemed to be withdrawn and the parties shall continue to perform under this agreement.

 

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18.7                     Termination for convenience

 

Cortendo may terminate this agreement at any time for convenience upon 90 days’ prior written notice to ATL.

 

18.8                     Termination due to Force Majeure Event

 

If a party invoking an event of force majeure pursuant to clause 20 is prevented from complying with its obligations under this agreement and such inability to comply continues for a period greater than six calendar months as provided in clause 20, the non-invoking party may terminate this agreement with immediate effect by written notice to the other party.

 

18.9                     Disputed Breach

 

(a)                              If a party notifies the other party (breaching party) that the breaching party has breached any of its obligations pursuant to clause 18.1(b) or 18.1(c), and the breaching party disagrees with such party’s claim, such breaching party shall so notify such party in writing within 15 days after receipt of such party’s notice stating in reasonable detail its basis for disputing such party’s claim, in which event the parties shall promptly refer the matter to an Independent Expert in accordance with clause 24 to determine whether the breaching party has breached any of its obligations pursuant to clause 18.1(b) or 18.1(c).

 

(b)                              In the event that the breaching party notifies the other party that it disputes such right to terminate as required pursuant to clause 18.9(a), and has initiated dispute resolution pursuant to clause 18.9(a), then any right to terminate under clause 18.1(b) or 18.1(c) shall be stayed, and any applicable cure period (if any) or termination shall be stopped, which stay and stopping shall last until the Independent Expert has made a determination.

 

(c)                               If the breaching party does not correct such breach within the period specified by the Independent Expert, or if the Independent Expert determines that there has been a breach by the breaching party of any of its obligations that cannot be cured, then the other party shall have the right to terminate this agreement by sending written notice confirming such termination in accordance with clause 18.1(b) or 18.1(c), as applicable (which notice shall be deemed to be the subsequent notice, where applicable), with the effect as provided in clause 19.1, or to exercise its alternative rights pursuant to clause 19.3.

 

(d)                              If the Independent Expert determines that there has not been a breach, then the initial breach notice by the other party shall be deemed to be withdrawn and the parties shall continue to perform under this agreement.

 

19.                         After termination

 

19.1                     Consequences of termination

 

(a)                              In the event of any early termination of this agreement by either party pursuant to clause 18, but subject to clause 19.4:

 

(i)           Cortendo must promptly pay ATL all amounts due;

 

(ii)          subject to clause 19.4, the Licence ends;

 

(iii)         subject to clause 19.4, Cortendo must (and, subject to clause 4.5, must procure that all Sub-Licensees) immediately stop Exploiting the Technology; and

 

(iv)         subject to paragraph (c) and clauses 19.2 and 19.4, each Recipient must, immediately upon being so requested in writing by the Disclosing Party, at the Disclosing Party’s option:

 

(A)                            deliver to the Disclosing Party;

 

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(B)                            destroy and certify in writing to the Disclosing Party the destruction of; or

 

(C)                            destroy and permit the Disclosing Party to witness the destruction of,

 

all Confidential Information of the Disclosing Party that is either in the possession of the Recipient or that the Recipient has provided to any other person, including all notes, memoranda, correspondence, reports, summaries, and all other materials or things brought into existence by the Recipient or any of its disclosees which in any manner contain or refer to any part of the Confidential Information of the Disclosing Party.

 

(b)                              Cortendo’s obligations under paragraphs (a)(iii) and (a)(iv) do not apply to:

 

(i)           any inventions that were, during the Term, the subject of a patent or patent application but have ceased to be the subject of any patent or patent application; or

 

(ii)          any technical or other information that was, during the Term, not in the public domain but has entered the public domain, other than by way of Cortendo breaching this agreement.

 

(c)                               A Recipient may retain one copy of the Confidential Information of the Disclosing Party for its internal records, provided that the Recipient continues to comply with its obligations under clause 13 in respect of that Confidential Information.

 

(d)                              In the event that this agreement is terminated by Cortendo pursuant to clause 18.1 or 18.2, or by ATL pursuant to clause 18.5, the grant-back licence in clause 3.3 ends.

 

(e)                               In the event that this agreement is terminated by Cortendo pursuant to clause 18.1 or 18.2, or this agreement is terminated by ATL pursuant to clause 18.5 where the ISIS Agreement was terminated due to a breach by ATL thereunder, then the Moratorium Period, if any is ongoing at the effective date of such termination, shall end as of the earlier of (i) 12 months after the effective date of such termination, or (ii) 24 months after the Start Date.  For the avoidance of doubt, if the effective date of such termination is later than 24 months after the Start Date, then the Moratorium Period shall terminate simultaneously with the effective date of such termination.

 

(f)                                In the event that this agreement is terminated by Cortendo pursuant to clause 18.6 or 18.7, or by ATL pursuant to clause 18.1, 18.2, 18.3, 18.4, 18.5 (where the ISIS Agreement has terminated due to a breach by Cortendo of this agreement) or 18.8, the parties agree to work together during the 90 day notice period to wind-down the ongoing studies, programs and activities under this agreement (or, if such termination of by Cortendo pursuant to clause 18.7, at the direction of ATL, transition them from Cortendo to ATL); provided that Cortendo shall be responsible for all non-cancellable costs incurred by or on behalf of Cortendo in connection with the foregoing, or by ATL with respect to the ATL1103 higher dose study described in Schedule 3.  For the avoidance of doubt, all information provided from one party to the other party during such transition period shall be deemed Confidential Information of the Disclosing Party under this agreement.

 

(g)                               In the event that this agreement is terminated by Cortendo pursuant to clause 18.7, in addition to its obligations under clause 19.1(f):

 

(i)                                  Cortendo shall, to the extent practicable and so requested by ATL, transfer and assign any agreements with Third Party subcontractors who are performing such studies or activities to ATL; and

 

55

 

(ii)                               if such notice of termination under clause 18.7  is provided by Cortendo prior to the filing of an NDA in the U.S. for ATL1103 for the first Acromegaly Indication, then Cortendo shall pay ATL a termination fee of US$[****] on or before the effective date of such termination, which the parties agree is a genuine pre-estimate of the loss that ATL may incur or suffer in connection with Cortendo’s termination of this agreement pursuant to clause 18.7.

 

(h)                              In the event that this agreement is terminated by Cortendo pursuant to clause 18.6 or 18.7, or by ATL pursuant to clauses 18.1, 18.2, , 18.3, 18.4, 18.5 (where the ISIS Agreement has terminated due to a breach by Cortendo of this agreement) or 18.8, ATL shall have the right, exercisable upon written notice by ATL to Cortendo given within 90 days after the effective date of such termination, to obtain the Program Transfer, and effective upon such notice, Cortendo shall conduct the Program Transfer pursuant to clause 19.2, subject to the terms and conditions set forth in this clause 19.1(h).  If:

 

(i)                                  the effective date of such termination is prior to (A) the Start of a Phase III Trial, or (B) the Further Phase IIB Trial (whichever will be the In-Human Trial Milestone), then the Program Transfer and the licence therein shall be royalty-free;

 

(ii)                               the effective date of such termination is on or after the Start of a Phase III Trial or the Further Phase IIB Trial (as applicable), then ATL shall pay to Cortendo [****] ([****]%) percent of all ATL Net Sales by ATL, its Affiliates and sub-licensees in consideration for the grant of the licence.

 

(i)                                  Payment terms and audit provisions set forth in this agreement shall apply in a reciprocal manner.

 

19.2                     Program Transfer

 

If ATL exercises its right under clause 19.1(h), Cortendo shall:

 

(a)                              and (with effect from the date that ATL exercises such right) it hereby does, grant to ATL, an exclusive, worldwide, royalty-bearing, perpetual, transferable licence, with the right to sub-license, under the Cortendo IP and Joint IP to exploit the technology that is the subject of the Cortendo IP and Joint IP for any purpose or indication and in any;

 

(b)                              transfer to ATL as soon as reasonably practicable all Development Data, and any reports, records, materials and information resulting from Cortendo’s performance under this agreement and/or in Cortendo’s or its Affiliates’ control relating to ATL1103 or ATL1103 Products as may be necessary to enable ATL to practice such licence;

 

(c)                               transfer and assign to ATL all of its right, title and interest in and to all INDs, registration applications, drug dossiers and master files with respect to any and all ATL1103 Products and all Marketing Approvals with respect to any and all ATL1103 Products;

 

(d)                              to the extent Cortendo is permitted to do so under each sublicense agreement, continue each such sublicense agreement entered into by Cortendo with a Sub-Licensee in full force and effect in accordance with the terms and conditions of the respective sublicense agreements, and  assign each such sublicense agreement to ATL;

 

(e)                               to the extent Cortendo is permitted to do so under the relevant agreement, continue each agreement with Third Party subcontractors who are performing studies or activities relating to this agreement in full force and effect in accordance with the terms and conditions of the respective Third Party agreements, provided that ATL shall be responsible for all obligations of Cortendo under any such agreement that arise on and after the effective date of such termination, and assign each such Third Party Agreement

 

56

 

to ATL (having paid all amounts due under such agreement up until the effective date of assignment); and

 

(f)                                take such other actions and execute such other instruments, assignments and documents as may be necessary to effect the transfer of rights provided for under this clause 19.2 to ATL (collectively, the Program Transfer).

 

19.3                     Continuation of rights in certain circumstances

 

(a)                              In the event that Cortendo has the right to terminate this agreement pursuant to clause 18.1 or 18.8, then Cortendo may, in lieu of terminating this Agreement in its entirety as provided in such provisions, elect to continue this agreement in full force and effect except, upon written notice to ATL of Cortendo’s election under this clause 19.3(a), as follows:

 

(i)           the Licence granted by ATL to Cortendo shall remain in full force and effect in accordance with its terms, except that the performance obligations set forth in clause 7.8 shall cease to apply; and

 

(ii)          all JSC participation rights of ATL shall terminate and be of no further force or effect.

 

(b)                              In the event that Cortendo notifies ATL of its intention to terminate this agreement pursuant to clause 18.2, then (subject to clause 19.3(d)) Cortendo may, upon written notice to ISIS, elect to take a direct licence from ISIS  in respect of ISIS’ rights licensed to ATL under the ISIS Agreement that ATL has sub-licensed to Cortendo under this agreement, provided that:

 

(i)           Cortendo is not in breach of this agreement;

 

(ii)          Cortendo agrees in writing to comply with all of the terms of the ISIS Agreement to the extent applicable to the rights originally sublicensed to Cortendo by ATL with respect to ATL1103 under this agreement; and

 

(iii)         Cortendo agrees to pay directly to ISIS ATL’s payments due to ISIS under the ISIS Agreement to the extent applicable to the rights sublicensed to Cortendo by ATL with respect to ATL 1103,

 

with such agreement to be effective immediately upon the termination of this agreement.

 

(c)                               In the event that ATL notifies Cortendo of its intention to terminate this agreement pursuant to clause 18.5 (other than where the ISIS Agreement has terminated due to a breach by Cortendo of this agreement), then (subject to clause 19.3(d)), Cortendo may, upon written notice to ATL and to ISIS, elect  to take a direct licence from ISIS in respect of ISIS’ rights licensed to ATL under the ISIS Agreement that ATL has sub-licensed to Cortendo under this agreement, provided that:

 

(i)           Cortendo is not in breach of this agreement;

 

(ii)          Cortendo agrees in writing to comply with all of the terms of the ISIS Agreement to the extent applicable to the rights originally sublicensed to Cortendo by ATL with respect to ATL1103 under this agreement; and

 

(iii)         Cortendo agrees to pay directly to ISIS ATL’s payments due to ISIS under the ISIS Agreement to the extent applicable to the rights sublicensed to Cortendo by ATL with respect to ATL 1103,

 

with such agreement to be effective immediately upon the termination of this agreement.

 

57

 

(d)                              Before exercising its right to take  a direct licence from ISIS under clause 19.3(b) or 19.3(c), Cortendo must conduct, consistent, good faith negotiations with ATL for a period of at least three calendar months  to agree an arrangement that:

 

(i)                                  preserves all material benefits of this agreement to Cortendo; and

 

(ii)                               preserves the material financial value  of this agreement to ATL.

 

19.4                     Run off period

 

ATL agrees that, for a period of six calendar months after the termination of this agreement, Cortendo and its Sub-Licensees may continue to supply and sell ATL1103 Products that had already been manufactured or that Cortendo or its Sub-Licensees had already committed to supply or sell as at the date of expiry or termination of this agreement.

 

19.5                     Accrued rights and remedies

 

The expiry or termination of this agreement for any reason does not affect any accrued rights or remedies of either party.

 

20.                         Force majeure

 

Neither party is liable for any failure to perform, or delay in performing, its obligations under this agreement, other than an obligation to pay money, if that failure or delay is due to anything beyond that party’s reasonable control, including without limitation war, insurrection, fire, flood, explosion, discontinuity in supply of power, act of God, war, civil commotion, terrorist act, labour strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm or like catastrophe, and failure of plant or machinery (provided that such failure could not have been prevented by the exercise of skill, diligence, and prudence that would be reasonably and ordinarily expected from a skilled and experienced person engaged in the same type of undertaking under the same or similar circumstances), court order or governmental interference.  If that failure or delay exceeds six calendar months, the other party may terminate this agreement pursuant to clause 18.8.

 

21.                         Goods and services taxes

 

21.1                     Interpretation

 

Words or expressions used in this clause 21 which are defined in the A New Tax System (Goods and Services Tax) Act 1999 (Cth) have the same meaning in this clause.

 

21.2                     Consideration is GST exclusive

 

Any consideration to be paid or provided for a supply made under or in connection with this agreement unless specifically described in this agreement as ‘GST inclusive’, does not include an amount on account of GST.

 

21.3                     Cortendo GST warranties

 

Cortendo warrants that as at the date of this agreement and for the duration of this agreement:

 

(a)                              it is not incorporated in Australia;

 

(b)                              it is not and will not be registered in Australia as a foreign corporation or body;

 

(c)                               it is not and will not be present in Australia in relation to the supplies made under or in connection with this agreement;

 

(d)                              it is not registered or required to be registered for GST purposes; and

 

(e)                               it is not an Australian resident for income tax purposes.

 

58

 

21.4                     Gross up of consideration

 

Despite any provision in this agreement, if ATL makes a supply under or in connection with this agreement on which GST is imposed (not being a supply the consideration for which is specifically described in this agreement as ‘GST inclusive):

 

(a)                              the consideration payable or to be provided for that supply under this agreement but for the application of this clause (GST exclusive consideration) is increased by, and Cortendo must also pay to ATL an amount equal to the GST payable on the supply (GST Amount); and

 

the GST Amount  must be paid to ATL by Cortendo without set off, deduction or requirement for demand, at the same time as the GST exclusive consideration is payable or to be provided.

 

21.5                     Reimbursements (net down)

 

If a payment to a party under this agreement is a reimbursement or indemnification, calculated by reference to a loss, cost or expense incurred by that party, then the payment will be reduced by the amount of any input tax credit to which that party, or the representative member of a GST group of which that party is a member, is entitled for that loss, cost or expense.

 

21.6                     Exclusion of GST from calculations

 

If a payment is calculated by reference to or as a specified percentage of another amount or revenue stream, that payment shall be calculated by reference to or as a specified percentage of the amount or revenue stream exclusive of GST.

 

21.7                     Tax invoices

 

Cortendo need not pay the GST Amount in respect of a taxable supply made under or in connection with this agreement until ATL has given Cortendo a tax invoice in respect of that taxable supply.

 

21.8                     Cortendo warranty and indemnity

 

If GST is payable by ATL in relation to a supply and consideration for that supply was not increased under clause 21.4 for whatever reason , Cortendo will pay the amount by which the GST exclusive consideration is increased on account of GST under clause 21.4(a) (plus an amount equal to any interest or penalty imposed, by the Australian Commissioner of Taxation on ATL in respect of that GST) within seven days of receiving notice in writing from ATL requesting it to do so and a tax invoice under clause 21.7.

 

21.9                     Adjustments

 

If an adjustment event arises in respect of a supply made by ATL to Cortendo under or in connection with this Agreement, then:

 

(a)                              if ATL’s corrected GST Amount is less than the previously attributed GST Amount, ATL shall refund the difference to Cortendo;

 

(b)                              if ATL’s corrected GST Amount is greater than the previously attributed GST Amount, Cortendo shall pay the difference to ATL;

 

(c)                               ATL must issue an adjustment note to Cortendo within 7 days of the adjustment event occurring or otherwise as soon as it becomes aware of the adjustment event; and

 

(d)                              any payment under clauses 21.9(a) or 21.9(b) must be paid to ATL or Cortendo (as the case may be) within 15 days of the adjustment note being issued by ATL.

 

59

 

22.                         Withholding Tax

 

(a)                              To the extent Cortendo is required by law to make a deduction or withholding in respect of Tax from any payment to ATL, Cortendo must:

 

(i)                                  make that deduction or withholding from the payment;

 

(ii)                               promptly pay an amount equal to the amount deducted or withheld as required by law and by the date that Tax is due to be paid to the appropriate Governmental Authority; and

 

(iii)                            in a timely manner and promptly provide to ATL an official tax certificate, receipt or other evidence of payment of that amount to the Governmental Authority, together with such other documentation relating to such payment as ATL may request.

 

(b)                              Cortendo must in a reasonable manner substantiate to ATL’s reasonable satisfaction that Cortendo is required by law to make a deduction or withholding in respect of Tax from any payment of the royalty or any other monies payable to ATL under this agreement.

 

(c)                               ATL and Cortendo will do all such lawful acts and things and sign all such lawful deeds and documents as either party may reasonably request from the other party and ATL will provide Cortendo any information or documents that may be reasonably necessary to enable ATL to qualify for any reduction in the applicable rate of withholding tax or exemption (whether in part or full) from withholding tax under any applicable legal provision or any double taxation treaties

 

(d)                              In the event that clause 26.3(a)  applies:

 

(i)                                  ATL must substantiate to Cortendo’s reasonable satisfaction that:

 

(A)                            the rate of withholding or deduction applying to any payments to ATL under this agreement as a result of an assignment and/or novation under clause 26.3(a) is more than 10% higher than the rate that would otherwise have applied if Cortendo made the payments to ATL; and

 

(B)                            such additional amount that is withheld or deducted is not subject to full reimbursement to ATL (e.g., such as via a foreign tax credit); and

 

(ii)                               Cortendo must pay an amount to ATL equal to fifty percent (50%) of the additional amount required to be withheld or deducted as a result of the assignment and/or novation.

 

23.                         Dispute resolution

 

23.1                     Dispute; Notice of Dispute

 

(a)                              The parties agree that, except as set forth in clause 23.7 or clause 24, the procedures set forth in this clause 23 shall be the exclusive mechanism for resolving any dispute, disagreement, controversy or claim arising under, out of or relating to this Agreement and any subsequent amendments of this Agreement, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims arising out of the subject matter of this Agreement (a Dispute).

 

(b)                              A party claiming that a Dispute has arisen must give the other party notice of the details of the Dispute (a Dispute Notice).

 

60

 

23.2                     No court proceeding unless procedure followed

 

A party must not start any legal proceedings (except proceedings seeking interlocutory relief as provided in clause 23.7) unless it has complied with this clause 23 or, where expressly stated in this agreement, with clause 24.

 

23.3                     Negotiations

 

The parties must attempt to resolve any Dispute by negotiation using the following escalation procedure:

 

(a)                              after a Dispute Notice is given, each party’s respective representative must first attempt to resolve the Dispute; and

 

(b)                              if the parties’ representatives cannot resolve the Dispute within 14 days after the Dispute Notice is given (or any longer period agreed between those representatives), each party must refer the Dispute to its chief executive officer who must then attempt to resolve it.

 

23.4                     Court proceedings if procedure fails

 

If the chief executive officers (or their respective nominees) cannot resolve the Dispute under clause 23.3(b) within 20 days (or such longer period as agreed between the chief executive officers or their respective nominees) after the Dispute is referred to them, then a party may seek any relief it considers appropriate in a court of competent jurisdiction.

 

23.5                     Release if other party breaches

 

If a party breaches this clause 23 in relation to a Dispute, the other party need not comply with this clause 23 in relation to that Dispute.

 

23.6                     Costs

 

Each party shall bear its own attorney’s fees, costs, and disbursements arising out of complying with this clause 23.

 

23.7                     Injunctive Relief

 

Nothing contained in this agreement shall deny either party the right to seek injunctive or other equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing mediation or arbitration proceeding.

 

24.                         Expert determination

 

24.1                     Referral to an expert

 

Any matter or Dispute arising under clause 3.2(b)(ii), 3.3(a)(v), 3.3(b)(iii), 3.3(c), 4.2(d), 7.8(h), 7.8(l)(ii),  9.3(c), 18.6(b) or 18.9(a) or the definition of Gross Sales or under any other clause of this agreement that specifies the use of an Independent Expert must be dealt with as set out in this clause 24.

 

24.2                     Independent Expert

 

Within 7 days of a party electing to refer a matter or Dispute to an Independent Expert under this agreement, the parties agree to meet to attempt to agree to an appropriate Independent Expert to determine the matter in dispute who has at least 10 years of experience in the area which is the subject of the Dispute (eg, clinical development, accounting, patent prosecution).  If within a further 10 days the parties are unable to agree on an Independent Expert to make this determination, then either party may approach the president for the time being of the Licensing Executives Society — International and request that they nominate the person to be the Independent Expert. Neither party shall unreasonably withhold or delay its approval of such Independent Expert.

 

61

 

24.3                     Determination by Independent Expert

 

(a)                              The Independent Expert appointed under clause 24.2 will:

 

(i)                                  make a determination based upon the information made available by the parties;

 

(ii)                               make a determination having regard to the obligations of the parties under this agreement; and

 

(iii)                            notify the parties in writing of that determination within 14 days of his or her appointment.

 

(b)                              For clarity, the Independent Expert’s determination shall be limited to selecting only either ATL’s proposal or Cortendo’s proposal as the resolution of the Dispute, and shall not have the authority to make any other determination.

 

(c)                               Without prejudice to ATL’s rights to terminate this agreement, in the event that the Dispute relates to whether or not Commercially Reasonable Efforts were used, if it is determined by the Independent Expert that Cortendo failed to use Commercially Reasonable Efforts, then the Independent Expert shall determine what corrective action by Cortendo would best meet the standard of Commercially Reasonable Efforts and a timeframe for the completion of such corrective action by Cortendo, based on a proposals submitted by each party.

 

24.4                     Independent Expert not arbitrator

 

The Independent Expert must act as an expert not as an arbitrator and his or her decision will be final and binding on the parties.

 

24.5                     Cost of Independent Expert

 

The parties shall initially share equally the fees and costs of such Independent Expert, but promptly after such Independent Expert makes a determination regarding the matter, the non-prevailing party shall reimburse the prevailing party for the share of such fees and costs borne by the prevailing party.

 

24.6                     Obligation of the parties not affected

 

The fact that a matter or Dispute is being resolved in accordance with clause 23 or this clause 24 does not affect the obligations of either party under this agreement.

 

25.                         Notices and other communications

 

25.1                     Service of notices

 

(a)                              Subject to clause 25.1(b), a notice, demand, consent or approval under this agreement (Notice) must be:

 

(i)                                  in writing, in English and signed by a person duly authorised by the sender; and

 

(ii)                               hand delivered or sent by prepaid post, prepaid express courier service (signature required), facsimile (receipt confirmed) or email to the recipient’s address for Notices specified in the Details, as varied by any Notice given by the recipient to the sender.

 

(b)                              Any:

 

(i)                                  notice of termination under clause 18;

 

(ii)                               notice requiring a party to remedy a breach under clause 18.1; or

 

(iii)                            Dispute Notice,

 

62

 

may not be sent by email.

 

25.2                     Effective on receipt

 

A Notice given in accordance with clause 25.1 takes effect when taken to be received (or at a later time specified in it), and is taken to be received:

 

(a)                              if hand delivered, on delivery;

 

(b)                              if sent by prepaid post, on the seventh Business Day after the date of posting;

 

(c)                               if sent by prepaid express courier service, on the second Business Day after the date of posting;

 

(d)                              if sent by facsimile, when the sender’s facsimile system generates a message confirming successful transmission of the entire Notice unless, within eight Business Hours after the transmission, the recipient informs the sender that it has not received the entire Notice; or

 

(e)                               if sent by email, on the first to occur of:

 

(i)                                  receipt by the sender of an email acknowledgement from the recipient’s information system showing that the Notice has been delivered to the recipient’s email address for Notices;

 

(ii)                               the time that the Notice enters an information system which is under the control of the recipient; and

 

(iii)                            the time that the Notice is first opened or read by the intended addressee,

 

provided that, if the sender receives an out of office reply that states the recipient is out of the office until a later date, the notice will only be taken to be received pursuant to paragraph (i) or (ii) on that later date.

 

25.3                     Event giving rise to receipt

 

If the event giving rise to receipt occurs on a day that is not Business Day or after the end of Business Hours on a Business Day, the Notice is taken to be received at the start of Business Hours on the next Business Day.

 

26.                         General

 

26.1                     Alterations

 

This agreement may be altered, amended, or added to only in writing signed by an authorised officer of each party.

 

26.2                     Approvals and consents

 

Except where this agreement expressly states otherwise, a party may, in its discretion, give conditionally or unconditionally or withhold any approval or consent under this agreement.

 

26.3                     Assignment by Cortendo

 

(a)                              Cortendo may, without ATL’s prior consent, assign any of its rights and novate any of its obligations under this agreement to:

 

(i)                                  an Affiliate; or

 

(ii)                               a Third Party that acquires Cortendo or all or substantially all of the assets to which this agreement relates (whether by merger, reorganisation, acquisition, sale or otherwise) and agrees in writing to be bound by the terms and conditions of this agreement,

 

63

 

provided that (for so long as ATL has not assigned any of its rights or novated any of its obligations under this agreement pursuant to clause 26.4) in the event that such assignment by Cortendo under this clause 26.3(a) results in a rate of withholding or deduction of more than 10% applying to any payments due by such assignee to ATL thereafter than would have otherwise applied if Cortendo made those payments, then Cortendo is required to pay to ATL an additional amount equal to fifty percent (50%) of the excess of the amount required to be withheld or deducted, as provided in clause 22.1(d).

 

(b)                              To the extent practicable and possible given business objectives and confidentiality obligations, Cortendo will use reasonable efforts to provide ATL at least 60 days’ prior written notice of any such assignment under this clause 26.3.

 

26.4                     Assignment by ATL

 

(a)                              ATL may, without Cortendo’s prior consent, assign any of its rights and novate any of its obligations under this agreement to:

 

(i)                                  a Related Body Corporate of it; or

 

(ii)                               a Third Party that acquires all the Technology (whether by merger, reorganisation, acquisition, sale or otherwise) and agrees in writing to be bound by the terms and conditions of this agreement.

 

(b)                              Notwithstanding the foregoing, in the event that there is an assignment or novation of rights under this agreement by ATL to an entity that Cortendo reasonably considers to be a competitor of Cortendo in relation to acromegaly or any Other Indication that is the subject of the Development Plan at the time of the proposed assignment , then:

 

(i)                                  the JSC shall be dissolved (if it is still ongoing at such time);

 

(ii)                               Cortendo shall not be required to share any Development Data with such third party; and

 

(iii)                            Cortendo shall not be required to provide any information, audit or inspection rights or any reports to such assignee except solely with respect to Net Sales reports and audit rights relating thereto.

 

(c)                               To the extent practicable, taking into account its business objectives and confidentiality obligations, ATL will use reasonable efforts to provide Cortendo at least 60 days’ prior written notice of any such assignment under this clause 26.4.

 

26.5                     Guarantee

 

In connection with the licence granted to Cortendo under this agreement, Cortendo AB, a corporation organised and existing under the laws of Sweden, with an office located at 900 Northbrook Drive, Trevose, Pennsylvania 19053 USA (Cortendo AB) shall enter into that certain guarantee and indemnity deed, dated as of the same date as this agreement, in favour of ATL.

 

26.6                     Third Party Beneficiary

 

Cortendo acknowledges and agrees that ISIS is a third party beneficiary of this agreement. Except as to the foregoing, this agreement is neither expressly nor impliedly made for the benefit of any entity other than the parties.

 

26.7                     Binding Effect

 

The rights and obligations of the parties under this agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties.

 

64

 

26.8                     Costs

 

Each party must pay its own costs of negotiating, preparing and executing this agreement.

 

26.9                     Set-off

 

Either party may set-off, against any amount that such party owes to the other party, any amount that such other party owes to such party from time to time, whether under this agreement or otherwise.

 

26.10              Survival

 

Any indemnity or obligation of confidence under this agreement is independent of, and survives termination of, this agreement.  Any other term by its nature intended to survive termination of this agreement survives termination of this agreement, including clauses 1, 3.3 (solely to the extent that the licence granted thereunder survives the expiration of this agreement pursuant to any relevant provision of clause 19), 3.4 and 3.5 (solely to the extent that the Licence granted hereunder survives the expiration of this agreement pursuant to any relevant provision of clause 19), 4.5 (solely to the extent applicable, as provided therein),  5.1, 5.2, 9.8, 9.9, 9.10, 10.7 through 10.13, 11, 12.3, 12.4, 12.5 and 12.6 but with respect to clauses 12.3, 12.4, 12.5 and 12.6, solely with respect to any action that is ongoing thereunder as of the effective date of termination of this agreement), 13, 15.1, 15.4, 15.5, 16, 17, 19, 21, 22, 23, 24, 25 and 26.9 through 26.18.

 

26.11              Counterparts

 

This agreement may be executed in counterparts.  All executed counterparts constitute one document.

 

26.12              No merger

 

The rights and obligations of the parties under this agreement do not merge on completion of any transaction contemplated by this agreement.

 

26.13              Further action

 

Each party must do, at its own expense, everything reasonably necessary (including executing documents) to give full effect to this agreement and any transaction contemplated by it.

 

26.14              Severability

 

A term or part of a term of this agreement that is illegal or unenforceable may be severed from this agreement and the remaining provisions or parts of the provisions of this agreement continue in force.

 

26.15              Waiver

 

A party does not waive a right, power or remedy if it fails to exercise or delays in exercising the right, power or remedy.  A single or partial exercise of a right, power or remedy does not prevent another or further exercise of that or another right, power or remedy.  A waiver of a right, power or remedy must be in writing and signed by the party giving the waiver.

 

26.16              Relationship

 

Except where this agreement expressly states otherwise, it does not create a relationship of employment, trust, agency or partnership between the parties. The relationship of the parties under this agreement is intended to be that of an independent contractor.  Neither party has any express or implied right or authority under this agreement to assume or create any obligations on behalf of or in the name of the other, or to bind the other party to any contract, agreement or undertaking with any third party.

 

26.17              Governing law and jurisdiction

 

This agreement is governed by the laws of England and Wales, and each party irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of London, England.

 

65

 

26.18              Entire agreement

 

This agreement (together with all Schedules to this agreement) constitutes the entire agreement between the parties in connection with its subject matter and supersedes all previous agreements or understandings between the parties in connection with its subject matter, including the Non-Disclosure Agreement.

 

66

 

Schedule 1- Technology

	
 
    

[****]

 

67

 

	
Schedule 2 —   Milestones
    

 

1.                                 Clinical and Regulatory Milestones1

 

	
Milestone
    	
 
    	
Milestone Fee
    
	
WITH   RESPECT TO THE FIRST ACROMEGALY INDICATION
    

 

	
 
    	
 
    	
If In-Human Trial Milestone 
   was a Phase III Trial
    	
 
    	
If In-Human Trial Milestone 
   was a Phase II B Trial
    
	
Start of the first Phase III Trial for an ATL1103   Product for the first Acromegaly Indication in any jurisdiction in the   Territory
    	
 
    	
US$[****], comprising:

 

- $US[****] to be paid in accordance with clause   9.6; and

- the Milestone Shares Subscription Price to be paid   in accordance with clause 10.3
    	
 
    	
US$[****]
    
	
Filing of an NDA in the U.S. for an ATL1103 Product   for the first Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    
	
Filing of an MAA in the EU:

 

(a) through the centralized procedure; or

(b) in at least 3 of the 5 major markets in the   EU comprised of the United Kingdom, France, Germany, Italy or Spain); or

(c) the date that is six calendar months after   filing in at least 1 of the one of the following countries; the United   Kingdom, France, Germany, Italy or Spain,

whichever occurs first, for an ATL1103 Product for   the first Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    
	
US Approval (excluding Pricing Approval) for an   ATL1103 Product for the first Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    
	
EU Approval (excluding Pricing Approval) for an   ATL1103 Product for the first Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    
	
Japanese Approval (excluding Pricing Approval) for   an ATL1103 Product for the first Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    

 

1  For the avoidance of doubt, if the In-Human Trial Milestone is a Phase III Trial, then the Milestone Fees in the second column of the above table apply and the third column of the above table no longer has any application or relevance under this agreement.

 

68

 

	
Milestone
    	
 
    	
Milestone Fee
    
	
WITH   RESPECT TO THE SECOND ACROMEGALY INDICATION
    

 

	
 
    	
 
    	
If In-Human Trial Milestone 
   was a Phase III Trial
    	
 
    	
If In-Human Trial Milestone 
   was a Further Phase II B Trial
    
	
Start of a Phase III Trial for an ATL1103 Product   for the second Acromegaly Indication in any jurisdiction in the Territory
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    
	
Filing of an NDA in the U.S. for an ATL1103 Product   for the second Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    
	
Filing of an MAA in the EU:

(a) through the centralized procedure; or

(b) in at least 3 of the 5 major markets in the   EU comprised of the United Kingdom, France, Germany, Italy or Spain); or

(c) the date that is six calendar months after   filing in at least 1 of the one of the following countries; the United   Kingdom, France, Germany, Italy or Spain,

whichever occurs first, for an ATL1103 Product for   the second Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    
	
U.S. Approval (excluding Pricing Approval) for an   ATL1103 Product for the second Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    
	
EU Approval (excluding Pricing Approval) for an   ATL1103 Product for the second Acromegaly Indication
    	
 
    	
US$[****]
    	
 
    	
US$[****]
    

 

	
Milestone
    	
 
    	
Milestone Fee
    
	
WITH   RESPECT TO ANY OTHER INDICATION
    
	
Start of a Phase III Trial for an ATL1103 Product   for any Other Indication in any jurisdiction in the Territory
    	
 
    	
US$[****]
    
	
Filing of an NDA in the U.S. for an ATL1103 Product   for any Other Indication
    	
 
    	
US$[****]
    
	
Filing of an MAA in the EU for an ATL1103 Product   for any Other Indication
    	
 
    	
US$[****]
    
	
U.S. Approval (excluding Pricing Approval) for an   ATL1103 Product for any Other Indication
    	
 
    	
US$[****]
    
	
EU Approval (excluding Pricing Approval) for an   ATL1103 Product for any Other Indication
    	
 
    	
US$[****]
    
	
Japanese Approval (excluding Pricing Approval) for   an ATL1103 Product for any Other Indication
    	
 
    	
US$[****]
    

 

69

 

2.                                   Commercial Milestones2

 

	
Milestone
    	
 
    	
Milestone Fee
    
	
WITH   RESPECT TO THE FIRST ACROMEGALY INDICATION
    

 

	
 
    	
 
    	
If In-Human Trial Milestone 
   was a Phase III Trial
    	
 
    	
If In-Human Trial Milestone 
   was a Further Phase II B Trial
    
	
Aggregate Net Sales in a Calendar Year of US$[****]
    	
 
    	
US$[****]
   (once off)
    	
 
    	
US$[****]
   (once off)
    
	
Aggregate Net Sales in a Calendar Year of US$[****]
    	
 
    	
US$[****]
   (once off)
    	
 
    	
US$[****]
   (once off)
    
	
Aggregate Net Sales in a Calendar Year of US$[****]
    	
 
    	
US$[****]
   (once off)
    	
 
    	
US$[****]
   (once off)
    
	
Aggregate Net Sales in a Calendar Year of US$[****]
    	
 
    	
US$[****]
   (once off)
    	
 
    	
US$[****]
   (once off)
    
	
Aggregate Net Sales in a Calendar Year of US$[****]
    	
 
    	
US$[****]
   (once off)
    	
 
    	
US$[****]
   (once off)
    

 

2  For the avoidance of doubt, (i) if the In-Human Trial Milestone is a Phase III Trial, then the Milestone Fees in the second column of the above table apply and the third column of the above table no longer has any application or relevance under this agreement; and (ii) each of the Commercial Milestone Fees shall be paid only one time, upon the first achievement of such event in any Calendar Year.

 

70

 

	
Schedule 3 — ATL1103   higher dose study
    

 

A Phase II Open-Label Study of the Safety, Tolerability, Pharmacokinetics and Efficacy of ATL1103 300mg in Adult Patients with Acromegaly

 

	
Budget
    	
 
    	
$ (AUD)
    
	
 
    	
 
    	
 
    
	
Clinical Monitoring, Data Management & CSR
    	
 
    	
[****]
    
	
Site costs / StV & PARC
    	
 
    	
[****]
    
	
Shipping
    	
 
    	
[****]
    
	
Central Lab assays
    	
 
    	
[****]
    
	
IMP, Storage, shipping & labelling
    	
 
    	
[****]
    
	
Medical Monitoring & DSMB
    	
 
    	
[****]
    
	
Additional Stability/ref standard
    	
 
    	
[****]
    
	
PK & Complement
    	
 
    	
[****]
    
	
MRI & central reader
    	
 
    	
[****]
    
	
Out of scope
    	
 
    	
[****]
    
	
Travel
    	
 
    	
[****]
    
	
TOTAL
    	
 
    	
$
    	
[****]
    

 

71

 

 

TRIAL OUTLINE

 

	
Study Title:
    	
 
    	
A Phase II Open-Label Study of the Safety,   Tolerability, Pharmacokinetics and Efficacy of ATL1103 300mg in Adult   Patients with Acromegaly.
    
	
 
    	
 
    	
 
    
	
Protocol Number:
    	
 
    	
1103-CT03
    
	
 
    	
 
    	
 
    
	
Test Drug:
    	
 
    	
ATL1103
    
	
 
    	
 
    	
 
    
	
Route of Administration:
    	
 
    	
Subcutaneous
    
	
 
    	
 
    	
 
    
	
Indication:
    	
 
    	
Acromegaly
    
	
 
    	
 
    	
 
    
	
Study Sponsor:
    	
 
    	
Antisense Therapeutics Limited
   6 Wallace Avenue
   Toorak Victoria 3142
   Australia
   Telephone +61 3 9827 8999
    
	
 
    	
 
    	
 
    
	
Protocol Version:
    	
 
    	
2.0
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
11 December 2014
    

 

CONFIDENTIALITY STATEMENT

 

All information relating to the study drug, Investigator’s Brochure, Clinical Protocol, Case Report Forms and any information and results developed during, or arising from the study, is considered confidential and proprietary information of Antisense Therapeutics Limited (‘Confidential Information’).  This Confidential Information shall remain the sole property of Antisense Therapeutics Limited, and shall not be disclosed to others without prior written consent from Antisense Therapeutics Limited and shall not be used except in the performance of this study.

 

PROTOCOL SYNOPSIS

 

	
Study Title:
    	
 
    	
A Phase II Open-Label Study of the Safety,   Tolerability, Pharmacokinetics and Efficacy of ATL1103 300mg in Adult   Patients with Acromegaly.
    
	
 
    	
 
    	
 
    
	
Study Period:
    	
 
    	
2014 - 2015
    
	
 
    	
 
    	
 
    
	
Objectives:
    	
 
    	
Primary objectives:

 

·      To evaluate the safety and tolerability of ATL1103 in   patients with acromegaly.
    

 

72

 

	
 
    	
 
    	
·      To evaluate the single dose and multiple dose pharmacokinetic   profiles of ATL1103 via the subcutaneous route in patients with acromegaly.

Secondary objectives:

·      To evaluate the effect of ATL1103 on   serum IGF-I levels in patients with acromegaly.

·      To explore the effects of ATL1103 on the following parameters   in patients with acromegaly:

·      GH,   GHBP

·      IGFBP-3,   ALS, IGF-II

·      Ring   size assessment

·      Signs   and Symptoms Scale
    
	
 
    	
 
    	
 
    
	
Methodology:
    	
 
    	
Single or multicentre, open-label, uncontrolled.
    
	
 
    	
 
    	
 
    
	
Number of patients:
    	
 
    	
It is planned that four patients will be enrolled.   Additional patients may be enrolled to ensure four complete the treatment   period.
    
	
 
    	
 
    	
 
    
	
Diagnosis and main criteria for inclusion:
    	
 
    	
Patients with:

·      Acromegaly due to pituitary adenoma.

·      Serum IGF-I levels >1.3 times the ULN (central lab   results).

·      Not on acromegaly treatment, or wiling   to cease acromegaly medications for a 6 week to 4 month washout period   (depending on medication).

·      Meet the following weight requirements:   Males >60kg and <100kg, females >60kg and <85kg.
    
	
 
    	
 
    	
 
    
	
Main criteria for exclusion:
    	
 
    	
·      Less than 1 year at Baseline since pituitary radiotherapy.

·      Less than 3 months at Screening since pituitary surgery.
    
	
 
    	
 
    	
 
    
	
Test product, dose, and mode of administration:
    	
 
    	
The ATL1103 drug product formulation is a 200 mg/mL   sterile, aqueous solution containing the ATL1103 drug substance in Water for   Injection with a small amount of either HCl or NaOH to adjust the pH of the   solution to 7.4.

A dose is 1.5mL delivered via one subcutaneous   injection to the abdomen.

Dosing regimen: Patients will   receive subcutaneous doses of ATL1103 300 mg twice a week (Day 1 and Day 4 or   Day 5) for 13 weeks.

Total of 26 doses.

Total of 7800 mg ATL1103.
    
	
 
    	
 
    	
 
    
	
Duration of study per patient:
    	
 
    	
Up to 28 days screening period, 13 weeks treatment   period followed by 8 weeks follow up period. Patients on other acromegaly   drugs who wish to participate in the study will also require a washout period   of up to 4 months 
    

 

73

 

	
 
    	
 
    	
(depending on drug) after consent.
    
	
 
    	
 
    	
 
    
	
Criteria for evaluation:
    	
 
    	
Safety and Tolerability

·      Physical examinations

·      Adverse event recording and assessment

·      Safety laboratory evaluations   (biochemistry, haematology, urinalysis)

·      Coagulation; Complement Bb

·      Vital signs

·      12-lead ECGs

·      Pituitary tumour size changes

Pharmacokinetics

·      Concentrations of ATL1103 in plasma   (single and multiple dose concentration-time profile)

·      Cmax, Tmax,   Cmin, T1/2, AUCinf and AUC of ATL1103

Efficacy

·      Primary efficacy variable: Serum IGF-I   levels (fasting)

·      Secondary efficacy variables:

·      GH,   GHBP

·      IGFBP-3,   ALS, IGF-II

·      Ring   size assessment

·      Signs   and Symptoms Scale
    
	
 
    	
 
    	
 
    
	
Statistical methods and analyses:
    	
 
    	
There is no sample size calculation. This study is   being conducted to provide initial data on tolerability of this dose level   and regimen, prior to considering further studies with this drug in this   indication.

Safety data will be summarized using descriptive   statistics.

The mean percentage change in IGF-I, and the mean   change in IGF-I, from baseline to week 14 shall be tested with a one-sample   t-test. The primary efficacy variable will be graphed over time for each   individual patient, and as observed mean with 95% CI.
   The proportion of patients with normalised IGF-I at week 14 or at any visit   will be reported, and the mean change in IGF-I from baseline to week 14 will   be tested with a one-sample t-test.

For continuous secondary efficacy variables and for   ring size assessment, the change from baseline to week 14 will be analysed   with a one-sample t-test. The continuous variables will be graphed over time   for each patient, and as mean and 95% confidence interval.

Signs and symptoms will be will be summarised by   assessing the change from baseline to week 14.
    

 

74

 

Article I.                                        Study Schedule of Assessments

 

[****]

 

75

 

1 Patients who have been taking acromegaly medications must stop and wash out for the period specified in the inclusion criterion, according the medication they were taking. The decision to wash-out should be made after review of entry criteria, and haematology, biochemistry and urinalysis results. The full screen visit must be performed post wash-out, within 28 days prior to Day 1

 

2 GH, glucose and insulin measured as part of OGTT when OGTT performed (all three measured before oral glucose load, and GH and glucose also measured at 30, 60, 90 and 120 mins post glucose load)

 

3 See section 8.2 for specific tests

 

4 At Baseline and Week 13, PK samples are collected at pre-dose, then 1, 2, 3, 4, and 6 hours post dose. For all other PK days, samples will be collected pre-dose only

 

5 For patients who have specifically given consent for this in the PICF

 

6 MRI to be performed after IGF-1 and GH eligibility have been confirmed, and before Day 1 visit.

 

7 Vials will be dispensed to patients for self-administration of doses - vials may be dispensed at visits as required to ensure patients have adequate supply between visits.

 

8 Doses will be administered by study staff for the first (Day 1) and last doses (Week 13 Day 4 or Day 7 depending on dosing regimen). All other doses will be self-administered by the patient

 

9 The End of Treatment (EOT) visit should be performed if patients withdraw from treatment early. Patients who withdraw consent should be asked to attend 28 days after last dose of

 

83

 

	
Schedule 4 — Initial press release
    

 

 

CONFIDENTIAL DRAFT 5.6.15 — NOT FOR DISTRIBUTION

 

Cortendo AB and Antisense Therapeutics Announce Licensing Agreement for ATL1103 for Acromegaly

 

May XX, 2015 — Goteborg, Sweden and Trevose, Pa., USA and Victoria, Australia — Cortendo AB (publ) [ticker: CORT on NOTC-A], a biopharmaceutical company focused on rare endocrine disorders and other rare diseases, and Antisense Therapeutics Limited [ticker: ANP on ASX] today announced that the companies have entered into an exclusive license agreement that provides Cortendo with development and commercialization rights to Antisense Therapeutics’ ATL1103 for endocrinology applications.

 

Under the terms of the agreement, Cortendo will provide Antisense Therapeutics with an initial upfront payment of $5 million (AUD $6.2 million), consisting of $3 million (AUD $3.7 million) in cash and a $2 million (AUD $2.5 million) investment in Antisense Therapeutics equity. Additional payments, contingent upon achieving specific development and commercialization milestones, may total up to $105 million (AUD $131 million) over the lifetime of the agreement. There is also the potential for royalty payments based upon sales performance.

 

“Cortendo is dedicated to addressing the needs of the rare disease community, and we are focused on developing novel therapeutic options and resources for rare diseases that will make a difference for patients, their families and physicians. The opportunity to advance ATL1103, a novel second-generation antisense therapeutic with potential utility in acromegaly, nicely complements COR-003, our existing Phase 3 asset for Cushing’s Syndrome, and builds upon our rare endocrine disease franchise,” said Matthew Pauls, president and chief executive officer of Cortendo. “We are also continuing to actively explore other partnerships in endocrinology as well as other therapeutic areas for rare diseases,” Pauls added.

 

Cortendo will be responsible for the ongoing clinical development of ATL1103 in endocrinology applications and will fund the associated future development, regulatory and drug manufacture costs. Antisense Therapeutics will retain commercialization rights for ATL1103 in endocrinology applications in Australia and New Zealand, and will also retain worldwide rights for other ATL1103 indications, and may utilize new ATL1103 data generated by Cortendo in pursuing these other indications, subject to certain terms and conditions.

 

“We are extremely pleased to deliver on our strategic partnering plans in endocrinology applications of ATL1103, and to be partnering with Cortendo given the company’s focus in endocrine disorders and other rare diseases. This is a significant deal not only for Antisense Therapeutics and its shareholders, but also for the Australian biotech industry as a whole,” said Mark Diamond, chief executive officer and managing director of Antisense Therapeutics. “We

 

76

 

aim to unlock further value from our pipeline, including ATL1102 for MS and other potential indications for ATL1103,” Diamond added.

 

Locust Walk and Destum Partners acted as Cortendo’s and Antisense Therapeutics’ transaction advisors, respectively, throughout the process.

 

About Antisense Therapeutics Limited

 

Antisense Therapeutics Limited is an Australian publicly listed biopharmaceutical drug discovery and development company. Its mission is to create, develop and commercialise second generation antisense pharmaceuticals for large unmet markets.  Antisense Therapeutics has 4 products in its development pipeline that it has in-licensed from Isis Pharmaceuticals Inc. (ISIS), a world leader in antisense drug development and commercialisation - ATL1102 (injection) which has successfully completed a Phase II efficacy and safety trial, significantly reducing the number of brain lesions in patients with relapsing-remitting multiple sclerosis (RRMS), ATL1103 drug designed to block GHr production which in a Phase II clinical trial, successfully reduced blood IGF-1 levels in patients with the growth disorder acromegaly, ATL1102 (inhaled) which is at the pre-clinical research stage as a potential treatment for asthma and ATL1101 a second-generation antisense drug at the pre-clinical stage being investigated as a potential treatment for cancer.

 

About Cortendo AB

 

Cortendo AB is a biopharmaceutical company incorporated in Sweden and based in the United States. Cortendo’s strategic focus is to be a leader in commercializing innovative medicines for rare endocrine disorders and other rare diseases. Cortendo’s lead product candidate, COR-003 (levoketoconazole), is a cortisol inhibitor that is currently being studied in the global Phase 3 SONICS trial for the treatment of Cushing’s syndrome. COR-003 (levoketoconazole) has received orphan designation from both the European Medicines Agency and the U.S. Food and Drug Administration. Cortendo’s intent is to independently commercialize its Orphan/Endocrine assets in key global markets.

 

About ATL1103

 

ATL1103 is a second-generation antisense drug designed to block growth hormone receptor (GHr) expression thereby reducing levels of the hormone insulin-like growth factor-1 (IGF-1) in the blood and is a potential treatment for diseases associated with excessive growth hormone and IGF-1 action. These diseases include acromegaly, an abnormal growth disorder of organs, face, hands and feet, diabetic retinopathy, a common disease of the eye and a major cause of blindness, diabetic nephropathy, a common disease of the kidney and major cause of kidney failure, and some forms of cancer. Acromegalic patients have significantly higher blood IGF-1 levels than healthy individuals. Reduction of these levels to normal is accepted by clinical authorities as the primary marker of an effective drug treatment for the disease. GHr is a clinically validated target in the treatment of acromegaly. In the case of diabetic retinopathy, published clinical studies have shown that treatments producing a reduction in IGF-1 levels retarded the progression of the disease and improve vision in patients. Scientific papers have been published on the suppression of blood IGF-1 levels in mice (Tachas et al., 2006, J Endocrinol 189, 147-54) and inhibition of retinopathy in a mouse retinopathy model (Wilkinson-Berka et al., 2007, Molecular Vision 13, 1529- 38) using an antisense drug to inhibit the production of GHr. In a Phase I study in healthy subjects, ATL1103 demonstrated a preliminary indication of drug activity, including suppression of IGF-1 and the target GHr (via circulating growth hormone binding protein) levels. In a Phase

 

77

 

II trial in acromegalic patients, ATL1103 met its primary efficacy endpoint by showing a statistically significant average reduction in sIGF-1 levels from baseline (P<0.0001) at week 14 (one week past the last dose) at the twice weekly 200 mg dose tested. Antisense is currently undertaking a higher dose study (2 x 300 mg/week) in acromegaly patients. Under its technology collaboration with ISIS, Antisense Therapeutics’ will pay ISIS a percentage (single digit) of the licensing revenue it earns from ATL1103.

 

Cortendo Forward-Looking Statements

 

This press release contains forward-looking statements concerning Cortendo that involve a number of risks and uncertainties. All statements other than statements of historical facts included in this press release, including, without limitation, statements regarding Cortendo’s strategy, anticipated investments, outcomes of product development efforts and objectives of management for future operations, may be deemed to be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Cortendo’s actual results, performance or achievements or industry results to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward-looking statements. Given these risks and uncertainties, investors should not place any undue reliance on forward-looking statements as a prediction of actual results. None of these forward-looking statements constitutes a guarantee of the future occurrence of such facts and data or of actual results.  These statements are based on data, assumptions and estimates that Cortendo believes are reasonable. The forward-looking statements contained in this document are made only as of the date hereof. Cortendo expressly disclaims any obligation or undertaking to release publicly any updates of any forward-looking statements contained in this press release to reflect any change in its actual results, assumptions, expectations or any change in events, factors, conditions or circumstances on which any forward-looking statement contained in this press release is based.

 

Antisense Therapeutics Forward-Looking Statements

 

This press release contains forward-looking statements concerning Antisense that involve a number of risks and uncertainties. All statements other than statements of historical facts included in this press release, including, without limitation, statements regarding Antisense’s, strategy, anticipated investments, outcomes of products development efforts and objectives of management for future operations, may be deemed to be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Antisense’s actual results, performance or achievements or industry results to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward-looking statements. Given these risks and uncertainties, investors should not place any undue reliance on forward-looking statements as a prediction of actual results. None of these forward-looking statements constitutes a guarantee of the future occurrence of such facts and data or of actual results.  These statements are based on data, assumptions and estimates that Antisense believes are reasonable. The forward-looking statements contained in this document are made only as of the date hereof. Antisense expressly disclaims any obligation or undertaking to release publicly any updates of any forward-looking statements contained in this press release to reflect any change in its actual results, assumptions, expectations or any change in events, factors, conditions or circumstances on which any forward-looking statement contained in this press release is based.

 

78

 

Antisense Therapeutics Risk and Uncertainty

 

Pharmaceutical R&D involves scientific uncertainty and long lead times.  Risks inherent in these activities include uncertainty of the outcome of Antisense’s research results; difficulties or delays in development of any of Antisense’s drug candidates; and general uncertainty related to the scientific development of a new medical therapy.

 

Due to the significant costs in drug discovery and development it is common for biotechnology companies to partner with larger biotechnology or pharmaceutical companies to help progress drug development. There is no guarantee that the Antisense will be able to maintain such partnerships or license its products in the future.

 

Antisense will always remain subject to the material risk arising from the intense competition that exists in the pharmaceutical industry. One or more competitive products may be in human clinical development now or may enter into human clinical development in the future. Competitive products focusing on or directed at the same diseases or protein targets as those that Antisense is working on may be developed by pharmaceutical companies or other antisense drug companies including Isis or any of its other collaboration partners or licensees. Such products could prove more efficacious, safer, more cost effective or more acceptable to patients than Antisense’s product.

 

Securing rights to technology and patents is an integral part of potential product value in the outcomes of pharmaceutical R&D.  Antisense’s success depends, in part, on its ability to obtain patents, maintain trade secret protection and operate without infringing the proprietary rights of third parties.

 

Other risk factors include, but are not limited to, those discussed in the Antisense Therapeutics Limited Annual Report for the year ended 30 June 2014 and the Half Year Report for the period to 31 December 2014, copies of which are available from the company or at www.antisense.com.au.

 

Contacts:

 

Antisense Therapeutics:

 

Mark Diamond

+61 (0) 3 9827 8999

 

Cortendo AB:
  Elixir Health Public Relations
 Lindsay Rocco
 +1 862-596-1304
 lrocco@elixirhealthpr.com

 

Sweden

Box 47

SE-433 21 Partille

Tel. / Fax. +46 (0) 31-263010

USA

900 Northbrook Drive

Suite 200

Trevose, PA 19053

Tel. +1 610-254-9200

Fax. +1 610-254-8005

 

79

 

	
Signing page
    

 

EXECUTED as an agreement.

 

Licensee

 

Executed by Cortendo Cayman Ltd

 

 

	
/s/ Jenni Blomquist
    	
 
    
	
Signature of   authorised officer
    	
 
    
	
 
    	
 
    
	
Jenni Blomquist
    	
 
    
	
 
    	
 
    
	
Name of authorised   officer (print)
    	
 
    
	
 
    	
 
    
	
Assistant Secretary
    	
 
    
	
 
    	
 
    
	
Title of authorised   officer (print)
    	
 
    

 

 

Licensor

 

	
Executed by Antisense Therapeutics   Ltd
   ACN 095 060 745
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Signature of director
    	
 
    	
Signature of   director/company secretary
   (Please delete as applicable)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name of director   (print)
    	
 
    	
Name of company   secretary (print)
    	
 
    

 

80

 

	
Signing page
    

 

EXECUTED as an agreement.

 

Licensee

 

Executed by Cortendo Cayman Ltd

 

 

	
 
    	
 
    
	
Signature of   authorised officer
    	
 
    
	
 
    	
 
    
	
Jenni Blomquist
    	
 
    
	
 
    	
 
    
	
Name of authorised   officer (print)
    	
 
    
	
 
    	
 
    
	
Assistant Secretary
    	
 
    
	
 
    	
 
    
	
Title of authorised   officer (print)
    	
 
    

 

 

Licensor

 

	
Executed by Antisense Therapeutics   Ltd
   ACN 095 060 745
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
/s/ Mark Diamond
    	
 
    	
/s/ Phillip Hains
    	
 
    
	
Signature of director
    	
 
    	
Signature of   director/company secretary
   (Please delete as applicable)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Mark Diamond
    	
 
    	
Phillip Hains
    	
 
    
	
Name of director   (print)
    	
 
    	
Name of company   secretary (print)
    	
 
    

 

81

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