Document:

Exhibit 10.4

 

VITAE PHARMACEUTICALS, INC.

 

2013 STOCK PLAN

 

ADOPTED ON NOVEMBER 20, 2013

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
SECTION 1.
    	
ESTABLISHMENT AND PURPOSE
    	
1
    
	
 
    	
 
    
	
SECTION 2.
    	
ADMINISTRATION
    	
1
    
	
(a)
    	
Committees of the Board of Directors
    	
1
    
	
(b)
    	
Authority of the Board of Directors
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
ELIGIBILITY
    	
1
    
	
(a)
    	
General Rule
    	
1
    
	
(b)
    	
Ten-Percent Stockholders
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
STOCK SUBJECT TO PLAN
    	
2
    
	
(a)
    	
Basic Limitation
    	
2
    
	
(b)
    	
Additional Shares
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
TERMS AND CONDITIONS OF   AWARDS OR SALES
    	
2
    
	
(a)
    	
Stock Grant or Purchase Agreement
    	
2
    
	
(b)
    	
Duration of Offers and Nontransferability of Rights
    	
3
    
	
(c)
    	
Purchase Price
    	
3
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
TERMS AND CONDITIONS OF   OPTIONS
    	
3
    
	
(a)
    	
Stock Option Agreement
    	
3
    
	
(b)
    	
Number of Shares
    	
3
    
	
(c)
    	
Exercise Price
    	
3
    
	
(d)
    	
Exercisability
    	
3
    
	
(e)
    	
Basic Term
    	
4
    
	
(f)
    	
Termination of Service (Except by Death)
    	
4
    
	
(g)
    	
Leaves of Absence
    	
4
    
	
(h)
    	
Death of Optionee
    	
4
    
	
(i)
    	
Restrictions on Transfer of Options
    	
5
    
	
(j)
    	
No Rights as a Stockholder
    	
5
    
	
(k)
    	
Modification, Extension and Assumption of Options
    	
5
    
	
(l)
    	
Company’s Right to Cancel Certain Options
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 7.
    	
PAYMENT FOR SHARES
    	
6
    
	
(a)
    	
General Rule
    	
6
    
	
(b)
    	
Services Rendered
    	
6
    
	
(c)
    	
Promissory Note
    	
6
    
	
(d)
    	
Surrender of Stock
    	
6
    
	
(e)
    	
Exercise/Sale
    	
6
    
	
(f)
    	
Net Exercise
    	
6
    
	
(g)
    	
Other Forms of Payment
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
ADJUSTMENT OF SHARES
    	
7
    
	
(a)
    	
General
    	
7
    

 

i

 

	
(b)
    	
Corporate Transactions
    	
7
    
	
(c)
    	
Reservation of Rights
    	
9
    
	
 
    	
 
    
	
SECTION 9.
    	
TERMS AND CONDITIONS OF   RESTRICTED STOCK UNITS
    	
9
    
	
(a)
    	
Restricted Stock Unit Agreement
    	
9
    
	
(b)
    	
Payment for Restricted Stock Units
    	
9
    
	
(c)
    	
Vesting Conditions
    	
9
    
	
(d)
    	
Forfeiture
    	
9
    
	
(e)
    	
Voting and Dividend Rights
    	
10
    
	
(f)
    	
Form and Time of Settlement of Restricted Stock Units
    	
10
    
	
(g)
    	
Death of Recipient
    	
10
    
	
(h)
    	
Creditors’ Rights
    	
10
    
	
(i)
    	
Modification, Extension and Assumption of Restricted Stock Units
    	
10
    
	
(j)
    	
Restrictions on Transfer of Restricted Stock Units
    	
10
    
	
 
    	
 
    	
 
    
	
SECTION 10.
    	
PRE-EXERCISE INFORMATION   REQUIREMENT
    	
11
    
	
(a)
    	
Application of Requirement
    	
11
    
	
(b)
    	
Scope of Requirement
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 11.
    	
MISCELLANEOUS PROVISIONS
    	
11
    
	
(a)
    	
Securities Law Requirements
    	
11
    
	
(b)
    	
No Retention Rights
    	
11
    
	
(c)
    	
Treatment as Compensation
    	
11
    
	
(d)
    	
Governing Law
    	
11
    
	
(e)
    	
Conditions and Restrictions on Shares
    	
11
    
	
(f)
    	
Tax Matters
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 12.
    	
DURATION AND AMENDMENTS;   STOCKHOLDER APPROVAL
    	
13
    
	
(a)
    	
Term of the Plan
    	
13
    
	
(b)
    	
Right to Amend or Terminate the Plan
    	
13
    
	
(c)
    	
Effect of Amendment or Termination
    	
13
    
	
(d)
    	
Stockholder Approval
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 13.
    	
DEFINITIONS
    	
13
    

 

ii

 

VITAE PHARMACEUTICALS, INC. 2013 STOCK PLAN

 

SECTION 1.                         ESTABLISHMENT AND PURPOSE.

 

The purpose of this Plan is to offer persons selected by the Company an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by acquiring Shares of the Company’s Stock. The Plan provides for the direct award or sale of Shares, the grant of Options to purchase Shares and the grant of Restricted Stock Units. Options granted under the Plan may be ISOs intended to qualify under Code Section 422 or NSOs which are not intended to so qualify.

 

Capitalized terms are defined in Section 13.

 

SECTION 2.                         ADMINISTRATION.

 

(a)                                 Committees of the Board of Directors. The Plan may be administered by one or more Committees. Each Committee shall consist, as required by applicable law, of one or more members of the Board of Directors who have been appointed by the Board of Directors. Each Committee shall have such authority and be responsible for such functions as the Board of Directors has assigned to it. If no Committee has been appointed, the entire Board of Directors shall administer the Plan. Any reference to the Board of Directors in the Plan shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function.

 

(b)                                 Authority of the Board of Directors. Subject to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan. Notwithstanding anything to the contrary in the Plan, with respect to the terms and conditions of awards granted to Participants outside the United States, the Board of Directors may vary from the provisions of the Plan to the extent it determines it necessary and appropriate to do so; provided that it may not vary from those Plan terms requiring stockholder approval pursuant to Section 12(d) below. All decisions, interpretations and other actions of the Board of Directors shall be final and binding on all Purchasers, all Optionees, all Recipients and all persons deriving their rights from a Purchaser, Optionee or Recipient.

 

SECTION 3.                         ELIGIBILITY.

 

(a)                                 General Rule. Only Employees, Outside Directors and Consultants shall be eligible for the grant of NSOs, Restricted Stock Units or the direct award or sale of Shares.(1) Only Employees shall be eligible for the grant of ISOs.

 

(1) Note that special considerations apply if the Company proposes to grant awards to an Employee or Consultant of a Parent company.

 

 

(b)                                 Ten-Percent Stockholders. A person who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not be eligible for the grant of an ISO unless (i) the Exercise Price is at least 110% of the Fair Market Value of a Share on the Date of Grant and (ii) such ISO by its terms is not exercisable after the expiration of five years from the Date of Grant. For purposes of this Subsection (b), in determining stock ownership, the attribution rules of Code Section 424(d) shall be applied.

 

SECTION 4.                         STOCK SUBJECT TO PLAN.

 

(a)                                 Basic Limitation. Not more than 46,287,107 Shares, which includes 12,205,519 Shares plus up to 101,220 Shares subject to outstanding options under the Company’s 2004 Stock Plan (the “2004 Plan”) to the extent they are added to the Plan pursuant to Section 4(b) plus up to 33,980,388 Shares subject to outstanding options under the Company’s 2001 Stock Plan (the “2001 Plan” and together with the 2004 Plan, the “Prior Plans”) to the extent they are added to the Plan pursuant to Section 4(b), may be issued under the Plan, subject to Subsection (b) below and Section 8(a).(2) All of these Shares may be issued upon the exercise of ISOs. The number of Shares that are subject to Awards outstanding at any time under the Plan may not exceed the number of Shares that then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. Shares offered under the Plan may be authorized but unissued Shares or treasury Shares.

 

(b)                                 Additional Shares. In the event that Shares previously issued under the Plan are reacquired by the Company, such Shares shall be added to the number of Shares then available for issuance under the Plan. In the event that Shares that otherwise would have been issuable under the Plan are withheld by the Company in payment of the Purchase Price, Exercise Price or withholding taxes, such Shares shall remain available for issuance under the Plan. In the event that an outstanding Option, Restricted Stock Unit or other right for any reason expires or is canceled before being exercised or settled in full, the Shares allocable to the unexercised or unsettled portion of such Option, Restricted Stock Unit or other right shall be added to the number of Shares then available for issuance under the Plan. To the extent a Restricted Stock Unit is settled in cash, the cash settlement shall not reduce the number of Shares remaining available for issuance under the Plan. Any Share subject to an outstanding option under the Prior Plans, as they may be amended, that subsequently expires, or is cancelled, terminated or forfeited for any reason without having been exercised or is repurchased by the Company shall be automatically, and without any further action on the part of the Company or any grantee, added to the “pool” of reserved Shares hereunder and be available for grant for the purpose of this Plan (unless this Plan shall have been terminated) unless the Board determines otherwise.

 

SECTION 5.                         TERMS AND CONDITIONS OF AWARDS OR SALES.

 

(a)                                 Stock Grant or Purchase Agreement. Each award of Shares under the Plan shall be evidenced by a Stock Grant Agreement between the Grantee and the Company.

 

(2) Please refer to Exhibit A for a schedule of the initial share reserve and any subsequent increases in the reserve.

 

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Each sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Grant Agreement or Stock Purchase Agreement. The provisions of the various Stock Grant Agreements and Stock Purchase Agreements entered into under the Plan need not be identical.

 

(b)                                 Duration of Offers and Nontransferability of Rights. Any right to purchase Shares under the Plan (other than an Option or Restricted Stock Unit) shall automatically expire if not exercised by the Purchaser within 30 days (or such other period as may be specified in the Award Agreement) after the grant of such right was communicated to the Purchaser by the Company. Such right is not transferable and may be exercised only by the Purchaser to whom such right was granted.

 

(c)                                  Purchase Price. The Board of Directors shall determine the Purchase Price of Shares to be offered under the Plan at its sole discretion. The Purchase Price shall be payable in a form described in Section 7.

 

SECTION 6.                         TERMS AND CONDITIONS OF OPTIONS.

 

(a)                                 Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. The Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Board of Directors deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

 

(b)                                 Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 8. The Stock Option Agreement shall also specify whether the Option is an ISO or a NSO.

 

(c)                                  Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an Option shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant, and in the case of an ISO a higher percentage may be required by Section 3(b). Subject to the preceding sentence, the Exercise Price shall be determined by the Board of Directors at its sole discretion. The Exercise Price shall be payable in a form described in Section 7. This Subsection (c) shall not apply to an Option granted pursuant to an assumption of, or substitution for, another option in a manner that complies with Code Section 424(a) (whether or not the Option is an ISO).

 

(d)                                 Exercisability. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. No Option shall be exercisable unless the Optionee (i) has delivered an executed copy of the Stock Option Agreement to the Company or (ii) otherwise agrees to be bound by the terms of the Stock Option Agreement. The

 

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Board of Directors shall determine the exercisability provisions of the Stock Option Agreement at its sole discretion.

 

(e)                             Basic Term. The Stock Option Agreement shall specify the term of the Option. The term shall not exceed 10 years from the Date of Grant, and in the case of an ISO, a shorter term may be required by Section 3(b). Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an Option is to expire.

 

(f)                              Termination of Service (Except by Death). If an Optionee’s Service terminates for any reason other than the Optionee’s death, then the Optionee’s Options shall expire on the earliest of the following dates:

 

(i)                                     The expiration date determined pursuant to Subsection (e) above;

 

(ii)                                  The date three months after the termination of the Optionee’s Service for any reason other than Disability, or such earlier or later date as the Board of Directors may determine (but in no event earlier than 30 days after the termination of the Optionee’s Service); or

 

(iii)                               The date six months after the termination of the Optionee’s Service by reason of Disability, or such later date as the Board of Directors may determine.

 

The Optionee may exercise all or part of the Optionee’s Options at any time before the expiration of such Options under the preceding sentence, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination). The balance of such Options shall lapse when the Optionee’s Service terminates. In the event that the Optionee dies after the termination of the Optionee’s Service but before the expiration of the Optionee’s Options, all or part of such Options may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination).

 

(g)                            Leaves of Absence. For purposes of Subsection (f) above, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing and if continued crediting of Service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).

 

(h)                            Death of Optionee. If an Optionee dies while the Optionee is in Service, then the Optionee’s Options shall expire on the earlier of the following dates:

 

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(i)                                     The expiration date determined pursuant to Subsection (e) above; or

 

(ii)                                  The date 12 months after the Optionee’s death, or such earlier or later date as the Board of Directors may determine (but in no event earlier than six months after the Optionee’s death).

 

All or part of the Optionee’s Options may be exercised at any time before the expiration of such Options under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s death (or became exercisable as a result of the death) and the underlying Shares had vested before the Optionee’s death (or vested as a result of the Optionee’s death). The balance of such Options shall lapse when the Optionee dies.

 

(i)                                    Restrictions on Transfer of Options. An Option shall be transferable by the Optionee only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as provided in the next sentence. If the applicable Stock Option Agreement so provides, an NSO shall also be transferable by gift or domestic relations order to a Family Member of the Optionee. An ISO may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative.

 

(j)                                    No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by the Optionee’s Option until such person files a notice of exercise, pays the Exercise Price and satisfies all applicable withholding taxes pursuant to the terms of such Option.

 

(k)                                 Modification, Extension and Assumption of Options. Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options or a different type of award for the same or a different number of Shares and at the same or a different Exercise Price (if applicable). The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations under such Option.

 

(l)                                    Company’s Right to Cancel Certain Options. Any other provision of the Plan or a Stock Option Agreement notwithstanding, the Company shall have the right at any time to cancel an Option that was not granted in compliance with Rule 701 under the Securities Act. Prior to canceling such Option, the Company shall give the Optionee not less than 30 days’ notice in writing. If the Company elects to cancel such Option, it shall deliver to the Optionee consideration with an aggregate Fair Market Value equal to the excess of (i) the Fair Market Value of the Shares subject to such Option as of the time of the cancellation over (ii) the Exercise Price of such Option. The consideration may be delivered in the form of cash or cash equivalents, in the form of Shares, or a combination of both. If the consideration would be a negative amount, such Option may be cancelled without the delivery of any consideration.

 

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SECTION 7.                         PAYMENT FOR SHARES.

 

(a)                                 General Rule. The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as otherwise provided in this Section 7. In addition, the Board of Directors in its sole discretion may also permit payment through any of the methods described in (b) through (g) below.

 

(b)                                 Services Rendered. Shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award.

 

(c)                                  Promissory Note. All or a portion of the Purchase Price or Exercise Price (as the case may be) of Shares issued under the Plan may be paid with a full-recourse promissory note. The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Board of Directors (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note.

 

(d)                                 Surrender of Stock. All or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when the Option is exercised.

 

(e)                                  Exercise/Sale. If the Stock is publicly traded, all or part of the Exercise Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company.

 

(f)                                   Net Exercise. An Option may permit exercise through a “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issued upon exercise by the largest whole number of Shares having an aggregate Fair Market Value (determined by the Board of Directors as of the exercise date) that does not exceed the aggregate Exercise Price or the sum of the aggregate Exercise Price plus all or a portion of the minimum amount required to be withheld under applicable tax law (with the Company accepting from the Optionee payment of cash or cash equivalents to satisfy any remaining balance of the aggregate Exercise Price and, if applicable, any additional withholding obligation not satisfied through such reduction in Shares); provided that to the extent Shares subject to an Option are withheld in this manner, the number of Shares subject to the Option following the net exercise will be reduced by the sum of the number of Shares withheld and the number of Shares delivered to the Optionee as a result of the exercise.

 

(g)                                 Other Forms of Payment. To the extent that an Award Agreement so provides, the Purchase Price or Exercise Price of Shares issued under the Plan may be paid in any other form permitted by the Delaware General Corporation Law, as amended.

 

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SECTION 8.                         ADJUSTMENT OF SHARES.

 

(a)                                 General. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a reclassification, or any other increase or decrease in the number of issued shares of Stock effected without receipt of consideration by the Company, proportionate adjustments shall automatically be made in each of (i) the number and kind of Shares available for future grants under Section 4, (ii) the number and kind of Shares covered by each outstanding Option, Restricted Stock Unit and any outstanding and unexercised right to purchase Shares that has not yet expired pursuant to Section 5(b), (iii) the Exercise Price under each outstanding Option and the Purchase Price applicable to any unexercised stock purchase right described in clause (ii) above, and (iv) any repurchase price that applies to Shares granted under the Plan pursuant to the terms of a Company repurchase right under the applicable Award Agreement. In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Stock, a recapitalization, a spin-off, or a similar occurrence, the Board of Directors at its sole discretion may make appropriate adjustments in one or more of the items listed in clauses (i) through (iv) above. No fractional Shares shall be issued under the Plan as a result of an adjustment under this Section 8(a), although the Board of Directors in its sole discretion may make a cash payment in lieu of fractional Shares.

 

(b)                                 Corporate Transactions. In the event that the Company is a party to a merger or consolidation, or in the event of a sale of all or substantially all of the Company’s stock or assets, all Shares acquired under the Plan and all Awards outstanding on the effective date of the transaction shall be treated in the manner described in the definitive transaction agreement (or, in the event the transaction does not entail a definitive agreement to which the Company is party, in the manner determined by the Board of Directors in its capacity as administrator of the Plan, with such determination having final and binding effect on all parties), which agreement or determination need not treat all Awards (or all portions of an Award) in an identical manner. The treatment specified in the transaction agreement or as determined by the Board of Directors may include (without limitation) one or more of the following with respect to each outstanding Award:

 

(i)                                     Continuation of the Awards by the Company (if the Company is the surviving corporation).

 

(ii)                                  Assumption of the Awards by the surviving corporation or its parent in a manner that complies with Code Section 424(a) (whether or not the Option is an ISO).

 

(iii)                               Substitution by the surviving corporation or its parent of equivalent awards for such outstanding Awards (including but not limited to an award to acquire the same consideration paid to the holders of Shares in the transaction) provided that the substitution of Options shall be in a manner that complies with Code Section 424(a) (whether or not the Option is an ISO).

 

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(iv)                              Cancellation of the Option and a payment to the Optionee with respect to each Share subject to the portion of the Option that is vested as of the transaction date equal to the excess of (A) the value, as determined by the Board of Directors in its absolute discretion, of the property (including cash) received by the holder of a share of Stock as a result of the transaction, over (B) the per-Share Exercise Price of the Option (such excess, the “Spread”). Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent having a value equal to the Spread. In addition, any escrow, holdback, earn-out or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Stock. If the Spread applicable to an Option is zero or a negative number, then the Option may be cancelled without making a payment to the Optionee.

 

(v)                                 Cancellation of the Option without the payment of any consideration; provided that the Optionee shall be notified of such treatment and given an opportunity to exercise the Option (to the extent the Option is vested or becomes vested as of the effective date of the transaction) during a period of not less than five (5) business days preceding the effective date of the transaction, unless (A) a shorter period is required to permit a timely closing of the transaction and (B) such shorter period still offers the Optionee a reasonable opportunity to exercise the Option. Any exercise of the Option during such period may be contingent upon the closing of the transaction.

 

(vi)                              Suspension of the Optionee’s right to exercise the Option during a limited period of time preceding the closing of the transaction if such suspension is administratively necessary to permit the closing of the transaction.

 

(vii)                           Termination of any right the Optionee has to exercise the Option prior to vesting in the Shares subject to the Option (i.e., “early exercise”), such that following the closing of the transaction the Option may only be exercised to the extent it is vested.

 

(viii)                        Cancellation of outstanding Restricted Stock Units and a payment to the Recipient with respect to each Share subject to the portion of the Restricted Stock Unit that is vested as of the closing of the transaction equal to the value, as determined by the Board of Directors in its absolute discretion, of the property (including cash) received by the holder of a share of Stock as a result of the transaction (the “Transaction Value”). Such payment shall be made in the form of cash, cash equivalents or securities of the surviving corporation or its parent having a value equal to the Transaction Value. In addition, any escrow, holdback, earn-out or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Stock. In the event that a Restricted Stock Unit is subject to Code Section 409A, the payment described in this Section 8(b)(viii) shall be made on the settlement date specified in the applicable Restricted Stock Unit

 

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Agreement, provided that settlement may be accelerated in accordance with Treasury Regulation 1 .409A-3(j)(4).

 

For the avoidance of doubt, the Board of Directors has discretion to accelerate, in whole or part, the vesting and exercisability of an Option or Award in connection with a corporate transaction covered by this Section 8(b). Any action taken under this Section 8(b) must either preserve a Restricted Stock Unit’s status as exempt from Code Section 409A or comply with Code Section 409A. Immediately following a transaction, outstanding Awards shall terminate and cease to be outstanding, except to the extent such Awards have been continued, assumed or substituted, as described in Sections 8(b)(i), (ii) and/or (iii).

 

(c)                                  Reservation of Rights. Except as provided in this Section 8, a Participant shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of stock of any class. Any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

 

SECTION 9.        TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS.

 

(a)                                 Restricted Stock Unit Agreement. Each grant of Restricted Stock Units under the Plan shall be evidenced by a Restricted Stock Unit Agreement between the Recipient and the Company. Such Restricted Stock Units shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Restricted Stock Unit Agreement. The provisions of the various Restricted Stock Unit Agreements entered into under the Plan need not be identical.

 

(b)                                 Payment for Restricted Stock Units. No cash consideration shall be required of the Recipient in connection with the grant of Restricted Stock Units.

 

(c)                                  Vesting Conditions. Restricted Stock Units may or may not be subject to vesting, as determined in the discretion of the Board of Directors. Vesting may occur, in full or in installments, upon the satisfaction of vesting conditions specified in the Restricted Stock Unit Agreement, which may include continued employment or other Service, achievement of performance goals and/or such other criteria as the Board of Directors may determine. A Restricted Stock Unit Agreement may provide for accelerated vesting upon specified events.

 

(d)                                 Forfeiture. Unless a Restricted Stock Unit Agreement provides otherwise, upon termination of the Participant’s Service and upon such other times specified in the Restricted Stock Unit Agreement, any unvested Restricted Stock Units shall be forfeited to the Company. For this purpose, Service will not cease if a Participant is on a bona fide leave of absence that was approved by the Company in writing and if continued crediting of Service for

 

9

 

this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).

 

(e)                                  Voting and Dividend Rights. The holders of Restricted Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Restricted Stock Unit granted under the Plan may, at the discretion of the Board of Directors, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Restricted Stock Unit is outstanding. Dividend equivalents may be converted into additional Restricted Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares or in a combination of both. Prior to distribution, any dividend equivalents that are not paid shall be subject to the same conditions and restrictions as the Restricted Stock Units to which they attach.

 

(f)                                   Form and Time of Settlement of Restricted Stock Units. Settlement of vested Restricted Stock Units may be made in the form of (i) cash, (ii) Shares or (iii) any combination of both, as determined by the Board of Directors. The actual number of Restricted Stock Units eligible for settlement may be larger or smaller than the number included in the original award, based on predetermined performance factors. Vested Restricted Stock Units shall be settled in such manner and at such time(s) as specified in the Restricted Stock Unit Agreement. Until Restricted Stock Units are settled, the number of such Restricted Stock Units shall be subject to adjustment pursuant to Section 8.

 

(g)                                 Death of Recipient. Any Restricted Stock Units that become distributable after the Recipient’s death shall be distributed to the Recipient’s beneficiary or beneficiaries. Each Recipient of Restricted Stock Units under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, than any Restricted Stock Units that become payable after the Participant’s death shall be distributed to his or her estate.

 

(h)                                 Creditors’ Rights. A holder of Restricted Stock Unit shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Restricted Stock Unit Agreement.

 

(i)                                    Modification, Extension and Assumption of Restricted Stock Units. Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Restricted Stock Units. The foregoing notwithstanding, no modification of a Restricted Stock Unit shall, without the consent of the Participant, impair the Participant’s rights or increase the Participant’s obligations under such Restricted Stock Unit.

 

(j)                                    Restrictions on Transfer of Restricted Stock Units. A Restricted Stock Unit shall be transferable by the Recipient only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution or, if the Board of Directors so provides, in a Restricted Stock Unit Agreement or otherwise, a Restricted Stock Unit shall also be transferable by gift or domestic relations order to a Family Member of the Participant.

 

10

 

SECTION 10.      PRE-EXERCISE INFORMATION REQUIREMENT.

 

(a)                                 Application of Requirement. This Section 10 shall apply only during a period that (i) commences when the Company begins to rely on the exemption described in Rule 12h-1(f)(1) under the Exchange Act, as determined by the Company in its sole discretion, and (ii) ends on the earlier of (A) the date when the Company ceases to rely on such exemption, as determined by the Company in its sole discretion, or (B) the date when the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. In addition, this Section 10 shall in no event apply to an Optionee after he or she has fully exercised all of his or her Options.

 

(b)                                 Scope of Requirement. The Company shall provide to each Optionee the information described in Rule 701(e)(3), (4) and (5) under the Securities Act. Such information shall be provided at six-month intervals, and the financial statements included in such information shall not be more than 180 days old. The foregoing notwithstanding, the Company shall not be required to provide such information unless the Optionee has agreed in writing, on a form prescribed by the Company, to keep such information confidential.

 

SECTION 11.      MISCELLANEOUS PROVISIONS.

 

(a)                                 Securities Law Requirements. Shares shall not be issued under the Plan unless, in the opinion of counsel acceptable to the Board of Directors, the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded. The Company shall not be liable for a failure to issue Shares as a result of such requirements.

 

(b)                                 No Retention Rights. Nothing in the Plan or in any right or Award granted under the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

(c)                                  Treatment as Compensation. Any compensation that an individual earns or is deemed to earn under this Plan shall not be considered a part of his or her compensation for purposes of calculating contributions, accruals or benefits under any other plan or program that is maintained or funded by the Company, a Parent or a Subsidiary.

 

(d)                                 Governing Law. The Plan and all awards, sales and grants under the Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

 

(e)                                  Conditions and Restrictions on Shares. Shares issued under the Plan shall be subject to such forfeiture conditions, rights of repurchase, rights of first refusal, other transfer restrictions and such other terms and conditions as the Board of Directors may

 

11

 

determine. Such conditions and restrictions shall be set forth in the applicable Award Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally. In addition, Shares issued under the Plan shall be subject to conditions and restrictions imposed either by applicable law or by Company policy, as adopted from time to time, designed to ensure compliance with applicable law or laws with which the Company determines in its sole discretion to comply including in order to maintain any statutory, regulatory or tax advantage.

 

(f)                              Tax Matters.

 

(i)                                     As a condition to the Award, grant, issuance, vesting, purchase, exercise or transfer of any Award, or Shares issued pursuant to any Award, granted under this Plan, the Participant shall make such arrangements as the Board of Directors may require or permit for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such event.

 

(ii)                                  Unless otherwise expressly set forth in an Award Agreement, it is intended that awards granted under the Plan shall be exempt from Code Section 409A, and any ambiguity in the terms of an Award Agreement and the Plan shall be interpreted consistently with this intent. To the extent an award is not exempt from Code Section 409A (any such award, a “409A Award”), any ambiguity in the terms of such award and the Plan shall be interpreted in a manner that to the maximum extent permissible supports the award’s compliance with the requirements of that statute. Notwithstanding anything to the contrary permitted under the Plan, in no event shall a modification of an Award not already subject to Code Section 409A be given effect if such modification would cause the Award to become subject to Code Section 409A unless the parties explicitly acknowledge and consent to the modification as one having that effect. A 409A Award shall be subject to such additional rules and requirements as specified by the Board of Directors from time to time in order for it to comply with the requirements of Code Section 409A. In this regard, if any amount under a 409A Award is payable upon a “separation from service” to an individual who is considered a “specified employee” (as each term is defined under Code Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to Section 409A(a)(1). In addition, if a transaction subject to Section 8(b) constitutes a payment event with respect to any 409A Award, then the transaction with respect to such award must also constitute a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Code Section 409A.

 

(iii)                               Neither the Company nor any member of the Board of Directors shall have any liability to a Participant in the event an award held by the Participant fails to achieve its intended characterization under applicable tax law.

 

12

 

SECTION 12.      DURATION AND AMENDMENTS; STOCKHOLDER APPROVAL.

 

(a)                                 Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors, subject to approval of the Company’s stockholders under Subsection (d) below. The Plan shall terminate automatically 10 years after the later of (i) the date when the Board of Directors adopted the Plan or (ii) the date when the Board of Directors approved the most recent increase in the number of Shares reserved under Section 4 that was also approved by the Company’s stockholders. The Plan may be terminated on any earlier date pursuant to Subsection (b) below.

 

(b)                                 Right to Amend or Terminate the Plan. Subject to Subsection (d) below, the Board of Directors may amend, suspend or terminate the Plan at any time and for any reason.

 

(c)                                  Effect of Amendment or Termination. No Shares shall be issued or sold and no Option or Restricted Stock Unit granted under the Plan after the termination thereof, except upon exercise of an Option or settlement of a Restricted Stock Unit (or any other right to purchase Shares) granted under the Plan prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Award previously granted under the Plan.

 

(d)                                 Stockholder Approval. To the extent required by applicable law, the Plan will be subject to approval of the Company’s stockholders within 12 months of its adoption date. To the extent required by applicable law, any amendment of the Plan will be subject to the approval of the Company’s stockholders within 12 months of the amendment date if it (i) increases the number of Shares available for issuance under the Plan (except as provided in Section 8), or (ii) materially changes the class of persons who are eligible for the grant of ISOs. In addition, an amendment effecting any other material change to the Plan terms will be subject to approval of the Company’s stockholder only if required by applicable law. Stockholder approval shall not be required for any other amendment of the Plan.

 

SECTION 13.      DEFINITIONS.

 

(a)                                 “Award” means any award granted under the Plan, including an Option, Restricted Stock Unit or the grant or sale of Shares.

 

(b)                                 “Award Agreement” means a Stock Grant Agreement, Stock Option Agreement, Restricted Stock Unit Agreement or Stock Purchase Agreement.

 

(c)                                  “Board of Directors” means the Board of Directors of the Company, as constituted from time to time.

 

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

 

(e)                                  “Committee” means a committee of the Board of Directors, as described in Section 2(a).

 

13

 

(f)                                   “Company” means Vitae Pharmaceuticals, Inc., a Delaware corporation.

 

(g)                                  “Consultant” means a person, excluding Employees and Outside Directors, who performs bona fide services for the Company, a Parent(3) or a Subsidiary as a consultant or advisor and who qualifies as a consultant or advisor under Rule 701(c)(1) of the Securities Act or under Instruction A.1.(a)(1) of Form S-8 under the Securities Act.

 

(h)                                 “Date of Grant” means the date of grant specified in the applicable Stock Option Agreement, which date shall be the later of (i) the date on which the Board of Directors resolved to grant the Option or (ii) the first day of the Optionee’s Service.

 

(i)                                     “Disability” means that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

 

(j)                                    “Employee” means any individual who is a common-law employee of the Company, a Parent(4) or a Subsidiary.

 

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

 

(l)                                     “Exercise Price” means the amount for which one Share may be purchased upon exercise of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement.

 

(m)                             “Fair Market Value” means the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

 

(n)                                 “Family Member” means (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in- law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, (ii) any person sharing the Participant’s household (other than a tenant or employee), (iii) a trust in which persons described in Clause (i) or (ii) have more than 50% of the beneficial interest, (iv) a foundation in which persons described in Clause (i) or (ii) or the Participant control the management of assets and (v) any other entity in which persons described in Clause (i) or (ii) or the Participant own more than 50% of the voting interests.

 

(o)                                 “Grantee” means a person to whom the Board of Directors has awarded Shares under the Plan.

 

(p)                                 “ISO” means an Option that qualifies as an incentive stock option as described in Code Section 422(b). Notwithstanding its designation as an ISO, an Option that does not qualify as an ISO under applicable law shall be treated for all purposes as an NSO.

 

(3) Note that special considerations apply if the Company proposes to grant awards to consultant or advisor of a Parent company.

(4) Note that special considerations apply if the Company proposes to grant awards to an Employee of a Parent company.

 

14

 

(q)                                 “NSO” means an Option that does not qualify as an incentive stock option as described in Code Section 422(b) or 423(b).

 

(r)                                    “Option” means an ISO or NSO granted under the Plan and entitling the holder to purchase Shares.

 

(s)                                   “Optionee” means a person who holds an Option.

 

(t)                                    “Outside Director” means a member of the Board of Directors who is not an Employee.

 

(u)                                 “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

(v)                                 “Participant” means a Grantee, Optionee, Recipient or Purchaser or, if the context requires, an estate or other permissible transferee holding an Award may also be deemed to be a Participant.

 

(w)                               “Plan” means this Vitae Pharmaceuticals, Inc. 2013 Stock Plan.

 

(x)                                 “Purchase Price” means the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Board of Directors.

 

(y)                                 “Purchaser” means a person to whom the Board of Directors has offered the right to purchase Shares under the Plan (other than upon exercise of an Option or settlement of a Restricted Stock Unit).

 

(z)                                  “Recipient” means a person to whom the Board of Directors has granted a Restricted Stock Unit under the Plan.

 

(aa)                          “Restricted Stock Unit” means a bookkeeping entry representing the equivalent of one Share, as awarded under the Plan.

 

(bb)                          “Restricted Stock Unit Agreement” means the agreement between the Company and the Recipient that contains the terms, conditions and restrictions pertaining to such Restricted Stock Unit.

 

(cc)                            “Securities Act” means the Securities Act of 1933, as amended.

 

(dd)                          “Service” means service as an Employee, Outside Director or Consultant.

 

(ee)                            “Share” means one share of Stock, as adjusted in accordance with Section 8 (if applicable).

 

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(ff)                              “Stock” means the Common Stock of the Company.

 

(gg)                            “Stock Grant Agreement” means the agreement between the Company and a Grantee who is awarded Shares under the Plan that contains the terms, conditions and restrictions pertaining to the award of such Shares.

 

(hh)                          “Stock Option Agreement” means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to the Optionee’s Option.

 

(ii)                                  “Stock Purchase Agreement” means the agreement between the Company and a Purchaser who purchases Shares under the Plan that contains the terms, conditions and restrictions pertaining to the purchase of such Shares.

 

(jj)                                “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

16

 

EXHIBIT A

 

SCHEDULE OF SHARES RESERVED FOR ISSUANCE UNDER THE PLAN

 

	
Date of Board
   Approval
    	
 
    	
Date of Stockholder
   Approval
    	
 
    	
Number of
   Shares Added
    	
 
    	
Cumulative Number
   of Shares
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Not Applicable
    	
 
    	
46,287,107
    	
 
    

 

SUMMARY OF MODIFICATIONS AND AMENDMENTS TO THE PLAN

 

The following is a summary of material modifications made to the Plan (including any material deviations from the Gunderson Dettmer precedent form used to create the Plan):

 

E-1

 

VITAE PHARMACEUTICALS, INC. 2013 STOCK PLAN

 

NOTICE OF STOCK OPTION GRANT (INSTALLMENT EXERCISE)

 

The Optionee has been granted the following option to purchase shares of the Common Stock of Vitae Pharmaceuticals, Inc.:

 

	
Name of Optionee:
    	
«Name»
    
	
 
    	
 
    
	
Total   Number of Shares:
    	
«TotalShares»
    
	
 
    	
 
    
	
Type   of Option:
    	
«ISO»          Incentive Stock Option (ISO)
    
	
 
    	
 
    
	
 
    	
«NSO»   Nonstatutory Stock Option   (NSO)
    
	
 
    	
 
    
	
Exercise   Price per Share:
    	
$«PricePerShare»
    
	
 
    	
 
    
	
Date of Grant:
    	
«DateGrant»
    
	
 
    	
 
    
	
Date   Exercisable:
    	
This   option may be exercised with respect to the first «Percent»% of the Shares subject to this option when the Optionee   completes «CliffPeriod» months of   continuous Service beginning with the Vesting Commencement Date set forth   below. This option may be exercised with respect to an additional «Fraction»% of the Shares subject to this   option when the Optionee completes each month of continuous Service   thereafter.
    
	
 
    	
 
    
	
Vesting Commencement Date:
    	
«VestComDate»
    
	
 
    	
 
    
	
Expiration   Date:
    	
«ExpDate». This option expires earlier if the   Optionee’s Service terminates earlier, as provided in Section 6 of the   Stock Option Agreement, or if the Company engages in certain corporate   transactions, as provided in Section 8(b) of the Plan.
    

 

By signing below, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, the 2013 Stock Plan and the Stock Option Agreement.  Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant.  Section 13 of the Stock Option Agreement includes important acknowledgements of the Optionee.

 

 

	
OPTIONEE:
    	
VITAE   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

VITAE PHARMACEUTICALS, INC. 2013 STOCK PLAN:

STOCK OPTION AGREEMENT (INSTALLMENT EXERCISE)

 

SECTION 1.                         GRANT OF OPTION.

 

(a)                                 Option.  On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant.  The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market Value if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).  This option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

 

(b)                                 $100,000 Limitation.  Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

 

(c)                                  Stock Plan and Defined Terms.  This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received.  The provisions of the Plan are incorporated into this Agreement by this reference.  Except as otherwise defined in this Agreement (including without limitation Section 14 hereof), capitalized terms shall have the meaning ascribed to such terms in the Plan.

 

SECTION 2.                         RIGHT TO EXERCISE.

 

(a)                                 Exercisability.  Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant.

 

2

 

(b)                                 Stockholder Approval.  Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company’s stockholders.

 

SECTION 3.                         NO TRANSFER OR ASSIGNMENT OF OPTION.

 

Except as otherwise provided in this Agreement, this option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment, levy or similar process.

 

SECTION 4.                         EXERCISE PROCEDURES.

 

(a)                                 Notice of Exercise.  The Optionee or the Optionee’s representative may exercise this option by: (i) signing and delivering written notice to the Company pursuant to Section 12(c) specifying the election to exercise this option, the number of Shares for which it is being exercised and the form of payment and (ii) delivering payment, in a form permissible under Section 5, for the full amount of the Purchase Price (together with any applicable withholding taxes under Subsection (b)). In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option.

 

(b)                                 Withholding Taxes.  In the event that the Company determines that it is required to withhold any tax (including without limitation any income tax, social insurance contributions, payroll tax, payment on account or other tax-related items arising in connection with the Optionee’s participation in the Plan and legally applicable to the Optionee (the “Tax-Related Items”)) as a result of the grant, vesting or exercise of this option, or as a result of the transfer of shares acquired upon exercise of this option, the Optionee, as a condition of this option, shall make arrangements satisfactory to the Company to enable it to satisfy all Tax-Related Items.  The Optionee acknowledges that the responsibility for all Tax-Related Items is the Optionee’s and may exceed the amount actually withheld by the Company (or its affiliate or agent).

 

(c)                                  Issuance of Shares.  After satisfying all requirements for exercise of this option, the Company shall cause to be issued one or more certificates evidencing the Shares for which this option has been exercised.  Such Shares shall be registered (i) in the name of the person exercising this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right of survivorship or (iii) with the Company’s consent, in the name of a revocable trust.  Until the issuance of the Shares has been entered into the books and records of the Company or a duly authorized transfer agent of the Company, no right to vote, receive dividends or any other right as a stockholder will exist with respect to such Shares. The Company shall cause such certificates to be delivered to or upon the order of the person exercising this option.

 

SECTION 5.                         PAYMENT FOR STOCK.

 

(a)                                 Cash.  All or part of the Purchase Price may be paid in cash or cash equivalents.

 

3

 

(b)                                 Surrender of Stock.  At the discretion of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee.  Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when this option is exercised.

 

(c)                                  Exercise/Sale.  All or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company.  However, payment pursuant to this Subsection (c) shall be permitted only if (i) Stock then is publicly traded and (ii) such payment does not violate applicable law.

 

SECTION 6.                         TERM AND EXPIRATION.

 

(a)                                 Basic Term.  This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).

 

(b)                                 Termination of Service (Except by Death).  If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

 

(i)                                     The expiration date determined pursuant to Subsection (a) above;

 

(ii)                                  The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

 

(iii)                               The date six months after the termination of the Optionee’s Service by reason of Disability.

 

The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option had become exercisable before the Optionee’s Service terminated.  When the Optionee’s Service terminates, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable.  In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become exercisable before the Optionee’s Service terminated. Once this option (or portion thereof) has terminated, the Optionee shall have no further rights with respect to the option (or portion thereof) or to the underlying Shares.

 

(c)                                  Death of the Optionee.  If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

 

4

 

(i)                                     The expiration date determined pursuant to Subsection (a) above; or

 

(ii)                                  The date 12 months after the Optionee’s death.

 

All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become exercisable before the Optionee’s death.  When the Optionee dies, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable. Once this option (or portion thereof) has terminated, the Optionee shall have no further rights with respect to the option (or portion thereof) or to the underlying Shares.

 

(d)                                 Extension of Post-Termination Exercise Periods.  Following the date on which the Company’s Stock is first listed for trading on an established securities market, if during any part of the exercise period described in Subsections (b)(ii) or (iii) or Subsection (c)(ii) above the exercise of this option would be prohibited solely because the issuance of Shares upon such exercise would violate the registration requirements under the Securities Act or a similar provision of other applicable law, then instead of terminating at the end of such prescribed period, the then-vested portion of this option will instead remain outstanding and not expire until the earlier of (i) the expiration date determined pursuant to Section 6(a) above or (ii) the date on which the then-vested portion of this option has been exercisable without violation of applicable law for the aggregate period (which need not be consecutive) after termination of the Optionee’s Service specified in the applicable Subsection above.

 

(e)                                  Part-Time Employment and Leaves of Absence.  If the Optionee commences working on a part-time basis, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant.  If the Optionee goes on a leave of absence, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant in accordance with the Company’s leave of absence policy or the terms of such leave.  Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while the Optionee is on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of Service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).  Service shall be deemed to terminate when such leave ends, unless the Optionee immediately returns to active work.

 

(f)                                   Notice Concerning ISO Treatment.  Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent that it is exercised:

 

(i)                                     More than three months after the date when the Optionee ceases to be an Employee for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code);

 

5

 

(ii)                                  More than 12 months after the date when the Optionee ceases to be an Employee by reason of permanent and total disability (as defined in Section 22(e)(3) of the Code); or

 

(iii)                               More than three months after the date when the Optionee has been on a leave of absence for three months, unless the Optionee’s reemployment rights following such leave were guaranteed by statute or by contract.

 

SECTION 7.                         RIGHT OF FIRST REFUSAL.

 

(a)                                 Right of First Refusal.  In the event that the Optionee proposes to sell, pledge or otherwise transfer to a third party any Shares acquired under this Agreement, or any interest in such Shares, the Company shall have the Right of First Refusal with respect to all (and not less than all) of such Shares.  If the Optionee desires to transfer Shares acquired under this Agreement, the Optionee shall give a written Transfer Notice to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal, State or foreign securities laws.  The Transfer Notice shall be signed both by the Optionee and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Shares.  The Company shall have the right to purchase all, and not less than all, of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (b) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company.

 

(b)                                 Transfer of Shares.  If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, the Optionee may, not later than 90 days following receipt of the Transfer Notice by the Company, conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions described in the Transfer Notice, provided that any such sale is made in compliance with applicable federal, State and foreign securities laws and not in violation of any other contractual restrictions to which the Optionee is bound.  Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in Subsection (a) above.  If the Company exercises its Right of First Refusal, the parties shall consummate the sale of the Shares on the terms set forth in the Transfer Notice within 60 days after the date when the Company received the Transfer Notice (or within such longer period as may have been specified in the Transfer Notice); provided, however, that in the event the Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Transfer Notice.

 

(c)                                  Additional or Exchanged Securities and Property.  In the event of a merger or consolidation of the Company, a sale of all or substantially all of the Company’s stock

 

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or assets, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 7 shall immediately be subject to the Right of First Refusal.  Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 7.

 

(d)                                 Termination of Right of First Refusal.  Any other provision of this Section 7 notwithstanding, in the event that the Stock is readily tradable on an established securities market when the Optionee desires to transfer Shares, the Company shall have no Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a) and (b) above.

 

(e)                                  Permitted Transfers.  This Section 7 shall not apply to (i) a transfer by beneficiary designation, will or intestate succession or (ii) a transfer to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement.  If the Optionee transfers any Shares acquired under this Agreement, either under this Subsection (e) or after the Company has failed to exercise the Right of First Refusal, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

 

(f)                                   Termination of Rights as Stockholder.  If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 7, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement).  Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

 

(g)                                  Assignment of Right of First Refusal.  The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part.  Any person who accepts an assignment of the Right of First Refusal from the Company shall assume all of the Company’s rights and obligations under this Section 7.

 

SECTION 8.                         LEGALITY OF INITIAL ISSUANCE.

 

No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

 

(a)                                 It and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;

 

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(b)                                 Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

 

(c)                                  Any other applicable provision of federal, State or foreign law has been satisfied.

 

SECTION 9.                         NO REGISTRATION RIGHTS.

 

The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law.  The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with any law.

 

SECTION 10.                  RESTRICTIONS ON TRANSFER OF SHARES.

 

(a)                                 Securities Law Restrictions.  Regardless of whether the offer and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State or other relevant jurisdiction, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on the stock certificates (or electronic equivalent) or the imposition of stop-transfer instructions) and may refuse (or may be required to refuse) to transfer Shares acquired hereunder (or Shares proposed to be transferred in a subsequent transfer) if, in the judgment of the Company, such restrictions, legends or refusal are necessary or appropriate to achieve compliance with the Securities Act or other relevant securities or other laws, including without limitation under Regulation S of the Securities Act or pursuant to another available exemption from registration.

 

(b)                                 Market Stand-Off.  In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter.  Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter.  In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules.  The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering.  In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with

 

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respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off.  In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period.  The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b).  This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act.

 

(c)                                  Investment Intent at Grant.  The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

 

(d)                                 Investment Intent at Exercise.  In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available that requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel, including (if applicable because the Company is relying on Regulation S under the Securities Act) that as of the date of exercise the Optionee is (i) not a U.S. Person; (ii) not acquiring the Shares on behalf, or for the account or benefit, of a U.S. Person; and (iii) is not exercising the option in the United States.

 

(e)                                  Legends.  All certificates evidencing Shares purchased under this Agreement shall bear the following legend:

 

“THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).  SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES.  IN ADDITION, THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A LIMITED PERIOD FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

 

All certificates evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

 

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“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY SECURITIES LAWS OF ANY U.S. STATE, AND MAY NOT BE SOLD, REOFFERED, PLEDGED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.  IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY (CONFIRMED BY OPINION OF COUNSEL) OF AN ALTERNATIVE EXEMPTION FROM REGISTRATION UNDER THE ACT (INCLUDING WITHOUT LIMITATION IN ACCORDANCE WITH REGULATION S UNDER THE ACT), THESE SHARES MAY NOT BE SOLD, REOFFERED, PLEDGED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF.  HEDGING TRANSACTIONS INVOLVING THESE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.”

 

(f)                                   Removal of Legends.  If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

 

(g)                                  Administration.  Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 10 shall be conclusive and binding on the Optionee and all other persons.

 

SECTION 11.                  ADJUSTMENT OF SHARES.

 

In the event of any transaction described in Section 8(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 8(a) of the Plan.  In the event that the Company is a party to a merger or consolidation or in the event of a sale of all or substantially all of the Company’s stock or assets, this option shall be subject to the treatment provided by the Board of Directors in its sole discretion, as provided in Section 8(b) of the Plan.

 

SECTION 12.                  MISCELLANEOUS PROVISIONS.

 

(a)                                 Rights as a Stockholder.  Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

 

(b)                                 No Retention Rights.  Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly

 

10

 

reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

(c)                                  Notice.  Any notice required by the terms of this Agreement shall be given in writing.  It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid, (iii) deposit with Federal Express Corporation, with shipping charges prepaid or (iv) deposit with any internationally recognized express mail courier service.  Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c).

 

(d)                                 Modifications and Waivers.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Optionee and by an authorized officer of the Company (other than the Optionee).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

(e)                                  Entire Agreement.  The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof.  They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.

 

(f)                                   Choice of Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

 

SECTION 13.                  ACKNOWLEDGEMENTS OF THE OPTIONEE.

 

In addition to the other terms, conditions and restrictions imposed on this option and the Shares issuable under this option pursuant to this Agreement and the Plan, the Optionee expressly acknowledges being subject to Sections 7 (Right of First Refusal), 8 (Legality of Initial Issuance) and 10 (Restrictions on Transfer of Shares, including without limitation the Market Stand-Off), as well as the following provisions:

 

(a)                                 Tax Consequences (No Liability for Discounted Options).  The Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities.  The Optionee shall not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from this option or the Optionee’s other compensation.  In particular, any Optionee subject to U.S. taxation acknowledges that this option is exempt from Section 409A of the Code only if the Exercise Price is at least equal to the Fair Market Value per Share on the Date of Grant.  Since Shares are not traded on an established securities market, the determination of their Fair Market Value is made by the Board of Directors or by an independent valuation firm retained by the Company.  The Optionee acknowledges that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and the Optionee

 

11

 

shall not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low.

 

(b)                                 Electronic Delivery of Documents.  The Optionee agrees to accept by email all documents relating to the Company, the Plan or this option and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the Securities and Exchange Commission).  The Optionee also agrees that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company.  If the Company posts these documents on a website, it shall notify the Optionee by email of their availability.  The Optionee acknowledges that he or she may incur costs in connection with electronic delivery, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere with his or her ability to access the documents.  This consent shall remain in effect until this option expires or until the Optionee gives the Company written notice that it should deliver paper documents.

 

(c)                                  No Notice of Expiration Date.  The Optionee agrees that the Company and its officers, employees, attorneys and agents do not have any obligation to notify him or her prior to the expiration of this option pursuant to Section 6, regardless of whether this option will expire at the end of its full term or on an earlier date related to the termination of the Optionee’s Service.  The Optionee further agrees that he or she has the sole responsibility for monitoring the expiration of this option and for exercising this option, if at all, before it expires.  This Subsection (c) shall supersede any contrary representation that may have been made, orally or in writing, by the Company or by an officer, employee, attorney or agent of the Company.

 

(d)                                 Waiver of Statutory Information Rights. The Optionee acknowledges and agrees that, upon exercise of this option and until the first sale of the Company’s Stock to the general public pursuant to a registration statement filed under the Securities Act, he or she will be deemed to have waived any rights the Optionee might otherwise have had under Section 220 of the Delaware General Corporation Law (or under similar rights under other applicable law) to inspect for any proper purpose and to make copies and extracts from the Company’s stock ledger, a list of its stockholders and its other books and records or the books and records of any subsidiary.  This waiver applies only in the Optionee’s capacity as a stockholder and does not affect any other inspection rights the Optionee may have under other law or pursuant to a written agreement with the Company.

 

(e)                            Plan Discretionary.  The Optionee understands and acknowledges that (i) the Plan is entirely discretionary, (ii) the Company and the Optionee’s employer have reserved the right to amend, suspend or terminate the Plan at any time, (iii) the grant of an option does not in any way create any contractual or other right to receive additional grants of options (or benefits in lieu of options) at any time or in any amount and (iv) all determinations with respect to any additional grants, including (without limitation) the times when options will be granted, the number of Shares offered, the Exercise Price and the vesting schedule, will be at the sole discretion of the Company.

 

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(f)                             Termination of Service.  The Optionee understands and acknowledges that participation in the Plan ceases upon termination of his or her Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement.

 

(g)                            Extraordinary Compensation.  The value of this option shall be an extraordinary item of compensation outside the scope of the Optionee’s employment contract, if any, and shall not be considered a part of his or her normal or expected compensation for purposes of calculating severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

 

(h)                           Authorization to Disclose.  The Optionee hereby authorizes and directs the Optionee’s employer to disclose to the Company or any Subsidiary any information regarding the Optionee’s employment, the nature and amount of the Optionee’s compensation and the fact and conditions of the Optionee’s participation in the Plan, as the Optionee’s employer deems necessary or appropriate to facilitate the administration of the Plan.

 

(i)                               Personal Data Authorization.  The Optionee consents to the collection, use and transfer of personal data as described in this Subsection (i).  The Optionee understands and acknowledges that the Company, the Optionee’s employer and the Company’s other Subsidiaries hold certain personal information regarding the Optionee for the purpose of managing and administering the Plan, including (without limitation) the Optionee’s name, home address, telephone number, date of birth, social insurance number, salary, nationality, job title, any Shares or directorships held in the Company and details of all options or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor (the “Data”).  The Optionee further understands and acknowledges that the Company and/or its Subsidiaries will transfer Data among themselves as necessary for the purpose of implementation, administration and management of the Optionee’s participation in the Plan and that the Company and/or any Subsidiary may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan.  The Optionee understands and acknowledges that the recipients of Data may be located in the United States or elsewhere.  The Optionee authorizes such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering the Optionee’s participation in the Plan, including a transfer to any broker or other third party with whom the Optionee elects to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Optionee’s behalf.  The Optionee may, at any time, view the Data, require any necessary modifications of Data or withdraw the consents set forth in this Subsection (i) by contacting the Company in writing.

 

SECTION 14.                  DEFINITIONS.

 

(a)                                 “Agreement” shall mean this Stock Option Agreement.

 

(b)                                 “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

 

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(c)                                  “Company” shall mean Vitae Pharmaceuticals, Inc. a Delaware corporation.

 

(d)                                 “Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

 

(e)                                  “Notice of Stock Option Grant” shall mean the document so entitled to which this Agreement is attached.

 

(f)                                   “Optionee” shall mean the person named in the Notice of Stock Option Grant.

 

(g)                                  “Plan” shall mean the Vitae Pharmaceuticals, Inc. 2013 Stock Plan, as in effect on the Date of Grant.

 

(h)                                 “Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

 

(i)                                     “Right of First Refusal” shall mean the Company’s right of first refusal described in Section 7.

 

(j)                                    “Service” means service as an Employee, Outside Director or Consultant.

 

(k)                                 “Transferee” shall mean any person to whom the Optionee has directly or indirectly transferred any Share acquired under this Agreement.

 

(l)                                     “Transfer Notice” shall mean the notice of a proposed transfer of Shares described in Section 7.

 

(m)                             “U.S. Person” shall mean a person described in Rule 902(k) of Regulation S of the Securities Act (or any successor rule or provision), which generally defines a U.S. person as any natural person resident in the United States, any estate of which any executor or administrator is a U.S. Person, or any trust of which of any trustee is a U.S. Person.

 

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VITAE PHARMACEUTICALS, INC. 2013 STOCK PLAN

 

NOTICE OF RESTRICTED STOCK UNIT AWARD

 

You (“Participant”) have been granted Restricted Stock Units (“RSUs”) representing shares of Common Stock of Vitae Pharmaceuticals, Inc. (the “Company”) on the following terms:

 

	
Name:
    	
 
    	
«Name»
    
	
 
    	
 
    	
 
    
	
Total   Number of Stock Units Granted:
    	
 
    	
«TotalStockUnits»
    
	
 
    	
 
    	
 
    
	
Date of Grant:
    	
 
    	
«DateGrant»
    
	
 
    	
 
    	
 
    
	
Vesting Commencement Date:
    	
 
    	
«VestComDate»
    
	
 
    	
 
    	
 
    
	
Expiration Date:
    	
 
    	
«ExpirationDate»
    
	
 
    	
 
    	
 
    
	
Vesting:
    	
 
    	
You   will receive a benefit with respect to this RSU only if it vests. If the   Liquidity Event Requirement is satisfied on or before the Expiration Date,   this award will vest immediately prior to the satisfaction of the Liquidity   Event Requirement (the “Vesting Date”)   (as to any then-outstanding RSUs that have not theretofore been terminated   pursuant to Section 2 of the Restricted Stock Unit Agreement).
    
	
 
    	
 
    	
 
    
	
Liquidity   Event Requirement:
    	
 
    	
The   Liquidity Event Requirement will be satisfied (as to any then-outstanding   RSUs that have not theretofore been terminated pursuant to Section 2 of   the Restricted Stock Unit Agreement) on the earlier to occur of (i) an   IPO, or (ii) a Sale Event.
    
	
 
    	
 
    	
 
    
	
Settlement:
    	
 
    	
Settlement   of RSUs refers to the issuance of Shares (or, if applicable, cash) once the   award is vested. If a RSU vests as a result of satisfaction of the vesting   requirements described above, the Company will deliver one Share for that RSU   at the time of settlement, unless at the time of settlement the Board of   Directors, in its sole discretion, determines that settlement shall, in whole   or in part, be in the form of cash, based on the then Fair Market Value of a   Share. Settlement shall occur on or following the Vesting Date, but not later   than two and one-half (21⁄2) months following the end of the year
    

 

 

	
 
    	
 
    	
in   which the Vesting Date applicable to a RSU occurs (the last day of such two   and one-half month period is referred to as the “Short Term   Deferral End Date”). Notwithstanding the   above, settlement of RSUs that become vested RSUs upon (i) a   Sale Event will be made in Shares, unless otherwise specified in the   definitive agreement for such Sale Event, or (ii) an IPO shall occur on   the earlier of (a) the 185th day following the IPO Date or (b) the   Short Term Deferral End Date.
    

 

By signing below, you and the Company agree that these RSUs are granted under and governed by the terms and conditions of the Company’s 2013 Stock Plan (the “Plan”) and the Restricted Stock Unit Agreement, both of which are attached to and made a part of document.  Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.  You hereby acknowledge that the vesting of the RSUs pursuant to this Notice of Restricted Stock Unit Award is conditioned on the occurrence, on or before the Expiration Date, of an IPO or Sale Event.  You shall have no right with respect to the RSUs to the extent an IPO or Sale Event does not occur on or before the Expiration Date.

 

You further agree to accept by email all documents relating to the Company, the Plan or these RSUs and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the Securities and Exchange Commission).  You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company.  If the Company posts these documents on a website, it will notify you by email.  You acknowledge that you may incur costs in connection with electronic delivery, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere with your ability to access the documents.

 

The RSUs granted hereunder are subject to forfeiture if you breach your confidentiality obligations to the Company.

 

	
PARTICIPANT:
    	
VITAE   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
Address   for Mailing Stock Certificate:
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
					

 

 

VITAE PHARMACEUTICALS, INC. 2013 STOCK PLAN

RESTRICTED STOCK UNIT AGREEMENT

 

SECTION 1.                         GRANT OF RESTRICTED STOCK UNITS.

 

(a)                                 Grant.  On the terms and conditions set forth in the Notice of Restricted Stock Unit Award and this Agreement, the Company grants to you on the Date of Grant the number of RSUs set forth in the Notice of Restricted Stock Unit Award.  Each RSU represents the right to receive one share of the Company’s Common Stock on the terms and conditions set forth in this Agreement.

 

(b)                                 Consideration.  No payment is required for the RSUs that have been granted to you.

 

(c)                                  Nature of Units; No Rights As a Stockholder.  Your RSUs are mere bookkeeping entries and represent only the Company’s unfunded and unsecured promise to issue Shares on a future date under specified conditions.  As a holder of RSUs, you have no rights other than the rights of a general creditor of the Company.  Your RSUs carry neither voting rights nor rights to cash dividends.  You have no rights as a stockholder of the Company unless and until your RSUs are settled pursuant to Section 4.

 

(d)                                 Stock Plan and Defined Terms.  Your RSUs are granted pursuant to the Plan, a copy of which you acknowledge having received.  The provisions of the Plan are incorporated into this Agreement by this reference.  Except as otherwise defined in this Agreement (including without limitation Section 10 hereof), capitalized terms shall have the meaning ascribed to such terms in the Plan.

 

SECTION 2.                         VESTING.

 

(a)                                 Generally.  The RSUs vest in accordance with the vesting schedule set forth in the Notice of Restricted Stock Unit Award.  You will receive a benefit with respect to a RSU only if the Liquidity Event Requirement is satisfied on or before the Expiration Date.  Your RSUs will not vest if such requirement is not satisfied on or before the Expiration Date.

 

(b)                                 Termination of Service.

 

(i)                                     Termination For Cause.  If your Service terminates in a Termination For Cause, all RSUs will immediately be terminated as of your termination date.

 

(ii)                                  Termination other than for Cause.  If your Service terminates for any reason other than a Termination For Cause, the RSUs will (if an IPO or Sale Event had not yet occurred) remain outstanding until the first to 

 

 

occur of: (A) settlement in connection with an IPO, (B) settlement in connection with a Sale Event, (C) the Expiration Date or (D) the date three months after the date of your termination of [Service][employment].  In case of any dispute as to whether your Service has terminated, the Board of Directors shall have sole discretion to determine whether such termination has occurred and the effective date of such termination.

 

(c)                                  Expiration of RSUs.  If an IPO or Sale Event does not occur on or before the earliest of (A) the Expiration Date, (B) your termination of Service for Cause or (C) the date three months after your Service terminates for any reason other than for Cause, all RSUs shall automatically terminate upon such earliest date.  Upon a termination of one or more RSUs pursuant to this Section 2, you will have no further right with respect to such RSUs or the Shares previously allocated thereto.

 

(d)                                 Leave of Absence.  Service shall be deemed to continue for any purpose under this Agreement while you are on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of Service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).  Service shall be deemed to terminate when such leave ends, unless you immediately return to active work.

 

SECTION 3.                         RESTRICTIONS APPLICABLE TO RSUS.

 

(a)                                 Restrictions on Transfer.  Except as otherwise provided in this Agreement, these RSUs and the rights and privileges conferred hereby shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of by you prior to the settlement of the RSUs.  However, you may designate a third party who, in the event of your death, shall thereafter be entitled to receive any distribution of Shares to which you were entitled at the time of your death pursuant to this Agreement by delivering a written beneficiary designation to the Company’s headquarters on the prescribed form before your death.  If you deliver no such beneficiary designation or if your designated beneficiaries do not survive you, your estate will receive payments in respect of any vested RSUs.

 

(b)                                 Forfeiture of RSUs.  In connection with your RSUs, the Company may be required to provide you with certain highly confidential information about the Company, including information regarding its financial condition and business prospects. Unauthorized disclosure of such information is prohibited under your existing Proprietary Information and Inventions Agreement with the Company and under Company policy, and you may be required to sign an additional nondisclosure agreement prior to receiving this type of information.  In addition, unauthorized disclosure of the Company’s confidential information could result in the immediate forfeiture of your RSUs, including vested RSUs as well as termination of your service relationship with the Company.

 

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SECTION 4.                         SETTLEMENT OF RSUS.

 

(a)                                 Settlement Date.  Upon a Vesting Date with respect to a particular RSU, the Company will deliver one Share for that RSU, unless at the time of settlement the Board of Directors, in its sole discretion, determines that settlement shall, in whole or in part, be in the form of cash, based on the then Fair Market Value of a Share.  Settlement shall occur on or following the Vesting Date, but not later than Short Term Deferral End Date (as defined in the Notice of Restricted Stock Unit Award).  Notwithstanding the above, settlement of RSUs that become vested RSUs upon (i) a Sale Event will be made in Shares, unless otherwise specified in the definitive agreement for such Sale Event, or (ii) an IPO shall occur on the earlier of (A) the 185th day following the IPO Date or (B) the Short Term Deferral End Date.

 

(b)                                 Form of Delivery.  The form of any delivery of Shares (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company.

 

(c)                                  Legality of Issuance.  No Shares shall be issued to you upon settlement of these RSUs unless and until the Company has determined that (i) you and the Company have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof; (ii) any applicable listing requirement of any stock exchange or other securities market on which stock is listed has been satisfied; and any other applicable provision of federal, State or foreign law has been satisfied.  The Company shall have no liability to issue Shares in respect of the RSUs unless it is able to do so in compliance with applicable law.

 

SECTION 5.                         TAXES.

 

(a)                                 Withholding Taxes.  Upon the Vesting Date and/or settlement date for the RSUs, the Fair Market Value of the Shares is treated as income subject to withholding by the Company and/or the Parent or Subsidiary employing you (your “Employer”) for the payment of all applicable federal, State, local and foreign income and employment withholding taxes (including without limitation social insurance contributions, payroll tax or other tax-related items arising in connection with the RSU that are legally applicable to you) which arise in connection with the vesting or settlement of the RSUs (the “Withholding Taxes”).  No consideration will be paid to you in respect of this award unless you have made arrangements satisfactory to your Employer to satisfy the Withholding Taxes and any other taxes.  To the extent that you fail to make such arrangements with respect to certain RSUs, then you will permanently forfeit such RSUs.  At the discretion of the Company, these arrangements may include (i) withholding from other compensation or amounts that are owed to you by your Employer, (ii) payment in cash, (iii) if the Stock is publicly traded, payment from the proceeds of the sale of shares through a Company-approved broker, (iv) withholding a number of Shares that otherwise would be issued to you when the RSUs are settled with a Fair Market Value equal to the minimum statutory amount required to be withheld, or (v) any other method permitted by the Company.   However, if you are a Company officer subject to Section 16 of the Exchange Act, then the Withholding Taxes will be satisfied pursuant to clause (iv) of the preceding sentence, unless otherwise determined in advance by the Board of Directors.  If the Withholding Taxes are satisfied pursuant to clause (iv), you will be deemed to have been issued the full number of Shares subject to the RSUs and the Fair Market 

 

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Value of the withheld Shares, determined as of the date when taxes otherwise would have been withheld in cash, will be applied to the Withholding Taxes and such amount will be remitted to appropriate tax authorities by the Company or your Employer.  The Company will not withhold fractional shares pursuant to clause (iv), so if the Withholding Taxes are satisfied pursuant to clause (iv), you hereby authorize the Company or your Employer to withhold the amount of any remaining Withholding Taxes from your wages or other cash compensation.  You acknowledge and agree that the responsibility for all Withholding Taxes and any other taxes or tax-related items related to the grant, vesting or settlement of the RSUs is your own and may exceed the amount actually withheld by the Company.

 

(b)                                 Section 409A.  The settlement of these RSUs is intended to be exempt from the application of Code Section 409A pursuant to the “short-term deferral exemption” in Treasury Regulation 1.409A-1(b)(4) and shall be administered and interpreted in a manner that complies with such exemption.   To the extent that any provision of this Agreement is ambiguous as to its exemption from Code Section 409A, the provision shall be read in such a manner so that all payments hereunder are exempt from Code Section 409A.  Notwithstanding the foregoing, if this award of RSUs is interpreted as not being exempt from Code Section 409A, it shall be interpreted to comply with the requirement of Code Section 409A so that this award is not subject to additional tax or interest under Code Section 409A.  In this regard, if this award is payable upon your “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) (a “Separation”) and you are a “specified employee” of the Company or any affiliate thereof within the meaning of Code Section 409A(a)(2)(B)(i) on the day of your Separation, then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after your Separation, or (ii) your death, but only to the extent such delay is necessary so that this award is not subject to additional tax or interest under Code Section 409A.

 

(c)                                  Acknowledgements.  You acknowledge that there will be tax consequences upon vesting and/or settlement of the RSUs and/or disposition of the Shares, if any, received hereunder, and you should consult a tax adviser regarding your tax obligations prior to such event.  You acknowledge that the Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding your participation in the Plan or acquisition or sale of Shares subject to this award.  You are hereby advised to consult with your own personal tax, legal, and financial advisors regarding your participation in the Plan. You further acknowledge that the Company (i) makes no representations or undertakings regarding the tax treatment of the award of RSUs, including, but not limited to the grant, vesting, or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such RSUs, and the receipt of any dividends; and (ii) does not commit to and is under no obligation to structure the terms of the grant of the RSUs to reduce or eliminate your tax liability or achieve any particular tax result.  You agree that the Company does not have a duty to design or administer the RSUs, the Plan or its other compensation programs in a manner that minimizes your tax liability.  You shall not make any claim against the Company or its Board of Directors, officers, or employees related to tax matters arising from this award or your other compensation.

 

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SECTION 6.                         RIGHT OF FIRST REFUSAL.

 

(a)                                 Right of First Refusal.  In the event that you propose to sell, pledge or otherwise transfer to a third party any Shares acquired under this Agreement, or any interest in such Shares to the extent consistent with the restrictions set forth in Section 3, the Company shall have the Right of First Refusal with respect to all (and not less than all) of such Shares.  If you desire to transfer Shares acquired under this Agreement, you must give a written Transfer Notice to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal, State or foreign securities laws.  The Transfer Notice shall be signed both by you and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Shares.  The Company shall have the right to purchase all, and not less than all, of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Section 6(b) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company.

 

(b)                                 Transfer of Shares.  Subject to Section 7(a) below, If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, you may, not later than 90 days following receipt of the Transfer Notice by the Company, conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions described in the Transfer Notice, provided that any such sale is made in compliance with applicable federal, State and foreign securities laws and not in violation of any other contractual restrictions to which you are bound.  Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by you, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in Section 6(a) above.  If the Company exercises its Right of First Refusal, the parties shall consummate the sale of the Shares on the terms set forth in the Transfer Notice within 60 days after the date when the Company received the Transfer Notice (or within such longer period as may have been specified in the Transfer Notice); provided, however, that in the event the Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Transfer Notice.

 

(c)                                  Additional or Exchanged Securities and Property.  In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 6 shall immediately be subject to the Right of First Refusal.  Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 6.

 

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(d)                                 Termination of Right of First Refusal.  Any other provision of this Section 6 notwithstanding, in the event that the Stock is readily tradable on an established securities market when you desire to transfer Shares, the Company shall have no Right of First Refusal, and the you shall have no obligation to comply with the procedures prescribed by Sections 6(a) and 6(b) above.

 

(e)                                  Permitted Transfers.  This Section 6 shall not apply to (i) a transfer by beneficiary designation, will or intestate succession or (ii) a transfer to one or more members of the your Immediate Family or to a trust established by you for the benefit of you and/or one or more members of your Immediate Family, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement.  If you transfer any Shares acquired under this Agreement, either under this Section 6(e) or after the Company has failed to exercise the Right of First Refusal, then this Agreement shall apply to the Transferee to the same extent as to you.

 

(f)                                   Termination of Rights as Stockholder.  If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 6, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement).  Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

 

(g)                                  Assignment of Right of First Refusal.  The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part.  Any person who accepts an assignment of the Right of First Refusal from the Company shall assume all of the Company’s rights and obligations under this Section 6.

 

SECTION 7.                         RESTRICTIONS APPLICABLE TO SHARES.

 

(a)                                 Securities Law Restrictions.  Regardless of whether the offer and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State or other relevant jurisdiction, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of the Shares (including the placement of appropriate legends on stock certificates (or electronic equivalent) or the imposition of stop-transfer instructions)  and may refuse (or may be required to refuse) to transfer Shares acquired hereunder (or Shares proposed to be transferred in a subsequent transfer), in each case if, in the judgment of the Company, such restrictions, legends or refusal are necessary or appropriate in order to achieve compliance with the Securities Act or other relevant securities or other laws, including without limitation under Regulation S of the Securities Act or pursuant to another available exemption from registration.  You (or the beneficiary or your personal representative in the event of your death or incapacity, as the case may be) shall deliver to the Company any representations or other documents or assurances as the Company may deem necessary or reasonably desirable to ensure compliance with all applicable legal and regulatory requirements.

 

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(b)                                 Market Stand-Off.  In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, you or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter.  Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter.  In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in Rule 2711(f)(4) of the Financial Industry Regulatory Authority and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules.  The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering.  In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off.  In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period.  The Company’s underwriters shall be beneficiaries of the agreement set forth in this Section 7(c).  This Section 7(c) shall not apply to Shares registered in the public offering under the Securities Act.

 

(c)                                  Investment Intent at Grant.  You represent and agree that the Shares to be acquired upon settlement of these RSUs will be acquired for investment, and not with a view to the sale or distribution thereof.

 

(d)                                 Investment Intent at Settlement.  In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available that requires an investment representation or other representation, you shall represent and agree at the time of issuance that the Shares being acquired upon settlement of these RSUs are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel, including (if applicable because the Company is relying on Regulation S under the Securities Act) that as of the date of issuance of Shares that you are (i) not a U.S. Person; (ii) not acquiring the Shares on behalf, or for the account or benefit, of a U.S. Person; and (iii) is not in the United States at the time of settlement.

 

(e)                                  Rights of the Company.  The Company shall not be required to (i) transfer on its books any Shares that have been sold or transferred in contravention of this Agreement or (ii) treat as the owner of Shares, or otherwise to accord voting, dividend or 

 

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liquidation rights to, any Transferee to whom the Shares have been transferred in contravention of this Agreement.

 

(f)                                   Legends.  All certificates evidencing the Shares issued under this Agreement shall bear the following legend:

 

“THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).  SUCH AGREEMENT RESTRICTS THE TRANSFER OF THE SHARES AND GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES.  IN ADDITION, THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A LIMITED PERIOD FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.  THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

 

All certificates evidencing Shares issued under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

 

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY SECURITIES LAWS OF ANY U.S. STATE, AND MAY NOT BE SOLD, REOFFERED, PLEDGED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.  IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY (CONFIRMED BY OPINION OF COUNSEL) OF AN ALTERNATIVE EXEMPTION FROM REGISTRATION UNDER THE ACT (INCLUDING WITHOUT LIMITATION IN ACCORDANCE WITH REGULATION S UNDER THE ACT), THESE SHARES MAY NOT BE SOLD, REOFFERED, PLEDGED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF.  HEDGING TRANSACTIONS INVOLVING THESE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.”

 

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If required by the authorities of any State in connection with the issuance of the Shares, the legend or legends required by such State authorities shall also be endorsed on all such certificates.

 

(g)                                  Removal of Legends.  If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares issued under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

 

(h)                                 Administration.  Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 7 shall be conclusive and binding on you and all other persons.

 

SECTION 8.                         ADJUSTMENT OF SHARES.

 

In the event of any transaction described in Section 8(a) of the Plan, the terms of these RSUs (including, without limitation, the number and kind of shares subject to these RSUs) shall be adjusted as set forth in Section 8(a) of the Plan.  In the event that the Company is party to a merger or consolidation, your RSUs shall be subject to Section 8(b) of the Plan, provided that any action taken must either preserve the exemption of your RSUs from Code Section 409A or comply with Code Section 409A.  Any additional RSUs and any new, substituted or additional shares, cash or other property that become subject to this award as a result of any such transaction shall be subject to the same conditions and restrictions as applicable to the RSUs to which they relate.

 

SECTION 9.                         MISCELLANEOUS PROVISIONS.

 

(a)                                 Successors and Assigns.  Except as otherwise expressly provided to the contrary, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and be binding upon you and your legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person has become a party to this Agreement or has agreed in writing to join herein and to be bound by the terms, conditions and restrictions hereof.

 

(b)                                 No Retention Rights.  Nothing in this Agreement or in the Plan shall confer upon you the right to remain in Service in any capacity for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining you) or you, which rights are hereby expressly reserved by each, to terminate your Service at any time and for any reason, with or without cause.

 

(c)                                  Notice.  Any notice required by the terms of this Agreement shall be given in writing.  It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid, (iii) deposit with Federal Express Corporation, with shipping charges prepaid or (iv) deposit with an internationally recognized express mail courier service.  Notice shall be addressed to the 

 

9

 

Company at its principal executive office and to you at the address that you most recently provided to the Company in accordance with this Section 9(c).

 

(d)                                 Effect on Other Employee Benefit Plans.  The value of your RSUs and the Shares issuable thereunder shall not be included as compensation, earnings, salaries, or other similar terms used when calculating benefits under any employee benefit plan (other than the Plan) sponsored by the Company, a Parent, or a Subsidiary, except as such plans otherwise expressly provide.

 

(e)                                  Entire Agreement.  The Notice of Restricted Stock Unit Award, this Agreement and the Plan constitute the entire understanding between you and the Company regarding the subject matter hereof.  They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.

 

(f)                                   Choice of Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

 

(g)                                  Plan Discretionary.  You understand and acknowledge that (i) the Plan is entirely discretionary, (ii) the Company and your employer have reserved the right to amend, suspend or terminate the Plan at any time, (iii) the grant of an RSU does not in any way create any contractual or other right to receive additional grants of RSUs (or benefits in lieu of RSUs) at any time or in any amount and (iv) all determinations with respect to any additional grants, including (without limitation) the times when RSUs will be granted, the number of Shares offered and the vesting schedule, will be at the sole discretion of the Company.

 

(h)                                 Termination of Service.  You understand and acknowledge that participation in the Plan ceases upon termination of your Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement.

 

(i)                                     Extraordinary Compensation.  The value of this RSU shall be an extraordinary item of compensation outside the scope of your employment contract, if any, and shall not be considered a part of your normal or expected compensation for purposes of calculating severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

 

(j)                                    Authorization to Disclose.  You hereby authorize and direct your employer to disclose to the Company or any Subsidiary any information regarding your employment, the nature and amount of your compensation and the fact and conditions of your participation in the Plan, as your employer deems necessary or appropriate to facilitate the administration of the Plan.

 

(k)                                 Personal Data Authorization.  You consent to the collection, use and transfer of personal data as described in this Subsection (i).  You understand and acknowledge that the Company, your employer and the Company’s other Subsidiaries hold certain personal 

 

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information regarding you for the purpose of managing and administering the Plan, including (without limitation) your name, home address, telephone number, date of birth, social insurance number, salary, nationality, job title, any Shares or directorships held in the Company and details of all RSUs or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (the “Data”).  You further understand and acknowledge that the Company and/or its Subsidiaries will transfer Data among themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan and that the Company and/or any Subsidiary may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan.  You understand and acknowledge that the recipients of Data may be located in the United States or elsewhere.  You authorize such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering your participation in the Plan, including a transfer to any broker or other third party with whom you elect to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf.  You may, at any time, view the Data, require any necessary modifications of Data or withdraw the consents set forth in this Subsection (i) by contacting the Company in writing.

 

SECTION 10.                                                                  DEFINITIONS.

 

(a)                                 “Agreement” means this Restricted Stock Unit Agreement.

 

(b)                                 “Board of Directors” means the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

 

(c)                                  “Cause” means (i) your unauthorized use or disclosure of the Company’s confidential information or trade secrets, which use or disclosure causes material harm to the Company, (ii) your material breach of any agreement between you and the Company, (iii) your material failure to comply with the Company’s written policies or rules, (iv) your conviction of, or your plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State, (v) your gross negligence or willful misconduct, (vi) your continuing failure to perform assigned duties after receiving written notification of the failure from the Company’s Board of Directors or (vii) your failure to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested your cooperation.

 

(d)                                 “Committee” means a committee of the Board of Directors, as described in Section 2 of the Plan.

 

(e)                                  “Date of Grant” means the date specified in the Notice of Restricted Stock Unit Award, which date shall be the later of (i) the date on which the Board of Directors resolved to grant these RSUs or (ii) your first date of Service.

 

(f)                                   “Expiration Date” means the expiration date of the RSUs as set forth in the Notice of Restricted Stock Unit Award.

 

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(g)                                  “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

 

(h)                                 “IPO” means the first firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale by the Company of its equity securities, as a result of or following which the Shares shall be publicly held, and “IPO Date” means the date on which the IPO occurs.

 

(i)                                     “Liquidity Event Requirement” shall have the meaning set forth on the Notice of Restricted Stock Unit Award.

 

(j)                                    “Plan” means the Vitae Pharmaceuticals, Inc. 2013 Stock Plan, as may be amended from time to time.

 

(k)                                 “Right of First Refusal” means the Company’s right of first refusal described in Section 6.

 

(l)                                     “RSUs” means the Restricted Stock Units granted to you by the Company as set forth in the Notice of Restricted Stock Unit Award.

 

(m)                             “Sale Event” means the consummation of the following transactions in which holders of Shares receive cash or marketable securities tradable on an established national or foreign securities exchange: (i) a sale of all or substantially all of the assets of the Company determined on a consolidated basis to an unrelated person or entity; (ii) a merger, reorganization, or consolidation involving the Company in which the shares of voting stock of the Company outstanding immediately prior to such transaction represent or are converted into or exchanged for securities of the surviving or resulting entity immediately upon completion of such transaction which represent less than 50% of the outstanding voting power of such surviving or resulting entity; or (iii) the acquisition of all or a majority of the outstanding voting stock of the Company in a single transaction or series of related transactions by a person or group of persons.  For the avoidance of doubt, an initial public offering, any subsequent public offering, another capital raising event, and a merger effected solely to change the Company’s domicile shall not constitute a “Sale Event.”  In addition, a transaction shall not constitute a Sale Event unless such transaction also qualifies as an event under Treasury Regulation Section 1.409A-3(i)(5)(v) (change in the ownership of a corporation), Treasury Regulation Section 1.409A-3(i)(5)(vi) (change in the effective control of a corporation), or Treasury Regulation Section 1.409A-3(i)(5)(vii) (change in the ownership of a substantial portion of a corporation’s assets).

 

(n)                                 “Termination For Cause” means a termination of your Service by the Company, following a determination by the Company that such termination is for Cause, and evidenced by written notice from the Company to you that such termination of Service is for Cause.

 

(o)                                 “Transferee” means any person to whom you have directly or indirectly transferred any Shares acquired under this Agreement.

 

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(p)                                 “Transfer Notice” means the notice of a proposed transfer of Shares described in Section 6.

 

(q)                                 “U.S. Person” means a person described in Rule 902(k) of Regulation S of the Securities Act (or any successor rule or provision), which generally defines a U.S. person as any natural person resident in the United States, any estate of which any executor or administrator is a U.S. Person, or any trust of which of any trustee is a U.S. Person.

 

(r)                                    “Vesting Date” shall have the meaning set forth on the Notice of Restricted Stock Unit Award.

 

13Exhibit 10.6

 

CONFIDENTIAL TREATMENT REQUESTED

 

 

 

RESEARCH COLLABORATION AND LICENSE AGREEMENT

 

BETWEEN

 

VITAE PHARMACEUTICALS, INC.

 

AND

 

BOEHRINGER INGELHEIM INTERNATIONAL GMBH

 

Dated as of October 2, 2007 (the “Effective Date”)

 

Boehringer Ingelheim Contract Number: ****

 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
1.
    	
DEFINITIONS
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
LICENSE GRANTS, OWNERSHIP AND EXCLUSIVITY
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
License Grants
    	
 
    	
17
    
	
 
    	
2.2
    	
Sublicensing and Subcontracting
    	
 
    	
18
    
	
 
    	
2.3
    	
Trademarks
    	
 
    	
19
    
	
 
    	
2.4
    	
Exclusivity
    	
 
    	
19
    
	
 
    	
2.5
    	
Non-Core 11β HSD-1   Inhibitors
    	
 
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
GOVERNANCE
    	
 
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
General
    	
 
    	
19
    
	
 
    	
3.2
    	
Committees
    	
 
    	
20
    
	
 
    	
3.3
    	
Joint Steering Committee
    	
 
    	
20
    
	
 
    	
3.4
    	
Joint Research Committee
    	
 
    	
22
    
	
 
    	
3.5
    	
Joint Development Committee
    	
 
    	
24
    
	
 
    	
3.6
    	
Minutes of Committee Meetings
    	
 
    	
25
    
	
 
    	
3.7
    	
Expenses
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
4.
    	
RESEARCH COLLABORATION
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
General
    	
 
    	
25
    
	
 
    	
4.2
    	
Research Plan
    	
 
    	
26
    
	
 
    	
4.3
    	
Research Term
    	
 
    	
26
    
	
 
    	
4.4
    	
Records
    	
 
    	
26
    
	
 
    	
4.5
    	
Vitae’s Responsibilities
    	
 
    	
26
    
	
 
    	
4.6
    	
BI’s Responsibilities
    	
 
    	
27
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
5.
    	
DEVELOPMENT OF PRODUCTS
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
General
    	
 
    	
29
    
	
 
    	
5.2
    	
Minimum Diligence
    	
 
    	
29
    
	
 
    	
5.3
    	
Development Decisions/Progress
    	
 
    	
30
    
	
 
    	
5.4
    	
Co-Development Option
    	
 
    	
30
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
6.
    	
COMMERCIALIZATION
    	
 
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
General
    	
 
    	
31
    
	
 
    	
6.2
    	
BI Responsibilities
    	
 
    	
31
    
	
 
    	
6.3
    	
Promotional Materials, Samples and Labeling
    	
 
    	
31
    
	
 
    	
6.4
    	
Biannual Reports
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
7.
    	
MANUFACTURING AND INVENTORIES
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
Manufacturing
    	
 
    	
32
    
	
 
    	
7.2
    	
Inventory
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
8.
    	
REGULATORY MATTERS
    	
 
    	
32
    

 

i

 

	
 
    	
8.1
    	
General
    	
 
    	
32
    
	
 
    	
8.2
    	
Regulatory Submissions
    	
 
    	
32
    
	
 
    	
8.3
    	
Drug Safety Information
    	
 
    	
32
    
	
 
    	
8.4
    	
Recalls or Corrective Action
    	
 
    	
33
    
	
 
    	
8.5
    	
Events Affecting Integrity or Reputation
    	
 
    	
33
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
9.
    	
FINANCIAL PROVISIONS
    	
 
    	
33
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.1
    	
Execution Payment
    	
 
    	
34
    
	
 
    	
9.2
    	
Research Funding
    	
 
    	
34
    
	
 
    	
9.3
    	
Development and Regulatory Milestone Payments
    	
 
    	
34
    
	
 
    	
9.4
    	
Commercialization Milestone Payments
    	
 
    	
35
    
	
 
    	
9.5
    	
Requirements for Invoices
    	
 
    	
36
    
	
 
    	
9.6
    	
Royalties
    	
 
    	
36
    
	
 
    	
9.7
    	
Net Sales Report
    	
 
    	
38
    
	
 
    	
9.8
    	
Third Party Royalties
    	
 
    	
38
    
	
 
    	
9.9
    	
Multiple Royalties
    	
 
    	
38
    
	
 
    	
9.10
    	
Equity Investment
    	
 
    	
39
    
	
 
    	
9.11
    	
Payment Terms
    	
 
    	
39
    
	
 
    	
9.12
    	
Currency
    	
 
    	
39
    
	
 
    	
9.13
    	
Financial Standards
    	
 
    	
39
    
	
 
    	
9.14
    	
Late Payments
    	
 
    	
39
    
	
 
    	
9.15
    	
Tax Withholding, Financial Records and Audits
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
10.
    	
CONFIDENTIAL INFORMATION
    	
 
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.1
    	
Definition
    	
 
    	
40
    
	
 
    	
10.2
    	
Confidentiality
    	
 
    	
40
    
	
 
    	
10.3
    	
Permitted Disclosure and Use
    	
 
    	
41
    
	
 
    	
10.4
    	
Return
    	
 
    	
41
    
	
 
    	
10.5
    	
Remedies
    	
 
    	
41
    
	
 
    	
10.6
    	
Survival
    	
 
    	
41
    
	
 
    	
10.7
    	
Internet Mail Encryption
    	
 
    	
41
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
11.
    	
REPRESENTATIONS AND WARRANTIES
    	
 
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.1
    	
Mutual Representations and Warranties
    	
 
    	
42
    
	
 
    	
11.2
    	
BI Representations and Warranties
    	
 
    	
42
    
	
 
    	
11.3
    	
Vitae Representations and Warranties
    	
 
    	
43
    
	
 
    	
11.4
    	
Disclaimer of Warranty
    	
 
    	
45
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
12.
    	
INDEMNIFICATION
    	
 
    	
45
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.1
    	
Indemnification by BI
    	
 
    	
45
    
	
 
    	
12.2
    	
Indemnification by Vitae
    	
 
    	
45
    
	
 
    	
12.3
    	
Procedure for Indemnification
    	
 
    	
45
    
	
 
    	
12.4
    	
Insurance
    	
 
    	
46
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
13.
    	
PATENTS
    	
 
    	
46
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.1
    	
Ownership of Inventions
    	
 
    	
46
    

 

ii

 

	
 
    	
13.2
    	
Prosecution and Maintenance of Patents
    	
 
    	
47
    
	
 
    	
13.3
    	
Patent Infringement
    	
 
    	
51
    
	
 
    	
13.4
    	
Infringement of Patents
    	
 
    	
51
    
	
 
    	
13.5
    	
Notice of Certification
    	
 
    	
52
    
	
 
    	
13.6
    	
Validity Challenge
    	
 
    	
52
    
	
 
    	
13.7
    	
Assistance
    	
 
    	
52
    
	
 
    	
13.8
    	
Settlement
    	
 
    	
53
    
	
 
    	
13.9
    	
Licensed Patents
    	
 
    	
53
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
14.
    	
TERM AND TERMINATION
    	
 
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.1
    	
Term
    	
 
    	
53
    
	
 
    	
14.2
    	
Termination for Material Breach
    	
 
    	
53
    
	
 
    	
14.3
    	
Other Termination Rights
    	
 
    	
54
    
	
 
    	
14.4
    	
Effects of Termination; Terminated Products
    	
 
    	
55
    
	
 
    	
14.5
    	
Change of Control
    	
 
    	
58
    
	
 
    	
14.6
    	
Accrued Rights; Surviving Obligations
    	
 
    	
58
    
	
 
    	
14.7
    	
Bankruptcy under U.S. or German Law
    	
 
    	
59
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
15.
    	
MISCELLANEOUS
    	
 
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
15.1
    	
Publications
    	
 
    	
59
    
	
 
    	
15.2
    	
Public Announcements
    	
 
    	
60
    
	
 
    	
15.3
    	
No Debarred Personnel
    	
 
    	
60
    
	
 
    	
15.4
    	
Relationship of the Parties
    	
 
    	
60
    
	
 
    	
15.5
    	
Registration of This Agreement
    	
 
    	
61
    
	
 
    	
15.6
    	
Force Majeure
    	
 
    	
61
    
	
 
    	
15.7
    	
Dispute Resolution
    	
 
    	
61
    
	
 
    	
15.8
    	
Governing Law
    	
 
    	
62
    
	
 
    	
15.9
    	
Attorneys’ Fees and Related Costs
    	
 
    	
62
    
	
 
    	
15.10
    	
Assignment
    	
 
    	
62
    
	
 
    	
15.11
    	
Assignment and Performance within the BI Group
    	
 
    	
62
    
	
 
    	
15.12
    	
Notices
    	
 
    	
62
    
	
 
    	
15.13
    	
Severability
    	
 
    	
63
    
	
 
    	
15.14
    	
Headings
    	
 
    	
63
    
	
 
    	
15.15
    	
Waiver
    	
 
    	
63
    
	
 
    	
15.16
    	
Entire Agreement
    	
 
    	
63
    
	
 
    	
15.17
    	
Modification
    	
 
    	
63
    
	
 
    	
15.18
    	
No License
    	
 
    	
63
    
	
 
    	
15.19
    	
No Third Party Beneficiaries
    	
 
    	
63
    
	
 
    	
15.20
    	
Ambiguities
    	
 
    	
64
    
	
 
    	
15.21
    	
CREATE Act
    	
 
    	
64
    
	
 
    	
15.22
    	
Counterparts
    	
 
    	
64
    

 

	
Exhibit 1
    	
Vitae Patents
    
	
Exhibit 2
    	
Preliminary Research Plan
    
	
Exhibit 3
    	
Initial Development Plan
    
	
Exhibit 4
    	
Collaboration Compounds
    

 

iii

 

	
Exhibit 5
    	
BI Compounds
    
	
Exhibit 6
    	
Share Purchase Agreement
    
	
Exhibit 7
    	
Requirements for Invoices
    
	
Exhibit 8
    	
Potential Third Party Rights for BI Compounds
    

 

iv

 

RESEARCH COLLABORATION AND LICENSE AGREEMENT

 

This RESEARCH COLLABORATION AND LICENSE AGREEMENT (“Agreement”) effective as of October 2, 2007 (“Effective Date”) is entered into by and between Vitae Pharmaceuticals, Inc (“Vitae”), with offices at 502 West Office Center Drive, Ft. Washington, PA 19034, USA. (taxpayer ID number 04-3567753), and Boehringer Ingelheim International GmbH (“BI”), with offices at **** (VAT ID number ****).  Vitae and BI may each be referred to as a “Party” or together as the “Parties.”

 

RECITALS

 

WHEREAS, Vitae is a company which possesses certain patent applications, proprietary know-how, scientific and technical information including new molecular entities that inhibit 11-beta hydroxysteroid dehydrogenase type 1 (“11β HSD-1”) for use in research, discovery and development of pharmaceutical products;

 

WHEREAS, BI is a company which possesses expertise and resources relating to the research, development, manufacture, marketing and sale of new molecular entities, including proprietary know-how and technical information about its own 11β HSD-1 Inhibitors (defined below), as pharmaceutical products for the treatment of metabolic diseases and other disorders in human beings and animals;

 

WHEREAS, BI wishes to obtain, and Vitae is willing to grant, an exclusive license to such applications (and any resulting patents), proprietary know-how, scientific and technical information in respect of 11β HSD-1 Inhibitors (defined below) for the development, use, manufacture and commercialization of therapeutic products for human beings and animals worldwide;

 

WHEREAS, Vitae and BI desire to enter into a collaboration for the research, development and commercialization of 11β HSD-1 Inhibitors as provided by this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the representations, covenants and agreements contained herein, Vitae and BI, intending to be legally bound, hereby agree as follows:

 

AGREEMENT

 

1.             DEFINITIONS.  For purposes of this Agreement, the following capitalized terms, whether used in the singular or plural, shall have the following meanings:

 

1.1          “11β HSD-1” shall have the meaning assigned thereto in the Recitals of this Agreement.

 

1.2          “11β HSD-1 Inhibitor” means a compound that (i) inhibits human microsomal 11β HSD-1 enzyme activity by ****

 

****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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1.3          “AAA” shall have the meaning assigned thereto in Section 15.7.

 

1.4          “Acquiring Entity” shall have the meaning assigned thereto in Section 14.5(a).

 

1.5          “Affiliate” means any Person that, directly or indirectly, controls, is controlled by or is under common control with a Party for so long as such control exists, where “control” means the decision-making authority as to such Person and, further, where such control shall be presumed to exist where a Person owns more than fifty percent (50%) of the equity (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) entitled to vote regarding composition of the board of directors or other body entitled to direct the affairs of the entity.

 

1.6          “Annual Net Sales” shall have the meaning assigned thereto in Section 9.6.

 

1.7          “Assignment Date” shall have the meaning assigned thereto in Section 13.1.2.

 

1.8          “Bankruptcy Code” shall have the meaning assigned thereto in Section 14.7.

 

1.9          “BI” means Boehringer Ingelheim International GmbH.

 

1.10        “BI Compound” means a compound that (i) is an 11β HSD-1 Inhibitor, and (ii) (a) was discovered by the BI Group on or before the Effective Date, or (b) is within the scope of the BI Group’s plans of structural variation for lead optimization as of the Effective Date, or (c) is in-licensed by the BI Group during the Research Term.  BI Compounds discovered by the BI Group on or before the Effective Date are set forth in Exhibit 5.  BI shall promptly update Exhibit 5 for any 11β HSD-1 Inhibitors in-licensed or otherwise acquired by the BI Group during the Research Term.

 

1.11        “BI Group” means, collectively, BI and its Affiliates.

 

1.12        “BI Intellectual Property” means collectively BI Know-How and BI Patents.

 

1.13        “BI Know-How” means all information regarding Products or 11β HSD-1 Inhibitors, but excluding BI Life-Cycle Know-How, necessary for or relevant to, or useful for, Vitae’s performance of its obligations or exercise of its rights under this Agreement, including, but not limited to, all data and records relating to Products and/or 11β HSD-1 Inhibitors, and which are or become in BI’s or any of its Affiliates’ possession or control or are or become owned by, or otherwise may be licensed to, BI or any of its Affiliates.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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1.14        “BI Life-Cycle Intellectual Property” means collectively BI Life-Cycle Know-How and BI Life-Cycle Patents.

 

1.15        “BI Life-Cycle Know-How” means the Inventions, discoveries, technologies, methods, techniques, procedures, protocols, and other proprietary know-how developed by or on behalf of BI or its Affiliates that result from activities carried out with respect to Development Candidates or Products following start of GLP toxicology studies other than in the course of Research; for the sake of clarity, the subject matter of such Patents may include (but is not limited to) salt forms, polymorphs, metabolites, intermediates, technical process for manufacture of drug substance, catalysts, formulations, methods of production, uses (including methods of treatment), combinations (including combinations with other pharmaceutical compounds, devices etc.), dosages, application regimens, routes of administration, packaging, purification methods and analytical methods associated therewith.

 

1.16        “BI Life-Cycle Patents” means, in respect to any Development Candidate, all Patents that are invented by or on behalf of BI or its Affiliates and result from activities carried out with respect to Development Candidates or Products following start of GLP toxicology studies other than in the course of Research; for the sake of clarity, the subject matter of such Patents may include (but not be limited to) salt forms, polymorphs, metabolites, intermediates, technical process for manufacture of drug substance, catalysts, formulations, methods of production, uses (including methods of treatment), combinations (including combinations with other pharmaceutical compounds, devices etc.), dosages, application regimens, routes of administration, packaging, purification methods and analytical methods associated therewith.

 

1.17        “BI Patents” means all Patents (excluding BI Life-Cycle Patents) that are owned as of the Effective Date, or become owned or in-licensed (with the right to grant sublicense rights granted to Vitae under this Agreement), by BI or BI’s Affiliates during the Term, that, but for a license granted thereunder to Vitae pursuant to Section 2.1.2 would be infringed by Vitae’s performance of its rights and obligations, which Patent rights Cover the making, having made, use, offer for sale, sale or importation of an 11β-HSD-1 Inhibitor or Product.

 

1.18        “Claim” means any charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand.

 

1.19        “Co-Development Option” shall have the meaning assigned thereto in Section 5.4.

 

1.20        “Collaboration Compound” means a compound that (i) is an 11β HSD-1 Inhibitor, and (ii) (a) is discovered by either or both Parties or their Affiliates (except an Acquiring Entity) during the Research Term, (b) is acquired by either or both Parties or their Affiliates (except an Acquiring Entity) during the Research Term, or (c) was discovered by Vitae prior to the Research Term.  Collaboration Compounds discovered prior to the Effective Date by Vitae are listed in Exhibit 4.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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1.21        “Combination Product” shall have the meaning assigned thereto in Section 9.6.4.

 

1.22        “Commercial Conflict” means a situation where (i) the Parties disagree with BI’s decision regarding the priority of Development or Commercialization of a Product: (a) such that the Product will be no longer primarily be sold for use in respect of a Core Indication, and (b) such that the decision will likely result in a materially reduced financial return to Vitae from such Product, and (c) such decision is not based on the technical or medical profile of the Product (including, but not limited to, Technical Failure) but primarily on commercial factors; (ii) the Parties disagree as to whether BI failed to meet its Diligent Efforts obligations to Develop Products as set forth in Sections 5.1 and 5.2 below, taking into consideration the Milestone Timing (including any extensions) set forth therein; (iii) the Parties disagree as to whether BI failed to use Diligent Efforts in general, as described elsewhere in the Agreement; (iv) a Party disputes whether the other Party has followed the Potential Development Candidate Selection process set forth in Section 4.6.1; (v) Vitae disputes whether BI has failed to advance one (1) Collaboration Compound or BI Compound into Development even though Collaboration Compound(s) or BI Compound(s) fulfill the criteria for Development Candidate Selection pursuant to Section 1.31 and Exhibit 2; or (vi) the applicable Committee fails to reach consensus on a Research decision and such issue is not resolved by the Officers pursuant to Section 3.3.4(b) below.

 

1.23        “Commercialization” or “Commercialize” means engaging in any and all activities directed to manufacturing, marketing, promoting, distributing, offering for sale, selling, importing, exploiting a product, and conducting post Marketing Authorization Approval studies.

 

1.24        “Commercialization Plan” shall have the meaning assigned thereto in Section 6.

 

1.25        “Committee” means the Joint Steering Committee, JRC, JDC, and/or any subcommittee established by the Joint Steering Committee, as applicable.

 

1.26        “Confidential Information” shall have the meaning assigned thereto in Section 10.1.

 

1.27        “Core Indication” means prevention and or treatment of any of the following indications: type 2 diabetes, obesity, metabolic syndrome, dyslipidemia, hypertension, and reduction of cardiovascular events.

 

1.28        “Cover” or “Covering” means, (i) with respect to a Patent, that at least one Valid Claim of such Patent would be infringed by the product, method or device, as applicable, and (ii) with respect to any other intellectual property right that the product, method or device would infringe or misappropriate such rights unless a license were granted.

 

1.29        “Development” or “Develop” means engaging in preclinical and clinical drug development activities, including, but not limited to, discovery, test method development, stability testing, toxicology, formulation, process development, manufacturing scale-up, development-stage manufacturing, analytical method validation, manufacturing process validation, cleaning validation, post-approval changes, quality assurance/quality control,       

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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statistical analysis, report writing, preclinical and clinical studies, regulatory filing submission and approval and regulatory affairs.

 

1.30        “Development Candidate” means a Collaboration Compound or BI Compound meeting the characteristics and/or properties described in Exhibit 2 and selected as further described in Sections 4.1 and 4.6.2.

 

1.31        “Development Candidate Selection” means the earlier to occur of (i) the identification by the Joint Steering Committee of a Collaboration Compound or BI Compound for Development and the decision by BI to start GLP toxicity studies with respect to a Collaboration Compound or a BI Compound, provided that BI’s internal decision-making process with respect to such Collaboration Compound or BI Compound is consistent with BI’s normal decision-making processes used for internally developed compounds, or (ii) the start of GLP toxicity studies with respect to a Collaboration Compound or a BI Compound by BI.

 

1.32        “Development Plan” means the outline plan for each Product designed to achieve the Development for such Product, including, but not limited to, the nature, number and schedule of Development activities necessary to implement such activities as may be amended in accordance with the terms of this Agreement.  An initial Development Plan is attached hereto as Exhibit 3.

 

1.33        “Diligent Efforts” means the carrying out of obligations in a sustained manner consistent with the efforts a party would be expected to devote (and which in no event shall be less than the level of effort and resources standard in the pharmaceutical industry for a company similar in size and scope to such party) to a lead product of similar market potential, profit potential or strategic value resulting from its own research efforts, based on conditions then prevailing, in respect of a Core Indication.  Without limiting the foregoing, Diligent Efforts in all cases requires at least that (i) each Party promptly assigns responsibility for such obligations to specific employee(s) who are held accountable for progress and monitor such progress on an ongoing basis; (ii) each Party sets and consistently seeks to achieve specific and meaningful objectives for carrying out such obligations; and (iii) each Party consistently makes and implements decisions and allocates resources designed to advance progress with respect to such objectives.

 

1.34        “Disclosing Party” shall have the meaning assigned thereto in Section 10.1.

 

1.35        “Effective Date” shall have the meaning assigned thereto in the first paragraph of this Agreement.

 

1.36        “EMEA” means the European Medicines Agency and any successor agency thereto.

 

1.37        “FDA” means the United States Food and Drug Administration and any successor agency thereto.

 

1.38        “Field” means the diagnosis, treatment, palliation or prevention of all human and animal diseases including, but not limited to, Core Indications.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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1.39         “First Commercial Sale” means the first invoice for commercial quantities of any Product sold to a Third Party by a member of the BI Group and/or sublicensees in any country after receipt of Marketing Authorization Approval for such Product in such country.  Sales for test marketing, sampling and promotional uses, clinical trial purposes or compassionate or similar uses shall not be considered to constitute a First Commercial Sale.

 

1.40        “Force Majeure Event” shall have the meaning assigned thereto in Section 15.6.

 

1.41        “FTE” means a full-time equivalent person-year based upon a total of **** working hours per year, undertaken in connection with the conduct of Research in accordance with the Research Collaboration.

 

1.42        “Generic Competition” shall have the meaning assigned thereto in Section 9.6.5(a).

 

1.43        “Generic Product” means, with respect to a particular Product and a particular country, any pharmaceutical product (other than such Product) that contains the same active ingredient(s) as such Product, has substantially the same formulation, mode of administration and duration of release as such Product, and is approved for the same indications as such Product in such country.

 

1.44        “Good Laboratory Practices” or “GLP” means, with respect to the United States, the then-current requirements for non-clinical (animal or laboratory) studies that will be submitted to a Government Authority to support a marketing application, specified in 21 C.F.R. Part 58, as may be amended, and, with respect to any other country or jurisdiction, the equivalent regulations in such other country or jurisdiction.

 

1.45        “Good Manufacturing Practices” or “GMP” means, with respect to the United States, the minimum then-current good manufacturing practices for methods, facilities, and controls to be used for the manufacture, processing, packing, or holding of a drug to assure that it meets the requirements of the Federal Food, Drug, and Cosmetic Act for safety and has the identity and strength and meets the quality and purity characteristics, specified in 21 C.F.R. Parts 210 and 211, as may be amended, and, with respect to any other country or jurisdiction, the equivalent regulations in such other country or jurisdiction.

 

1.46        “Governmental Authority” means any court, tribunal, arbitrator, agency, legislative body, commission, official or other instrumentality of (i) any government of any country, (ii) a federal, state, province, county, city or other political subdivision thereof or (iii) any supranational body, including, but not limited to, the FDA and EMEA.

 

1.47        “Handelsgesetzbuch” or “HGB” shall have the meaning assigned thereto in Section 1.72.

 

1.48        “Indemnified Party” shall have the meaning assigned thereto in Section 12.3.1.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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1.49        “Indemnifying Party” shall have the meaning assigned thereto in Section 12.3.1.

 

1.50        “Initial Funded Research Period” shall have the meaning assigned thereto in Section 9.2.1.

 

1.51        “Initiation” means, with respect to a clinical study, the date of the dosing of the first subject.

 

1.52        “Invention” means any discovery (whether patentable or not) invented during the Term as a result of Research and Development activities in respect of a Product or 11β HSD-1 Inhibitor.

 

1.53        “Joint Development Committee” or “JDC” shall have the meaning assigned thereto in Section 3.2.

 

1.54        “Joint Intellectual Property” means collectively Joint Inventions, Joint Know-How and Joint Patents.

 

1.55        “Joint Invention” means an Invention with respect to which employees and/or agents of both Vitae and BI are joint inventors in the course of the Research activities hereunder, all of which specifically relate to 11β HSD-1 Inhibitors, regardless of whether any Third Parties are also joint inventors.  Inventorship for Joint Inventions shall be determined in accordance with the patent laws of the United States (Title 35, United States Code).

 

1.56        “Joint Know-How” means all present and future information, know-how, data and results in whatsoever form including, but not limited to, all biological, toxicological, chemical information, biochemical information, metabolic, pre-clinical data, and assays generated jointly by employees and/or agents of both Vitae and BI in the course of the Research activities hereunder all of which specifically relate to 11β HSD-1 Inhibitors.

 

1.57        “Joint Patent” means any Patent Covering a Joint Invention.

 

1.58        “Joint Research Committee” or “JRC” shall have the meaning assigned thereto in Section 3.2.

 

1.59        “Joint Steering Committee” or “JSC” shall have the meaning assigned thereto in Section 3.2.

 

1.60        “Laws” means all laws, statutes, rules, regulations (including, but not limited to, current Good Manufacturing Practice regulations as specified in 21 C.F.R. Parts 210 and 211; Investigational New Drug Application regulations at 21 C.F.R. Part 312; NDA regulations at 21 C.F.R. Part 314; relevant provisions of the Federal Food, Drug and Cosmetic Act, and other laws and regulations enforced by the FDA), ordinances and other pronouncements having the binding effect of law of any Governmental Authority.

 

1.61        “****” shall have the meaning assigned thereto in Section 13.1.2.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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1.62        “Losses” means any and all damages (including, but not limited to, all loss of profits, diminution in value, and incidental, indirect, consequential, special, reliance, exemplary, punitive, statutory and treble damages), awards, deficiencies, settlement amounts, defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, taxes, liens, losses and expenses (including, but not limited to, court costs, interest and reasonable fees of attorneys, accountants and other experts) incurred by or awarded to Third Parties and required to be paid to Third Parties with respect to a Claim by reason of any judgment, order, decree, stipulation or injunction, or any settlement entered into in accordance with the provisions of this Agreement, together with all documented out-of-pocket costs and expenses incurred in contesting any Third Party Claim or complying with any judgments, orders, decrees, stipulations and injunctions that arise from or relate to a Third Party Claim.

 

1.63        “Major EU Country” means one or more of the following countries within the European Union:  ****.

 

1.64        “Major Market” means the following countries:  ****.

 

1.65        “Marketing Authorization Approval” shall mean approval by a Governmental Authority for sale of a Product, including any applicable pricing, final labeling or reimbursement approvals.

 

1.66        “Marketing Plan” means for each relevant Product, a summary of the plan prepared by BI, identifying the core strategic, commercial and promotional claims and objectives for the specific Product as reviewed under Section 3.3.2.

 

1.67        “Milestone Timing” shall have the meaning assigned thereto in Section 5.2.

 

1.68        “NDA” means a new drug application, abbreviated new drug application or supplemental new drug application or any amendments thereto submitted to the FDA or an equivalent thereof submitted to a Governmental Authority in a foreign country.

 

1.69        “NDA Acceptance” means the written notification by the FDA or equivalent Governmental Authority in a foreign country that the NDA has met all the criteria for filing acceptance.

 

1.70        “NDA Approval” means approval by the FDA for marketing and sale of a Product in the United States, including any applicable pricing, final labeling or reimbursement approvals, as applicable.

 

1.71        “NDA Filing” means the submission of an NDA to the FDA or equivalent Governmental Authority in a foreign country.

 

1.72        “Net Sales” means the actual gross amount invoiced by a member of BI Group and/or its sublicensees for sales or other commercial disposition of a Product to a Third Party, less the following deductions (consistent with customary and reasonable business practices with respect to such sales and not recovered or reimbursed to BI Group and/or its sublicensees:

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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(a)       sales returns and allowances actually paid, granted or accrued, including trade, quantity and cash discounts and any other adjustments, including those granted on account of price adjustments or billing errors;

 

(b)       rejected goods, damaged or defective goods, recalls, and returns;

 

(c)       rebates, chargeback rebates, compulsory rebates, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions;

 

(d)       adjustments arising from consumer discount programs or other similar programs;

 

(e)       customs or excise duties, sales tax, consumption tax, value added tax, and other taxes (except income taxes); and

 

(f)        charges for packing, freight, shipping and insurance (to the extent that BI, its Affiliates and sublicensees actually bear such costs for a Product).

 

Notwithstanding the foregoing, the above-listed deductions shall be allowed only if incurred in the ordinary course of business, of the type and in an amount consistent with normal industry practice, and determined in accordance with normally accepted accounting principles, or more specifically, the principles of the German commercial code (“Handelsgesetzbuch” or “HGB”) on a basis consistent with BI’s audited consolidated financial statements .  All such discounts, allowances, credits, rebates and other deductions shall be fairly and equitably allocated to the Product and other products of BI and its Affiliates and sublicensees such that the Product does not bear a disproportionate portion of such deductions.  For avoidance of doubt, there shall be no deduction from Net Sales for bad debt allowances or bad debt expenses notwithstanding any requirement or principle in the HGB.  For sake of clarity and avoidance of doubt, sales of a Product by a member of BI Group and/or sublicensees to a Third Party distributor of such Product in a given country shall be considered a sale to a Third Party customer.  Any Products used for promotional or advertising purposes or used for clinical or other research purposes shall not be included in Net Sales.  Donations of Product for charity reasons shall also not be deemed Net Sales.  A “sale” will include any transfer or other disposition for consideration, and Net Sales will include the fair market value of all consideration received by the BI Group and/or sublicensees in respect of any sale of a Product, whether such consideration is in cash payment, in kind or in any other form.

 

1.73        “Net Sales Report” shall have the meaning assigned thereto in Section 9.7.

 

1.74        “Non-Core Indication” means an indication within the Field other than a Core Indication.

 

1.75        “Non-Core 11β HSD-1 Inhibitor” means an 11β HSD-1 Inhibitor that (i) is Covered by Vitae Patents or Joint Patents, (ii) is not a Potential Development Candidate or has not been selected as a Development Candidate, and (iii) is to be Researched, Developed and/or Commercialized by Vitae for Non-Core Indications pursuant to the process specified in Sections 4.6.1 and 3.3.2(k) below.

 

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1.76        “Officers” shall have the meaning assigned thereto in Section 3.3.4(b).

 

1.77        “Other Product” shall have the meaning assigned thereto in Section 9.6.4.

 

1.78        “OUS Filings” shall have the meaning assigned thereto in Section 13.2.2(b).

 

1.79        “Party” or “Parties” shall have the meaning assigned thereto in the first paragraph of this Agreement.

 

1.80        “Patent” means any patent or patent application, including any United States provisional application and any continuation, continuation-in-part, divisional, registration, confirmation, revalidation, reissue, PCT application, patent term extension, SPC, and utility model, as well as all related extensions or restorations of terms thereof.

 

1.81        “Patent Challenge” shall have the meaning assigned thereto in Section 13.6.1.

 

1.82        “Patent Counsel” shall have the meaning assigned thereto in Section 13.2.1.

 

1.83        “Patent Infringement Claim” shall have the meaning assigned thereto in Section 13.3.

 

1.84        “PCT” shall have the meaning assigned thereto in Section 13.2.2(b).

 

1.85        “Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, joint venture, proprietorship or other de jure entity organized under the Laws of any jurisdiction.

 

1.86        “Phase I Studies” means the first clinical studies conducted in human volunteers or patients (e.g. patients with hypertension or diabetes) to obtain preliminary information on a Product’s safety, tolerability, pharmacodynamic activity, pharmacokinetics, drug metabolism and mechanism of action, as well as early evidence of effectiveness if possible, with respect to (i) the United States, as more fully defined in 21 C.F.R. § 312.21(a), as may be amended; or (ii) the equivalent of such a clinical study for submission to the EMEA; or (iii) equivalent submission in such other country or jurisdiction.

 

1.87        “Phase II Studies” means clinical studies in human patients, the primary intention of which is to collect data on dosages and demonstrate clinical safety and efficacy in a target population for a specific disease or condition under study (i.e., statistically significant differences between groups for clinical endpoints, which may include generally accepted surrogate pharmacodynamic endpoints), with respect to (i) the United States, as more fully defined in 21 C.F.R. § 312.21(b), as may be amended; or (ii) the equivalent of such a clinical study for submission to the EMEA; or (iii) equivalent submission in such other country or jurisdiction.

 

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1.88        “Phase III Studies” means large, adequate and well-controlled clinical studies that are conducted in human patients, after successful completion of the first Phase II Study, designed to evaluate safety and therapeutic efficacy of the Product and that are needed to obtain regulatory approval(s) and product labeling, with respect to (i) the United States, as more fully defined in 21 C.F.R. § 312.21(c), as may be amended; or (ii) the equivalent of such a clinical study for submission to the EMEA; or (iii) equivalent submission in such other country or jurisdiction.

 

1.89        “Product” means a pharmaceutical product containing at least one Collaboration Compound or BI Compound, whether or not such Product is used as a single agent and/or in combination with other therapeutically active components.  If a Product contains a Collaboration Compound or BI Compound, all provisions of this Agreement relevant to Products (including, but not limited to, milestone and royalty payments to Vitae) will apply thereto, regardless of whether the active ingredient (i.e., the 11β HSD-1 Inhibitor) in such Product was identified by Vitae or by the BI Group, except as otherwise provided for in this Agreement.

 

1.90        “Potential Development Candidate” means any Collaboration Compound that has not failed to meet the characteristics and/or properties described in Exhibit 2 pursuant to Section 4.6.1.

 

1.91        “Promotional Materials” means advertising, promotional, educational and communication materials (other than labeling) for Commercialization of Products.

 

1.92        “Receiving Party” shall have the meaning assigned thereto in Section 10.1.

 

1.93        “Records” shall have the meaning assigned thereto in Section 4.4.

 

1.94        “Research” means those activities undertaken for the identification, synthesis, characterization and optimization of compounds and selection of compounds for Development defined in the Research Plan as amended from time to time.

 

1.95        “Research Collaboration” shall have the meaning assigned thereto in Section 4.1.

 

1.96        “Research Plan” means the outline plan prepared in accordance with Section 4.2 below for the Research of 11β HSD-1 Inhibitors designed to achieve the selection of a Development Candidate as a Product.  A preliminary Research Plan is attached as Exhibit 2.

 

1.97        “Research Term” shall have the meaning assigned thereto in Section 4.3.

 

1.98        “Royalty Term” means, on country-by-country and Product-by-Product basis, a period starting on the Effective Date and expiring upon the later of (i) the expiry of the last-to-expire Vitae Patent, Joint Patent, or BI Patent which has at least one Valid Claim Covering such Product in such country (including the term of any applicable SPC), or (ii) ten (10) years from the date of First Commercial Sale of such Product in such country.

 

1.99        “Serious Material Breach” means any material breach by Vitae of one or more of the following provisions (wherein such breach results in the 

 

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actual loss of exclusivity granted to BI under this Agreement relating to any Patents covering key composition of matter for a Product sold by BI in a Major Market):  (i) Vitae’s grant of rights to BI under Section 2.1.1; (ii) Vitae’s confidentiality obligations under Article 10 with respect to key data obtained during the Research Collaboration, the key results of BI’s Development and any material information contained in any registration dossier or submission for any Marketing Authorization for any Products; or (iii) Vitae’s obligations under Section 13.2 to properly file, maintain and prosecute any Patents Covering the composition of matter for any Products currently being sold by BI for a Core Indication in a Major Market.  For the avoidance of doubt, a Serious Material Breach, if determined by an arbitrator to have occurred pursuant to Section 15.7, will also qualify as a material breach of a material obligation for purposes of Section 14.2.

 

1.100      “SPC” means a right based upon a Patent to exclude others from making, having made, using, offering to sell, selling, importing or exporting a Product, such as a Supplementary Protection Certificate.

 

1.101      “Special Damages” shall have the meaning assigned thereto in Section 14.2.3.

 

1.102      “Studies” means Phase I Studies, Phase II Studies, Phase III Studies and post-Marketing Authorization Approval studies, as applicable.

 

1.103      “Technical Failure” means the discontinuation of Development or Commercialization of a Product for technical, scientific, medical or regulatory reasons, including, but, not limited to, unacceptable preclinical toxicity, demonstration of a side effect profile significantly worse than currently marketed products, or inability to manufacture in an acceptable purity or for an acceptable price.

 

1.104      “Term” shall have the meaning assigned thereto in Section 14.1.

 

1.105      “Terminated Product” shall have the meaning assigned thereto in Section 14.3.

 

1.106      “Territory” means all the countries and territories of the world.

 

1.107      “Third Party” means a Person who is not a Party or an Affiliate of a Party, or in the case of BI, not a member of the BI Group.

 

1.108      “Third Party Claim” shall have the meaning assigned thereto in Section 12.3.1.

 

1.109      “Trademark” shall have the meaning assigned thereto in Section 2.2.3.

 

1.110      “Transaction” shall have the meaning assigned thereto in Section 14.5.

 

1.111      “United States” means the United States of America and its territories and possessions.

 

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1.112      “Valid Claim” means on a country-by-country and Product-by-Product basis, any claim pending in a patent application or any granted claim in an unexpired patent which has (i) not been held unenforceable, unpatentable or invalid by a decision of a court or other Governmental Authority of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer; and (ii) would, if issued, but for the licenses granted hereunder, be infringed by the Research, Development and/or Commercialization of said Product in said country.  Notwithstanding the foregoing, in case of pending patent applications, it is understood and agreed that if the corresponding claim in the corresponding US or EP patent applications:  (1) have been limited or cancelled because of patentability requirements such that the corresponding claim does not Cover said Product; (2) has lapsed; (3) has been finally rejected (and the rejection has been affirmed on appeal or the time for appeal or petition has lapsed); or (4) has been finally revoked (and the revocation has been affirmed on appeal or the time for appeal or petition has lapsed), then such corresponding claim in such corresponding patent application pending in any country will not be deemed to be a Valid Claim.

 

1.113      “Vitae Intellectual Property” shall mean collectively Vitae Know-How and Vitae Patents.

 

1.114      “Vitae Know-How” means all present and future information regarding Products or 11β HSD-1 Inhibitors that (i) are necessary for, or relevant to, or useful for BI to perform its obligations or exercise its rights under this Agreement, and (ii) during the Term, are in Vitae’s or any of its Affiliates’ (except an Acquiring Entity’s) possession or control and are or become owned by, or otherwise may be licensed by Vitae or any of its controlled Affiliates.

 

1.115      “Vitae Patents” means all Patents that are owned or become owned by Vitae or Vitae’s Affiliates (except an Acquiring Entity), or as to which Vitae or Vitae’s Affiliates (except an Acquiring Entity) are or become in-licensed (other than BI Patents) now or in the future, with the right to grant the sublicense rights granted to BI under this Agreement without payment of additional consideration to the licensor (unless BI agrees to pay such additional consideration), which patent rights Cover the Development and Commercialization, including the making, having made, use, offer for sale, sale or importation of a Product or 11β HSD-1 Inhibitor.  Vitae Patents as of the Effective Date are listed in Exhibit 1.

 

2.             LICENSE GRANTS, OWNERSHIP AND EXCLUSIVITY.

 

2.1          License Grants.

 

2.1.1       License to BI.  Subject to the terms and conditions of this Agreement, Vitae grants to BI, and BI accepts, an exclusive, royalty-bearing, non-transferable (except as expressly set forth in Sections 15.10 and 15.11) license in the Field under the Vitae Patents, Vitae Know-How and Vitae’s rights in the Joint Patents, Joint Inventions and Joint Know-How to make, have made, use, register, sell, offer to sell, import, export, Research, Develop and Commercialize BI Compounds, Collaboration Compounds, Potential Development Candidates, Development Candidates and Products in the Territory.

 

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2.1.2       Licenses to Vitae.

 

(a)           Subject to the terms and conditions of this Agreement, BI grants to Vitae, and Vitae accepts, a royalty-free, non-transferable (except as expressly set forth in Section 15.10) license in the Field under the BI Patents, the BI Know-How and BI’s rights in the Joint Patents, Joint Inventions and Joint Know-how for the sole purpose of Vitae’s exercise of its rights and performance of its obligations as described in this Agreement relating to (i) the Research of 11β HSD-1 Inhibitors as a non-exclusive license, and (ii), solely to make, have made, use, register, sell, offer to sell, import, export, exploit, Develop and Commercialize Collaboration Compounds (other than Development Candidates and/or Potential Development Candidates) and Products containing Collaboration Compounds (other than Development Candidates and/or Potential Development Candidates) for Non-Core Indications in the Territory as an exclusive license.

 

(b)           Subject to the terms and conditions of this Agreement, BI grants to Vitae, and Vitae accepts, a royalty-free, non-transferable (except as expressly set forth in Section 15.10) sublicense in the Field under the Vitae Patents and the Vitae Know-How for the sole purpose of Vitae’s performance of its rights and obligations as described in this Agreement relating to (i) the Research of 11β HSD-1 Inhibitors as a non-exclusive sublicense, and (ii) solely to make, have made, use, register, sell, offer to sell, import, export, exploit, Develop and Commercialize Collaboration Compounds (other than Development Candidates and/or Potential Development Candidates) and Products containing Collaboration Compounds (other than Development Candidates and/or Potential Development Candidates) for Non-Core Indications in the Territory as an exclusive sublicense.

 

2.2          Sublicensing and Subcontracting.

 

2.2.1       BI’s Right to Sublicense and Subcontract.  BI may sublicense or subcontract its rights to Research, Develop or Commercialize Products in whole or in part to any of its Affiliates, subject to BI’s prior written notification to Vitae, and/or in whole or in part to Third Parties with respect to the Major Markets, subject to Vitae’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed.  However, BI may sublicense or subcontract its rights to Commercialize Products in part to any Third Parties with respect to countries outside of the Major Markets upon prior written notification to Vitae.  BI shall secure all appropriate covenants, obligations and rights from any such sublicensee or subcontractor, including, but not limited to, licenses, intellectual property rights and confidentiality obligations, to ensure that such sublicensee or subcontractor is subject to, and BI can comply with, all of BI’s covenants and obligations to Vitae under this Agreement.  BI’s rights to sublicense or subcontract are limited as expressly set forth in this Section 2.2.1.  BI shall (i) use Diligent Efforts to enforce any such sublicense or subcontract, and (ii) be responsible for any failure of its sublicensees and subcontractors to comply with this Agreement.

 

2.2.2       Vitae’s Right to Sublicense and Subcontract.  Vitae may subcontract its Research obligations as set forth in Section 4 below to any of its Affiliates and/or to Third Parties, subject to BI’s prior written consent only with respect to Third Parties, which consent shall not be unreasonably withheld, conditioned or delayed.  Vitae may sublicense its rights to Develop or Commercialize Products for Non-Core Indications in whole or in part to any

 

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of its Affiliates and/or Third Parties, provided that Vitae gives BI the opportunity to negotiate in good faith the granting of a sub-license to BI prior to granting a sublicense to a Third Party.  If Vitae decides to sublicense its rights to Develop or Commercialize Products for Non-Core Indications in whole or in part to a Third Party, Vitae shall give written notice of such intent to BI, whereupon BI shall advise Vitae in writing if BI is interested in negotiating a sublicense agreement.  If BI indicates that BI is not interested in obtaining a sublicense or if the Parties are unable to conclude a sublicense agreement within **** after the date of Vitae’s written notice to BI of Vitae’s intent to grant a sublicense to a Third Party, then Vitae shall be free to grant such sublicense to a Third Party without further obligation of negotiation with BI.  Vitae shall secure all appropriate covenants, obligations and rights from any such subcontractor or sublicensee, including, but not limited to, licenses, intellectual property rights and confidentiality obligations, to ensure that such subcontractor is subject to, and Vitae can comply with, all of Vitae’s applicable covenants and obligations to BI under this Agreement.  Vitae’s rights to sublicense and subcontract are limited as expressly set forth in this Section 2.2.2.  Vitae shall (i) use Diligent Efforts to enforce any such subcontract, and (ii) be responsible for any failure of its subcontractors to comply with this Agreement.

 

2.2.3               Trademarks.  Products shall be Commercialized under trademarks and trade dress selected by BI (collectively, “Trademarks”).  BI shall exclusively own all Trademarks for Products, and shall be responsible for the procurement, filing and maintenance of trademark registrations for such Trademarks and all related costs and expenses.

 

2.2.4               Exclusivity.  During the Research Term (including any extensions of the initial Research Term), the BI Group, Vitae and Vitae’s Affiliates (except an Acquiring Entity) shall not, directly or with any Third Party, conduct Research, Development or Commercialization activities involving any 11β HSD-1 Inhibitor in the Field outside of this Research Collaboration, except as permitted pursuant to Sections 2.2, 2.2.5 and 3.3.2(k) (Vitae’s right to Research, Develop and Commercialize Non-Core 11β HSD-1 Inhibitors).

 

2.2.5               Non-Core 11β HSD-1 Inhibitors.  Subject to Sections 2.2.2, 3.3.2(k) and 4.6.1, Vitae shall have complete decision-making authority with respect to any issues relating to Research, Development and Commercialization of Non-Core 11β HSD-1 Inhibitors; and such issues shall not be subject to the governance provisions of Article 3.  Notwithstanding the foregoing, Vitae shall provide the JSC at least twice yearly with a summary of the Development and Commercialization activities pertaining to any Non-Core 11β HSD-1 Inhibitor.  Any information provided by Vitae to BI concerning its activities relating to Non-Core 11β HSD-1 Inhibitors shall be deemed Vitae Confidential Information, and BI shall not disclose or use such information for its internal research programs.  Further, BI shall not use such information if such use will provide a competitive advantage to a Product, Collaboration Compound or BI Compound vis-à-vis one of Vitae’s Non-Core 11β HSD-1 Inhibitors.

 

3.             GOVERNANCE.

 

3.1          General.  In connection with this Agreement, the Parties shall:  (i) strive to balance the legitimate interests and concerns of the Parties and to realize the economic potential of Products; (ii) act in a commercially reasonable manner and in good faith in all decisions or determinations to be made hereunder, including, but not limited to, all decisions specified to be 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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in a Party’s discretion; (iii) use Diligent Efforts to conduct Research according to the Research Plan and to perform all responsibilities assigned to the Parties under the Research Plan; and (iv) use Diligent Efforts to carry out the terms and intent of this Agreement and collaboration, including, but not limited to, a Party’s responsibilities in respect of Developing and Commercializing 11β HSD-1 Inhibitors.  In addition, the Parties agree that they shall follow the Potential Development Candidate Selection process set forth in Section 4.6.1.

 

3.2          Committees.  The Parties shall form a “Joint Steering Committee”, which shall be established, hold meetings and make decisions in accordance with the procedures specified in Section 3.3 below.  The Joint Steering Committee (i) shall establish a Joint Research Committee, as described in Section 3.4 below (“JRC”) and (ii) shall establish a Joint Development Committee, as described in Section 3.5 below (“JDC”), provided that Vitae elects to exercise its option to co-fund Development of any Product pursuant to Section 5.4.  In the event that the Joint Steering Committee elects not to establish an applicable Committee as specified above, the Joint Steering Committee shall be responsible for performing the responsibilities of such Committee specified below.  The Parties intend that their respective organizations will work together and will use Diligent Efforts to assure success of the collaboration.  By consensus, any Committee may cancel meetings and/or establish a different meeting schedule.

 

3.3          Joint Steering Committee.

 

3.3.1       Members.  Within thirty (30) days after the Effective Date, the Parties shall establish the Joint Steering Committee, which shall consist of **** members, with each Party designating **** of its or its Affiliates’ employees as members.  Each of BI and Vitae may replace any or all of its representatives on the Joint Steering Committee at any time upon written notice to the other Party.  A Party may designate a substitute employee to temporarily attend and perform the functions of such Party’s designee at any meeting of the Joint Steering Committee.  BI and Vitae each may, on advance written notice to the other Party, invite non-member employees of such Party to attend meetings of the Joint Steering Committee.  The Joint Steering Committee shall be co-chaired by a Joint Steering Committee representative of each of Vitae and BI.  A secretary of the Joint Steering Committee will be appointed on an annual rotating basis by either Vitae or BI, who shall be a representative of such Party, as applicable, with Vitae providing the first secretary.

 

3.3.2       Responsibilities.  Except as specified otherwise in this Agreement, the Joint Steering Committee shall perform the following functions:

 

(a)           Discuss the overall strategy for the Research Collaboration;

 

(b)           Coordinate the Parties’ activities hereunder;

 

(c)           Monitor Development and Commercialization of Products in Major Markets pursuant to the terms of this Agreement;

 

(d)           Serve as a forum for discussion and communication regarding the Development and Commercialization of Products pursuant to this Agreement;

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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(e)           Review and approve Research Plans and any material amendments to Research Plans;

 

(f)            Review Research Collaboration activities and results for the previous period and make any strategic recommendations as appropriate;

 

(g)           Discuss Development Plans and Marketing Plans (in Major Markets) for Products and any material amendments to such Development Plans and Marketing Plans;

 

(h)           Discuss Development activities for the previous period;

 

(i)            Establish the JRC and, if applicable, the JDC;

 

(j)            Discuss “go/no-go” decisions and other matters referred to the Joint Steering Committee, including, but not limited to, the continued Development of a particular Product;

 

(k)           Review and approve requests by Vitae regarding Research, Development and Commercialization of Non-Core 11β HSD-1 Inhibitors by Vitae pursuant to Section 4.6.1;

 

(l)            Review a summary of life-cycle management of, and intellectual property protection for, Products;

 

(m)          Review and coordinate the progress of all Committees other than the Joint Steering Committee;

 

(n)           Use Diligent Efforts to resolve Commercial Conflicts;

 

(o)           Resolve disputes, disagreements and deadlocks unresolved by any other Committee;

 

(p)           Review cost plans relating to any Research; and

 

(q)           Perform such other responsibilities as may be assigned to the Joint Steering Committee pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

 

3.3.3       Meetings.  The Joint Steering Committee shall meet in person at least ****each ****, and more frequently (i) as mutually agreed by the Parties, (ii) as required to resolve Commercial Conflicts, or (iii) as required to resolve disputes, disagreements or deadlocks in the JRC, JDC or other Committees established by the Joint Steering Committee, on such dates, and at such places and times, as the Parties shall agree; provided that the Parties shall endeavor to have the first meeting of the Joint Steering Committee within thirty (30) days after the establishment of the Joint Steering Committee.  The Joint Steering Committee shall arrange to meet in person or convene otherwise to assess (and to the extent specified above, approve) any Research Plans, Development Plans or Marketing Plans submitted to the Joint

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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Steering Committee in each calendar year so that such plans will be assessed within **** following submission to the Joint Steering Committee.  To the extent the applicable Committee differs in its assessment (or approval, if applicable) of any such Research Plans, and recommends them to be reformulated, such plans shall be assessed (and approved, if applicable) by the Joint Steering Committee as soon as reasonably practicable after resubmission of same.  Meetings of the Joint Steering Committee that are held in person shall alternate between offices of BI and Vitae (with the first meeting to be held at Vitae’s offices), or such other place as the Parties may agree.  In addition to the semi-annual face-to-face meetings, the Parties may also agree to hold meetings of the Joint Steering Committee by means of telecommunications or video conferences.

 

3.3.4       Decision-Making.

 

(a)           The Joint Steering Committee may make decisions with respect to any subject matter that is subject to the Joint Steering Committee’s responsibility and functions as set forth in Section 3.3.2.  Except as specified in Section 3.4.2(b), all decisions of the Joint Steering Committee shall be made by consensus, with the representatives from each Party having one collective vote.  The Joint Steering Committee shall use Diligent Efforts to resolve the matters within its roles and functions or otherwise referred to it.

 

(b)           With respect to any issue, if the Joint Steering Committee cannot reach consensus within ****after the matter has been brought to the Joint Steering Committee’s attention, then such issue shall be referred to the Chief Executive Officer of Vitae and the Board Member for Research, Development and Medicine of BI (collectively, the “Officers”) for resolution.  If the Officers are unable to reach consensus within ****after the matter has been referred to them, then BI shall have final decision-making authority with respect to all issues relating to Development and Commercialization of any Development Candidate, Potential Development Candidate or BI Compound selected for Development pursuant to Section 4.6.1.  However, if the disputed issue involves a Commercial Conflict or any other dispute not within one Party’s sole final decision-making authority (as expressly set forth in this Agreement), then the Parties shall resolve the issue using the dispute resolution procedures set forth in Section 15.7 below.  Notwithstanding the above, neither the Joint Steering Committee nor BI may make decisions that would otherwise require agreement, approval or consent of a Party as set forth in this Agreement.

 

3.4          Joint Research Committee.

 

3.4.1       Members.  Within thirty (30) days after the establishment of the Joint Steering Committee, the Joint Steering Committee shall establish the JRC, and BI and Vitae shall each designate an equal number of employees from their respective organizations, up to a maximum total of ****members on the JRC, with a maximum of ****representatives from each Party.  Each of BI and Vitae may replace any or all of its representatives on the JRC at any time upon written notice to the other Party.  Such representatives shall include individuals who have the relevant experience and expertise for activities included in the Research Plan for the next ****.  A Party may designate a substitute employee to temporarily attend and perform the functions of such Party’s designee at any meeting of the JRC.  BI and Vitae each may, on advance written notice to the other Party, invite non-member

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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employees of such Party to attend meetings of the JRC.  The JRC shall be chaired on an annual rotating basis by a JRC representative of either Vitae or BI, as applicable, with Vitae providing the first such chairperson.  The other Party shall appoint a secretary of the JRC, who shall be a representative of such Party and who shall serve for the same annual term as such chairperson.

 

3.4.2       Responsibilities.  The JRC shall perform the following functions:

 

(a)           Prepare, review and approve the Research Plan on at least an annual basis (the initial Research Plan has been agreed in writing by the Parties prior to the Effective Date and is attached as Exhibit 2 to this Agreement);

 

(b)           On a quarterly rolling basis beginning within **** after the Effective Date, update and amend any Research Plan and review the Research Plan for each Product for the following calendar year so that it can immediately thereafter submit such proposed Research Plan to the Joint Steering Committee for review and approval;

 

(c)           Review and recommend to the Joint Steering Committee any material amendments or modifications to Research Plans;

 

(d)           Review the progress of the Research Collaboration during the previous period, and any reports submitted by the Parties to the JRC;

 

(e)           Review and recommend to the Joint Steering Committee “go/no-go” decisions for the Development of Products and 11β HSD-1 Inhibitors by BI; and

 

(f)            Perform such other responsibilities as may be assigned to the JRC pursuant to this Agreement or as may be mutually agreed upon by the Parties through the Joint Steering Committee from time to time.

 

3.4.3       Meetings.  The JRC shall meet at least ****during every ****, and more frequently as BI and Vitae mutually agree, on such dates, and at such places and times, as such Parties shall agree; provided that the Parties shall endeavor to have the first meeting of the JRC as a face-to-face meeting within thirty (30) days after the establishment of the JRC.  Meetings of the JRC that are held in person shall alternate between the offices of BI and Vitae (with the first such meeting to be held at Vitae’s offices), or such other place as the Parties may agree and such face-to-face meetings shall occur no less than ****per ****.  The Parties may agree to hold the remaining meetings by means of telecommunications or video conferences.

 

3.4.4       Decision-Making.  The JRC may make decisions with respect to any subject matter that is subject to the JRC’s responsibility and functions as set forth in Section 3.4.2.  Except as set forth below, all decisions of the JRC shall be made by consensus, with the representatives from each Party having one collective vote.  If the JRC cannot reach consensus within **** after it has first met and attempted to reach such consensus, the matter shall be referred to the Joint Steering Committee for resolution.

 

3.4.5       Start of Development.  Notwithstanding the foregoing, BI may decide at its sole discretion to commence Development with any Potential Development

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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Candidate even in the event that such Potential Development Candidate does not fulfill all criteria set forth in the relevant Research Plan.  If BI decides to commence Development of a Potential Development Candidate even if such Potential Development Candidate does not fulfill all criteria set forth in the Research Plan, then such Potential Development Candidate shall be deemed a Development Candidate after BI’s decision, and such decision shall trigger the obligation to pay the Development Candidate Selection milestone payment pursuant to Section 9.3.1 or 9.3.3.

 

3.5          Joint Development Committee.

 

3.5.1       Members.  In the event that the Joint Steering Committee establishes the JDC, BI and Vitae shall each designate an equal number of employees in their respective organizations, up to a maximum total of ****members on the JDC, with a maximum of ****employees from each Party.  Each of BI and Vitae may replace any or all of its employees on the JDC at any time upon written notice to the other Party.  Such employees shall include individuals who have the relevant experience and expertise for activities included in the Development Plan for the next ****.  A Party may designate a substitute employee to temporarily attend and perform the functions of such Party’s designee at any meeting of the JDC.  BI and Vitae each may, on advance written notice to the other Party, invite non-member employees of such Party to attend meetings of the JDC.  The JDC shall be chaired on an annual rotating basis by a JDC representative of either Vitae or BI, as applicable, with BI providing the first such chairperson.  The other Party shall appoint a secretary of the JDC, who shall be a representative of such Party and who shall serve for the same annual term as such chairperson.

 

3.5.2       Responsibilities.  If formed, the JDC shall perform the following functions (otherwise, the Joint Steering Committee shall perform such functions) for both Core and None-Core Indications:

 

(a)           On a ****per ****basis beginning within ****of the commencement of Development activities, discuss any updates and amendments of any Development Plan and monitor the Development Plan for each Product;

 

(b)           Monitor the Development strategy for Products in the Territory;

 

(c)           Monitor regulatory strategy and activities for Products in accordance with Article 8 of the Agreement;

 

(d)           Discuss “go/no-go” decisions for the Development of Products;

 

(e)           Discuss the status and results of all Studies in respect of Products and other major Development milestones in respect of Products based on the management summary provided by BI;

 

(f)            Discuss labeling goals and strategy; and

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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(g)           Have such other responsibilities as may be assigned to the JDC pursuant to this Agreement or as may be mutually agreed upon by the Parties through the Joint Steering Committee from time to time.

 

3.5.3       Meetings.  If established, the JDC shall meet at least ****during ****, and more frequently as BI and Vitae mutually agree, on such dates, and at such places and times, as such Parties shall agree; provided that the Parties shall endeavor to have the first meeting of the JDC as a face-to-face meeting within thirty (30) days after the establishment of the JDC.  Meetings of the JDC that are held in person shall alternate between the offices of BI and Vitae (with the first such meeting to be held at BI’s offices), or such other place as the Parties may agree.  The Parties may agree to hold other meetings by means of telecommunications or video conferences.

 

3.5.4       Decision-Making.  If established, the JDC may make decisions with respect to any subject matter that is subject to the JDC’s responsibility and functions as set forth in Section 3.5.2.  Except as set forth below, all decisions of the JDC shall be made by consensus, with the representatives from each Party having one collective vote.  If the JDC cannot reach consensus within ****after it has first met and attempted to reach such consensus, the matter shall be referred to the Joint Steering Committee for resolution.

 

3.6          Minutes of Committee Meetings.  The secretary of each Committee will finalize definitive minutes of such Committee’s meetings no later than ****after the meeting to which the minutes pertain as follows:

 

3.6.1       Distribution of Minutes.  Within ****after a meeting, the applicable secretary shall prepare and distribute to all members of such Committee draft minutes of the meeting.  Such minutes shall provide a list of any issues yet to be resolved, either within such Committee or through the relevant resolution process.

 

3.6.2       Review of Minutes.  Members of each Committee shall have **** after receiving such draft minutes to provide comments to the secretary of such Committee.

 

3.6.3       Discussion of Comments.  Upon the expiration of such second ten (10) day period, the Parties shall have an additional ****to discuss each other’s comments and finalize the minutes.  The chairperson and secretary of such Committee shall approve the minutes by signing and dating the minutes or by other means determined by the Committee.

 

3.7          Expenses.  Each Party shall be responsible for all travel and related costs and expenses for its members and other representatives to attend meetings of, and otherwise participate in, a Committee.

 

4.             RESEARCH COLLABORATION.

 

4.1          General.  Under the direction of the JRC, the Parties shall use Diligent Efforts to Research 11β HSD-1 Inhibitors (the “Research Collaboration”) and to recommend that certain Collaboration Compounds, Potential Development Candidates or BI Compounds meeting

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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certain criteria (agreed upon by the JRC and Joint Steering Committee) be selected for further pre-clinical studies (each a “Development Candidate”) pursuant to Section 4.6.2.

 

4.2          Research Plan.  The Parties will use Diligent Efforts to conduct the Research Collaboration in accordance with a Research Plan.  The Research Plan will set forth (i) the scope of the Research Collaboration and the resources that will be dedicated to the activities contemplated within the scope of the Research Collaboration, (ii) specific objectives for the term of the Research Plan which objectives will be updated or amended, as appropriate, by the JRC and reviewed and approved by the Joint Steering Committee and (iii) cost plan for such activities.  The Parties have agreed upon the initial Research Plan, which is attached as Exhibit 2 to this Agreement.

 

4.3          Research Term.  The Research Collaboration shall commence on the Effective Date and continue for a period of **** (the initial “Research Term”).  The Parties may agree to extend the Research Term by extending the Initial Research Funding Period as explained in further detail in Section 9.2.2 below.

 

4.4          Records.  Each Party agrees to maintain proper records (the “Records”) in respect of its performance of the Research, including the procedures, techniques and methodologies used, the progress made, and any Inventions conceived and/or reduced to practice or otherwise made as part of the Research.  During the Research Term, each Party shall upon written request by the other Party, which shall not be unreasonably made, (a) make the Records available for inspection and review by the other Party during normal business hours; and (b) provide copies of the Records or any part(s) thereof to the other Party, as requested by said other Party.  As part of keeping the Records, each Party shall ensure that all of its personnel and all of its agents that are involved in the Research will keep accurate laboratory notebooks, which laboratory notebooks: (i) shall be duly signed, dated and witnessed; and (ii) shall be created and maintained in accordance with its standard operating procedures that would be sufficient to allow for said laboratory notebooks to be used in any proceedings before the United States Patent and Trademark Office, in order to establish the date of invention for any Inventions in accordance with United States patent Laws.

 

4.5          Vitae’s Responsibilities.

 

4.5.1       FTE’s.

 

(a)           Subject to BI’s payment of its research funding obligations set forth in Section 9.2, Vitae shall dedicate a minimum of ****FTE’s up to a maximum of ****FTE’s.  BI acknowledges that any FTE’s that Vitae will use to satisfy its FTE obligations under this Agreement may be ****employees based in ****provided that no more than an average of ****employees are used to fulfill the minimum FTE requirements during any ****.  For avoidance of doubt, Vitae shall determine, in its sole discretion (notwithstanding any other provision in this Agreement), the number of additional FTE’s (above ****) that Vitae shall dedicate to the Research Collaboration during the initial ****portion of the Research Term; and neither BI nor the Joint Steering Committee have authority to require Vitae to commit more than the minimum FTE requirement

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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specified above.  Vitae shall secure all appropriate covenants, obligations and rights from ****including, but not limited to, confidentiality obligations, to ensure that ****is subject to, and ****can comply with, all of Vitae’s applicable covenants and obligations to BI under this Agreement.

 

(b)           The Parties may extend the Research Term by extending the Initial Research Funding Period as set forth in Section 9.2.2.

 

(c)           Vitae shall have no obligation to provide any FTE’s or perform any Research during any unfunded period of the Research Term (including unfunded portions of the extended Research Term), although Vitae may, at its sole discretion, agree to provide FTE resources during such time period in order to advance the Research Collaboration.  For avoidance of doubt, during any unfunded period of the Research Term, notwithstanding any other provision of this Agreement, Vitae shall have the sole discretion to determine whether it will commit any FTE’s and, if it commits such FTE’s, how many FTE’s it will commit during such time period; and neither BI nor the Joint Steering Committee have authority to require Vitae to commit any FTE resources during such time period.

 

4.5.2       Reports.  Vitae shall work with BI to provide a report to the JRC at the end of each calendar quarter detailing the progress made on the Research Collaboration by the Parties.

 

4.5.3       Vitae’s Activities.  Vitae shall use Diligent Efforts to perform all of its Research activities in accordance with the Research Plan and as determined by the JRC.

 

4.6          BI’s Responsibilities.

 

4.6.1       Potential Development Candidates.

 

(a)           All Collaboration Compounds shall be deemed initially to be Potential Development Candidates until such time that BI decides that any Potential Development Candidate has failed to meet the characteristics and/or properties described in Exhibit 2.  After such determination or decision regarding such compound, such compound shall no longer be deemed a Potential Development Candidate but rather shall be available to Vitae to select for Development and Commercialization for Non-Core Indications pursuant to the procedure outlined below.  The determination of whether a Potential Development Candidate has failed to meet the characteristics and/or properties described in Exhibit 2, as well as BI’s decision on Development Candidate Selection shall not be unreasonably delayed or withheld by BI.  For the avoidance of doubt, Vitae may not select any Potential Development Candidates for Development and Commercialization for Non-Core Indications but shall be free to Develop and Commercialize any Collaboration Compound that is not a Potential Development Candidate for Non-Core Indications as set forth in this Agreement.

 

(b)           Notwithstanding the above, Vitae may submit a request for selection of Potential Development Candidates for Non-Core Indications through the Joint Research Committee, subject to the following conditions:  (i) Vitae shall notify BI promptly of its request to select such Collaboration Compounds or Potential Development Candidates through the Joint Steering Committee as set forth in Section 3.3.2(k); (ii) such Potential                                    

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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Development Candidate is not actively being tested and progressed toward Development Candidate Selection according to the Preliminary Research Plan as described in Exhibit 2; and (iii) after Vitae’s notification, BI shall have a period of ****to test such Collaboration Compound or Potential Development Candidate for eligibility as Development Candidate.  Should BI determine that such Collaboration Compound or Potential Development Candidate is eligible as Development Candidate, it shall continue to be treated as Potential Development Candidate.  However, should BI fail to select such compound as Development Candidate or backup Development Candidate within ****after said determination, such compound shall be thereafter no longer be considered a Potential Development Candidate, and BI shall not have any further right to classify such Collaboration Compound as Potential Development Candidate, and Vitae shall be free to Develop and Commercialize such compound for Non-Core Indications.

 

(c)           The Parties understand and agree that BI shall have the final decision-making authority to Develop such Potential Development Candidate, Collaboration Compounds or BI Compounds which BI deems most promising.

 

(d)           Any Potential Development Candidate or Collaboration Compound selected by Vitae for Development and Commercialization in Non-Core Indications shall no longer be deemed a Potential Development Candidate and shall no longer be available to BI for selection as a Development Candidate.

 

4.6.2       Development Candidate Selection.  BI and Vitae shall use Diligent Efforts to select Potential Development Candidates or BI Compounds that meet the Development Candidate and backup Development Candidate selection criteria agreed upon by the Parties.  If (i) Vitae recommends that BI selects a particular Potential Development Candidates, which in Vitae’s reasonable judgment satisfies the Development Candidate selection criteria agreed upon by the Parties, as a Development Candidate, and (ii) BI (a) declines to select such compound as a Development Candidate and (b) fails to select any Potential Development Candidate as a Development Candidate within ****after Vitae’s first Development Candidate recommendation, or has not already selected any Potential Development Candidate as a Development Candidate, then any such Potential Development Candidate(s) rejected by BI as Development Candidates shall each remain a Collaboration Compound and shall no longer be considered a Potential Development Candidate, and Vitae shall have the right (but not the obligation) to pursue Development of such Collaboration Compound(s) at Vitae’s sole expense for Non-Core Indications pursuant to the procedure outlined in Section 4.6.1.

 

4.6.3       BI Activities.  BI shall use Diligent Efforts to perform all in vivo and preclinical activities in accordance with the Research Plan and as determined by the JRC.

 

4.6.4       Funding.  BI shall bear the costs and expenses in connection with fulfilling its obligations for the Research Collaboration in accordance with Sections 4.6 and 9.2.

 

4.6.5       Reports.  BI will work with Vitae to provide a report to the JRC at the end of each calendar quarter detailing the progress made on the Research Collaboration by the Parties.  If key clinical or other data are obtained by BI between JRC, JDC or JSC meetings,                                                                              

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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BI shall promptly report such data to Vitae; and such reports should be substantially contemporaneous with the disclosure of the same data to BI’s senior management.

 

5.             DEVELOPMENT OF PRODUCTS.

 

5.1          General.  BI shall use Diligent Efforts to Develop Products, and will have sole responsibility for the performance of all Development activities.  It is the intention of this Research Collaboration to move a minimum of ****into Development at the earliest opportunity.  Without limiting the foregoing, BI shall use Diligent Efforts to (i) advance at least ****for type 2 diabetes or another Core Indication ready for Phase I Studies; (ii) advance ****through Development in accordance with the stage gates identified in the then current Development Plan for such Product; (iii) efficiently Develop the Products; and (iv) obtain Marketing Authorization Approvals to market the Products in Major Markets (as contemplated in Section 8.2).  BI shall use Diligent Efforts to secure the necessary resources and will keep the applicable Committee informed with a summary of the progress of individual Studies and activities relating to Products as part of any changes to Development Plans and timelines.  Except as otherwise provided for in this Agreement (i.e., if Vitae exercises its Co-Development Option pursuant to Section 5.4), BI shall bear all costs and expenses associated with Development of Products.  The Development Plan (attached as Exhibit3) may be amended as necessary by BI following consultation with Vitae, provided that any amendments shall be consistent with BI’s Diligent Efforts obligation, including the minimum diligence obligations set forth in Section 5.2.

 

5.2          Minimum Diligence.  Without limiting the foregoing, BI shall use Diligent Efforts to meet the diligence milestones set forth below (“Milestone Timing”) and to achieve the time periods set forth below for the lead Product/compound (i.e. the compound or Product that is the furthest advanced).  For avoidance of doubt, the Milestone Timings shall not apply to the second or any subsequent Products, or the second or any subsequent indications.  The Parties anticipate as of the Effective Date that the milestones set forth in Section 5.2.1 could be achieved on time if BI meets its Diligent Efforts obligations.

 

5.2.1       Diligence Milestones.

 

	
Milestone
    	
 
    	
Milestone Timing
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    

 

5.2.2       Unforeseen Delays.  If BI uses Diligent Efforts to Develop a particular Product, but (i) BI’s results do not support further advancement of the applicable Product; or (ii) BI discontinues Development of a particular Product for a particular Core 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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Indication due to Technical Failure and promptly commences advancement of a back-up Product for the same Core Indication, then the relevant Milestone Timing set forth in Section 5.2.1 shall be extended by a reasonable period of time necessary to perform or re-perform the Development with such Product or back-up Product.  For example, ****.

 

5.2.3       Obligation to Notify Promptly of Delays.  In the event that BI determines that it will likely fail to achieve an applicable milestone with respect to any Product (other than First Commercial Sale) within the applicable Milestone Timing established above, BI shall inform Vitae and use Diligent Efforts to resolve the situation taking into due consideration any recommendation and suggestion of Vitae.

 

5.3          Development Decisions/Progress.  In conducting Development activities, BI shall consult with the applicable Committee (i.e., JDC or Joint Steering Committee) and shall promptly and comprehensively share a summary of relevant information relating to Development activities with Vitae.  In addition, BI shall provide its proposals and suggestions for amending or otherwise modifying the Development Plan (including Development timelines) to Vitae through the applicable Committee.  Without limiting the foregoing, BI shall provide to such Committee updates of Development progress and efforts at least twice per year.

 

5.4          Co-Development Option.  Vitae shall have the right, but not the obligation, to co-fund the global Development of one (1) Product by sharing between ****to **** of all costs of the Phase III Studies for such Product in return for an increased royalty in accordance with Section 9.6.5(b) (the “Co-Development Option”).

 

5.4.1       Procedure for Exercise of Option.  At least ****prior to Initiation of Phase III Studies for each Product, BI shall provide Vitae with a budget for the estimated Development costs for such Phase III Studies.  To exercise its Co-Development Option, Vitae shall notify BI in writing at least ****prior to the Initiation of Phase III Studies that it is exercising its Co-Development Option; such written notice shall also specify the percentage of expenses that Vitae will be co-funding.

 

5.4.2       Reimbursement of Development Costs.  If Vitae exercises its Co-Development Option, it shall reimburse BI for Vitae’s specified share of any reasonable Development costs actually incurred by BI in performing such Phase III Studies from the Initiation of such Phase III Studies until the submission of an NDA with the FDA or the EMEA.  Vitae shall make its reimbursement payments in arrears on a quarterly basis within ****after receipt of an invoice from BI.  For avoidance of doubt, reimbursable Development costs shall also include BI’s internal expenses (such as employees’ salaries or overhead expenses), as determined and calculated in accordance with BI’s normal operating protocols for internal development projects.  If actual Development costs for the Phase III Studies exceed BI’s initial budget forecast (provided to Vitae pursuant to Section 5.4.1) by more than ****, then Vitae shall have the right to continue to share Development costs in accordance with the original budget (with a corresponding pro rata reduction in the royalty increase Vitae would

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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be entitled to, as set forth in more detail in Section 9.6.5(b)), but shall not prevent or require Vitae to reduce its reimbursement percentage.

 

5.4.3       Responsibility for Development.  BI shall remain solely responsible for Development and continue to have sole responsibility for all Development activities even if Vitae exercises its Co-Development Option.

 

6.             COMMERCIALIZATION.

 

6.1          General.  BI shall use Diligent Efforts to Commercialize Products in the Major Markets.  No later than **** before the First Commercial Sale of a Product, BI shall prepare and oversee the implementation of an overall commercialization plan (“Commercialization Plan”).  BI will present a summary of said Commercialization Plan to the Joint Steering Committee (or the appropriate subcommittee created by the Joint Steering Committee) for such Product.

 

6.2          BI Responsibilities.  BI shall have the sole right and responsibility for Commercialization of Products for distribution and sale.  BI shall bear all costs and expenses associated with the Commercialization of Products.  Without limiting the foregoing, BI shall have the sole right and responsibility to perform the following responsibilities:

 

(a)           Receive, accept and fill orders for Products;

 

(b)           Distribute, sell, record sales and collect payments for Products;

 

(c)           Establish and modify the terms and conditions with respect to the sale of Products, including, but not limited to, the price or prices at which Products will be sold, any discount, rebates or other deductions applicable to payments or receivables, and similar matters; and

 

(d)           Record Product sales in its books of account.

 

6.3          Promotional Materials, Samples and Labeling.

 

6.3.1       Markings.  To the extent permitted or required by applicable Law, the package insert for all Products will indicate that the Product has been jointly discovered and developed by BI together with Vitae.  Labeling of Products shall include all required notices needed to comply with all statutory patent marking requirements and other legal notice requirements or best practices.

 

6.3.2       Statements Consistent with Labeling.  BI shall ensure that sales representatives detail Products in a fair and balanced manner and consistent with the requirements of all applicable Laws.

 

6.3.3       Samples.  BI shall ensure that all samples are labeled and distributed in accordance with applicable Law.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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6.4          **** Reports.   BI shall provide the Joint Steering Committee ****a ****with a management summary of the Commercialization activities for Products in reasonable detail sufficient for Vitae to determine (i) whether the Commercialization of Products proceeds in accordance with the relevant Commercialization Plan; and (ii) whether BI has met its Diligent Efforts obligations.

 

7.             MANUFACTURING AND INVENTORIES.

 

7.1          Manufacturing.  BI shall use Diligent Efforts to manufacture or otherwise obtain supply of the requirements of formulated, packaged and labeled Products for Development and Commercialization, in accordance with all applicable Laws, current Good Manufacturing Practices and this Agreement.  BI shall be solely responsible for manufacturing, packaging and labeling of Product.

 

7.2          Inventory.  BI shall maintain an inventory of Products in accordance with BI’s normal practices with the goal of ensuring fulfillment of global demand for Products.

 

8.             REGULATORY MATTERS.

 

8.1          General.  BI shall be solely responsible for, and shall use Diligent Efforts in the Major Markets in connection with, the submission of information, communicating with, and seeking Marketing Authorization Approvals from, Governmental Authorities in respect of Products and will keep Vitae informed, through the Joint Steering Committee or applicable subcommittee, of all significant issues arising therefrom.

 

8.2          Regulatory Submissions.   BI shall also be solely responsible for submission of drug approval applications for Products and will use Diligent Efforts in seeking Marketing Authorization Approval for Products in accordance with this Agreement in the Major Markets and such other countries as BI reasonably determines, following consultation with the applicable Committee.  Upon request of BI, Vitae shall provide such reasonable assistance as may be required by BI where liaison between the Parties is, or may be, necessary to enable BI to fulfill its responsibilities hereunder.  BI shall be responsible for maintaining the Marketing Authorization Approvals obtained under this Section 8.2, and BI shall solely own all such approvals in the Territory.  BI shall be fully responsible for bearing all costs and expenses associated with undertaking and completing said registration activities in the Territory, including, but not limited to, the costs of preparing and prosecuting applications for such Marketing Authorization Approvals and fees payable to regulatory agencies in obtaining and maintaining same.

 

8.3          Drug Safety Information.  Both Parties shall comply fully with all applicable adverse event reporting recommendations and requirements in all countries where the Parties intend to carry out clinical trials and/or to market the Products and agree to exchange such information as may be necessary to achieve that end and to ensure that both Parties are completely informed regarding adverse events with Products.  This includes single case reports, together with an appropriate medical evaluation, as well as aggregate data, such as PSURs required by authorities.  Vitae shall provide BI with all information on the safety of 11β HSD-1 Inhibitors which is in Vitae’s possession as of the execution of this Agreement or thereafter.  

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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This includes all adverse event reports received in the past, published literature and previous actions taken by Vitae or by authorities due to safety issues.  The Parties agree that the most effective and efficient method for exchanging safety information is electronically.  If electronic transmission capability between the Parties is not possible or is interrupted, other methods for the exchange of safety information such as telefax or courier service will be used. Interruptions to electronic data transfer will be kept to a minimum.  The transfer of safety information between the Parties will be made in an electronic format that complies with the ICH Guidance on Data Elements for Transmission of Individual Case Safety Reports. Transmission procedures specified by the ICH Electronic Standards for the Transfer of Regulatory Information (ICH M2) will be used at such time as these come into force as defined either in the Step 5 Consensus Guideline, or by the date on which these standards are required by European authorities or the FDA to be implemented, whichever is the earlier.  Both Parties will execute and implement a detailed pharmacovigilance agreement pertaining to Products no later than **** before the earlier of the following events:  (i) BI or Vitae is physically and/or legally able to distribute Products in the market, in a clinical trial or for whatever purpose, or (ii) BI or Vitae has a Marketing Authorisation Approval, a clinical trial authorisation, or has regulatory reporting obligations for any other reason.

 

8.4          Recalls or Corrective Action.  BI shall have sole responsibility for and shall make all decisions with respect to any recall, market withdrawal or other corrective action related to Products that BI has Commercialized, provided, however, that BI shall to the extent practicable consult Vitae prior to making any such decision and take into account Vitae’s views and interests in making its decision, provided such consultation does not delay or endanger the recall process.  BI shall be solely responsible for all costs and expenses associated with such recall, market withdrawal or corrective action, including, but not limited to, all fines, fees and refunds to distributors and other customers unless it can be demonstrated that the recall was caused by any act, omission or breach of this Agreement by Vitae.  If BI recalls or withdraws a Product, and BI does not use Diligent Efforts to reintroduce such Product, after the initial recall or withdrawal, then upon written notice to BI, Vitae shall have the right, but not the obligation, to terminate this Agreement with respect to such Product in any market in which such Product was recalled or withdrawn; and such Product shall be deemed a Terminated Product.

 

8.5          Events Affecting Integrity or Reputation.  During the Term, the Parties shall notify each other immediately of any circumstances of which they are aware and which could impair the integrity and reputation of Products or if a Party is threatened by or becomes aware of unlawful activity in relation to Products, including, but not limited to, deliberate tampering with or contamination of Products.  In any such circumstances, the Parties shall use Diligent Efforts to limit any damage to the Parties and/or to Products.  The Parties shall bring the matter to the attention of the other Party at the next Joint Steering Committee meeting to discuss and resolve such circumstances.

 

9.         FINANCIAL PROVISIONS.

 

In consideration of the contributions and activities of Vitae under this Agreement and the rights granted by Vitae to BI hereunder, particularly the licenses set forth in Article 2 above, BI agrees to make the following payments as set forth in this Article 9:

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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9.1          Execution Payment(a).  Within ten (10) business days of (i) receipt of a written invoice, which shall be provided as soon as practicable after the Effective Date, and (ii) after BI’s receipt of a duly signed original of the Agreement, BI shall pay to Vitae a non-creditable, non-refundable amount of fifteen million dollars (US$15,000,000).

 

9.2          Research Funding.

 

9.2.1       Initial Research Collaboration.  During the initial twenty-four (24) months of the Research Term (the “Initial Funded Research Period”), BI shall pay Vitae eight hundred and twelve thousand, five hundred dollars (US$812,500) per quarter.  This research funding payment is based on an FTE rate of **** per FTE multiplied by ****FTE’s per year.  The installments shall be paid at the beginning of each calendar quarter provided that Vitae has provided a written invoice at least ****prior to that date.  Vitae shall also provide a quarterly report setting forth the number of FTEs assigned to work on the Research Collaboration over the previous quarter.

 

9.2.2       Research Collaboration Extension.  The Parties may agree to extend the Research Collaboration by extending the Initial Funded Research Period.  BI shall notify Vitae in writing at least ****prior to the end of the Initial Funded Research Period (including any extensions) as to whether BI desires to continue funding Vitae FTE’s, as well as the number of FTE’s that BI intends to fund during the extended Initial Funded Research Period.  Vitae shall notify BI whether Vitae agrees to BI’s proposed extension within ****after receipt of BI’s written notification.  The applicable FTE rate shall be equal to the original FTE rate of ****adjusted for inflation based on the increase in the Biomedical Research and Development Price Index (as determined by the Bureau of Economic Analysis (BEA), United States Department of Commerce), or successor index, over the applicable time period.  If the Initial Funded Research Period is extended, the Research Term shall be extended by the same time period.  For example, if the Parties agree to extend the Initial Funded Research Period by ****, then the Research Term shall likewise be extended for ****for all purposes under this Agreement.

 

9.2.3       Other Expenses.  BI shall reimburse Vitae for all out-of-pocket expenses reasonably incurred by Vitae for external studies and other out-of-pocket non-FTE costs and expenses reasonably incurred as directed by the applicable Committee or specified in the applicable Research Plan (such as, for example, external in vivo studies), provided that such studies have been agreed beforehand with BI.

 

9.3          Development and Regulatory Milestone Payments.  In the event BI achieves a Development or regulatory milestone specified below with respect to a Collaboration Compound or BI Compound, BI shall promptly, but in no event more than ****after the achievement of each such milestone, notify Vitae in writing of the achievement of such milestone.  BI shall pay to Vitae the non-refundable, non-creditable milestone payments as specified below within ****of receipt of a written invoice to be provide by Vitae as soon as practicable following achievement of the particular milestone.  Notwithstanding the foregoing, if one or more Development milestones with respect to a particular Product does not occur, but a later Development milestone for the same Product is achieved, then all previous

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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Development milestones for which the applicable milestone payments have not been made shall be paid at the time of achievement of such subsequent Development milestone.  The full milestone payments shall be payable only once for the first Product to reach the applicable milestone.  All milestone payments will apply whether Products are Developed and Commercialized as single or combination products.

 

9.3.1       Development Milestones.

 

	
Development Milestones
    	
 
    	
Amount
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    

 

9.3.2       Regulatory Milestones.

 

	
Regulatory Milestones
    	
 
    	
Amount
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    
	
****
    	
 
    	
****
    

 

9.3.3       Second and Subsequent Products.  The milestone payments set forth in Sections 9.3.1 and 9.3.2 shall be payable only once upon the first occurrence of a Product to reach each such milestone.  Milestone payments for the second and for each subsequent Product to reach each milestone shall be equal to fifty percent (50%) of the corresponding milestone payments set forth in Sections 9.3.1 and 9.3.2.

 

9.3.4       Second and Subsequent Core Indications.  In addition to the milestone payments specified above upon achievement of the milestone for the first Core Indication for each Product, BI shall pay milestone payments equal to fifty (50%) of the regulatory milestone payments set forth in Section 9.3.2 for the second separate Core Indication (e.g., hypertension) for each Product, but not for label extensions to a primary diabetes indication.

 

9.4          Commercialization Milestone Payments.  In the event that BI achieves a Commercialization milestone, BI shall promptly, but in no event more than **** after the end of the calendar quarter in which the achievement of each such milestone occurred notify Vitae of the achievement such event.  The following non-refundable, non-creditable milestone payments will be payable one time only for the first Product to reach such milestone and will apply to such Product across all indications.  “Annual Net Sales” shall mean the cumulative, total worldwide Net Sales of a given Product in a given calendar year.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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9.4.1       Commercialization Milestones.

 

	
Commercialization Milestones
    	
 
    	
Amount
    
	
Upon   reaching ****
    	
 
    	
****
    
	
Upon   reaching ****
    	
 
    	
****
    
	
Upon   reaching ****
    	
 
    	
****
    

 

9.4.2       Second and Subsequent Products.  The milestone payments set forth in Section 9.4.1 shall be payable only once upon the first occurrence of a Product to reach each such milestone.  Milestone payments for the second and each subsequent Product to reach each applicable milestone shall be equal to fifty percent (50%) of the corresponding milestone payments set forth in Section 9.4.1.

 

9.5          Requirements for Invoices.  All invoices provided by Vitae shall fulfill the requirements set forth in Exhibit 9.

 

9.6          Royalties.

 

9.6.1       Net Sales Royalties.  BI will make royalty payments based on Net Sales, on a Product-by-Product and country-by-country basis, from the date of the First Commercial Sale of each Product in each country until the expiration of the Royalty Term.  Such royalty payments shall be calculated based on year-to-date annual, aggregate, worldwide, Annual Net Sales of each Product (on a Product-by-Product basis), applying the tiered royalty rate shown below:

 

	
Annual Net Sales
    	
 
    	
Royalty
    
	
Annual   Net Sales up to and including ****
    	
 
    	
****
    
	
Annual   Net Sales between**** and****
    	
 
    	
****
    
	
Annual   Net Sales between ****and ****
    	
 
    	
****
    
	
Annual   Net Sales over ****
    	
 
    	
****
    

 

For avoidance of doubt, the following example shall illustrate the royalty payment calculation:  Royalties on aggregate Net Sales of any Product in the Territory in a Calendar Year shall be paid at the rate applicable to the portion of Net Sales within each of the Net Sales levels during such Calendar Year.  For example, if, during a Calendar Year, Net Sales of a particular Product were equal to ****, then the royalties payable would be calculated by adding (i) the royalties with respect to the first ****at the first-level percentage of ****; and (ii) the royalties with respect to the next ****at the second-level percentage of ****, for a total royalty of ****.

 

9.6.2       Timing of Royalty Payments.  BI shall make all royalty payments within **** following the end of each calendar quarter for Net Sales from the previous calendar quarter.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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9.6.3       Bundling.  In the event that a Product is included as a “bundle” of products and/or services, BI may discount the bona fide list price of a Product by no more than the average percentage discount of all products in a particular “bundle,” calculated as ****.****

 

9.6.4       Royalties on Combination Products.  In the event that a Product is sold bundled with other products or in combination with other active, therapeutic components (“Other Product”) for a single price (“Combination Product”), then the royalty payments due on the Net Sales of the Combination Product will be adjusted as follows:

 

(a)           If the Product and the Other Product are sold separately, the royalty payments due on the Net Sales of the Combination Product shall be equal to ****.

 

(b)           If the Product and the Other Product are sold separately, but the mean gross selling price of the Other Product cannot be determined, the royalty payments due on the Net Sales of the Combination Product shall be equal to ****.

 

(c)           If the Product and the Other Product are sold separately, but the mean gross selling price of the Product cannot be determined, the royalty payments due on the Net Sales of the Combination Product shall be equal to ****.

 

(d)           If the Product and the Other Product are sold separately, but the mean gross selling price of neither the Product nor the Other Product can be determined, Net Sales of the Product shall be equal to ****.  If the Parties are unable to agree upon such a ****, the dispute shall be resolved by arbitration pursuant to Section 15.7.

 

(e)           The ****for a Product or Other Product shall be calculated for each country, once each calendar year, by dividing ****In the initial ****, a forecasted ****shall be used for the Product or Other Product, if no relevant sales occurred in the previous ****.  Any over or under payment due to a difference between forecasted and actual ****will be paid or credited in the first royalty payment of the following calendar year.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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9.6.5       Royalty Adjustments.

 

(a)           Generic Competition.  The royalty payment due to Vitae (as set forth in Section 9.6.1) for sales of a particular Product in a particular country shall be reduced by ****during any calendar quarter in which such Product faces Generic Competition.  “Generic Competition” means and shall be deemed to exist in a particular country in the Territory during a given calendar quarter with respect to a particular Product if during such calendar quarter, one or more Generic Products (other than a Generic Product sold by BI or its Affiliates or by a sublicensee under a license granted by BI or its Affiliate) were sold commercially in such country, and the Generic Products in the aggregate have a market share of ****or more in that country (as measured by units sold based on data provided by IMS International, or if such data is not available, such other reliable data source as reasonably agreed upon by Vitae and BI).  If no data is commercially available, then the Parties shall agree upon a methodology for estimating the percentage unit-based market share of Generic Products in such country.

 

(b)           Co-Development Option.  If Vitae exercises its Co-Development Option with respect to a Product pursuant to Section 5.4, Vitae shall be entitled to an increased royalty rate for such Product as follows.  The applicable royalty rate from the table in Section 9.6.1 shall be increased by ****per ****of Phase III Study Development costs shared by Vitae.  For example, if Vitae shares in ****of the Development costs for the Phase III Study for such Product, then the applicable royalty rate for each tier shall increase by 0.8% (i.e., a ****).  If Vitae co-funds less than ****of the Development costs for the Phase III Study because actual expenses exceeded BI’s budget forecast by more than ****, then Vitae shall still be entitled to an upward adjustment in the applicable royalty rate based on its percentage share of actual Development costs for the Phase III Study (in accordance with the formula set forth in this Section 9.6.5(b)).  For example, if Vitae ultimately shares in five percent (5%) of the actual Phase III Study Development costs, then the applicable royalty rate for each tier shall increase by ****(i.e., a ****).

 

9.7          Net Sales Report.  Within ****following the end of each calendar quarter, BI shall submit to Vitae a written report setting forth Net Sales in the Territory on a country-by-country and Product-by-Product basis during such calendar quarter and year-to-date, total royalty payments due Vitae in respect of Products and Combination Products, and information supporting the calculation of Net Sales of Products (“Net Sales Report”).

 

9.8          Third Party Royalties.  BI shall be solely responsible for all royalties, milestone payments, fees or other amounts due to any Third Parties with respect to any intellectual property Covering a Product or otherwise necessary or useful for the Development and/or Commercialization of a Product or for conducting the Research Collaboration.

 

9.9          Multiple Royalties.  No multiple royalties shall be payable because a Product, its manufacture, use or sale is or shall be Covered by more than one Valid Claim of a Vitae Patent, BI Patent or Joint Patent.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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9.10        Equity Investment.  Contemporaneous with the execution of this Agreement, BI shall make an equity investment in Vitae of fifteen million dollars (US$15,000,000) pursuant to a share purchase agreement substantially in the form of the agreement attached as Exhibit 6.

 

9.11        Payment Terms.

 

9.11.1     All sums due to Vitae shall be payable in United States dollars by bank wire transfer in immediately available funds to such bank account(s) as Vitae shall designate.

 

9.11.2     Except as otherwise set forth herein, all other payments due hereunder shall be paid within ****following receipt of Vitae’s invoice.

 

9.12        Currency.  When Products are sold for monies other than United States dollars, the earned royalties will first be determined in the foreign currency of the country in which such Products were sold and then converted into equivalent United States funds.  The exchange rate will be the rate published by the European Central Bank, Frankfurt am Main, Germany, on the last business day of each calendar quarter in which such royalties accrued.

 

9.13        Financial Standards.  All financial terms and standards (including any calculation of Net Sales, Development costs and financial payments due under this Agreement) shall be governed by and determined in accordance with normally accepted accounting principles (more specifically, the German Handelsgesetzbuch or HGB) and shall be consistent with BI’s audited consolidated financial statements.  Notwithstanding the above and notwithstanding the requirements or principles of the HGB, Net Sales shall be calculated in accordance with the formula specified in Section 1.72, and no deductions shall be allowed other than the deductions specifically enumerated in Section 1.72.  For avoidance of doubt, there shall be no deduction from Net Sales for bad debt allowances or bad debt expenses.

 

9.14        Late Payments.  Any payment that is not paid within ****of the date such payment is due under this Agreement shall bear interest, to the extent permitted by applicable Law, at an annual rate equal to the ****for the first date on which payment was delinquent and calculated on the number of days such payment is overdue.

 

9.15        Tax Withholding, Financial Records and Audits.

 

9.15.1     Tax Withholding.  If laws or regulations require BI to withhold any taxes from royalty or advance payments made to Vitae under this Agreement, then such taxes shall be deducted by BI as required by law from such remittable royalty, milestone, FTE or similar payments and shall be paid by BI to the proper tax authorities.  Official receipts of payment of any withholding tax shall be secured and sent to Vitae as evidence of such payment.  The Parties shall exercise their best efforts to ensure that any withholding taxes imposed are reduced as far as possible under the provisions of any relevant tax treaty.

 

9.15.2     Financial Records and Audits.  BI shall keep accurate and complete records of all financial information needed to calculate Net Sales and/or any payments 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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due to Vitae under this Agreement, including, but not limited to, all such records for the BI Group.  BI shall retain records relating to Net Sales and/or any payments made to Vitae during the ****preceding ****.  At Vitae’s request such records shall be made available for inspection, review and audit, during normal business hours and with reasonable advance notice to BI, by an independent certified public accountant, or the local equivalent, appointed by Vitae and reasonably acceptable to BI for the purpose of verifying the accuracy of the BI Group’s accounting reports and payments pursuant to this Agreement and report to Vitae the findings (but not the underlying data) of said examination of records as are necessary to evidence that BI has complied with its payment and other financial obligations under Section 9 of this Agreement.  A copy of any report provided to Vitae by the accountant shall be given concurrently to BI.  Vitae may perform such an audit no more than once per calendar year.  Vitae shall be responsible for all costs and expenses incurred in performing any such audit unless the audit discloses at least a ****shortfall, in which case BI shall bear the full cost of the audit.  Vitae shall be entitled to recover any shortfall in payments as determined by such audit, plus interest thereon, calculated in accordance with Section 9.14.  If said examination of records reveals any overpayment(s) of royalties, then Vitae shall credit the amount overpaid against BI’s future royalty payment(s).

 

10.          CONFIDENTIAL INFORMATION.

 

10.1        Definition.  “Confidential Information” means confidential or proprietary information, data or know-how, whether provided in written, oral, visual or other form, provided by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) in connection with this Agreement, including, but not limited to, the terms of this Agreement and information relating to the Disclosing Party’s existing or proposed research, development efforts, patent applications, business or products, including, but not limited to BI Know-How, Vitae Know-How and Joint Know-how, as applicable. Confidential Information shall not include any such information that:  (i) is already known to the Receiving Party or its Affiliates (other than under an obligation of confidentiality) at the time of disclosure (as evidenced by written records of the Receiving Party); (ii) is or becomes generally available to the public other than through any act or omission of the Receiving Party or its Affiliates; (iii) is disclosed to the Receiving Party or its Affiliates by a Third Party who had no separate nondisclosure obligation in respect of such information; or (iv) is independently discovered or developed by or on behalf of the Receiving Party or its Affiliates without the use of the Confidential Information of the Disclosing Party (as evidenced by written records of the Receiving Party).  The terms of this Agreement shall be deemed Confidential Information of each Party.  The Parties agree that with respect to the Vitae Intellectual Property Vitae shall be deemed the Disclosing Party, and with respect to BI Intellectual Property BI shall be deemed the Disclosing Party.  With respect to Joint Intellectual Property, both Parties are deemed the Receiving Party.

 

10.2        Confidentiality.  The Receiving Party shall keep in confidence all Confidential Information of the Disclosing Party with the same degree of care it employs to maintain the confidentiality of its own Confidential Information, but no less than a reasonable degree of care.  The Receiving Party shall not use such Confidential Information for any purpose other than in performance of this Agreement or disclose the same to any other Person other than to such of its own and its Affiliates’ employees, agents, sublicensees and subcontractors who have a need to know such Confidential Information to implement the terms of this Agreement.  

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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A Receiving Party shall advise any employee, agent, sublicensees and subcontractors who receives Confidential Information of such obligations, and the Receiving Party shall ensure (through enforcement of written agreements or otherwise) that all such employees, agents, sublicensees and subcontractors comply with such obligations as if they had been a Party hereto.  The Receiving Party will be liable for breach of this Article 10 by any of its employees, agents, sublicensees and subcontractors.

 

10.3        Permitted Disclosure and Use.  The Receiving Party shall have the right to disclose Confidential Information if, (i) in the reasonable opinion of the Receiving Party’s legal counsel, such disclosure is required by any applicable Laws (including the rules of any stock exchange), provided that the Receiving Party gives adequate prior notice of such disclosure to the Disclosing Party and the Receiving Party seeks confidential treatment of such Confidential Information to the maximum extent permitted by the relevant Governmental Authority; or (ii) a court, tribunal, administrative agency or other Governmental Authority orders such disclosure, provided that the Receiving Party gives adequate prior notice of such disclosure to the Disclosing Party to permit the Disclosing Party to intervene and to request protective orders or other confidential treatment.  The Receiving Party will cooperate reasonably with any such efforts by the Disclosing Party.  Furthermore, notwithstanding any other provision of this Agreement, Vitae may disclose Confidential Information as necessary in connection with any financing, merger or similar transaction, subject to confidentiality, or as necessary to obtain legal or financial advice from its attorneys, accountants and legal or financial advisors, provided, however, that Vitae shall limit such disclosure to the extent possible including the provision of redacted documents.  The Parties shall also be permitted to make disclosures consistent with, and pursuant to, Sections 15.1 (Publications) and 15.2 (Public Announcements).

 

10.4        Return.  Upon termination of this Agreement, the Receiving Party shall return or destroy all documents or other media containing Confidential Information of the Disclosing Party with the exception of one (1) copy for the sole purpose of monitoring and documenting the confidentiality obligations hereunder.

 

10.5        Remedies.  Money damages will not be an adequate remedy if this Article 10 is breached and, therefore, either Party may, in addition to any other legal or equitable remedies, seek an injunction or other equitable relief against such breach or threatened breach without the necessity of posting any bond or surety.

 

10.6        Survival.  This Article 10 shall survive the expiration or termination of this Agreement for a period of ****.

 

10.7        Internet Mail Encryption.  The Parties undertake to protect Confidential Information (including but not limited to patent-related, scientific or technical information) against unauthorized access by Third Parties.  If Confidential Information is communicated via internet mail, use of internet mail encryption technology is compulsory (for direct communication between the parties, BI provides for a suitable technology at ****free of charge).

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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11.          REPRESENTATIONS AND WARRANTIES.

 

11.1        Mutual Representations and Warranties.  Vitae and BI each represents and warrants to the other as of the Effective Date:

 

11.1.1       Such Party (i) is a company duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization; (ii) has the requisite corporate power and authority and the legal right to conduct its business as now conducted and hereafter contemplated to be conducted; and (iii) has or will obtain all necessary licenses, permits, consents, or approvals from or by, and has made or will make all necessary notices to, all Governmental Authorities having jurisdiction over such Party, required for performance of this Agreement;

 

11.1.2       The execution, delivery and performance of this Agreement by such Party (i) are within the corporate power of such Party; (ii) have been duly authorized by all necessary or proper corporate action; (iii) do not conflict with any provision of the organizational documents of such Party; (iv) will not, to the best of such Party’s knowledge, violate any Laws or any order or decree of any court or Governmental Authority; and (v) will not violate or conflict with any terms of any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Party is a party, or by which such Party is bound;

 

11.1.3       This Agreement has been duly executed and delivered by such Party and constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms;

 

11.1.4       No governmental authorization, consent, approval except Marketing Authorization Approvals, license, registration, filing or exemption therefrom with any court or other Governmental Authority is or will be necessary for, or in connection with, the transaction contemplated by this Agreement or any other agreement or instrument executed in connection therewith; and

 

11.1.5       Neither such Party nor, to the best of either Party’s knowledge, any of its employees has been debarred by the FDA (or similar action by the EMEA), or subject to an FDA debarment investigation or proceeding (or similar proceeding of EMEA) for any reason.

 

11.2        BI Representations and Warranties.  BI represents, warrants and covenants to Vitae as of the Effective Date:

 

11.2.1       BI has utilized its own scientific, marketing and distribution expertise and experience to analyze and evaluate both the scientific and commercial value of this collaboration, and BI has entered into this Agreement based on its own independent due diligence investigation and evaluation;

 

11.2.2       Neither BI nor any of its Affiliates is a party to or otherwise bound by any oral or written contract or agreement that will result in any Third Party obtaining any interest in, or that would give to any Third Party any right to assert any claim in or with respect to, any of BI’s rights granted under this Agreement;

 

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11.2.3       Exhibit 5 is a complete and accurate list of the BI Compounds as of the Effective Date, and Exhibit 5 completely and accurately describes BI’s plans for structural variation for lead optimization of BI Compounds as of the Effective Date;

 

11.2.4       BI is the sole and exclusive owner of or has obtained exclusive licenses to the BI Patents and BI Know-How;

 

11.2.5       BI (i) has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in BI Patents, or any component of the BI Know-How, and (ii) there is no Patent owned or controlled by BI, other than the BI Patent rights, in case of either (i) or (ii), that would prevent Vitae and/or the BI Group and subcontractors from Researching, Developing and/or Commercializing Products as set forth herein, and from exploiting its rights granted under Section 2.1;

 

11.2.6       BI has no knowledge of the existence of any Patent or intellectual property right (other than any patent application) controlled by a Third Party that would materially conflict with the grant of the license set forth in Section 2.1.2 of this Agreement or potentially claim the composition of matter or use of 11β HSD-1 Inhibitors with the exception of those BI Compounds which might be Covered by Third Party intellectual property rights as set forth in Exhibit 8;

 

11.2.7       To BI’s knowledge, there are no claims, judgments or settlements against, pending with respect to BI Patents or any component of BI Know-How, and BI has not received written notice that any such claims, judgments or settlements are threatened; and

 

11.2.8       BI is not currently a party to, and during the Term of this Agreement will not enter into, any agreements, oral or written, that are inconsistent with its obligations under this Agreement.

 

11.3        Vitae Representations and Warranties.  Vitae represents and warrants to BI as of the Effective Date:

 

11.3.1       Vitae has utilized its own scientific, marketing and distribution expertise and experience to analyze and evaluate both the scientific and commercial value of this collaboration, and Vitae has entered into this Agreement based on its own independent assessment and evaluation;

 

11.3.2       Vitae has furnished BI with all material information that is in Vitae’s possession and was requested by BI concerning Vitae’s 11β HSD-1 Inhibitor program, and, to Vitae’s knowledge, such information is accurate and complete in all material respects.

 

11.3.3       Neither Vitae nor any of its Affiliates is a party to or otherwise bound by any oral or written contract or agreement that will result in any Person obtaining any interest in, or that would give to any Person any right to assert any claim in or with respect to, any of Vitae’s rights granted under this Agreement;

 

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11.3.4       Vitae is not currently a party to, and during the Term of this Agreement will not enter into, any agreements, oral or written, that are inconsistent with its obligations under this Agreement;

 

11.3.5       All of the Vitae Patents listed on Exhibit 1 are pending and have not been abandoned as of the Effective Date;

 

11.3.6       Vitae is the sole and exclusive owner of, or has obtained exclusive licenses to, the Vitae Patents and Vitae Know-How;

 

11.3.7       Vitae (i) has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Vitae Intellectual Property that would prevent Vitae and/or the BI Group and subcontractors from Researching, Developing and/or Commercializing Products as set forth herein, and from exploiting its rights granted under Section 2.1; and (ii) there is no intellectual property right, in particular no Patent, owned or controlled by Vitae or its Affiliates (except an Acquiring Entity), other than the Vitae Intellectual Property, that would prevent Vitae and/or the BI Group and subcontractors from Researching, Developing and/or Commercializing Products as set forth herein, and from exploiting its rights granted under Section 2.1.  Should there, nevertheless, exist any such intellectual property rights owned or controlled by Vitae or Vitae’s Affiliates (except an Acquiring Entity) on or after the Effective Date, Vitae shall, and ensure that its Affiliates (except an Acquiring Entity) shall, then grant to BI free of additional charge and in accordance with the terms of this Agreement a non-exclusive license under such intellectual property rights in such a manner that BI, its Affiliates and sublicensees and subcontractors (as set forth in Section 2.2.1) may continue to exercise its rights granted hereunder, in particular, its right to Research, Develop and Commercialize the Potential Development Candidates, Development Candidates and Products without any interruption or restraint from Vitae or its Affiliates (except an Acquiring Entity); provided, however, that with respect to Patents licensed to Vitae and/or its Affiliates (except an Acquiring Entity), such license requirement will apply only to such extent that Vitae and/or its Affiliates (except an Acquiring Entity), as applicable, has the right to sublicense their respective rights in and to such Patents to BI, its Affiliates and sublicensees and subcontractors, without payment of additional consideration to their respective licensors (unless BI agrees to pay such additional consideration).

 

11.3.8       Vitae has no knowledge of any Patents or other intellectual property right (other than any patent applications) owned or controlled by a Third Party that would materially conflict with the grant of rights by Vitae to BI under this Agreement; and

 

11.3.9       There are no claims, judgments or settlements against, pending with respect to the Vitae Patents or any component of Vitae Know-How; and Vitae has not received written notice that any such claims, judgments or settlements are threatened, and, to Vitae’s knowledge, there are no such claims, judgments or settlements are threatened.

 

11.3.10      Vitae is not currently a party to, and during the Term of this Agreement will not enter into, any agreements, oral or written, that are inconsistent with its obligations under this Agreement.

 

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11.4        Disclaimer of Warranty.  Except for Sections 11.1, 11.2 and 11.3, nothing in this Agreement shall be construed as a representation or warranty by either Party (i) that any Product made, used, sold or otherwise disposed of under this Agreement is or will be free from infringement of patents, copyrights, trademarks or other intellectual property rights of any Third Party; (ii) regarding the effectiveness, value, safety, non-toxicity or patentability of any technology, Products or any results provided by either Party pursuant to this Agreement; or (iii) that any Product will obtain Marketing Authorization Approval.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES AND EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES AND RENOUNCES ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM ANY COURSE OF DEALING OR PERFORMANCE OR USAGE OF TRADE.

 

12.          INDEMNIFICATION.

 

12.1        Indemnification by BI.  Subject to Section 12.3, BI shall defend, indemnify and hold harmless Vitae and its Affiliates and each of their officers, directors, shareholders, employees, successors and assigns from and against all Claims of Third Parties, and all associated Losses, to the extent arising out of (i) BI’s negligence or willful misconduct in performing any of its obligations under this Agreement, (ii) breach by BI of any of its representations, warranties, covenants or agreements under this Agreement, or (iii) the Development, Commercialization, manufacture, use, handling, storage, marketing, sale, distribution or other disposition of Products by BI, its Affiliates, agents, subcontractors or sublicensees, except to the extent as set forth in Section 12.2.

 

12.2        Indemnification by Vitae.  Subject to Section 12.3, Vitae shall defend, indemnify and hold harmless BI and its Affiliates and each of their officers, directors, shareholders, employees, successors and assigns from and against all Claims of Third Parties, and all associated Losses, to the extent arising out of (i) Vitae’s negligence or willful misconduct in performing any of its obligations under this Agreement, (ii) breach by Vitae of any of its representations, warranties, covenants or agreements under this Agreement, or (iii) the Development, Commercialization, manufacture, use, handling, storage, marketing, sale, distribution or other disposition of Non-Core 11β HSD-1 Inhibitors or Products by Vitae, its Affiliates, agents, subcontractors or sublicensees, except to the extent as set forth in Section 12.1.

 

12.3        Procedure for Indemnification.

 

12.3.1     Notice.  Each Party (“Indemnified Party”) will notify promptly the other Party (“Indemnifying Party”) in writing if it becomes aware of a Claim (actual or potential) by any Third Party or any proceeding (including any investigation by a Governmental Authority) (“Third Party Claim”) for which indemnification may be sought and will give such related information as the Indemnifying Party shall reasonably request.

 

12.3.2       Defense of Claim.  The Indemnifying Party shall defend or control the defense of Third Party Claims.  The Indemnifying Party shall be responsible for satisfying and discharging any award made to or settlement reached with the Third Party

 

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pursuant to the terms of this Agreement.  The Indemnifying Party shall retain counsel reasonably acceptable to the Indemnified Party (such acceptance not to be unreasonably withheld, refused, conditioned or delayed) to represent the Indemnified Party and shall pay the reasonable fees and expenses of such counsel related to such proceeding.  In any such proceeding, the Indemnified Party, at its sole expense, shall have the right to retain its own counsel.  Neither Party shall settle any Third Party Claim without the prior written consent of the other Party, which consent shall not be unreasonably withheld, refused, conditioned or delayed.  The Indemnified Party shall cooperate in all reasonable respects in the defense of such Third Party Claim, as requested by the Indemnifying Party.  The Indemnifying Party shall not, without the written consent of the Indemnified Party (which consent shall not be unreasonably withheld, refused, conditioned or delayed), effect any settlement of any such Third Party Claim, unless such settlement includes an unconditional release of the Indemnified Party from all liability on such Claims.

 

12.4        Insurance.  During the Term of this Agreement, the Parties shall obtain and maintain at their sole cost and expense, an adequate liability insurance or self-insurance program (including product liability insurance) to protect against potential liabilities and risk arising out of the Development and Commercialization of any Product and upon such terms (including coverages, deductible limits and self-insured retentions) as are customary in the pharmaceutical industry and appropriate to cover each Party’s indemnification obligations hereunder.

 

13.          PATENTS.

 

13.1        Ownership of Inventions.

 

13.1.1     Each Party shall promptly disclose to the other Party all Inventions made under the Agreement during the Term.  Each Party shall own all right, title and interest in and to any Inventions invented solely by such Party.  Each Party shall own a fifty percent (50%) undivided interest in all Joint Inventions.  Except as expressly provided in this Agreement and subject to any restrictions therein, each joint owner may make, use, sell, keep, license, assign, or mortgage such Joint Inventions, and otherwise undertake all activities a sole owner might undertake with respect to such inventions, discoveries and know-how, without the consent of and without accounting to the other joint owner, provided that any such assignment, license or other disposition or use (i) shall at all times be and remain subject to the grants of rights and accompanying conditions and obligations with respect thereto under this Agreement, and (ii) allow the Parties to exercise their rights and perform their obligations under this Agreement, in particular to Research, Develop and Commercialize Products in at least the same scope as prior to such assignment, license or other disposition.  Inventorship for Inventions, including Joint Inventions, shall be determined in accordance with the patent laws of the United States (Title 35, United States Code).

 

13.1.2     Upon ****, such Vitae Patent(s) which specifically Cover(s) the composition of matter for such Development Candidate shall be jointly owned by the Parties.  In addition, Vitae shall provide BI with copies of all related Patent documentation (i.e., all search reports, correspondence with the competent patent offices and other documents relating to the prosecution or maintenance of such Vitae Patents).  Vitae shall assign, transfer and convey, also

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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on behalf of its Affiliates (including any Acquiring Entity), on the condition precedent of **** (“Assignment Date”) to BI co-ownership rights in such Vitae Patent(s) in all countries, in particular the right to be named and entered into national and regional patent registers as co-owner of said Vitae Patent(s).  Vitae shall perform all acts necessary to vest joint ownership in BI in said Vitae Patents, including execution and delivery of all declarations, certificates and other documents, and entry into additional agreements with BI, if necessary.  If it is necessary to obtain the consent of ****(“****”) to effect a valid assignment to BI pursuant to this Section 13.1.2 and Vitae determines that it will not be able to obtain such consent from ****as of the Assignment Date, then Vitae will do all acts necessary to effect the aforementioned assignment, including paying to ****the full amount of any outstanding loans made to Vitae, thereby terminating its agreement with ****, prior to the Assignment Date.  In the event that (i) it is necessary to obtain such consent for the aforementioned purpose and Vitae has not obtained such consent upon Assignment Date, or (ii) Vitae has not performed all necessary acts for giving the effect of the assignment upon Assignment Date at the latest, then BI shall be entitled to make any outstanding payments hereunder directly to ****and deduct such amounts from any royalties or milestone payments due hereunder in order to satisfy any outstanding loans of Vitae vis-à-vis ****.

 

(a)           Vitae shall inform BI in writing after co-ownership in said Vitae Patents has been established in a valid manner.  Upon assignment of said co-ownership rights, such Vitae Patent(s) shall be deemed and treated as Joint Patent(s).

 

(b)           Any costs, expenses or other fees incurred pursuant to this Section 13.1.2, in particular any governmental, notarization, legalization or official fees, for or in connection with the transfer and assignment of the co-ownership rights in said Vitae Patent(s) and the transfer of any related Patent documentation shall be reimbursed by BI within **** after receipt of an invoice (detailing value added tax separately) and proper documentation for such fees.

 

(c)           For avoidance of doubt, Vitae shall be required to assign co-ownership rights to only one Vitae Patent per Development Candidate per jurisdiction or country.  Vitae shall not be required to assign Vitae Patents not Covering the composition of matter for a Development Candidate or any Vitae Patents with broad generic claims, even if such Development Candidate may be within the scope of such generic claims.  In each jurisdiction or country, Vitae shall assign co-ownership rights to the single Vitae Patent containing the narrowest claims that still Cover the Development Candidate.  In addition, if there is already a Joint Patent that specifically Covers the composition of matter for such Development Candidate in a country/jurisdiction, Vitae shall not be required to assign co-ownership rights to any other Vitae Patents.

 

13.2        Prosecution and Maintenance of Patents.  During the Term of this Agreement, except as otherwise set forth in this Section 13, Vitae and BI shall closely cooperate in filing, prosecuting and maintaining the Vitae Patents and the Joint Patents using mutually agreed upon Patent Counsel.  BI shall have the right and obligation to file, prosecute and maintain the BI Patents and the BI Life-Cycle Patents.  Each Party shall keep the other Party

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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informed as to the status of any Patents Covering the Collaboration Compounds or the BI Compounds, and shall consult the other Party with respect to major strategic decisions.

 

13.2.1     Selection of Patent Counsel.  Within ****following the Effective Date, the Parties shall agree on a qualified US outside patent counsel (“Patent Counsel”) who shall be engaged by both Parties for filing, prosecuting and maintenance of the Vitae Patents and Joint Patents.  The Parties shall also agree in parallel on a substitute Patent Counsel to be engaged only for those cases where, for any reason, the first Patent Counsel is unable to handle a particular patent matter on behalf of Vitae or BI.  After the Patent Counsel is selected, Vitae shall within ****instruct its Patent attorneys or agents to promptly transfer all files, including all outstanding office actions and any other significant patent documents relating to existing Vitae Patents to the Patent Counsel.  The Patent Counsel shall within ****after having received all files and documents relating to the Vitae Patents arrange for BI to be registered as the exclusive licensee at all patent authorities where such registration is required or legally possible.  The Parties shall thereafter ensure that any arising Vitae Patents and any Joint Invention Patents are filed, prosecuted and maintained by Patent Counsel.  Vitae and BI shall confer and jointly instruct the Patent Counsel to supervise foreign (i.e., outside of the United States) patent filing, prosecution and maintenance, and shall select (in consultation with Vitae and BI) qualified foreign patent agents in each jurisdiction to file, prosecute and maintain Vitae Patents and Joint Patents in each such jurisdiction.  The Patent Counsel shall regularly advise Vitae and BI of the status of all pending Vitae Patent applications and pending Joint Patent applications, including the status of any related hearings or other proceedings, and provide Vitae and BI copies of all documentation concerning such applications and all correspondence to and from any Governmental Authority.  BI shall, at its discretion, either use qualified in-house patent counsel or retain qualified outside patent counsel to file, prosecute and maintain BI Patents and BI Life-Cycle Patents.  If BI chooses to retain outside patent counsel, it shall have sole discretion to select such patent counsel, except that it may not select a law firm or attorney that has an existing conflict with respect to Vitae.  BI shall regularly advise Vitae of the status of all pending BI Patent applications and pending BI Life Cycle Patent applications, including the status of any related hearings or other proceedings, and provide Vitae, upon Vitae’s request, copies of all documentation concerning such applications and all correspondence to and from any Governmental Authority with respect to BI Patents.

 

13.2.2     Decision-Making.

 

(a)           Each Party shall solicit the other Party’s advice and review of BI Patent applications,  Vitae Patent applications and Joint Patent applications and important prosecution matters related thereto in reasonably sufficient time prior to filing thereof, and shall take into account the other Party’s reasonable comments; provided that, subject to Sections 13.2.4 and 13.2.5 below and BI’s primary responsibility in the following sentence, Vitae shall have the final decision-making authority with respect to any action relating to any Vitae Patent and any Joint Patent, and BI shall have the final decision-making authority with respect to any action relating to any BI Patent and any BI Life Cycle Patent.  However, upon initiation of the ****, BI shall have primary responsibility for maintaining, prosecuting and defending such Vitae Patent(s) assigned pursuant to Section 13.1.2 and any other Joint Patents that Cover the composition of matter for the respective Development Candidate provided that such activities do not limit the scope or enforceability of said Patents

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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that would be detrimental to the interests of Vitae.  If any activities of or on behalf of BI limit the scope or enforceability of said Patents, then Vitae is entitled to veto or require the performance of such activities/decisions, as applicable such that any limit on the scope or enforceability of said Patent does not detrimentally affect the interests of Vitae.  Otherwise, BI shall have the final decision-making authority with respect to all activities/decisions not vetoed or otherwise required by Vitae.

 

(b)           Within the ****, Vitae and BI shall confer about the countries outside the United States in which corresponding applications should be filed (“OUS Filings”).  It shall be presumed that a corresponding Patent Cooperation Treaty (“PCT”) application will be filed unless otherwise agreed by the Parties within the ****.  In case a PCT application is filed, the Parties shall consult regarding the countries for which the application should enter into the national phase no later than ****after the earliest priority date.  If the Parties fail to reach agreement about OUS Filings or the country scope for entering the national phase of countries designated in a PCT application, then BI will have final decision-making authority with respect to any BI Patent or any BI Life Cycle Patent, and Vitae shall have final decision-making authority with respect to any Vitae Patent or Joint Patent, however subject to BI’s primary responsibility under Section 13.2.2(a).  If the Party with final decision-making authority declines to file a particular Patent application in a particular country or jurisdiction, then the other Party may exercise its step-in rights (pursuant to Sections 13.2.4 and 13.2.5) by filing such Patent application in such country or jurisdiction at its own expense.

 

13.2.3     Patent Prosecution and Maintenance Expenses.  BI shall be solely responsible for all costs incurred in connection with the filing, prosecution or maintenance of Vitae Patents, Joint Patents, BI Patents and BI Life-Cycle Patents, including, but not limited to, (i) filing fees, (ii) attorneys’ fees and other expenses associated with application preparation, prosecution, and maintenance, (iii) all costs associated with reexamination, oppositions and interference proceedings in the United States Patent and Trademark Office and/or the United States Courts, (iv) translation fees, (v) maintenance fees and annuities, including any service fees paid to an annuity payment service provider and (vi) attorneys’ fees and filing fees associated with protest or appeal proceedings.  Notwithstanding the foregoing, Vitae shall be responsible for all costs associated with re-examination, oppositions, appeals and interference proceedings of Vitae Patents and/or Joint Patents, which are unnecessarily caused by Vitae’s actions.

 

13.2.4     BI’s Step-In Rights.  BI shall have the right, but not the obligation, to assume responsibility for any Vitae Patent or Joint Patent which Vitae intends to abandon or otherwise cause or allow to be forfeited.  Vitae shall give BI notice of its intent to abandon a Vitae Patent or Joint Patent in a particular country or jurisdiction within a reasonable period prior to a possible loss of rights, and BI shall thereafter have the right through Patent Counsel, at BI’s sole expense, to prepare, file, prosecute and maintain such Vitae Patents or Joint Patents in such country or jurisdiction.

 

13.2.5     Vitae’s Step-In Rights.  Vitae shall have the right, but not the obligation, to assume responsibility for any BI Patents that BI intends to abandon or otherwise cause or allow to be forfeited.  BI shall give Vitae notice of its intent to abandon any Patents assigned to BI pursuant to Section 13.1.2 in a particular country or jurisdiction within a

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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reasonable period prior to a possible loss of rights, and Vitae shall thereafter have the right through Patent Counsel, at Vitae’s sole expense, to prepare, file, prosecute and maintain such BI Patents and/or Patents assigned to BI pursuant to Section 13.1.2 in such country or jurisdiction.  Notwithstanding the above, in the event that BI elects not to file, prosecute or maintain a BI Patent or Joint Patent or claims in a BI Patent or Joint Patent that would affect the royalty owed Vitae under this Agreement, BI will reimburse Vitae for all out-of-pocket expenses incurred by Vitae in connection with Vitae’s continued prosecution and maintenance of such Patent.

 

13.2.6     Execution of Documents by Agents.  Each of the Parties shall execute, or have executed by its appropriate agents, such documents as may be necessary to obtain, perfect or maintain any Patent rights filed or to be filed pursuant to this Agreement, and shall cooperate with the other Party so far as reasonably necessary with respect to furnishing all information and data in its possession reasonably necessary to obtain or maintain such Patent rights.

 

13.2.7     Patent Term Extensions.  BI shall have the right but not the obligation to seek extensions of the terms of any Vitae Patents, Joint Patents, BI Patents, BI Life-Cycle Patents and Patents assigned to BI pursuant to Section 13.1.2 Covering a Product.  At BI’s request, Vitae either shall authorize BI to act as Vitae’s agent for the purpose of making any application for any extensions of the term of such Patents or shall diligently seek to obtain and maintain such extensions, in either event, at BI’s sole expense.  BI shall consult with Vitae prior to its decision to seek a Patent term extension with respect to Vitae Patents, Joint Patents, BI Patents and Patents assigned to BI pursuant to Section13.1.2, provided, however, that when the Parties hereto cannot reach an agreement for these Patents, BI shall have the right to determine which Vitae Patents, BI Patents, Joint Patents, or BI Life-Cycle Patents to apply for Patent term extension in the Territory.  In countries where more than one Patent term extension per Patent owner and per registered Product can be applied for, each Party shall have the right to request Patent term extension.  For countries where only one registered Product per Patent can be extended, BI shall have final decision-making authority as to which Product the extension is applied.  BI shall be responsible for listing to the “Approved Drug Products with Therapeutic Equivalence Evaluation” (known as the “Orange Book”) in case of United States, and any and all similar procedures in the other countries, provided, however, that BI shall consult with Vitae in advance.

 

13.2.8     Supplementary Protection Certificates.  At BI’s request and sole expense, Vitae shall seek to obtain, and maintain until expiry, any SPC’s based on Vitae Patents or Joint Patents, excluding those Patents assigned to BI pursuant to Section 13.1.2, for which BI shall seek to obtain, and maintain such SPCs.  Alternatively, at BI’s request and sole expense, Vitae shall authorize BI to obtain SPC’s based on such Vitae Patent or Joint Patent on Vitae’s behalf and provide reasonable assistance and information therefor as well as for the Patents assigned to BI pursuant to Section 13.1.2.  Where BI holds the relevant Marketing Authorization, BI shall at its sole discretion provide to Vitae a copy of said Marketing Authorization and any information necessary for the purpose of obtaining an SPC based on such Vitae Patent or Joint Patent.  For clarity, BI shall reimburse Vitae for any expenses incurred by Vitae in obtaining an SPC that has been requested by BI.  BI shall be responsible, at its sole expense, for obtaining SPC’s based on BI Patents, or BI Life-Cycle Patents and those Patents assigned to BI pursuant to Section 13.1.2.

 

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13.3        Patent Infringement.  With respect to any and all Claims instituted by Third Parties against Vitae or BI or any of their respective Affiliates for patent infringement involving the manufacture, use, license, marketing or sale of a Product during the Term (each, a “Patent Infringement Claim”) as applicable, Vitae and BI will assist one another and cooperate in the defense and settlement of such Patent Infringement Claims at the other Party’s request.  The Parties agree to respond to or defend against any Patent Infringement Claims as follows:

 

13.3.1     Without limiting any of its obligations under Section 13.1, BI shall have the primary right to manage the defense of the Parties against a Patent Infringement Claim, at BI’s sole expense.  If BI elects to exercise such right as to a Patent Infringement Claim, Vitae shall cooperate with BI at BI’s request and expense, and shall have the right to be represented by counsel selected and paid for by Vitae.  If BI elects not to exercise such right as to the Patent Infringement Claim, Vitae may defend such Patent Infringement Claim, at Vitae’s expense, and BI shall cooperate with Vitae at Vitae’s request and shall have the right to be represented by counsel selected and paid for by BI.

 

13.3.2     The Party managing the defense against a Patent Infringement Claim shall also have the right to settle such Patent Infringement Claim, on terms deemed appropriate by such Party, provided, however that any such settlement must include a full and unconditional release from all liability of the other Party and may not adversely affect the rights of the other Party without such other Party’s prior written consent (such consent not to be unreasonably withheld or delayed).  Moreover, any settlement that (i) results in cross-licensing, (ii) results in sublicenses to Third Parties, (iii) otherwise affects the Vitae Patents or Joint Patents, (iv) would have the effect of reducing royalties payable to Vitae under this Agreement or (v) includes any liability or admission on behalf of Vitae, shall be subject to Vitae’s prior written consent, which shall not be unreasonably withheld or delayed.

 

13.4        Infringement of Patents.  In the event that Vitae or BI becomes aware of actual or threatened infringement of any Vitae Patents, BI Patents, and/or Joint Patents within the Field during the Term, that Party will promptly notify the other Party in writing.  BI will have the primary right, but not the obligation, to bring an infringement action under any Vitae Patents, BI Patents, and/or Joint Patents against any Third Party including the defense against counter-claims of invalidity and unenforceability.  If BI elects to pursue such infringement action, BI shall be solely responsible and have the full control of the proceedings and any recoveries (including settlements) will be applied as follows****.  If BI elects to pursue such infringement action, Vitae may be represented in such action by attorneys of its own choice and at its own expense, with BI having the lead in such action, subject to recovery of such expenses as set forth above.  Vitae shall cooperate with and support BI at BI’s request in such infringement procedure.  During the Term, in the event that BI does not use Diligent Efforts to pursue such an infringement action, Vitae will be permitted to do so, at Vitae’s sole expense, and, if legally required, in BI’s or the relevant BI Affiliate’s name and on BI’s or the relevant BI Affiliate’s behalf.  If BI has consented to an infringement action but Vitae is not recognized by the applicable court or other relevant body as having the requisite standing to pursue such action, then Vitae may join BI as a party-plaintiff.  If Vitae elects to pursue such infringement action, BI

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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may be represented in such action by attorneys of its own choice and at its own expense, with Vitae taking the lead in such action.  In the event that Vitae brings any such action after BI has elected not to pursue such action, it will retain all recoveries, provided that BI shall be reimbursed its reasonable expenses from such recoveries.

 

13.5        Notice of Certification.  BI and Vitae each shall immediately give notice to the other of any certification filed under the “U.S. Drug Price Competition and Patent Term Restoration Act of 1984” (or its foreign equivalent) claiming that a Vitae Patent, BI Patent or Joint Patent is invalid or that infringement will not arise from the manufacture, use or sale of a product by a Third Party (e.g., a paragraph IV certification pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV)).  BI shall have the first option in such proceedings (and similar proceedings in other countries) to take action.  Vitae shall cooperate with and support BI, at BI’s request, in such litigation.  If BI decides not to bring infringement proceedings against the entity making such a certification, BI will give notice to Vitae of its decision not to bring suit within such time period as to provide Vitae with a reasonable opportunity to retain litigation counsel and file suit within the statutory deadlines, but in no event less than **** after receipt of notice of such certification.  If BI decides not to bring such infringement proceeding, then Vitae has the right, but not the obligation, to bring suit against the entity that filed the certification.  Any suit by Vitae or BI will either be in the name of Vitae or in the name of BI (or any Affiliate) or jointly in the name of Vitae and BI (or any Affiliate), as required by Law.

 

13.6        Validity Challenge.

 

13.6.1     In the event that a Third Party commences any re-examination, interference, opposition or nullity proceeding or challenges the validity or enforceability of, or opposes any extension of or the grant of a patent term extension request or a SPC with respect to, any Vitae Patent, BI Patent or Joint Patent (each such action a “Patent Challenge”) during the Term in any country of the Territory, then the Parties shall jointly take such legal action as is required to defend the validity of such particular Vitae Patents, BI Patents, or Joint Patents through patent litigation counsel jointly selected by the Parties.  Each Party shall give all reasonable assistance (excluding financial assistance) to the other Party.  Each Party may also be represented by counsel of its own selection at its own expense in any such legal action.  Any settlement shall be subject to the Parties’ mutual agreement, which shall not be unreasonably withheld or delayed.  BI shall be solely responsible for all costs in connection with such Patent Challenge.

 

13.6.2     For the avoidance of doubt, this Section 13.6 shall not apply to the defense of any Patent Challenge that is raised as a counter-claim or defense by a Third Party that is the subject of an infringement action pursuant to Section 13.3 above, in which case the defense of such Patent Challenge will be governed by such Section 13.3.

 

13.7        Assistance.  For purposes of this Article 13, the Party not bringing suit shall execute such legal papers necessary for the prosecution of such suit as may be reasonably requested by the Party bringing suit.  The out-of-pocket costs and expenses of the Party bringing suit shall be reimbursed first out of any damages, settlements or other monetary awards recovered.  The documented out-of-pocket costs and expenses of the other Party shall then be reimbursed out of any remaining damages, settlements or other monetary awards.  The Party

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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initiating and prosecuting the action will retain any remaining damages, settlements or other monetary awards, except as otherwise specified in this Section 13.

 

13.8        Settlement.  Except as expressly otherwise set forth herein, no settlement, consent judgment or other voluntary final disposition of a suit under this Section 13 may be entered into without the joint written consent of both Parties (each Party’s consent shall not be unreasonably withheld, conditioned or delayed).  BI shall not be required to obtain such consent with respect settlement of any disputes involving only BI Life Cycle Patents.

 

13.9        Licensed Patents.   The provisions regarding BI Patents under this Section 13 affect those BI Patents which are licensed to BI only to such extent that BI has the right to act under this Section in accordance with the agreement with BI’s licensor.  The provisions regarding Vitae Patents under this Section 13 affect those Vitae Patents which are licensed to Vitae only to such extent that Vitae has the right to act under this Section in accordance with the agreement with Vitae’s licensor.

 

14.          TERM AND TERMINATION.

 

14.1        Term.  This Agreement shall commence on the Effective Date and shall end (i) upon the termination of this Agreement pursuant to Sections 14.2 and 14.3; or (ii) upon expiry of the Royalty Term for all Products in all countries (the “Term”).  Upon expiry of this Agreement under Section 14.1(ii), BI and its Affiliates shall retain, fully paid-up and perpetually, all licenses granted to BI under this Agreement on a non-exclusive basis.

 

14.2        Termination for Material Breach.

 

14.2.1     Either Party may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement in the event that the arbitrator pursuant to Section 15.7 determines that the other Party has materially breached in the performance of its material obligations under this Agreement; provided that the breaching Party shall, (i) if such breach can be cured, have ****(****for breach of any payment obligations) after receipt of written notice thereof from the non-breaching Party, such notice containing full details of said breach, to remedy such breach (or, if such breach cannot be cured within such period, the breaching Party must commence and use Diligent Efforts to cure such breach during such period), (ii) if such breach is not capable of being cured, use and continue to use Diligent Efforts to mitigate the impact of such breach, as demonstrated by written evidence, except that the non-breaching Party may nevertheless terminate if such breach is due to willful misconduct or gross negligence.  Vitae shall not have the right to terminate the Agreement following the First Commercial Sale of any Product by BI in a Major Market, provided that BI pays Vitae the amount of such damages that have been awarded by the arbitrator pursuant to Section 15.7.  Notwithstanding the foregoing or any other provision in this Agreement to the contrary, Vitae shall be entitled to terminate this Agreement for material breach by BI under this Section 14.2.1 (whether such breach occurred before or after First Commercial Sale of a Product) in the event that the arbitrator pursuant to Section 15.7 has determined that BI has willfully breached its obligation to pay the royalties as set forth in Sections 9.6 and 9.8 or any milestone payments as set forth in Sections 9.3 and 9.4.  BI shall not have the right to terminate the Agreement hereunder following the First Commercial Sale of any

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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Product in Major Market by Vitae provided that Vitae pays BI the amount of such damages that have been awarded by the arbitrator pursuant to Section 15.7.

 

14.2.2     Any such termination shall become effective at the end of such ****period unless the breaching Party has cured any such breach prior to the expiration of such ****period (or, if such breach is capable of being cured but cannot be cured within such ****period, the breaching Party has commenced and used Diligent Efforts to cure such breach, provided that, in such instance, such cure must have occurred within ****after receipt of written notice thereof from the non-breaching Party).

 

14.2.3     After the First Commercial Sale of any Product by the BI Group or its sublicensees in a Major Market, except as provided for in Section 14.2.1, Vitae shall not have the right to terminate this Agreement in the event that the arbitrator determines that BI failed to use Diligent Efforts in connection with its performance of this Agreement, provided that BI pays Vitae the amount of Special Damages.  “Special Damages” means ****.

 

14.2.4     For the avoidance of doubt, Vitae may only terminate this Agreement for BI’s (alleged) failure to use Diligent Efforts under Section 14.2.3 or 14.3.3 under the terms set forth therein and not under Section 14.2.1.

 

14.3        Other Termination Rights.

 

14.3.1     BI shall have the right to terminate this Agreement on the **** anniversary of the Effective Date by providing written notice ****prior to such **** anniversary date, provided that BI shall pay Vitae the entire amount of the committed research funding payments for the Initial Funded Research Period as set forth in Section 9.2.1,  For avoidance of doubt, the total amount of the committed research funding payments is ****.  In addition, BI shall be responsible for all previously authorized out-of-pocket expenses incurred or committed on or before the effective termination date.

 

14.3.2     At any time after the Research Term, BI shall have the right to terminate the entire Agreement or to terminate Development or Commercialization on a Product-by-Product basis upon one ****written notice to Vitae.  Any such Product (containing a Collaboration Compound and/or a BI Compound that has been selected as a Development Candidate) that is thereby terminated shall be referred to as a “Terminated Product.”  If BI terminates the entire Agreement for any reason, then all Potential Development Candidates, Development Candidates and Collaboration Compounds shall be deemed Terminated Products.

 

14.3.3     Vitae may terminate this Agreement before the First Commercial Sale of a Product in a Major Market on a Product-by-Product or compound-by-compound basis or in its entirety if a Commercial Conflict pursuant to Section 1.22(i) is resolved pursuant to Section 15.7 in favor of Vitae, and BI has not cured such Commercial Conflict within ****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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****upon such arbitrator’s final decision.  Any such Product or compound shall be deemed to be a Terminated Product, but the Agreement will otherwise continue in effect.

 

14.4        Effects of Termination; Terminated Products.

 

14.4.1     Effect of Termination.

 

(a)           Termination for Material Breach by Vitae.  In the event that this Agreement is terminated by BI pursuant to Section 14.2 for material breach by Vitae:

 

(i)            Vitae shall retain its rights granted by BI under Section 2.1.2(a)(ii) and 2.1.2(b)(ii) with the respective sublicense rights under 2.2.2.

 

(ii)           All licenses granted by Vitae to BI or its Affiliates under this Agreement will survive, subject to BI’s and its Affiliates’ ongoing obligations to pay milestone payments and royalty payments to Vitae hereunder; however, in case of an uncured Serious Material Breach resulting in BI’s loss of exclusivity in either the ****or in ****(as evidenced by BI Product(s) facing Generic Competition in those markets), BI shall be released from making any further royalty or milestone payments to Vitae for the Product(s) with respect to which the Serious Material Breach relate.  In any other case of an uncured Serious Material Breach, the arbitrator, pursuant to Section 15.7, shall determine the deduction from any milestone and royalty payments by BI (for the Product(s) with respect to which the Serious Material Breach relate) based on ****.

 

(iii)          In case of Serious Material Breach resulting in BI’s loss of exclusivity in either the ****or in ****(as evidenced by BI Product(s) facing Generic Competition in those markets), Vitae shall, no later than ****from the date of such termination, assign, transfer and convey to BI, free of charge, all of Vitae’s co-ownership interest in the Joint Intellectual Property, following which action such Joint Intellectual Property shall be owned exclusively by BI.  Furthermore, Vitae shall assign, also on behalf of its Affiliates (including an Acquiring Entity), to BI co-ownership rights in such Vitae Patent(s) which Cover(s) the Research, Development and Commercialization of the Collaboration Compound(s) or Product(s), as applicable, to which the Serious Material Breach relates and which Collaboration Compound(s) or Product(s) is or are Researched, Developed or Commercialized, as applicable, as of the effective date of such termination, and any Vitae Patent with respect to which co-ownership is assigned to BI pursuant to this Section 14.4.1(a)(iii) will be deemed a Joint Patent.  For purposes of the definition of “Joint Patents” and notwithstanding any statement to the contrary contained in this Agreement, all Vitae assignments effected pursuant to this Section 14.4.1(a)(iii) will be deemed to have occurred during the Term.

 

(iv)          If the Agreement was terminated by BI pursuant to Section 14.2, BI shall retain all of its rights to bring an action (through arbitration under Section 15.7) against Vitae for damages and any other available remedies in law or equity.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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(b)           Terminations Other Than Material Breach by Vitae.  In the event that this Agreement is terminated by BI or Vitae for reasons other than material breach by Vitae:

 

(i)            All licenses granted by Vitae to BI under this Agreement shall terminate;

 

(ii)           All Products containing (1) a BI Compound that was previously selected as a Development Candidate or (2) a Collaboration Compound shall be deemed to be Terminated Products;

 

(iii)          If the Agreement was terminated by Vitae pursuant to Section 14.2, Vitae shall retain all of its rights to bring an action (through arbitration under Section 15.7) against BI for damages and any other available remedies in law or equity;

 

(iv)          Vitae shall retain its rights granted by BI under Section 2.1.2(a)(ii) and 2.1.2(b)(ii) with the respective sublicense rights under 2.2.2; and

 

(v)           BI shall, no later than **** from the date of such termination, assign, transfer and convey to Vitae, free of charge, all of BI’s co-ownership interest in the Vitae Patents assigned to it pursuant to Section 13.1.2, following which action such Patents shall be owned exclusively by Vitae and all prior licenses, dispositions or assignments made by BI with respect thereto shall automatically become void and cease to be of any further effect.

 

14.4.2     Terminated Products.  Notwithstanding anything else, with respect to each Terminated Product:

 

(a)           BI shall, at its sole expense, promptly transfer to Vitae, or shall cause its designee(s) to transfer to Vitae, ownership of all regulatory filings, Marketing Authorization Approvals, material correspondence, made or filed for the Terminated Product (to the extent that any are held in BI’s or such designee(s)’s name), such transfer to be as permitted by any Third Party licenses or other such prior rights and applicable Laws and regulations, and BI shall otherwise cooperate to permit Vitae to fully exercise its rights hereunder;

 

(b)           BI grants to Vitae an exclusive (even as to the BI Group), royalty-free, worldwide, fully paid-up, perpetual, irrevocable, transferable, sublicensable license (or sublicense, as applicable) in the Field under the BI Intellectual Property (excluding in-licensed BI Patents), and BI’s rights in the Joint Intellectual Property and with respect to in-licensed BI Patents as far as legally possible and equal to the scope of the license granted to BI a sub-license only to the extent necessary to make, have made, use, register, sell, offer to sell, import, export, exploit, Research, Develop and Commercialize any Terminated Products.

 

(c)           The Parties will negotiate in good faith the granting of a non-exclusive, license to BI Life-Cycle Intellectual Property on reasonable and customary commercial terms to be mutually agreed between the Parties only to the extent necessary to make, have made, use, register, sell, offer to sell, import, export, exploit, Research, Develop and Commercialize any Terminated Products.  For the avoidance of doubt, such license does not

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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include any other implied license(s) to other intellectual property in the control of BI Group for any other BI products currently being researched, developed or marketed either alone or in combination with any Product;  Should the Parties are not able to agree, despite their good faith negotiations, on a license agreement within a period of ****after termination, unless the Parties have agreed to extend the negotiation period, the terms and conditions of such license agreement shall be decided by the arbitrator pursuant to Section 15.7 follows:  Within **** upon selection of the arbitrator each Party shall submit one written proposal for the afore mentioned license agreement.  The arbitrator shall select one of the two proposals for such a license agreement.  His decision shall be based solely on the criteria which of the proposals best reflects the terms on which the Parties have agreed so far, and standard provisions customary to such kind of agreements in the pharmaceutical industry.  The arbitrator shall come to a decision within ****.  The scope of authority of the arbitrator shall be limited to the aforementioned selection, and the license agreement so selected shall be binding upon the Parties.  The decision of the arbitrator shall be binding on the Parties.  The Party whose proposal has not been followed by the arbitrator shall bear the costs of this arbitration procedure.

 

(d)           In the event of material breach by BI pursuant to Section 14.2, then BI shall assign to Vitae any and all Trademarks (and associated goodwill) for relating to any Terminated Products which have already received Marketing Authorization Approval in at least one country; in the event of that BI terminates pursuant to Section 14.2.1, then such assignment of Trademarks shall be subject to the payment of a reasonable license fee or lump sum to be negotiated in good faith by the Parties.  In addition, for ****following the transfer of existing Product inventory pursuant to Section 14.4.2(g), BI shall grant a non-exclusive, royalty-free, fully paid-up, sublicensable, irrevocable license to any applicable BI house marks (i.e., trade names, trademarks and trade dress) for the sole purpose of allowing Vitae to market and sell any existing inventory of Terminated Products.  All goodwill associated with Vitae’s use of such BI house marks shall inure to the benefit of BI.

 

(e)           BI shall also provide Vitae with such regulatory information, reports, records and data which are in the possession or control of the BI Group in respect of such Terminated Product to enable Vitae to Develop and obtain the appropriate Marketing Authorization Approvals to Commercialize with such provision to be as permitted by any Third Party licenses or agreements or other prior rights and applicable Laws and regulations;

 

(f)            Upon request, BI shall assign any Third Party agreements in respect of Terminated Products to Vitae if such assignment is permitted by such Third Party agreement and if such assignment is necessary for Vitae to Develop and Commercialize such Terminated Product(s);

 

(g)           Vitae shall inform BI within ****of the effective termination date whether BI should transfer its remaining inventory of drug product and drug substance to Vitae, subject to Vitae’s reimbursement of the inventory at a price equal to the lesser of ****;

 

(h)           BI shall appoint Vitae as BI’s exclusive agent for all regulatory purposes with respect to such Terminated Product and as BI’s exclusive distributor of

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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any such Commercialized Terminated Products until all required Marketing Authorization Approvals are transferred; and

 

(i)            All licenses granted to BI by Vitae hereunder with respect to such Terminated Product shall be deemed terminated.

 

14.5        Change of Control.  Vitae shall promptly notify BI in writing of Transaction.  “Transaction” means any sale, merger, consolidation, transfer or other structural reorganization of Vitae in which (i) substantially all of the assets of the business of Vitae to which this Agreement relates are transferred to an entity in which the holders of Vitae’s capital stock immediately prior to the sale, merger, consolidation, transfer or other structural reorganization of Vitae directly or indirectly hold, subsequent to the sale, merger, consolidation, transfer or other structural reorganization of Vitae, less than a controlling majority of the capital stock; or (ii) the holders of Vitae’s capital stock immediately prior to the sale, merger, consolidation, transfer or other structural reorganization of Vitae hold less than a controlling majority of the capital stock of the surviving entity subsequent to the sale, merger, consolidation, transfer or other structural reorganization of Vitae (with the exception of any sale, merger, consolidation, transfer or other structural reorganization of Vitae that constitutes or involves a public offering of any Vitae stock).  Notwithstanding the foregoing, in the event that a controlling majority of the voting stock of Vitae is acquired by an entity during or after an initial public offering, then this shall be defined as a Transaction.

 

(a)           In the event of a Transaction wherein the entity acquiring the assets or capital stock of Vitae (hereinafter, such entity and all of its current and future Affiliates (excluding Vitae and its controlled Affiliates) shall be collectively referred to as an “Acquiring Entity”) is a pharmaceutical company marketing a diabetes product or having an active diabetes research program, (i) the Parties shall in any event retain all rights granted in this Agreement, in particular under Article 2; and (ii) BI shall be released from its obligations under Articles 3, 4, 5, 6, 7 and Sections 8.1, 8.2, 8.4 of this Agreement, provided, however, that BI shall continue to be obligated to use Diligent Efforts to Develop and Commercialize Products following any Transaction; and (iii) all other provisions of the Agreement shall continue in full force and effect.  Notwithstanding the foregoing, in the event that Vitae has exercised its Co-Development Option pursuant to Section 5.4 prior to the consummation of the Transaction or issuance of a press release about the Transaction, whatever occurs earlier, then Vitae shall be entitled to the increased royalty rate as set forth in Section 9.6.5(b).

 

(b)           Furthermore, in the event of a Transaction, the Parties understand and agree that any intellectual property, in particular, any Patents, know-how and compounds of such Acquiring Entity need not be introduced into this collaboration by Vitae and shall not be considered Vitae Intellectual Property or Joint Intellectual Property. Therefore, this collaboration will not extend to such intellectual property, in particular any Patents, know-how and compounds; and BI shall not, by virtues of said Transaction, obtain a license to the intellectual property of such Acquiring Entity.

 

14.6        Accrued Rights; Surviving Obligations.  Except as provided elsewhere, termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of any Party prior to such termination or expiration.

 

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Such termination or expiration shall not relieve any Party from obligations which are expressly or by implication intended to survive termination or expiration of this Agreement, including, but not limited to, Articles 1, 9, 10, and 12, and Sections 2.2.3, 4.4, 8.3, 11.4, 13.1.1, 13.2.6, 14.1, 14.4, 14.6, 15.1, 15.2, 15.4, 15.5, 15.7, 15.8, 15.9, 15.10, 15.12, 15.13, 15.14, 15.15, 15.16, 15.17, 15.18, 15.19, 15.20, and 15.22, and shall not affect or prejudice any provision of this Agreement which is expressly or by implication provided to come into effect on, or continue in effect after, such termination or expiration.

 

14.7        Bankruptcy under U.S. or German Law.  If this Agreement is rejected by or on behalf of Vitae under Section 365 of the United States Bankruptcy Code (the “Bankruptcy Code”), all licenses and rights to licenses granted under or pursuant to this Agreement by Vitae to BI are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code.  For the avoidance of doubt, the Parties intend that the licenses granted by Vitae to BI under this Agreement, in particular pursuant to Section 2.1 of this Agreement, are licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code.  The Parties agree that BI, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code, and that upon rejection of this Agreement by Vitae in a case under the Bankruptcy Code, if BI elects to retain its rights, as provided in Section 365(n)(1)(B) of the Bankruptcy Code, Vitae, as debtor in possession, or any trustee appointed in a case filed by or against Vitae under the Bankruptcy Code, shall provide to BI all intellectual property licensed to BI under this Agreement (including any embodiments) and held by Vitae or any trustee of Vitae, as provided in Section 365(n)(3)(A) of the Bankruptcy Code.  If this Agreement is rejected by or on behalf of BI in the event that (a) BI becomes a debtor in a bankruptcy proceeding or other proceeding for the general settlement of its debts, (b) a receiver or other official is appointed for all or substantially all of BI’s assets, or (c) BI makes a general assignment for the benefit of creditors, then Vitae will be entitled, to the extent legally possible under German Law, to receive the benefit of any protections afforded to licensees of intellectual property under German bankruptcy law, including protections equivalent to those provided under Section 365(n) of the Bankruptcy Code, whether such protections are in existence as of the Effective Date or are enacted in the future.

 

15.          MISCELLANEOUS.

 

15.1        Publications.  Prior to the commencement of **** in respect of any Development Candidate, neither Party shall make any publication in respect of the results arising out of Research and Development without prior written consent of the other Party.  Any publication made after commencement of the **** in respect of a Development Candidate or related Product shall be made in accordance with a publication strategy and the following provisions of this Section 15.1.  BI shall be responsible for the development of a publication strategy regarding the Development Candidate and/or Product.  The publication strategy shall be presented to the JSC no later than the start of the ****for said Developmental Candidate and/or related Product.  The JSC shall be notified of any planned abstracts, oral presentations and manuscripts relating to the publication of clinical data and other scientific data generated in the course of Development of the relevant Product by the submitting Party.  The JSC shall discuss whether a planned submission might contain information which compromises the patentability or confidentiality of Vitae Intellectual

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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Property, BI Intellectual Property, BI Life-Cycle Intellectual Property, or Joint Intellectual Property.  In the event that said patentability or confidentiality would be compromised, the Party wishing to publish shall within ****of objection by the other Party, request in writing a review of the abstract, oral presentation or manuscript for protection of patentable or proprietary information.  If requested in writing by the other Party, the submitting Party shall provide a draft of the planned submission and withhold the material for publication or presentation for ****to allow for the filing of patent applications or the taking of such measures as may be appropriate to preserve proprietary rights in and the confidentiality of the information in the material being submitted for publication or presentation (including withholding such publication).  The review period may be extended for an additional ****if a representative of the JSC can demonstrate a reasonable need for such extension, including, but not limited to, the preparation and filing of Patent applications.  By mutual agreement of the Parties, this period may be further extended.  The Parties will each comply with standard academic practice regarding authorship of scientific publications and recognition of contribution of other parties in any such publications or presentations.

 

15.2        Public Announcements.  Except as may be expressly permitted under this Section 15.2 or mandated by applicable Laws or the rules of any stock exchange, neither Party will make any public announcement of any information regarding this Agreement without the prior written consent of the other Party.  Once any statement is approved for disclosure by the Parties, either Party may make a subsequent public disclosure containing the same information disclosed in such prior public announcement without further approval of the other Party.  Upon execution of this Agreement, the Parties shall agree to issue a press release and mutually agree the content thereof, concerning this Agreement and the relationship established hereby.  Notwithstanding the above, Vitae shall have the right to issue a press release and/or make a public announcement concerning the status of the Research Collaboration and/or the Development or Commercialization status of any Product after achievement of any key milestones, including, but not limited to, the milestones set forth in Sections 9.3 and 9.4, provided that prior written consent has been obtained, which consent shall not be unreasonably withheld or delayed.  The Parties recognize that the progress of the Research Collaboration has significant impact on Vitae’s valuation as a company and is therefore of interest to Vitae’s investors and potential investors. Thus the Parties shall work together in good faith to agree upon what details and summary top-line results of any clinical trials may be disclosed by Vitae.

 

15.3        No Debarred Personnel.  BI agrees that BI and its Affiliates shall not use, during the Term of this Agreement, the services of any employee, consultant, contractor or clinical investigator that has been debarred by the FDA or any other Governmental Authority or that is the subject of debarment proceedings by the FDA or any other Governmental Authority.

 

15.4        Relationship of the Parties.  Each Party shall bear its own costs incurred in the performance of its obligations hereunder without charge or expense to the other except as expressly provided in this Agreement.  Neither Party shall have any responsibility for the hiring, termination or compensation of the other Party’s employees or for any employee benefits of such employee.  No employee or representative of a Party shall have any authority to bind or obligate the other Party to this Agreement in any manner whatsoever, or to create or impose any contractual or other liability on the other Party without said Party’s approval.  For all purposes, the Parties’ legal relationship under this Agreement to each other shall be that of independent 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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contractor.  This Agreement is not a partnership agreement and nothing in this Agreement shall be construed to establish a relationship of partners or joint venturers between the Parties.

 

15.5        Registration of This Agreement.  To the extent, if any, that either Party concludes in good faith that it or the other Party is required to file or register this Agreement or a notification thereof with any Governmental Authority, such Party shall inform the other Party thereof.  If both Parties jointly agree that either Party is required to submit or obtain any such filing, registration or notification, they shall cooperate (at BI’s sole expense) in such filing, registration or notification and shall execute all documents reasonably required in connection therewith.  In such filing, registration or notification, the Parties shall request confidential treatment of sensitive provisions of this Agreement, to the extent permitted by Law.  The Parties shall promptly inform each other as to the activities or inquiries of any such Governmental Authority relating to this Agreement, and shall reasonably cooperate to respond to any request for further information therefrom on a timely basis.  BI shall be responsible for all costs and expenses associated with any such filings or requirements.

 

15.6        Force Majeure.  The occurrence of an event which materially interferes with the ability of a Party to perform its obligations or duties hereunder which is not within the reasonable control of the Party affected or any of its Affiliates, and which could not with the exercise of Diligent Efforts have been avoided (“Force Majeure Event”), including, but not limited to, war, rebellion, earthquake, fire, accident, strike, riot, civil commotion, act of God, inability to obtain raw materials, delay or errors by shipping companies or change in Law, shall not excuse such Party from the performance of its obligations or duties under this Agreement, but shall merely suspend such performance during the Force Majeure Event.  The Party subject to a Force Majeure Event shall promptly notify the other Party of the occurrence and particulars of such Force Majeure Event and shall provide the other Party, from time to time, with its best estimate of the duration of such Force Majeure Event and with notice of the termination thereof.  The Party so affected shall use Diligent Efforts to avoid or remove such causes of non-performance as soon as is reasonably practicable.  Upon termination of the Force Majeure Event, the performance of any suspended obligation or duty shall without delay recommence.  The Party subject to the Force Majeure Event shall not be liable to the other Party for any damages arising out of or relating to the suspension or termination of any of its obligations or duties under this Agreement by reason of the occurrence of a Force Majeure Event, provided such Party complies in all material respects with its obligations under this Section 15.6.

 

15.7        Dispute Resolution.  In the event of any dispute, controversy or claim hereunder arising out of or relating to this Agreement, including, but not limited to, a Commercial Conflict that cannot be resolved by the Joint Steering Committee or the Officers as set forth in Section 3.3.4, and is not subject to BI’s final decision-making authority or Vitae’s final decision-making authority, either Party may, on ****written notice to the other Party, initiate binding arbitration in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association (the “AAA”).  The Parties shall select a mutually acceptable arbitrator within ****of the request of the Party invoking this dispute resolution procedure.  If the Parties are unable to agree upon an arbitrator, the AAA shall select a qualified, independent arbitrator.  Such arbitration will be held in New York, New York.  The decision of the arbitrator will be final and binding on the Parties.  The prevailing Party may enforce any arbitration decision or award exclusively in the federal and state courts in the State

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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of New York, New York, USA.  Notwithstanding the foregoing, either Party may seek injunctive, equitable or similar relief (without the requirement of arbitration) exclusively in any federal and state courts in the State of New York, New York, USA.

 

15.8        Governing Law.  This Agreement shall be construed, and the respective rights of the Parties determined, according to the substantive law of New York without regard to the provisions governing conflict of laws, except matters of intellectual property law, which shall be determined in accordance with the intellectual property laws relevant to the intellectual property in question.  The United Nations Convention on the International Sale of Goods shall not apply to this Agreement.

 

15.9        Attorneys’ Fees and Related Costs.  In the event that any legal proceeding is brought to enforce or interpret any of the provisions of this Agreement, the prevailing Party shall be entitled to recover its reasonable attorneys’ fees, court costs and expenses of litigation whether or not the action or proceeding results in a final judgment.

 

15.10      Assignment.  This Agreement may not be assigned or transferred by either Party, in whole or in part, whether voluntarily or by operation of law, without the prior written consent of the other Party; provided that either Party may assign this Agreement, in whole or in part, to any of its Affiliates if such Party guarantees the performance of this Agreement by such Affiliate; and provided further that either Party may assign this Agreement to a successor to all or substantially all of the assets or business of such Party to which this Agreement relates, whether by merger, sale of stock, sale of assets or other similar transaction.  Any assignment in violation of this provision is void and without effect.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto, their permitted successors, legal representatives and assigns.  In the event that Vitae assigns or transfers any of the Vitae Intellectual Property or Vitae’s interest in the Joint Intellectual Property to a Third Party, Vitae shall impose on such assignee or transferee such obligations as are necessary so that BI retains and obtains all of the rights to which it is entitled with respect to such Vitae Intellectual Property and Joint Intellectual Property under this Agreement, in particular the grant of rights under Section 2.1.1.

 

15.11      Assignment and Performance within the BI Group.  It is understood by the Parties that any right or obligation of BI under this Agreement may be exercised or performed by any of its Affiliates, provided that BI shall remain ultimately responsible for performing its obligations under this Agreement.  In the event that parts of this Agreement, in particular parts of the scope of work, are performed by Vitae in close collaboration with an Affiliate of BI , BI may notify Vitae thereof and Vitae shall invoice such Affiliate according to the information provided by BI (name of Affiliate, address and bank details) and such invoice shall refer to the respective attributable scope of work.  BI remains responsible and liable for the correct payment and any other performance of obligations by such Affiliate in accordance with this Agreement.  Any such payment of the Affiliate shall be made in and deemed as fulfillment of BI’s obligations under this Agreement.

 

15.12      Notices.  All demands, notices, consents, approvals, reports, requests and other communications hereunder must be in writing, in English, and will be deemed to have been duly given only if delivered personally, by mail (first class, postage prepaid), or by overnight delivery using a globally-recognized carrier, to the Parties at the following addresses:

 

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Vitae:
    	
 
    	
BI:
    
	
Vitae   Pharmaceuticals, Inc.
    	
 
    	
Boehringer Ingelheim GmbH,

Corporate Division Licensing
    
	
502   West Office Center Drive
    	
 
    	
****
    
	
Fort   Washington, PA 19034
    	
 
    	
****
    
	
USA
    	
 
    	
****
    
	
Attn:  Legal Department
    	
 
    	
Attn:   Head of CD Licensing
    

 

or to such other address as the addressee shall have last furnished in writing in accord with this provision.  All notices shall be deemed effective upon receipt by the addressee.

 

15.13      Severability.  If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable.

 

15.14      Headings.  The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

 

15.15      Waiver.  No waiver of any term or condition of this Agreement shall be effective unless set forth in a written instrument duly executed by or on behalf of the waiving Party.  No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any prior, concurrent or future occasion.  Except as expressly set forth in this Agreement, all rights and remedies available to a Party, whether under this Agreement or afforded by Law or otherwise, will be cumulative and not in the alternative to any other rights or remedies that may be available to such Party.

 

15.16      Entire Agreement.  This Agreement (including the exhibits and schedules hereto) constitutes the entire agreement between the Parties hereto with respect to the subject matter hereof and supersedes all previous agreements and understandings between the Parties, whether written or oral, including, but not limited, to all proposals, negotiations, conversations, letters of intent, memoranda of understanding or discussions, between Parties relating to the subject matter of this Agreement and all past dealing or industry custom.

 

15.17      Modification.  This Agreement may be altered, amended or changed only by a writing making specific reference to this Agreement and the clause to be modified, which amendment is signed by duly authorized representatives of Vitae and BI.

 

15.18      No License.  Nothing in this Agreement shall be deemed to constitute the grant of any license or other right in either Party, to or in respect of any Product, patent, trademark, Confidential Information, trade secret or other data or any other intellectual property of the other Party, except as expressly set forth herein.

 

15.19      No Third Party Beneficiaries.  None of the provisions of this Agreement shall be for the benefit of or enforceable by any Third Party, including, but not limited to, any creditor of either Party hereto.

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

59 of 88

 

15.20      Ambiguities.            This Agreement shall be deemed to have been drafted jointly by both Parties; and ambiguities, if any, shall not be construed against either Party, irrespective of which Party may have actually drafted the ambiguous provision.

 

15.21      CREATE Act.  This Agreement includes a joint research agreement as defined in 35 U.S.C. § 103(c)(3).

 

15.22      Counterparts.         This Agreement may be executed in counterparts, each of which, when executed, shall be deemed to be an original and all of which together shall constitute one and the same document.

 

[Remainder of Page Intentionally Left Blank]

 

60 of 88

 

IN WITNESS WHEREOF, Vitae and BI, by their duly authorized officers, have executed this Agreement as of the Effective Date.

 

	
VITAE PHARMACEUTICALS, INC.
    	
BOEHRINGER INGELHEIM
    
	
 
    	
INTERNATIONAL GMBH
    
	
 
    	
 
    
	
By: ****
    	
By:   ****
    
	
 
    	
 
    
	
Name: ****
    	
Name:   ****
    
	
 
    	
 
    
	
Title: ****
    	
Title:   ****
    

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

61 of 88

 

EXHIBIT 1

VITAE PATENTS

 

****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

EXHIBIT 2

PRELIMINARY RESEARCH PLAN

 

****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

EXHIBIT 3

INITIAL DEVELOPMENT PLAN

 

****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

EXHIBIT 4

COLLABORATION COMPOUNDS

 

****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

EXHIBIT 5

BI COMPOUNDS

 

****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

EXHIBIT 6

SHARE PURCHASE AGREEMENT

 

****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

EXHIBIT 7

REQUIREMENTS FOR INVOICES

 

·                  Name and address of Vitae

·                  Name and address of Boehringer Ingelheim International GmbH

·                  Vitae’s taxpayer identification number

·                  Description of services provided or milestone event

·                  Date of invoice

·                  Boehringer Ingelheim Contract No. ****

·                  Amount due and currency

·                  Amount of VAT (if applicable)

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

EXHIBIT 8

POTENTIAL THIRD PARTY RIGHTS TO BI COMPOUNDS

 

****

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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