Document:

Exhibit 4.1

 

EXECUTION VERSION

CONFIDENTIAL

 

AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), is made as of November 5, 2018, by and among NextCure, Inc., a Delaware corporation (the “Company”), the Investors listed on Schedule A hereto and any additional Investor that becomes a party to this Agreement in accordance with Section 6.10 hereof.

 

RECITALS

 

WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of the Company’s Series A-1 Preferred Stock, $0.001 par value per share, Series A-2 Preferred Stock, $0.001 par value per share and Series A-3 Preferred Stock, $0.001 par value per share (collectively, the “Series A Preferred Stock”), and the Existing Investors possess registration rights, information rights, rights of first offer and other rights pursuant to the Investors’ Rights Agreement dated as of December 29, 2015 between the Company and such Investors (the “Prior Agreement”);

 

WHEREAS, the Company and certain of the Investors are parties to the Series B Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”), and it is a condition to the closing of the sale of the Company’s Series B-1 Preferred Stock, Series B-2 Preferred Stock and Series B-3 Preferred Stock, each $0.001 par value per share (collectively, the “Series B Preferred Stock”), to such Investors that the parties hereto execute and deliver this Agreement;

 

WHEREAS, the Company and the Existing Investors desire to amend and restate the Prior Agreement on the terms set forth herein and, in order to induce the Company to enter into the Purchase Agreement and to induce certain of the Investors to purchase shares of the Series B Preferred Stock pursuant to the Purchase Agreement, the Investors and the Company hereby agree that this Agreement shall govern the rights of the Investors to cause the Company to register shares of Common Stock issuable to the Investors, to receive certain information from the Company, and to participate in future equity offerings by the Company, and shall govern certain other matters as set forth in this Agreement; and

 

WHEREAS, the undersigned include the holders of at least seventy percent (70%) of the shares of Common Stock, $0.001 par value per share (the “Common Stock”) issuable upon conversion of the then outstanding shares of Series A Preferred Stock, as necessary to amend the Prior Agreement in accordance with Section 6.6 thereof.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.                                      Definitions.  For purposes of this Agreement:

 

1.1                               “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director

 

 

of such Person or any investment fund or other entity now or hereafter existing that is controlled by one or more general partners or managing members of, or directly or indirectly shares the same management company with, such Person. With respect to Hillhouse or Ping An, the term Affiliate shall include investment entities and investment funds directly or indirectly managed or advised by Hillhouse Capital Management, Ltd. or Ping An, respectively.

 

1.2                               “Board” means the Company’s Board of Directors.

 

1.3                               “Board Observer” means a non-voting observer to the Board appointed pursuant to Section 3.3(a).

 

1.4                               “Competitor” means any Person (other than the Company) that the Board (including at least one (1) Series A Director and one (1) Series B Director) reasonably determines is engaged, directly or indirectly, in whole or in part, in the same or similar business as the Company; provided, however, that C.P. Pharmaceuticals International, C.V. and Pfizer Inc. (collectively, “Pfizer”) and their respective Affiliates shall be deemed to not be Competitors; provided, further, that no purchaser of Series B Preferred Stock under the Purchase Agreement shall be deemed a Competitor now or any time in the future for so long as such Investor is party to this Agreement; provided, further, that “Competitor” shall not include any financial investment firm or collective investment vehicle that, together with its Affiliates, (a) holds less than twenty percent (20%) of the outstanding equity of any Competitor and (b) does not, nor do any of its Affiliates, have a right to designate any members of the board of directors or similar governing body of such Competitor.

 

1.5                               “Damages” means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

 

1.6                               “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.

 

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

 

1.8                               “Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be

 

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required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

 

1.9                               “FOIA Party” means a Person that, in the determination of the Board (including at least one (1) Series A Director and one (1) Series B Director), is reasonably likely to be subject to, and thereby required to disclose non-public information furnished by or relating to the Company under, the Freedom of Information Act, 5 U.S.C. 552 (“FOIA”), any state public records access law, any state or other jurisdiction’s laws similar in intent or effect to FOIA, or any other similar statutory or regulatory requirement; provided, however, that no purchaser of Series B Preferred Stock under the Purchase Agreement shall be deemed a FOIA Party now or any time in the future for so long as such Investor is party to this Agreement.

 

1.10                        “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

1.11                        “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

1.12                        “Founders” means Michael Richman and Dr. Lieping Chen.

 

1.13                        “GAAP” means generally accepted accounting principles in the United States.

 

1.14                        “Hillhouse” means HH NCure Holdings LLC and its successors and assigns.

 

1.15                        “Holder” means any holder of Registrable Securities who is a party to this Agreement.

 

1.16                        “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, including, adoptive relationships, of a natural person referred to herein.

 

1.17                        “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

 

1.18                        “Investors” means the Persons named on Schedule A hereto, each Person to whom the rights of an Investor are assigned pursuant to Section 6.1, each Person who hereafter becomes a signatory to this Agreement pursuant to Section 6.9 and any one of them, as the context may require.

 

1.19                        “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

 

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1.20                        “Major Investor” means any Investor who has purchased at least $10,000,000 of Preferred Stock from the Company, each Person to whom any of the rights of any such Investor are assigned pursuant to Section 6.1, each Person who hereafter purchases at least $10,000,000 of Preferred Stock from the Company and becomes an Investor pursuant to Section 6.10 and any one of them, as the context may require; provided, however, that Taiho Ventures, LLC (“Taiho”), Citadel Multi-Strategy Equities Master Fund Ltd. (“Surveyor”), Bay City Capital GF Xinde International Life Sciences USD Fund, L.P. (“Bay City”), and any Person to whom any of the rights of Taiho, Surveyor or Bay City, respectively, are assigned pursuant to Section 6.1 shall each be deemed to be a Major Investor for so long as such Investor holds at least fifteen percent (15%) of the shares of Series B Preferred Stock purchased by such Investor pursuant to the terms of the Series B Preferred Stock Purchase Agreement, dated as of November 5, 2018 (the “Series B Purchase Agreement”); provided, further, that any such Person shall cease to be considered a “Major Investor” for purposes of this Agreement if such Person ceases to be an Investor.

 

1.21                        “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

1.22                        “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

1.23                        “Ping An” means Full Succeed International Limited and its successors and assigns.

 

1.24                        “Preferred Directors” means, collectively, the Series A Directors and the Series B Directors.

 

1.25                        “Preferred Stock” means, collectively, the Series A Preferred Stock and the Series B Preferred Stock.

 

1.26                        “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock; (ii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, acquired by the Investors after the date hereof; and (iii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i) and (ii) above; excluding in all cases, however, any Registrable Securities transferred by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 6.1, and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Section 2.13 of this Agreement.

 

1.27                        “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

 

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1.28                        “Restated Certificate” means the Company’s Second Amended and Restated Certificate of Incorporation, as amended from time to time.

 

1.29                        “Restricted Securities” means the securities of the Company required to be notated with the legend set forth in Section 2.12(b) hereof.

 

1.30                        “SEC” means the Securities and Exchange Commission.

 

1.31                        “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

1.32                        “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

 

1.33                        “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.34                        “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 2.6.

 

1.35                        “Series A Director” means any director of the Company that the holders of record of the Series A Preferred Stock are entitled to elect pursuant to the Restated Certificate.

 

1.36                        “Series B Director” means any director of the Company that the holders of record of the Series B Preferred Stock are entitled to elect pursuant to the Restated Certificate.

 

1.37                        “Voting Agreement” means the Amended and Restated Voting Agreement, dated as of the date hereof, among the Company, the Investors named on Schedule A hereto and certain other stockholders of the Company, as it may be amended and/or amended and restated from time to time.

 

2.                                      Registration Rights.  The Company covenants and agrees as follows:

 

2.1                               Demand Registration.

 

(a)                                 Form S-1 Demand.  If at any time after the earlier of (i) five (5) years after the Closing (as defined in the Purchase Agreement) and (ii) six (6) months after the effective date of the registration statement for an IPO, the Company receives a request from Holders of at least twenty percent (20%) of the Registrable Securities then outstanding that the Company file a Form S-1 registration statement with respect to Registrable Securities then outstanding and if the anticipated aggregate offering price, net of Selling Expenses, would exceed $10 million), then the Company shall (x) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (y) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the

 

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Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Sections 2.1(c) and 2.3.

 

(b)                                 Form S-3 Demand.  If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of Registrable Securities that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $1 million, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Sections 2.1(c) and 2.3.

 

(c)                                  Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Board it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such ninety (90) day period.

 

(d)                                 The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a) (i) if the Company delivers written notice to the Holders requesting a registration pursuant to Section 2.1(a) within thirty (30) days of such demand registration request of its good faith intent to file a registration statement for an IPO within sixty (60) days; provided that the Company actively employs its good faith commercially reasonable efforts to file such registration statement within such time period and to become effective as promptly as practicable thereafter, (ii) during the one hundred eighty (180) day-period commencing on the effective date of the registration statement for an IPO; (iii) after the Company has effected two (2) registrations pursuant to Section 2.1(a); or (iv) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately

 

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registered on Form S-3 pursuant to a request made pursuant to Section 2.1(b).  The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(b) if the Company has effected two (2) registrations pursuant to Section 2.1(b) within the twelve (12) month period immediately preceding the date of such request.  A registration shall be counted as “effected” for purposes of this Section 2.1(d) (i) if and when the applicable registration statement has been declared effective by the SEC and, subject to Section 2.3, such registration statement covers all of the Registrable Securities requested by Holders to be registered pursuant to Section 2.1 or (ii) the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand registration statement pursuant to Section 2.6, unless prior to such withdrawal, the Initiating Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Initiating Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information.

 

2.2                               Company Registration.  If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration.  Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration.  The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration.  The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6.

 

2.3                               Underwriting Requirements.

 

(a)                                 If, pursuant to Section 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1, and the Company shall include such information in the Demand Notice.  The underwriter(s) will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders.  In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.  All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting.  Notwithstanding any other provision of this Section 2.3, if the managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as

 

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nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting.

 

(b)                                 In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company.  If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering.  If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company or a stockholder invoking a demand registration) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering.  For purposes of the provision in this Section 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

2.4                               Obligations of the Company.  Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)                                 prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in

 

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the registration statement has been completed; provided, however, that such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration;

 

(b)                                 prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

(c)                                  furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

(d)                                 use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(e)                                  in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

(f)                                   furnish to each underwriter, if any, (i) a written legal opinion of the Company’s outside legal counsel, dated the closing date of the offering, in form and substance as is customarily given in opinions of the Company’s counsel to underwriters in underwritten registered offerings and (ii) on the date of the applicable prospectus, on the effective date of any post-effective amendment to the applicable registration statement and at the closing of the offering, dated the respective dates of delivery thereof, a “comfort” letter signed by the Company’s independent certified public accountants in form and substance as is customarily given in accountants’ letters to underwriters in underwritten registered offerings;

 

(g)                                  use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

(h)                                 provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(i)                                     promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the

 

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selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

(j)                                    notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

 

(k)                                 after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.

 

2.5                               Furnish Information.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

 

2.6                               Expenses of Registration.  All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements of one counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Sections 2.1(a) or 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Sections 2.1(a) or 2.1(b).  All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by

 

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the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

2.7          Delay of Registration.  No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

2.8          Indemnification.  If any Registrable Securities are included in a registration statement under this Section 2:

 

(a)           To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

(b)           To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Sections 2.8(b) and 2.8(d)

 

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exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

 

(c)           Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof.  The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action.  The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action.  The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.

 

(d)           To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such

 

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fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

 

(e)           Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

(f)            Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall prevail.

 

2.9          Reports Under Exchange Act.  With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

(a)           make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

 

(b)           use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

 

(c)           furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies) and (ii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).

 

2.10        Limitations on Subsequent Registration Rights.  From and after the date of this Agreement, the Company shall not, without the prior written consent of the Required Majority (as defined in the Restated Certificate), enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective

 

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holder (a) to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included; or (b) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Section 6.10.

 

2.11        “Market Stand-off” Agreement.  Each Holder hereby agrees that it will not, if requested by the managing underwriter, during the period commencing on the date of the final prospectus relating to the IPO and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days, or such other period as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports, and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise.  The foregoing provisions of this Section 2.11 (a) shall apply only to the IPO, (b) shall not apply to (A) the sale of any shares to an underwriter pursuant to an underwriting agreement, to any shares purchased in the IPO or to the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the Immediate Family Members of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, (B) transfer any shares owned by a Holder in the Company to its Affiliates, provided that the Affiliate of the Holder agrees to be bound in writing by the restrictions set forth herein, or (C) shares purchased by a Holder in the open market; and (c) shall be applicable to the Holders only if all officers and directors and stockholders individually owning one percent (1%) or more of the Company’s outstanding Common Stock (after giving effect to the conversion into Common Stock of all outstanding Preferred Stock and the conversion, exercise or exchange of all outstanding Derivative Securities into or for Common Stock) are subject to the same restrictions.  The underwriters in connection with such registration are intended third-party beneficiaries of this Section 2.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.  Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 2.11 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements.

 

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2.12        Restrictions on Transfer.

 

(a)           The Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act.  A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

 

(b)           Each certificate, instrument, or book entry representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c)) be notated with a legend substantially in the following form:

 

“THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.”

 

“THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.”

 

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.12.

 

(c)           The holder of such Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2.  Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer.  Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed

 

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sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company.  The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144; (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; or (z) in any internal transaction in which such Holder transfers Restricted Securities to an Affiliate of such Holder that is an entity and that is ultimately controlled by the same parent company as the Holder (or is the ultimate parent company of the Holder); provided that each transferee agrees in writing to be subject to the terms of this Section 2.12.  Notwithstanding the foregoing, the Company shall be obligated to reissue promptly unlegended certificates at the request of any Holder thereof if the Company has completed its IPO and the Holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification and legend, provided that the second legend listed above shall be removed only at such time as the Holder of such certificate is no longer subject to any restrictions hereunder.  Each certificate, instrument, or book entry representing the Restricted Securities transferred as above provided shall be notated with, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.12(b), except that such certificate instrument, or book entry shall not be notated with such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

2.13        Termination of Registration Rights.  The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Sections 2.1 or 2.2 shall terminate upon the earliest to occur of:

 

(a)           the closing of a Deemed Liquidation Event, as such term is defined in the Restated Certificate;

 

(b)           such time as SEC Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration; and

 

(c)           the fifth anniversary of the IPO.

 

3.             Information and Observer Rights.

 

3.1          Delivery of Financial Statements.  The Company shall deliver to each Major Investor; provided that such Major Investor is not a Competitor of the Company:

 

(a)           as soon as practicable, but in any event within ninety (90) days after the end of each fiscal year of the Company (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and a comparison between (x) the actual amounts as of and for such fiscal year and (y) the comparable amounts for the prior year, and (iii) a statement of stockholders’ equity as of the end of such year, all such financial statements audited and certified by an independent public accounting firm of nationally recognized standing

 

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approved by the Board (including at least a majority of the Preferred Directors) and such financial statements of income and of cash flows shall be accompanied by a comparison between the actual amounts as of and for such fiscal year and the comparable amounts included in the Budget (as defined below) for such year, with an explanation of any material differences between such amounts and a schedule as to the sources and applications of funds for such year;

 

(b)           as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments; and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

(c)           as soon as practicable, but in any event within thirty (30) days after the end of each month, an unaudited income statement and statement of cash flows for such month, and an unaudited balance sheet as of the end of such month, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

(d)           as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and operating plan for the next fiscal year (collectively, the “Budget”), approved by the Board and prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company;

 

(e)           with respect to the financial statements called for in Section 3.1(a), Section 3.1(b) and Section 3.1(c), an instrument executed by the chief financial officer and chief executive officer of the Company certifying that such financial statements were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (except as otherwise set forth in Section 3.1(b) and Section 3.1(c)) and fairly present the financial condition of the Company and its results of operation for the periods specified therein; and

 

(f)            such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Major Investor may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Section 3.1 to provide information (i) that the Company reasonably determines in good faith to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in a form acceptable to the Company); or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

 

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Notwithstanding anything else in this Section 3.1 to the contrary, the Company may cease providing the information set forth in this Section 3.1 during the period starting with the date thirty (30) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Section 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

 

3.2          Inspection.  The Company shall permit each Major Investor (provided that such Major Investor is not a Competitor of the Company), at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by such Major Investor with reasonable prior notice; provided, however, that the Company shall not be obligated pursuant to this Section 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.3          Observer Rights.

 

(a)           As long as a Major Investor together with its Affiliates, owns, at least fifteen percent (15%) of the shares of Preferred Stock that such Major Investor or any of its Affiliates purchased pursuant to the terms of the Series A Preferred Stock Purchase Agreement, dated as of December 29, 2015 (the “Series A Purchase Agreement”) and/or the Series B Purchase Agreement, as applicable, such Major Investor shall have the right to appoint one (1) individual as a Board Observer.

 

(b)           Each Board Observer shall be entitled to attend all meetings of the Board and the Board shall send to each Board Observer all of the notices, information, minutes, consents and other materials that are distributed to the directors of the Board and shall provide each Board Observer with a notice and agenda of each meeting of the Board (and committees thereof), all at the same time and in the same manner as such notices, information, minutes, consents, agenda, information and other materials are provided to the members of the Board; provided, however, that each Board Observer shall agree to hold in strict confidence all information so provided and shall execute a confidentiality agreement with the Company to such effect; and provided further, that the Company reserves the right to withhold any information and to exclude a Board Observer from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, or if such Board Observer or the Investor that appointed such Board Observer is a Competitor of the Company.  Each Board Observer shall be entitled to the identical expense reimbursement rights as non-employee members of the Board (including as set forth in Section 5.4 hereof).

 

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(c)           As long as Pfizer or any of its Affiliates owns at least twenty-five percent (25%) of the shares of Series A Preferred Stock that Pfizer or any of its Affiliates purchased pursuant to the terms of the Series A Purchase Agreement, Pfizer shall have the right to appoint one member of the Company’s scientific advisory board (or other substantially equivalent advisory body that the Company may establish).

 

3.4          Termination of Information and Observer Rights.  The covenants set forth in Section 3.1, Section 3.2, and Section 3.3 shall terminate and be of no further force or effect (a) immediately before the consummation of an IPO approved in accordance with the Restated Certificate, (b) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (c) upon a Deemed Liquidation Event, as such term is defined in the Restated Certificate, whichever event occurs first.

 

4.             Rights to Future Stock Issuances.

 

4.1          Right of First Offer.  Subject to the terms and conditions of this Section 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor.  A Major Investor shall be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate, among (i) itself and (ii) its Affiliates; provided that each such Affiliate (x) is not a Competitor or FOIA Party, unless such party’s purchase of New Securities is otherwise consented to by the Board, and (y) agrees to enter into this Agreement and each of the Voting Agreement and Right of First Refusal and Co-Sale Agreement of even date herewith among the Company, the Investors and the other parties named therein, as an “Investor” under each such agreement (provided that any Competitor or FOIA Party shall not be entitled to any rights as a Major Investor under Sections 3.1, 3.2 and 4.1 hereof).

 

(a)           The Company shall give notice (the “Offer Notice”) to each Major Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

(b)           By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock then held by such Major Investor (including all shares of Common Stock then issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held by such Major Investor) bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock and other Derivative Securities then outstanding).  At the expiration of such twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Major Investor’s failure to do likewise.  During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New

 

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Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares.  The closing of any sale pursuant to this Section 4.1(b) shall occur within the latest of (i) ninety (90) days of the date that the Offer Notice is given, (ii) the date of initial sale of New Securities pursuant to Section 4.1(c), and (iii) the date on which all regulatory approvals necessary for the sale have been obtained.

 

(c)           If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice.  If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Major Investors in accordance with this Section 4.1.

 

(d)           The right of first offer in this Section 4.1 shall not be applicable to (i) Exempted Securities (as defined in the Restated Certificate); (ii) shares of Common Stock issued in an IPO and (iii) the issuance of shares of Series B Preferred Stock pursuant to the Purchase Agreement.

 

4.2          Right of First Offer for Debt Securities.  Subject to the terms and conditions of this Article 4 and applicable securities laws, if the Company proposes to issue any indebtedness or offer or sell any debt securities that are not New Securities (collectively, “Debt Securities”), the Company shall first offer such Debt Securities to Hillhouse.  Hillhouse shall be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate, among itself and its Affiliates; provided that such Affiliate is not a Competitor or FOIA Party.

 

(a)           The Company shall give notice (the “Debt Offer Notice”) to Hillhouse, stating (i) its bona fide intention to offer such Debt Securities, (ii) the number of such Debt Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such Debt Securities.  By notification to the Company within ten (10) days after the Debt Offer Notice is given, Hillhouse may elect to purchase or otherwise acquire, at the price and on the terms specified in the Debt Offer Notice, all or any portion of such Debt Securities.

 

(b)           If all Debt Securities referred to in the Debt Offer Notice are not elected to be purchased or acquired as provided in Section 4.2(a), the Company may, during the ninety (90) day period following the expiration of the period provided in Section 4.2(a), offer

 

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and sell the remaining unsubscribed portion of such Debt Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Debt Offer Notice; provided that the Company shall not sell any unsubscribed portion of such Debt Securities to a Third Party at a price less than, or upon terms materially more favorable to the offeree than, those specified in the Debt Offer Notice without providing Hillhouse the opportunity to match any offer provided by a Third Party for a period of thirty (30) days after being notified of any such offer.

 

(c)                                  The right of first offer in this Section 4.2 shall not be applicable to indebtedness or debt securities that would be Exempted Securities (as defined in the Restated Certificate) if references to any Common Stock, Options or Convertible Securities (as defined in the Restated Certificate) in the definition of Exempted Securities were deemed to also include indebtedness or debt securities.

 

4.3                               Termination.  The covenants set forth in Section 4 shall terminate and be of no further force or effect (a) immediately before the consummation of an IPO approved in accordance with the Restated Certificate, (b) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (c) upon a Deemed Liquidation Event, as such term is defined in the Restated Certificate, whichever event occurs first.

 

4.4                               Waiver.  The right of first offer under Section 4.1 may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Required Majority.

 

5.                                      Additional Covenants.

 

5.1                               Insurance.  The Company shall use its reasonable best efforts to maintain from financially sound and reputable insurers approved by the Board, Directors and Officers liability insurance and term “key person” insurance on each of the Founders, each in an amount and on terms and conditions satisfactory to the Board (including at least one (1) Series A Director and one (1) Series B Director).  Notwithstanding any other provision of this Section 5.1 to the contrary, for so long as any Preferred Director is serving on the Board, the Company shall not cease to maintain a Directors and Officers liability insurance policy in an amount of at least $3,000,000 prior to the initiation by the Company of human clinical trials and $5,000,000 thereafter, in each case unless approved by all such Series A Directors and Series B Directors then serving on the Board, and the Company shall annually, within one hundred twenty (120) days after the end of each fiscal year of the Company, deliver to the Preferred Directors a certification that such a Directors and Officers liability insurance policy remains in effect.  The Company shall add the Series B Directors to its current Directors and Officers liability insurance policy as promptly as practicable, and no later than thirty (30) days after the date hereof.

 

5.2                               Employee Agreements.  The Company will cause (a) each Founder and each other Person now or hereafter employed by the Company or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) to enter into a nondisclosure and proprietary rights assignment agreement; and (b) each Founder and each other Person now or hereafter employed by the Company or by any subsidiary to enter into a

 

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nonsolicitation agreement covering a period of one (1) year commencing on the day after the last day of such Founder’s or Person’s employment with the Company and its subsidiaries.  Each of the above-referenced agreements shall be in a form reasonable and customary for businesses similar in nature to the Company and reasonably acceptable to the Investors.  In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements or any restricted stock agreement between the Company and any Person, without the consent of at least a majority of the Preferred Directors (including at least one (1) Series B Director).

 

5.3                               Employee Stock.  Unless otherwise approved by the Board, including at least a majority of the Board (including at least one (1) Series A Director and one (1) Series B Director), all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (a) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following twelve (12) months of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (b) a market stand-off provision substantially similar to that in Section 2.11.  In addition, unless otherwise approved by the Board, including at least a majority of the Board (including at least one (1) Series A Director and one (1) Series B Director), the Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock.

 

5.4                               Matters Requiring Investor Director Approval.  So long as the holders of Preferred Stock are entitled to elect any Preferred Directors, the Company hereby covenants and agrees with each of the Investors that it shall not (and shall not permit any of its subsidiaries to), either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without approval of the Board, which approval must include the affirmative vote of at least one (1) Series A Director and one (1) Series B Director:

 

(a)                                 approve or amend the annual budget or any capital expenditure plan or other deviation (including incurrence of indebtedness or expenditure) beyond the approved annual budget or any expenditure plan, in each case in excess of twenty percent (20%) in the aggregate during any fiscal year;

 

(b)                                 acquire, sell, transfer, exclusively license, encumber or dispose of assets, individually or in the aggregate during any fiscal year, having a fair market value in excess of twenty (20%) of the then fair market value of the Company (in each case, other than transactions approved by the Required Majority pursuant to Article Fourth, Section B.3.3 of the Restated Certificate);

 

(c)                                  hire or terminate any C-level executive officer of the Company, or increase the compensation of any C-level executive officer of the Company by more than twenty percent (20%) in the aggregate during any fiscal year;

 

22

 

(d)                                 change the principal business of the Company and its subsidiaries, enter new lines of business, or exit the current line of business; or

 

(e)                                  authorize or agree to do any of the foregoing.

 

5.5                               Board Matters. Unless otherwise determined by the vote of a majority of the Preferred Directors then in office (including at least one (1) Series A Director and one (1) Series B Director), the Board shall meet at least quarterly in accordance with an agreed upon schedule. The Company shall reimburse the nonemployee directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board.  Except as otherwise approved by a majority of the Preferred Directors then in office (including at least one (1) Series A Director and one (1) Series B Director), each Board committee shall include at least one (1) of the Series A Directors and one (1) of the Series B Directors.  The Company shall enter into an indemnification agreement, in substantially in the form of the Indemnification Agreement (as defined in the Purchase Agreement), with each Preferred Director designated pursuant to the Voting Agreement (covering such Preferred Director and any Affiliated funds or business entities) upon such Preferred Director’s joining the Board.

 

5.6                               Successor Indemnification.  If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, or transfers all or substantially all of its assets to any other Person, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, the Restated Certificate, or elsewhere, as the case may be.

 

5.7                               Indemnification Matters.  The Company hereby acknowledges that one (1) or more of the directors nominated to serve on the Board by the Investors (each an “Investor Director”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their affiliates (collectively, the “Investor Indemnitors”).  The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Investor Director are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Investor Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Investor Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Investor Director to the extent legally permitted and as required by the Company’s Certificate of Incorporation or Bylaws of the Company (or any agreement between the Company and such Investor Director), without regard to any rights such Investor Director may have against the Investor Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Investor Indemnitors from any and all claims against the Investor Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof.  The Company further agrees that no advancement or payment by the Investor Indemnitors on behalf of any such Investor Director with respect to any claim for which such Investor Director has sought

 

23

 

indemnification from the Company shall affect the foregoing and the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Investor Director against the Company. The Investor Directors and the Investor Indemnitors are intended third-party beneficiaries of this Section 5.7 and shall have the right, power and authority to enforce the provisions of this Section 5.7 as though they were a party to this Agreement.

 

5.8                               Right to Conduct Activities.  The Company hereby agrees and acknowledges that each Investor (together with its Affiliates) invests in numerous companies, some of which may be deemed competitive with the Company’s business (as currently conducted or as currently propose to be conducted).  The Company hereby agrees that, to the extent permitted under applicable law, such Investor shall not be liable to the Company for any claim arising out of, or based upon, (a) the investment by such Investor in any entity competitive with the Company, or (b) actions taken by any partner, officer or other representative of such Investor to assist any such competitive company, whether or not such action was taken as a member of the board of directors of such competitive company or otherwise, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve such Investor (together with its Affiliates) from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement or any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.  In addition, certain of the Investors (together with their respective Affiliates) are professional investment funds or similar investment organizations (collectively, the “Funds”). The Company agrees that, notwithstanding anything to the contrary in this Agreement, no Fund or any of its Affiliates that is a professional investment fund or similar investment organization, nor any of their respective partners, officers, directors or representatives which manage or advise any such professional investment fund or similar investment organization, shall be considered a “Competitor” for purposes of this Agreement as a result of any investment, management or advisory activities, in each case, so long as no confidential information of the Company is shared with any portfolio company which otherwise constitutes a “Competitor” hereunder or any officer, director, employee or advisor of any such portfolio company.

 

5.9                               FCPA Compliance.  The Company shall not, and shall not permit any of its subsidiaries or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents (collectively, “Representatives”) to, promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, any non-U.S. government official, in each case, in violation of the U.S. Foreign Corrupt Practices Act (“FCPA”) or any other applicable anti-bribery or anti-corruption law. The Company shall, and shall cause each of its subsidiaries to, cease all of its or their respective activities, as well as remediate any actions taken by the Company, its subsidiaries or any of its or their respective Representatives in violation of the FCPA or any other applicable anti-bribery or anti-corruption law. The Company shall, and shall cause each of its subsidiaries to, maintain systems or internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with the FCPA or any other applicable anti-bribery or anti-corruption law.

 

24

 

5.10                        Series B-2 Matters.  So long as the holders of Series B Preferred Stock are entitled to designate one or more Series B Director, the Company hereby covenants and agrees that it shall not (and shall not permit any of its subsidiaries to), either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without approval of the Series B-2 Majority (as defined in the Restated Certificate):

 

(a)                                 reclassify any shares of capital stock into shares of Series B-2 Preferred Stock; or

 

(b)                                 issue any additional shares of Series B-2 Preferred Stock after the date hereof.

 

5.11                        Termination.  The covenants set forth in this Section 5, except for Sections 5.6, 5.7 and 5.8 shall terminate and be of no further force or effect (a) immediately before the consummation of an IPO approved in accordance with the Restated Certificate, (b) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (c) upon a Deemed Liquidation Event, as such term is defined in the Restated Certificate, whichever event occurs first.

 

6.                                      Miscellaneous.

 

6.1                               Successors and Assigns.  The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (a) is an Affiliate of a Holder or (b) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; provided, however, that (i) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (ii) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Section 2.11.  The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.  In connection with a permitted transfer or assignment of its shares of Preferred Stock, each Investor shall have the right to assign any rights under this Agreement to its transferees or assignees without the consent of any other Person (other than any required consent for such transfer); provided that nothing in this sentence shall supersede any restrictions on transfer of such shares set forth in this Agreement or any other agreement to which such Investor is a party.

 

6.2                               Governing Law.  This Agreement shall be governed by the internal law of the State of Delaware without regard to principles of conflicts of law.

 

6.3                               Counterparts.  This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Counterparts may be delivered via facsimile, electronic mail

 

25

 

(including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

6.4                               Titles and Subtitles.  The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

6.5                               Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (a) personal delivery to the party to be notified; (b) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt.  All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Section 6.5.  If notice is given to the Company, a copy shall also be sent to Hogan Lovells US LLP, 100 International Drive, Suite 2000, Baltimore, Maryland 21202, Attention: Asher Rubin and if notice is given to Investors, a copy (which shall not constitute notice) shall also be sent to Goodwin Procter, One Exchange Square, Suite 2801, 8 Connaught Place, Central, Hong Kong.

 

6.6                               Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the Required Majority; provided that (i) Section 3.3(a) and (b), this Section 6.6(i) and the proviso in the following sentence shall not be amended or waived to the detriment of any Major Investor or any of their respective Affiliates without the consent of such Major Investor; (ii) Section 3.3(c) and this Section 6.6(ii) and the definition of “Competitor” may not be amended or waived without the written consent of Pfizer; (iii) no amendment or waiver to Section 5.1 that would allow the Company’s Directors and Officers liability insurance policy coverage to be less than at least $3,000,000 prior to the initiation by the Company of human clinical trials or $5,000,000 thereafter may be effected without the prior written consent of Pfizer; (iv) the Company may in its sole discretion waive compliance with Section 2.12(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Section 2.12(c) shall be deemed to be a waiver); (v) Section 4.2, this Section 6.6(v) or the last sentence of the definition of “Affiliates” shall not be amended or waived without the written consent of Hillhouse to the extent that such amendment or waiver would adversely affect the rights of Hillhouse; (vi) Section 5.10 and this Section 6.6(vi) shall not be amended or waived without the written consent of the Series B-2 Majority; (vii) the first proviso of the definition of “Major Investor” and this Section 6.6(vii) may not be amended or waived as to Surveyor, Taiho or Bay City, as applicable, without the written consent of Surveyor, Taiho or Bay City, as applicable; and (viii) the definition of “Competitor” and this

 

26

 

Section 6.6(viii) may not be amended or waived as to a particular Investor without such Investor’s written consent; and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party.  Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction; provided, however, that if, after giving effect to such waiver of Section 4 with respect to a particular transaction, a Major Investor purchases securities in such transaction or issuance, such waiver of the provisions of Section 4 shall be deemed to apply to each other Major Investor whose rights were waived or amended (each such Major Investor a “Non-Waiving Investor”) only if such Non-Waiving Investor has been provided the opportunity to purchase its pro rata share of the New Securities being offered by the Company in such transaction based on the pro rata purchase right of such Non-Waiving Investor set forth in Section 4, subject to the notice and election periods set forth in Section 4).  The Company shall give prompt written notice of any amendment or termination hereof or waiver hereunder to all parties hereto (and in any event within two (2) business days of such amendment, termination or waiver). Any amendment, termination, or waiver effected in accordance with this Section 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto.  No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

6.7                               Severability.  In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

6.8                               Stock Split.  All references to numbers of shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization affecting the Capital Stock occurring after the date of this Agreement. 

 

6.9                               Aggregation of Stock.  All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated Persons may apportion such rights as among themselves in any manner they deem appropriate.

 

6.10                        Additional Investors.  Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Preferred Stock after the date hereof, any purchaser of such shares of Preferred Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder.  No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so

 

27

 

long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.

 

6.11                        Entire Agreement.  This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

6.12                        Dispute Resolution.  The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS.  EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

Each party will bear its own costs in respect of any disputes arising under this Agreement.  The prevailing party shall be entitled to reasonable attorney’s fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.

 

6.13                        Delays or Omissions.  No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of

 

28

 

any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

6.14                        Acknowledgment.  The Company acknowledges that the Investors are in the business of investing and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company.  Nothing in this Agreement shall preclude or in any way restrict the Investors from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company.

 

[Remainder of Page Intentionally Left Blank]

 

29

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
NEXTCURE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael Richman
    
	
 
    	
Name:
    	
Michael   Richman
    
	
 
    	
Title:
    	
President &   CEO
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
ALEXANDRIA   VENTURE INVESTMENTS, LLC, a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:  ALEXANDRIA   REAL ESTATE EQUITIES, INC., a Maryland corporation, its Managing Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Aaron Jacobson
    
	
 
    	
Name:
    	
Aaron   Jacobson
    
	
 
    	
Title:
    	
SVP   — Venture Counsel
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
CANAAN   X L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
CANAAN   PARTNERS X LLC,
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tim Shannon
    
	
 
    	
Name:
    	
Tim   Shannon
    
	
 
    	
Title:
    	
General   Partner
    
				

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
LILLY   ASIA VENTURES FUND III, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Judith Li
    
	
 
    	
Name:
    	
Judith   Li
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LAV   BIOSCIENCES FUND III, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Judith Li
    
	
 
    	
Name:
    	
Judith   Li
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
ORBIMED   PRIVATE INVESTMENTS VI, LP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
ORBIMED   CAPITAL GP VI LLC,
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
ORBIMED   ADVISORS LLC,
    
	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jonathan Silverstein
    
	
 
    	
Name:
    	
Jonathan   Silverstein
    
	
 
    	
Title:
    	
Member
    
					

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
C.P.   PHARMACEUTICALS INTERNATIONAL C.V.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
PFIZER   MANUFACTURING LLC,
    
	
 
    	
 
    	
as   General Partner for and on behalf of
    
	
 
    	
 
    	
C.P.   PHARMACEUTICALS
    
	
 
    	
 
    	
INTERNATIONAL,   C.V.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Colum Lane
    
	
 
    	
Name:
    	
Colum   Lane
    
	
 
    	
Title:
    	
Senior   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AND
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
PFIZER   PRODUCTION LLC,
    
	
 
    	
 
    	
as   General Partner for and on behalf of
    
	
 
    	
 
    	
C.P.   PHARMACEUTICALS
    
	
 
    	
 
    	
INTERNATIONAL,   C.V.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brian McMahon
    
	
 
    	
Name:
    	
Brian   McMahon
    
	
 
    	
Title:
    	
Senior   Vice President
    
				

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
PFIZER   INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Barbara Dalton
    
	
 
    	
Name:
    	
Barbara   Dalton
    
	
 
    	
Title:
    	
VP Pfizer Ventures,   Worldwide Business Devel
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
SOFINNOVA   VENTURE PARTNERS IX, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   SOFINNOVA MANAGEMENT IX, L.L.C., its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mike Powell
    
	
 
    	
Name:
    	
Mike   Powell
    
	
 
    	
Title:
    	
General   Partner
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
ELI   LILLY AND COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David A. Ricks
    
	
 
    	
Name:
    	
David   A. Ricks
    
	
 
    	
Title:
    	
Chairman,   President and CEO
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
TAIHO   VENTURES, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Sakae Asanuma
    
	
 
    	
Name:
    	
Sakae   Asanuma
    
	
 
    	
Title:
    	
President
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
CITADEL MULTI-STRATEGY EQUITIES MASTER FUND LTD.
    
	
 
    	
 
    
	
 
    	
By:   Citadel Advisors LLC, its portfolio manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Noah Goldberg
    
	
 
    	
Name:
    	
Noah   Goldberg
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
Quan Venture Fund II, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Quan Venture Partners II, L.L.C.
    
	
 
    	
 
    
	
 
    	
Its:   General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Marietta Wu
    
	
 
    	
Name:
    	
Marietta   Wu
    
	
 
    	
Title:
    	
Managing   Director
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
GBG-1 CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Junkyu Park
    
	
 
    	
Name:   Junkyu Park
    
	
 
    	
Title:   Director
    
	
 
    	
 
    
	
 
    	
MERITZ NS GLOBAL BIO   FUND
    
	
 
    	
its co-managing   partners
    
	
 
    	
 
    	
 
    
	
 
    	
NS Investment   Co., Ltd.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tae-kyoung Sohn
    
	
 
    	
Name:   Tae-kyoung Sohn
    
	
 
    	
Title:   Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
Meritz Securities   Co., Ltd.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Min-kyu Song
    
	
 
    	
Name:   Min-kyu Song
    
	
 
    	
Title:   Deputy General Manager
    
	
 
    	
 
    	
 
    
	
 
    	
Paratus Investment   Co., Ltd.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Chan-ho Lee
    
	
 
    	
Name:   Chan-ho Lee
    
	
 
    	
Title:   Managing Director
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
Bay   City Capital GF Xinde International Life Sciences USD Fund, L.P.
    
	
 
    	
 
    
	
 
    	
By: Bay City   Capital GF XINDE Investment Management Co.
    
	
 
    	
Its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Fred Craves
    
	
 
    	
Name:
    	
Fred Craves
    
	
 
    	
Title:
    	
Director
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
ArrowMark Life Science   Fund, LP
    
	
 
    	
By: its General Partner
    
	
 
    	
AMP Life Science GP,   LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ David Corkins
    
	
 
    	
 
    	
Name: David Corkins
    
	
 
    	
 
    	
Title:   Managing Member
    
	
 
    	
 
    
	
 
    	
ArrowMark Fundamental   Opportunity Fund, L.P.
    
	
 
    	
By: its General Partner
    
	
 
    	
ArrowMark Partners GP,   LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ David Corkins
    
	
 
    	
 
    	
Name: David Corkins
    
	
 
    	
 
    	
Title:   Managing Member
    
	
 
    	
 
    
	
 
    	
Lookfar Investments,   LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ David Corkins
    
	
 
    	
 
    	
Name: David Corkins
    
	
 
    	
 
    	
Title:   Managing Member
    
	
 
    	
 
    
	
 
    	
CF Ascent LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ David Corkins
    
	
 
    	
 
    	
Name: David Corkins
    
	
 
    	
 
    	
Title:   Managing Member
    
	
 
    	
 
    
	
 
    	
THB Iron Rose LLC
    
	
 
    	
By: its Investment   Adviser
    
	
 
    	
ArrowMark Colorado   Holdings LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ David Corkins
    
	
 
    	
 
    	
Name: David Corkins
    
	
 
    	
 
    	
Title:   Managing Member
    
	
 
    	
 
    
	
 
    	
Iron Horse Investment,   LLC
    
	
 
    	
By: its Investment   Adviser
    
	
 
    	
ArrowMark Colorado   Holdings LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ David Corkins
    
	
 
    	
 
    	
Name: David Corkins
    
	
 
    	
 
    	
Title:   Managing Member
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
HH   NCURE HOLDINGS LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Colm O’Connell
    
	
 
    	
Name:
    	
Colm   O’Connell
    
	
 
    	
Title:
    	
Authorised   Signatory
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
Full   Succeed International Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Le Yu
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

NEXTCURE, INC.

SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

SCHEDULE A

 

Investors

 

	
HH NCure Holdings LLC
    
	
Suite 2202, 22nd Floor
    
	
Two International Finance Centre
    
	
8 Finance Street, Central
    
	
Hong Kong
    
	
 
    
	
with a copy (which shall not constitute notice) to:
    
	
 
    
	
Goodwin Procter
    
	
One Exchange Square
    
	
Suite 2801, 8 Connaught Place
    
	
Central, Hong Kong
    
	
 
    
	
Bay City Capital GF Xinde International Life   Sciences USD Fund, L.P.
    
	
c/o Bay City Capital, LLC
    
	
750 Battery Street, Suite 400
    
	
San Francisco, CA 94111
    
	
 
    
	
Citadel Multi-Strategy Equities Master Fund Ltd.
    
	
c/o Citadel Advisors LLC
    
	
601 Lexington Avenue
    
	
New York, New York
    
	
 
    
	
Full Succeed International Limited
    
	
c/o Ping An Ventures
    
	
24F, Ping An Finance Tower
    
	
No. 1333 Luijazui Ring Road
    
	
Pudong New District, Shanghai, PRC
    
	
 
    
	
Quan Venture Fund II, L.P.
    
	
c/o Quan Capital
    
	
Jinchuang Plaza
    
	
4560 Jinke Rd., Bldg. 1N, Suite 401
    
	
Zhangjiang Hi-tech Park, Pudong New Area
    
	
Shanghai, China 201210
    
	
 
    
	
Taiho Ventures, LLC
    
	
2420 Sand Hill Road, Suite 203
    
	
Menlo Park, CA 94025
    

 

 

	
GBG-1 Corporation
    
	
c/o NS Investments
    
	
501 Taesung Bld., 22 Sejong-daero 21-gil, Jung-gu
    
	
Seoul 04519 Rep. of Korea
    
	
 
    
	
Meritz NS Global Bio Fund
    
	
c/o NS Investments
    
	
501 Taesung Bld., 22 Sejong-daero 21-gil, Jung-gu
    
	
Seoul 04519 Rep. of Korea
    
	
 
    
	
ArrowMark Life Science Fund, L.P.
    
	
c/o ArrowMark Partners
    
	
100 Fillmore Street, Suite 325
    
	
Denver, CO 80206
    
	
 
    
	
ArrowMark Fundamental Opportunity Fund, L.P.
    
	
c/o ArrowMark Partners
    
	
100 Fillmore Street, Suite 325
    
	
Denver, CO 80206
    
	
 
    
	
Lookfar Investments, LLC
    
	
c/o ArrowMark Partners
    
	
100 Fillmore Street, Suite 325
    
	
Denver, CO 80206
    
	
 
    
	
CF Ascent LLC
    
	
c/o ArrowMark Partners
    
	
100 Fillmore Street, Suite 325
    
	
Denver, CO 80206
    
	
 
    
	
THB Iron Rose, LLC
    
	
c/o ArrowMark Partners
    
	
100 Fillmore Street, Suite 325
    
	
Denver, CO 80206
    
	
 
    
	
Iron Horse Investments, LLC
    
	
c/o ArrowMark Partners
    
	
100 Fillmore Street, Suite 325
    
	
Denver, CO 80206
    

 

 

	
C.P. Pharmaceuticals International, C.V.
    
	
c/o its General Partners (Pfizer Manufacturing LLC   and Pfizer Production LLC)
    
	
235 East 42nd Street
    
	
New York, NY 10017
    
	
United States of America
    
	
Attn: 
    	
Senior Vice President and   Associate      General Counsel
    
	
 
    	
Pfizer Legal   Division
    
	
 
    	
Business   Transactions Group
    
	
Fax: 
    	
+1 646 563 9611
    
	
 
    
	
Pfizer Inc.
    
	
235 East 42nd Street
    
	
New York, NY 10017
    
	
United States of America
    
	
Attn: 
    	
Senior Vice President and   Associate      General Counsel
    
	
 
    	
Pfizer Legal   Division
    
	
 
    	
Business Transactions   Group
    
	
Fax:
    	
 +1 646 563   9611
    
	
 
    
	
Canaan X L.P
    
	
285 Riverside Ave
    
	
Suite 250
    
	
Westport, CT 06880
    
	
 
    
	
Lilly Asia Ventures Fund III, LP
    
	
Unit 1109-10, Two Chinachem Central
    
	
26 Des Voeux Road Central, Hong Kong
    
	
Fax + 852 3951 9723
    
	
 
    
	
LAV Biosciences Fund III, LP
    
	
Unit 1109-10, Two Chinachem Central
    
	
26 Des Voeux Road Central, Hong Kong
    
	
Fax + 852 3951 9723
    
	
 
    
	
OrbiMed Private Investments VI, LP
    
	
c/o OrbiMed Advisors LLC
    
	
601 Lexington Avenue
    
	
54th Floor
    
	
New York, NY 10022
    
	
Attn: Chau Q. Khuong, Private Equity Partner
    
	
Fax: (212) 739-6444
    
	
Email: KhuongC@OrbiMed.com
    
	
 
    
	
Sofinnova Venture Partners IX, L.P.
    
	
3000 Sand Hill Road
    
	
Bldg. 4, Suite 250
    
	
Menlo Park, CA 94025
    
	
Fax: (650) 322-2037
    

 

 

	
Alexandria Venture Investments, LLC
    
	
385 E. Colorado Blvd.
    
	
Suite 299
    
	
Pasadena, CA 91101
    
	
Attn: Aaron Jacobson
    
	
Fax: (626) 578-0770
    
	
 
    
	
Eli Lilly and Company
    
	
Lilly Corporate Center
    
	
Indianapolis, IN 46285
    
	
Attention: Senior Vice-President of Business   Development
    
	
With a copy to: General CounselExhibit 10.1

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

	
Confidential
    	
Execution Version
    
	
 
    

 

LICENSE AGREEMENT

 

BY AND BETWEEN

 

YALE UNIVERSITY

 

AND

 

NEXTCURE, INC.

	
 
    

 

 

TABLE OF CONTENTS

 

	
1.
    	
BACKGROUND
    	
1
    
	
2.
    	
DEFINITIONS
    	
1
    
	
3.
    	
LICENSE GRANT AND TERM
    	
11
    
	
4.
    	
DUE DILIGENCE
    	
14
    
	
5.
    	
LICENSE MAINTENANCE   ROYALTY; MILESTONE PAYMENTS
    	
16
    
	
6.
    	
EARNED ROYALTIES;   MINIMUM ROYALTY PAYMENTS
    	
18
    
	
7.
    	
SUBLICENSES
    	
20
    
	
8.
    	
CONFIDENTIALITY AND   PUBLICITY
    	
22
    
	
9.
    	
REPORTS, RECORDS AND INSPECTIONS
    	
23
    
	
10.
    	
PATENT PROTECTION
    	
25
    
	
11.
    	
INFRINGEMENT AND   LITIGATION
    	
26
    
	
12.
    	
USE OF YALE’S NAME
    	
28
    
	
13.
    	
TERMINATION
    	
28
    
	
14.
    	
INDEMNIFICATION;   INSURANCE; DISCLAIMER OF WARRANTIES
    	
30
    
	
15.
    	
NOTICES
    	
34
    
	
16.
    	
INVENTOR AGREEMENTS
    	
34
    
	
17.
    	
LAWS, FORUM; DISPUTE RESOLUTION
    	
35
    
	
18.
    	
MISCELLANEOUS
    	
36
    

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

LICENSE AGREEMENT

 

This License Agreement (the “AGREEMENT”) by and between Yale University, a nonprofit corporation organized and existing under and by virtue of a charter granted by the general assembly of the Colony and State of Connecticut (“YALE”), and NextCure, Inc., a corporation organized and existing under the laws of the State of Delaware (“LICENSEE”), is effective as of December 29, 2015 (“EFFECTIVE DATE”). YALE and LICENSEE are each referred to herein, individually, as a “party” and, collectively, as the “parties.”

 

1.  BACKGROUND

 

1.1.                            In the course of research conducted under YALE auspices, Dr. Lieping Chen (“CHEN”) in the Department of Immunobiology at YALE, has produced inventions concerning “GENOME-SCALE T CELL ACTIVITY ARRAY AND METHODS OF USE THEREOF” [***] and “SIGLEC 15, A NOVEL TARGET FOR IMMUNO-ONCOLOGY” [***] (collectively, the “INVENTIONS”).

 

1.2.                            CHEN has assigned or is obligated to assign to YALE all of CHEN’s right, title and interest in and to the INVENTIONS and any resulting patents.

 

1.3.                            YALE wishes to have the INVENTIONS and any resulting patents commercialized to benefit the public good.

 

1.4.                            To induce YALE to enter into this AGREEMENT, LICENSEE has agreed that it shall act diligently to develop and commercialize the LICENSED PRODUCTS (as defined below) for public use throughout the TERRITORY (as defined below) under this AGREEMENT, subject to the terms and conditions of this AGREEMENT.

 

1.5.                            YALE is willing to grant a license to LICENSEE, subject to the terms and conditions of this AGREEMENT.

 

1.6.                            In consideration of these statements and mutual promises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, YALE and LICENSEE agree to the terms of this AGREEMENT.

 

2.  DEFINITIONS

 

The following terms used in this AGREEMENT shall be defined as set forth below:

 

2.1.                            “ACCOUNTING STANDARDS” shall mean, with respect to LICENSEE, US GAAP (United States Generally Accepted Accounting Principles), as generally and consistently applied by LICENSEE, or such other internationally recognized accounting principles (e.g., IFRS, US GAAP, etc.) as may be applied by LICENSEE and notified to YALE.

 

2.2.                            “AFFILIATE” shall mean, with respect to a party, any entity or person that directly or indirectly controls, is controlled by or is under common control with such party. For purposes of this definition, “control” means possession of the power to direct the

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

1

 

management of such entity or person, whether through ownership of more than fifty percent (50%) of voting securities, by contract or otherwise.

 

2.3.                            “ASSIGNEE” is defined in Article 5.4.

 

2.4.                            “CHANGE OF CONTROL” shall mean, with respect to LICENSEE, the acquisition by an unaffiliated third party, or group of unaffiliated third parties, directly or indirectly, in a single transaction or series of related transactions, of beneficial ownership of more than fifty percent (50%) of the total voting power of the voting stock of LICENSEE, but, for the avoidance of doubt, not including any bona fide debt or equity financing of LICENSEE, including a SUCCESSFUL FINANCING or any equity financing involving a private placement of preferred stock. As used herein, “unaffiliated” means a person or entity who is not, prior to the transaction or transactions in question, directly or indirectly a beneficial owner of securities of LICENSEE.

 

2.5.                            “CHEN” is defined in Article 1.1.

 

2.6.                            “CHEN LAB” shall mean the laboratory of CHEN at YALE, which for purposes of this AGREEMENT shall include discovery, research and development activities at YALE conducted or supervised, directly or indirectly, by CHEN, or in which CHEN participates. For clarity, the “CHEN LAB” includes (a) YALE faculty and employees while conducting such activities and (b) VISITING SCIENTISTS to the extent of their activities at YALE.

 

2.7.                            “CLAIMS” is defined in Article 14.1

 

2.8.                            “COMMERCIAL ENTITY” shall mean any for-profit entity or organization, or its agents or employees, including any for-profit entity or consortium engaged, directly or indirectly, in the discovery, research, development, or manufacturing of pharmaceutical or biological products or therapies for purposes of commercialization, in each case, other than LICENSEE and its AFFILIATES.

 

2.9.                            “COMMERCIAL PURPOSES” shall mean the sale, lease, license, or other transfer to or by a COMMERCIAL ENTITY. “COMMERCIAL PURPOSES” shall also include uses by any organization, including any NONPROFIT ORGANIZATION, to perform contract research, to produce or manufacture VALID CLAIM PRODUCTS for general sale, or to conduct research activities that result in any sale, lease, license, or transfer of VALID CLAIM PRODUCTS to or by a COMMERCIAL ENTITY other than LICENSEE.  However, industrially sponsored academic research shall not be considered a use for COMMERCIAL PURPOSES per se, unless any of the above conditions of this definition are met.

 

2.10.                     “COMMERCIALLY REASONABLE EFFORTS” shall mean with respect to LICENSEE and a LICENSED PRODUCT, efforts that are consistent with those utilized by companies of similar size, means and type in the development of products and therapies similar to the LICENSED PRODUCT (i.e., with similar product characteristics

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

2

 

and at a similar stage of research, development or commercialization), taking into account efficacy, safety, proprietary position of the product or therapy, including patent and regulatory exclusivity, regulatory structure involved including anticipated or approved labeling and anticipated or approved post-approval requirements, present and future market and commercial potential including competitive market conditions and probability of the profitability of the product or therapy in light of pricing and reimbursement issues, and all other relevant factors including technical, legal, scientific and/or medical factors and the unique nature of LICENSED PRODUCTS.

 

2.11.                     “CONFIDENTIAL INFORMATION” shall mean all information disclosed by one party to the other during the negotiation of or under this AGREEMENT in any manner, whether orally, visually or in tangible form, that relates to LICENSED PATENTS, LICENSED INFORMATION or the AGREEMENT itself, unless such information is subject to an exception described in Article 8.2; provided, however, that CONFIDENTIAL INFORMATION that is disclosed in tangible form shall be marked “Confidential” at the time of disclosure and CONFIDENTIAL INFORMATION that is disclosed orally or visually shall be identified as confidential at the time of disclosure and subsequently reduced to writing, marked “Confidential” and delivered to the other party within thirty (30) days of such disclosure. CONFIDENTIAL INFORMATION shall include, without limitation, materials, know-how and data, technical or non-technical, trade secrets, inventions, methods and processes, whether or not patentable.

 

2.12.                     “EARNED ROYALTY” is defined in Article 6.1.

 

2.13.                     “EFFECTIVE DATE” is defined in the introductory paragraph of this AGREEMENT.

 

2.14.                     “EXECUTIVE OFFICERS” shall mean (a) the chief executive officer of LICENSEE and (b) the Managing Director of the Office of Cooperative Research of YALE, or their respective designees with requisite decision-making authority with respect to matters under this AGREEMENT.

 

2.15.                     “EXCLUDED TARGETS” has the meaning set forth on Appendix C.

 

2.16.                     “FEDERAL PATENT POLICY” is defined in Article 3.2.

 

2.17.                     “FDA” means the U.S. Food and Drug Administration, or any successor thereto.

 

2.18.                     “FIELD” shall mean all preventative, therapeutic and diagnostic uses, except for any use involving or directed at an EXCLUDED TARGET.

 

For clarity, LICENSEE’s field of use for the LICENSE and its rights with respect to LICENSED INFORMATION shall not be limited except with respect to the EXCLUDED TARGETS.

 

2.19.                     “FIRST SALE” shall mean with respect to a LICENSED PRODUCT and a country or region, the first commercial sale to a third party of such LICENSED PRODUCT in such country or region, or in any country or region, as applicable.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

3

 

2.20.                     “FORCE MAJEURE” is defined in Article 18.10.

 

2.21.                     “IND” shall mean an investigational new drug application filed with the FDA prior to beginning clinical trials in humans in the United States or any comparable application filed with regulatory authorities in or for a country or group of countries other than the United States.

 

2.22.                     “INITIAL TARGETS” shall mean [***].

 

2.23.                     “INITIATION” is defined in Article 5.2.

 

2.24.                     “INVENTION” is defined in Article 1.1.

 

2.25.                     “INVENTOR AGREEMENT” shall mean a consulting or other agreement directly between LICENSEE and CHEN pursuant to which CHEN provides consultation, advice, or other services to LICENSEE or its AFFILIATES.

 

2.26.                     “INSOLVENT” shall mean that LICENSEE (i) has ceased to pay its debts in the ordinary course of business, (ii) has current assets that are insufficient to pay its current obligations, (iii) is insolvent as defined by the United States Federal Bankruptcy Law, as amended from time to time, or (iv) has commenced bankruptcy, reorganization, receivership or insolvency proceedings, or any other proceeding under any federal, state or other law for the relief of debtors.

 

2.27.                     “LICENSE” refers to the license granted under Article 3.1.

 

2.28.                     “LICENSED INFORMATION” shall mean all inventions, biological materials and reagents, patent applications, patents, concepts, processes, information, data, know-how and the like, in any form, whether or not patentable, that are useful for the discovery, development, manufacture, use, or sale of one or more LICENSED PRODUCTS, or for the practice of the LICENSED METHODS and are:

 

(a)                                 owned or co-owned by YALE as of the EFFECTIVE DATE or during the TERM; and

 

(b)                                 discovered or developed in or on behalf of (including, without limitation, by outsourced third parties and consultants) the CHEN LAB while CHEN is MEANINGFULLY INVOLVED with both YALE and LICENSEE;

 

in each case, to the extent disclosable and licensable (including on a non-exclusive basis as contemplated by this AGREEMENT) by YALE to LICENSEE without causing (i) YALE to be in contractual breach of an agreement between YALE and a third party either existing as of the EFFECTIVE DATE or entered into on or after the EFFECTIVE DATE without violating or being inconsistent with any of the requirements of this AGREEMENT or (ii) liability of YALE to a third party.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

4

 

For the avoidance of doubt, LICENSED INFORMATION does not include any patents or patent applications included within the LICENSED PATENTS.

 

2.29.                     “LICENSE MAINTENANCE ROYALTY” or “LMR” is defined in Article 5.1.

 

2.30.                     “LICENSED METHOD” shall mean any method, procedure, service or process the practice of which is claimed by a VALID CLAIM of a LICENSED PATENT, or which uses or is useful for the discovery, development, manufacture, use, or sale of a LICENSED PRODUCT.

 

2.31.                     “LICENSED PATENTS” shall mean the United States or foreign patent application(s) and patents(s) (a) listed in Appendix A and (b) any patents or patent applications claiming priority to such patent application(s) and patent(s), in each case, owned or co-owned by YALE during the TERM, including any continuations, divisionals, and continuations-in-part, if the claims of any such patent or patent application are directed to subject matter described in the patents or patent applications described in Appendix A or under clause (b) above; any reissues, re-examinations, or extensions thereof, or substitutes therefor; and the relevant international equivalents of any of the foregoing. Appendix A sets forth the inventor(s), filing date(s), jurisdiction(s) and owner(s), as applicable, of each LICENSED PATENT. Appendix A is incorporated into this AGREEMENT and will be updated or amended by YALE or its patent counsel as necessary, including at the reasonable request of LICENSEE, during the TERM.

 

2.32.                     “LICENSED PRODUCT” shall mean VALID CLAIM PRODUCTS and MEANINGFULLY INVOLVED PRODUCTS, defined as follows:

 

(a)                                 “VALID CLAIM PRODUCT” shall mean any product (including any apparatus or kit) or component part thereof, if the manufacture, use, sale, import, export or practice thereof is claimed by a VALID CLAIM of a LICENSED PATENT.

 

(b)                                 “MEANINGFULLY INVOLVED PRODUCT” shall mean any product (including any apparatus or kit) or component part thereof, other than a VALID CLAIM PRODUCT, that in whole or in part:

 

(i)                                     uses the LICENSED INFORMATION for its discovery, development, manufacture, use, or sale; or

 

(ii)                                  is discovered or developed by LICENSEE or its AFFILIATES (including if such product or component is developed indirectly through SUBLICENSEES or other third parties, or in-licensed from a third party) while CHEN is MEANINGFULLY INVOLVED with both (A) LICENSEE and (B) YALE. For the avoidance of doubt, activities funded by LICENSEE under the SRA shall constitute research and development by LICENSEE for this purpose.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

5

 

Notwithstanding the foregoing, if any product or component is in-licensed by LICENSEE or its AFFILIATES from a third party and developed by LICENSEE or its AFFILIATES without the use of LICENSED INFORMATION (including any materials provided by YALE to LICENSEE or its AFFILIATES), such product or component shall not be deemed to be a MEANINGFULLY INVOLVED PRODUCT hereunder; provided, that (A) if CHEN or the CHEN LAB generate any data or materials used in the research or development by LICENSEE or its AFFILIATES of any such in-licensed product or component, then such product or component shall be deemed to be a MEANINGFULLY INVOLVED PRODUCT hereunder, and (B) any combination of any such in-licensed product or component with a separate VALID CLAIM PRODUCT or MEANINGFULLY INVOLVED PRODUCT shall be a VALID CLAIM PRODUCT or a MEANINGFULLY INVOLVED PRODUCT, as applicable.

 

2.33.                     “LICENSEE” is defined in the introductory paragraph of this AGREEMENT.

 

2.34.                     “LIQUIDATION EVENT” shall mean:

 

(a)                                 any consolidation, merger, combination, reorganization or other transaction in which LICENSEE is not the surviving entity, irrespective of whether LICENSEE is maintained as an AFFILIATE or subsidiary of the new controlling entity, or dissolved and absorbed into the new controlling entity (except for any transaction or series of related transactions not involving a CHANGE OF CONTROL, including transactions with AFFILIATES and transactions to change the type or jurisdiction of organization of LICENSEE);

 

(b)                                 any CHANGE OF CONTROL transaction or series of related transactions in which the shares of stock or other equity interests of LICENSEE constituting in excess of fifty percent (50%) of the voting power of LICENSEE immediately prior to such transaction or series of related transactions are exchanged for or converted into other stock or securities, cash, and/or any other property;

 

(c)                                  a sale or other disposition to an unaffiliated third party of all or substantially all of the assets of the LICENSEE and its AFFILIATES; or

 

(d)                                 an “initial public offering” as that term is defined in the Securities Exchange Act of 1934, as amended, of LICENSEE’s capital stock.

 

2.35.                     “[***] MILESTONE” is defined in Article 5.5.

 

2.36.                     “MAJOR MARKET COUNTRY” shall mean the United States, Canada, Japan, Italy, Spain, France, Germany and the United Kingdom.

 

2.37.                     “MEANINGFULLY INVOLVED” shall mean:

 

(a)                                 With respect to LICENSEE as of a particular time, CHEN [***].

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

6

 

(b)                                 With respect to YALE as of a particular time, CHEN is [***].

 

2.38.                     “MINIMUM ROYALTY PAYMENTS” or “MRP” is defined in Article 6.5.

 

2.39.                     “NDA or BLA” shall mean either a Biologics License Application or New Drug Application filed with the FDA to obtain marketing approval for a LICENSED PRODUCT in the United States, or any comparable application filed with regulatory authorities in or for a country or group of countries other than the United States.

 

2.40.                     “NET SALES” shall mean, with respect to a LICENSED PRODUCT, [***].

 

2.41.                     “NONPROFIT ORGANIZATION” shall mean a university or other institution of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. As used herein, the term “NONPROFIT ORGANIZATION” also includes government agencies, but shall not include any COMMERCIAL ENTITY.

 

2.42.                     “PATENT CHALLENGE” shall mean any legal (including administrative) action that challenges or opposes the validity, patentability, enforceability, or term of any of the LICENSED PATENTS.

 

2.43.                     “PHASE I CLINICAL TRIAL” shall mean a human clinical trial constituting the initial introduction of an investigational new drug into humans, as defined in 21 C.F.R. §312.21(a) and as practiced according to the standards of the pharmaceutical industry.

 

2.44.                     “PHASE II CLINICAL TRIAL” shall mean a human clinical trial conducted to evaluate the effectiveness of a drug for a particular indication in patients with a disease and to determine the common short-term side effects and risks associated with the drug as defined in 21 C.F.R. §312.21(b) and as practiced according to the standards of the pharmaceutical industry.

 

2.45.                     “PHASE III CLINICAL TRIAL” shall mean expanded controlled and uncontrolled human clinical trials performed after PHASE II CLINICAL TRIAL(S) evidence suggesting effectiveness of an investigational new drug, as defined by 21 C.F.R. §312.21(c), and as practiced according to the standards of the pharmaceutical industry for a Phase III clinical trial and prior to the filing of an NDA or BLA, or comparable request for marketing approval in territories outside of the United States.

 

2.46.                     “PIVOTAL TRIAL” shall mean a controlled human clinical trial to evaluate the safety and efficacy of a LICENSED PRODUCT in which data are sufficient to form the basis for the filing of an NDA or BLA. A PIVOTAL TRIAL may not necessarily be a PHASE III CLINICAL TRIAL.

 

2.47.                     “PLAN” is defined in Article 4.1.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

7

 

2.48.                     “QUALIFIED SUBLICENSEES” shall mean any third party whose products or services primarily use pharmaceutical or biotechnology methods for their production, design or delivery, and whose [***].

 

2.49.                     “SPONSORED RESEARCH AGREEMENT” or “SRA” means the Sponsored Research Agreement entered into by the parties as of the EFFECTIVE DATE, as such agreement may be amended from time to time.

 

2.50.                     “SUBLICENSEE” shall mean any third party sublicensed by LICENSEE under this AGREEMENT to use or practice any LICENSED METHOD or LICENSED INFORMATION or to make, have made, use, sell, have sold, import or export any LICENSED PRODUCT.

 

2.51.                     “SUBLICENSE INCOME” shall mean consideration in any form received by LICENSEE or an AFFILIATE in connection with a grant to any third party or third parties of a sublicense, cross-license, or other license, privilege or immunity to use the LICENSED PATENTS or LICENSED INFORMATION to make, have made, use, sell, have sold, distribute, practice, import or export LICENSED PRODUCTS, but excluding consideration included in the calculation of EARNED ROYALTIES and consideration received for past or future research and development activities relating to LICENSED PRODUCTS. SUBLICENSE INCOME shall include, without limitation, any (i) license signing fee, option acquisition fee or other payment to obtain an option, (ii) license maintenance fee, (iii) unearned portion of any minimum royalty payment received by LICENSEE, (iv) the fair market value of any equity received in excess of any purchase price paid therefor, (v) distribution fee, joint marketing fee, or research and development funding in excess of LICENSEE’s cost of performing or funding such research and development or services, and (vi) any consideration received for an equity interest in, extension of credit by, or other investment in, LICENSEE to the extent such consideration exceeds the fair market value of the equity or other interest. SUBLICENSE INCOME shall also include any sale or extension of credit to LICENSEE for less than fair market value. In the event an extension of credit or loan to LICENSEE by a third party is forgiven in whole or in part by the third party, and such amount is not otherwise attributable to an exclusion from SUBLICENSE INCOME, such amount shall constitute SUBLICENSE INCOME.

 

For the avoidance of doubt, “research and development” for purposes of this definition includes actual documented costs (whether past or future) incurred by LICENSEE or an AFFILIATE for: (a) patent filing and maintenance of the LICENSED PATENTS, (b) manufacturing activities (including pre-clinical and clinical manufacturing and testing) for the LICENSED PRODUCTS, and (c) regulatory activities and clinical trials for LICENSED PRODUCTS, and only consideration received by LICENSEE or an AFFILIATE therefor in excess of their costs for such activities shall be considered SUBLICENSE INCOME hereunder.

 

In the event LICENSEE receives consideration in connection with the grant of a license, sublicense, cross-license, or other license, privilege or immunity to use the LICENSED

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

8

 

PATENTS or LICENSED INFORMATION and any other intellectual property rights of LICENSEE (including intellectual property rights owned by LICENSEE or licensed to LICENSEE from a third party), whether granted in the same agreement as such other LICENSEE intellectual property rights or in separate agreements, only the portion of such consideration reasonably allocable to the LICENSED PATENTS and LICENSED INFORMATION shall be considered SUBLICENSE INCOME.

 

Any dispute between the parties related to the calculation or payment of SUBLICENSE INCOME, including the valuation of any equity or other consideration and the portion of any consideration reasonably allocable to the LICENSED PATENTS and LICENSED INFORMATION, shall be subject to resolution in accordance with the dispute resolution procedure set forth in Article 17.2.

 

2.52.                     “SUCCESSFUL FINANCING” shall mean the cumulative financing of LICENSEE equal to at least $[***], exclusive of any grants awarded to LICENSEE.

 

2.53.                     “SUPPORT PERIOD” shall mean the period commencing on the EFFECTIVE DATE and concluding [***] following the expiration or termination of the SRA.

 

2.54.                     “TERM” is defined in Article 3.6.

 

2.55.                     “TERRITORY” shall mean worldwide.

 

2.56.                     “VALID CLAIM” shall mean a claim pending for not more than eight (8) years from the EFFECTIVE DATE, or an issued and unexpired claim of a LICENSED PATENT, so long as such claim shall not have been irrevocably abandoned or declared to be invalid in a non-appealable decision of a court or other authority of competent jurisdiction through no fault or cause of LICENSEE or an AFFILIATE or SUBLICENSEE, and, further provided, that should such a claim subsequently issue after eight (8) years from the EFFECTIVE DATE, it shall once again become a VALID CLAIM.

 

2.57.                     “VISITING SCIENTIST” means any VISITING SCIENTIST under and pursuant to a VISITING SCIENTIST AGREEMENT.

 

2.58.                     “VISITING SCIENTIST AGREEMENT” means a Visiting Scientist Agreement with respect to a VISITING SCIENTIST (as defined therein) entered into by the parties in substantially the form mutually agreed between the parties as of the EFFECTIVE DATE,

 

and any subsequent Visiting Scientist Agreement between the parties in substantially the form thereof covering any other VISITING SCIENTISTS, as such agreements may be amended from time to time.

 

2.59.                     “YALE” is defined in the introductory paragraph of this AGREEMENT.

 

2.60.                     “YALE INDEMNITEES” is defined in Article 14.1

 

2.61.                     “YALE POLICIES” is defined in Article 16.1.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

9

 

3.  LICENSE GRANT AND TERM

 

3.1.                            Subject to all the terms and conditions of this AGREEMENT, and in connection with the execution and delivery by the parties of the SRA, YALE hereby grants to LICENSEE (a) an exclusive license, subject to the reservation of rights by YALE under Article 3.3, under the LICENSED PATENTS to research, develop, make, have made, use, sell, have sold, import, export, or practice LICENSED PRODUCTS within the FIELD in the TERRITORY (the “LICENSE”); and (b) a non-exclusive license to the LICENSED INFORMATION to research, develop, make, have made, use, sell, have sold, import, export, or practice LICENSED PRODUCTS within the FIELD in the TERRITORY.

 

3.2.                            To the extent that any invention included within the LICENSED PATENTS has been funded in whole or in part by the United States government, the United States government retains certain rights in such invention as set forth in 35 U.S.C. §200-212 and all regulations promulgated thereunder, as amended, and any successor statutes and regulations (the “FEDERAL PATENT POLICY”). As a condition of the license granted hereby, LICENSEE acknowledges and shall comply with all aspects of the FEDERAL PATENT POLICY applicable to the LICENSED PATENTS, including the obligation that LICENSED PRODUCTS used or sold in the United States be manufactured substantially in the United States. Nothing contained in this AGREEMENT obligates or shall obligate YALE to take any action that would conflict in any respect with its past, current or future obligations to the United States Government under the FEDERAL PATENT POLICY with respect to the LICENSED PATENTS.

 

3.3.                            Reservation of Rights.

 

(a)                                 Subject to Article 3.4, the LICENSE is expressly made subject to YALE’s reservation of the right, on behalf of itself and all other NONPROFIT ORGANIZATIONS, to make, use and practice the LICENSED PATENTS and LICENSED PRODUCTS for research, clinical or teaching purposes that do not constitute COMMERCIAL PURPOSES. For clarity, it is agreed and acknowledged that research, development, manufacturing or other activities in the CHEN LAB sponsored or funded by, or conducted in collaboration with or under the direction of, any COMMERCIAL ENTITY for COMMERCIAL PURPOSES, constitute COMMERCIAL PURPOSES.

 

(b)                                 For clarity, except as expressly provided herein or in the SRA, the rights granted by YALE under Article 3.1 with respect to LICENSED INFORMATION are nonexclusive, and expressly made subject to YALE’s reservation of the right to use and practice the LICENSED INFORMATION for any purpose.

 

3.4.                            Notwithstanding anything else contained herein to the contrary, without the prior written consent of LICENSEE:

 

(a)                                 During the SUPPORT PERIOD:

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

10

 

(i)                                     The CHEN LAB shall not, directly or indirectly, engage in, or enter into any agreement or arrangement for, any research, development, manufacturing or other activities in which the LICENSED PATENTS or LICENSED PRODUCTS are used (A) for COMMERCIAL PURPOSES or (B) with a COMMERCIAL ENTITY.

 

For clarity, YALE shall be permitted to engage in any such activities (subject to the exclusivity of the LICENSE granted by YALE hereunder); provided, that they do not involve CHEN or the CHEN LAB.

 

(ii)                                  YALE shall not (A) enter into any agreement or arrangement with any COMMERCIAL ENTITY granting rights to use or practice, the LICENSED PATENTS or LICENSED PRODUCTS in the FIELD or (B) use or authorize the use of LICENSED PATENTS or LICENSED PRODUCTS in the FIELD for any COMMERCIAL PURPOSE.

 

For clarity, under (i) and (ii) above, except for LICENSEE or its AFFILIATES, or as permitted by LICENSEE under this AGREEMENT or the SRA.

 

(b)                                 During the SUPPORT PERIOD, YALE shall not authorize another NONPROFIT ORGANIZATION to make, use or practice the LICENSED PATENTS or VALID CLAIM PRODUCTS (to the extent such NONPROFIT ORGANIZATION seeks YALE’s authorization), without first entering into an inter-institutional or other agreement with such other NONPROFIT ORGANIZATION with respect to the ownership of inventions, discoveries or improvements arising out of such other NONPROFIT ORGANIZATION’s use or practice of the LICENSED PATENTS or VALID CLAIM PRODUCTS in form and substance reasonably acceptable to LICENSEE (such acceptance not to be unreasonably withheld, conditioned or delayed).

 

(c)                                  During the TERM and following the expiration of the SUPPORT PERIOD, to the extent that YALE authorizes another NONPROFIT ORGANIZATION to make, use or practice the LICENSED PATENTS or VALID CLAIM PRODUCTS for research, clinical or teaching purposes as permitted under Article 3.3 (to the extent another NONPROFIT ORGANIZATION seeks YALE’s authorization), YALE shall enter into an inter-institutional or other agreement with such other NONPROFIT ORGANIZATION that provides LICENSEE with an exclusive option to obtain an exclusive license to the other NONPROFIT ORGANIZATION’s rights in any invention, discovery or improvement arising out of such NONPROFIT ORGANIZATION’s use or practice of the LICENSED PATENTS or VALID CLAIM PRODUCTS.

 

3.5.                            During the SUPPORT PERIOD, for each patent or patent application included within the LICENSED INFORMATION, LICENSEE will have the option, for a period of [***] from the date of disclosure thereof to LICENSEE (which period, for the avoidance of

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

11

 

doubt, may extend beyond the expiration of the SUPPORT PERIOD, provided such disclosure to LICENSEE occurs within the SUPPORT PERIOD), to add such patent or patent application to the LICENSE as a LICENSED PATENT hereunder, and obtain a royalty-bearing, exclusive, worldwide license to YALE’s rights in such patent or patent application, including the right to sublicense, to make, have made, use, lease, sell, import and export LICENSED PRODUCTS, under the terms and conditions of this AGREEMENT; provided, that LICENSEE shall reimburse YALE for its documented expenses incurred for filing, prosecuting, and maintaining such patent or patent application within [***] of invoice by YALE, and provided, further, that the LICENSE with respect to any such patents or patent applications shall be subject to any obligations of YALE to third parties existing as of the disclosure of such patent or patent application to LICENSEE. YALE shall promptly notify LICENSEE of any such obligations, and, during the [***] period contemplated by this Article 3.5, provide LICENSEE with such information regarding any such obligations as LICENSEE may reasonably request. In the event that LICENSEE exercises such option, the relevant patent(s) or patent application(s) shall be added to Appendix A and shall be LICENSED PATENTS for all purposes hereunder effective as of the date of LICENSEE’s election. If relevant, Appendix A shall also set forth in sufficient detail any limitations to the FIELD as applicable to such patent(s) or patent application(s) necessitated by any obligations of YALE to third parties existing as of the disclosure of such patent or patent application to LICENSEE.

 

3.6.                            Unless terminated earlier as provided in Article 13, the term of this AGREEMENT (the “TERM”) shall commence on the EFFECTIVE DATE and shall automatically expire on the later of, on a country-by-country basis: (a) the date on which the last of the VALID CLAIMS of the LICENSED PATENTS in such country expires, lapses or is declared to be invalid by a non-appealable decision of a court or other authority of competent jurisdiction through no fault or cause of LICENSEE, or (b) ten (10) years after the FIRST SALE of a LICENSED PRODUCT in such country. Following expiration of this AGREEMENT on a country-by-country basis, the LICENSE and LICENSEE’s rights with respect to LICENSED INFORMATION shall automatically become a fully paid up and royalty free non-exclusive license.

 

3.7.                            Except as expressly provided in this AGREEMENT, nothing in this AGREEMENT shall be construed to grant by implication, estoppel or otherwise any licenses under patents of YALE other than the LICENSED PATENTS. Except as expressly provided in this AGREEMENT, under no circumstances will LICENSEE, as a result of this AGREEMENT, obtain any interest in or any other right to any technology, know-how, patents, patent applications, materials or other intellectual or proprietary property of YALE.

 

4.  DUE DILIGENCE

 

4.1.                            LICENSEE shall prepare and deliver to YALE a research and development plan for LICENSED PRODUCTS within [***] of the EFFECTIVE DATE, which shall include the scope of work under the SRA and reflect the results of such work under the SRA and

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

12

 

the information known to LICENSEE regarding LICENSED PRODUCTS at such time (the “PLAN”). Without limiting LICENSEE’s obligations to use COMMERCIALLY REASONABLE EFFORTS under this AGREEMENT, LICENSEE shall have the right to amend the PLAN in its sole discretion; provided, that LICENSEE shall provide YALE with a copy of any amended PLAN within [***].

 

4.2.                            LICENSEE shall use COMMERCIALLY REASONABLE EFFORTS within [***] after the EFFECTIVE DATE to begin to implement the PLAN at its sole expense, and, thereafter, to the extent LICENSED PRODUCT candidates are identified and validated, continue the research and development of at least one (1) LICENSED PRODUCT, and, thereafter, to the extent any such LICENSED PRODUCT candidate receives marketing approval on a country-by-country basis, commercialize such LICENSED PRODUCT.

 

4.3.                            [***] after the EFFECTIVE DATE, and [***], LICENSEE shall provide YALE with an updated copy of the PLAN, with such amendments as are reasonably necessary, which shall indicate LICENSEE’s progress to date in development and commercialization of LICENSED PRODUCTS and a forecast and estimated schedule of major events required to market the LICENSED PRODUCTS. Such updated PLAN shall identify LICENSEE’s products that are expected to be LICENSED PRODUCTS, and which LICENSED PATENTS (if any) claim each such LICENSED PRODUCT, and what LICENSED INFORMATION (if any) has been utilized in the development and/or commercialization of such LICENSED PRODUCT.

 

(a)                           In the event LICENSEE assigns this AGREEMENT to any third party pursuant to Article 18.7, LICENSEE’s assignee shall provide YALE with an updated copy of the PLAN, with such amendments as are reasonably necessary, within thirty (30) days following the assignment by LICENSEE.

 

(b)                           Without limiting LICENSEE’s or such assignee’s obligations to use COMMERCIALLY REASONABLE EFFORTS under this AGREEMENT, YALE shall review and may, by notice in writing to such assignee, approve or disapprove of such updated PLAN in good faith (such approval not to be unreasonably withheld, conditioned or delayed). In the event YALE disapproves of any such updated PLAN, (i) YALE’s notice shall describe the basis for such disapproval in reasonable detail and propose such reasonable amendments to the PLAN that would make the PLAN acceptable to YALE, (ii) such assignee shall consider YALE’s comments in good faith, (iii) YALE and such assignee shall negotiate in good faith and promptly agree on a mutually acceptable PLAN, and (iv) pending such mutual agreement, the PLAN in place immediately prior to such assignment shall remain in effect with such assignee as LICENSEE thereunder mutatis mutandis. For the avoidance of doubt, a disapproval by YALE of an updated PLAN under this Article 4.3(b) shall not affect the validity of an assignment made in accordance with this AGREEMENT.

 

(c)                            Each updated PLAN shall be substituted into this AGREEMENT as Appendix B.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

13

 

4.4.                            LICENSEE shall immediately send YALE a notice of abandonment if at any time LICENSEE abandons or suspends (a) prior to the receipt of marketing approval, its research and development, or (b) following the receipt of marketing approval, the marketing of the LICENSED PRODUCTS, in either case, for a period exceeding ninety (90) days. Any such abandonment or suspension, other than for a bona fide health or safety concern, in the event of a FORCE MAJEURE (subject to the terms of Article 18.10), to mitigate damages in any legal action, or as required by applicable law, shall constitute a material breach, except to the extent any such abandonment or suspension is consistent with LICENSEE’s obligations hereunder to use COMMERCIALLY REASONABLE EFFORTS to research, develop and commercialize the LICENSED PRODUCTS, which obligations shall continue to apply to LICENSEE.

 

4.5.                            LICENSEE agrees that YALE shall be entitled to terminate this AGREEMENT pursuant to Article 13.1(b) in the event (i) YALE terminates the SRA for cause pursuant to Section 10(c)(i) or (ii) of the SRA; or (ii) upon the occurrence of any of the following, subject to the notice and cure periods set forth in Article 13.1(b):

 

(a)                                 LICENSEE has failed to:

 

i.                  Achieve a SUCCESSFUL FINANCING within [***] of the EFFECTIVE DATE; or

 

ii.               Incur documented expenditures of a minimum of $[***] annually towards the discovery, development, manufacture, or sale of LICENSED PRODUCTS (including payments under the SRA) in any given year following the EFFECTIVE DATE; or

 

iii.            Following the filing of an IND for a LICENSED PRODUCT, LICENSEE (together with its SUBLICENSEES or AFFILIATES) has failed to demonstrate ongoing clinical development of LICENSED PRODUCTS, which shall be evidenced by conducting at least one (1) of the following activities in any given [***] period starting from the date of the first IND filing for a LICENSED PRODUCT, either directly or indirectly through an AFFILIATE, SUBLICENSEE or third party:

 

1)             having manufactured or procured the manufacture of LICENSED PRODUCT suitable for clinical trials under an approved IND;

 

2)             having actively engaged in study preparation, implementation, results analysis or reporting of a Phase I, II, or III CLINICAL TRIAL with respect to a LICENSED PRODUCT, or the preparation of regulatory documents for filing;

 

3)             having responded to regulatory requests or issues relating to a Phase I, II, or III CLINICAL TRIAL of a LICENSED PRODUCT;

 

4)             having prepared documents for an NDA or BLA filing with respect to a LICENSED PRODUCT;

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

14

 

5)             having filed an NDA or BLA for a LICENSED PRODUCT;

 

6)             following NDA or BLA filing, having actively pursued NDA or BLA approval for a LICENSED PRODUCT; or

 

7)             following NDA or BLA approval of a LICENSED PRODUCT, having launched, prepared for launch, or sold a LICENSED PRODUCT in the United States or another MAJOR MARKET COUNTRY; or

 

(b)                                 LICENSEE has failed to:

 

1)             Provide to YALE annual written progress reports, or

 

2)             Implement the PLAN consistent with LICENSEE’s obligations to use COMMERCIALLY REASONABLE EFFORTS to research and develop LICENSED PRODUCTS.

 

Notwithstanding the foregoing, if LICENSEE has not employed COMMERCIALLY REASONABLE EFFORTS in researching and developing, and following the receipt of marketing approval commercializing, LICENSED PRODUCTS in accordance with this AGREEMENT on a country-by-country basis within the TERRITORY for any reason (other than in the event of a FORCE MAJEURE as provided in Article 18.10), then YALE may, at its sole discretion subject to the notice and cure periods set forth in Article 13.1(b), terminate the LICENSE for material uncured breach pursuant to Article 13.1(b) on a country-by-country basis. Notwithstanding the foregoing, the parties agree and acknowledge that the scope of work under the SRA shall be sufficient to satisfy LICENSEE’s obligation to use COMMERCIALLY REASONABLE EFFORTS to research and develop LICENSED PRODUCTS during the term of the SRA.

 

5.  LICENSE MAINTENANCE ROYALTY; MILESTONE PAYMENTS

 

5.1.                            During the TERM, LICENSEE agrees to pay to YALE an annual license maintenance royalty (“LICENSE MAINTENANCE ROYALTY” or “LMR”) commencing on the first (1st) anniversary of the EFFECTIVE DATE and on each anniversary thereafter until LICENSEE starts to pay MINIMUM ROYALTY PAYMENTS under Article 6.5, according to the following schedule:

 

	
Anniversaries of the EFFECTIVE DATE
    	
 
    	
LMR
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    

 

5.2.                            LICENSEE shall pay the following milestone payments to YALE for each LICENSED PRODUCT developed by LICENSEE, its AFFILIATES or SUBLICENSEES upon the first occurrence of the corresponding milestone event with respect to the LICENSED PRODUCT:

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

15

 

	
Milestone Event
    	
 
    	
Payment
    	
 
    
	
Upon first   dosing of the first subject (“INITIATION”)   in a PHASE I CLINICAL TRIAL
    	
 
    	
$
    	
[***]
    	
 
    
	
Upon INITIATION   of a PHASE II CLINICAL TRIAL
    	
 
    	
$
    	
[***]
    	
 
    
	
Upon INITIATION   of a PHASE III CLINICAL TRIAL or PIVOTAL TRIAL
    	
 
    	
$
    	
[***]
    	
 
    
	
Upon FIRST SALE   in the U.S.
    	
 
    	
$
    	
[***]
    	
 
    
	
Upon FIRST SALE   in China, Japan, or a MAJOR MARKET COUNTRY in Europe
    	
 
    	
$
    	
[***]
    	
 
    

 

For the avoidance of doubt, each milestone payment set forth in this Article 5.2 shall be payable only once (upon first occurrence of the relevant milestone event) with respect to each LICENSED PRODUCT.

 

5.3.                            Neither the LMR pursuant to Article 5.1 nor the milestone payments set forth in Article 5.2 shall be credited against EARNED ROYALTIES payable under Article 6.1.

 

5.4.                            Participation in Future Private Equity Offerings: During the period commencing on the EFFECTIVE DATE and continuing until the earlier of (i) [***] anniversary thereof or (ii) the filing of a confidential S-1 with the U.S. Securities and Exchange Commission, if LICENSEE proposes to sell any equity securities or securities that are convertible into equity securities of LICENSEE, then YALE and/or its ASSIGNEE (as defined below) will have the right to purchase up to [***] of the securities issued in each such offering on the same terms and conditions in all material respects as are offered to the other purchasers in each such financing. For clarity, the foregoing applies to the material terms of purchase and sale, and shall not entitle YALE or its ASSIGNEES to all rights and privileges afforded other purchasers in such financing if such rights and privileges are afforded to holders of a greater number of securities of LICENSEE. For purposes hereof, the term “ASSIGNEE” means (a) any AFFILIATE of YALE to which YALE’s participation rights under this Article 5.4 have been assigned either by YALE or another AFFILIATE of YALE, (b) any AFFILIATE of YALE, or (c) any other entity proposed by YALE and approved by LICENSEE (such approval not to be unreasonably withheld, conditioned or delayed). Except with respect to the specific percentage contemplated by this Article 5.4, YALE’s participation rights shall be on the same terms and conditions in all material respects as participation rights granted to other investors in LICENSEE. YALE’s right to purchase up to [***] of such securities under this Article 5.4 shall be reduced in part or wholly by, and shall not be in addition to, any participation or preemptive right of YALE and its ASSIGNEES to purchase equity securities of

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

16

 

LICENSEE under any other agreement between or among LICENSEE and YALE or its ASSIGNEES.

 

5.5.                            Within ten (10) business days of [***], YALE shall receive a [***] MILESTONE in the amount of $[***] (the “[***] MILESTONE”); provided, that the [***] MILESTONE shall be reduced, in part or wholly, by [***], such that [***].

 

6.  EARNED ROYALTIES; MINIMUM ROYALTY PAYMENTS

 

6.1.                            During the TERM, as partial consideration for the LICENSE and LICENSEE’s rights with respect to LICENSED INFORMATION, LICENSEE shall pay to YALE an earned royalty on worldwide cumulative NET SALES of LICENSED PRODUCTS (“EARNED ROYALTY”) according to the following schedule:

 

	
VALID CLAIM
   PRODUCTS
    	
 
    	
MEANINGFULLY
   INVOLVED PRODUCTS
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    

 

During the TERM, the EARNED ROYALTY rate payable in accordance with this Article 6 shall not be reduced below [***].

 

6.2.                            In the event that (i) LICENSEE or any of its AFFILIATES or SUBLICENSEES brings a PATENT CHALLENGE anywhere in the world, or (ii) LICENSEE or any of its AFFILIATES or SUBLICENSEES materially assists another party in bringing a PATENT CHALLENGE anywhere in the world (except as required under a court order or subpoena), and (iii) YALE does not choose to exercise its rights to terminate this AGREEMENT pursuant to Article 13, then the following provisions shall apply.

 

(a)                                 All payments due to YALE under this AGREEMENT other than patent costs shall be doubled during the pendency of the PATENT CHALLENGE and shall remain payable to YALE when due.

 

(b)                                 If the PATENT CHALLENGE is inconclusive or results in a determination that at least one challenged claim is both valid and infringed, all payments due to YALE under this AGREEMENT other than patent costs shall be doubled for the remainder of the TERM of the AGREEMENT.

 

(c)                                  LICENSEE shall promptly reimburse YALE for all documented legal fees and expenses incurred by YALE in YALE’s defense against the PATENT CHALLENGE (provided, that the foregoing shall not prevent LICENSEE from seeking any legal or equitable relief to which it is otherwise entitled in any such PATENT CHALLENGE).

 

(d)                                 In the event that such a PATENT CHALLENGE is successful, LICENSEE will have no right to recoup any payments made prior to the final, non-appealable

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

17

 

determination of a court of competent jurisdiction, except as may be set forth in such final, non-appealable determination of a court of competent jurisdiction. For clarity, nothing in this AGREEMENT shall prevent LICENSEE or its AFFILIATES or SUBLICENSEES from seeking recovery of any amounts paid subsequent to the filing of the action in any such action.

 

6.3.                            Neither LICENSEE nor any of its AFFILIATES or SUBLICENSEES shall bring a PATENT CHALLENGE without first providing YALE [***] written notice setting forth (a) in reasonable detail which claims and patents are being challenged, (b) a statement of the factual and legal basis for the challenge, and (c) an identification of material prior art and other matters known to LICENSEE believed to invalidate any claim of the LICENSED PATENT.

 

6.4.                            LICENSEE shall pay all EARNED ROYALTIES accruing to YALE within [***] from the end of each calendar quarter (March 31, June 30, September 30 and December 31), beginning after the first calendar quarter in which NET SALES occur. Unless YALE requests otherwise, LICENSEE shall report all EARNED ROYALTIES and other payments accruing to YALE on a quarterly basis, but shall defer payments accruing to YALE that do not, in total, exceed [***] in any given quarter until the earlier of (1) the end of the calendar year, or (2) the quarter upon which the cumulative accrued royalties and other payments exceed [***]

 

6.5.                            During the TERM, LICENSEE agrees to pay YALE annual minimum royalty payments (“MINIMUM ROYALTY PAYMENTS” or “MRP”), commencing on the first December 31 to occur after the date of the FIRST SALE that results in NET SALES; provided, such December 31 is at least [***] following the date of FIRST SALE, or, if not, the following December 31. The MRP shall be payable to YALE in the amounts indicated in the following schedule:

 

	
Years after FIRST SALE
    	
 
    	
MRP
    
	
[***]
    	
 
    	
[***]
    

 

6.7.                            LICENSEE shall continue to pay the MRP until the end of the TERM. Notwithstanding anything herein to the contrary, the MRP shall not be payable in any calendar year in which EARNED ROYALTIES exceed the MRP, and YALE shall fully credit each MRP actually paid against any EARNED ROYALTIES payable by LICENSEE for the same calendar year.

 

6.8.                            All EARNED ROYALTIES and other payments due under this AGREEMENT shall be paid to YALE in United States Dollars. In the event that conversion from foreign currency is required in calculating a payment under this AGREEMENT, the United States Dollar equivalent shall be calculated using LICENSEE’s then-current standard exchange rate methodology as applied consistently for the conversion of foreign currency sales into United States Dollars. If overdue, the royalties and any other payments due

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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under this AGREEMENT shall bear interest until payment at a rate per annum [***], and YALE shall be entitled to recover documented and reasonable attorneys’ fees related to the administration or enforcement of this AGREEMENT in respect of the collection of royalties or other payments following such failure to pay. The payment of such interest shall not foreclose YALE from exercising any other right it may have as a consequence of the failure of LICENSEE to make any payment when due.

 

6.9.                            To the extent requested by LICENSEE, YALE shall deliver an invoice to LICENSEE with respect to each payment due to YALE under Article 5 and Article 6 other than EARNED ROYALTIES, and such payments shall be due within [***] of LICENSEE’s receipt of the applicable invoice.

 

7.  SUBLICENSES

 

7.1.                            LICENSEE shall have the right to sublicense the rights granted to it under this AGREEMENT in the TERRITORY, including through multiple tiers, (a) to an AFFILIATE of LICENSEE or a QUALIFIED SUBLICENSEE without the prior written consent of YALE, and (b) to any other third party with the prior written consent of YALE (not to be unreasonably withheld, conditioned or delayed). For the avoidance of doubt, a QUALIFIED SUBLICENSEE may further sublicense such rights in accordance with the preceding sentence as if it were the LICENSEE.

 

7.2.                            Any sublicense granted by LICENSEE (or a QUALIFIED SUBLICENSEE) shall include substantially similar definitions and provisions as this AGREEMENT, and such other provisions as are reasonably necessary to enable LICENSEE to provide YALE the protections and benefits contemplated herein. Subject to redaction of any competitively sensitive information required under applicable confidentiality obligations, to the extent that such information is not required to demonstrate compliance with this AGREEMENT, LICENSEE will provide YALE with a copy of each sublicense agreement (and all amendments thereto) promptly after execution; provided, further, that in the case where YALE reasonably requests that information be un-redacted in order for YALE to determine compliance with this AGREEMENT, LICENSEE shall provide YALE such information or allow for such information to be reviewed by an independent reviewer (selected by YALE and reasonably acceptable to LICENSEE, such acceptance not to be unreasonably withheld, conditioned or delayed) on behalf of YALE, subject to a confidentiality agreement between LICENSEE and such independent reviewer. LICENSEE (and each QUALIFIED SUBLICENSEE) shall also include provisions in all sublicenses to provide that in the event that SUBLICENSEE brings a PATENT CHALLENGE anywhere in the world or materially assists another party in bringing a PATENT CHALLENGE anywhere in the world (except as required under a court order or subpoena) then LICENSEE shall immediately terminate the sublicense. LICENSEE shall remain responsible for the performance of all SUBLICENSEES under any such sublicense as if such performance were carried out by LICENSEE itself, including, without limitation, the payment of any royalties or other payments provided for hereunder, regardless of whether the terms of any sublicense provide for such amounts to

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

19

 

be paid by the SUBLICENSEE directly to YALE. A material breach of this provision shall constitute a material breach of this AGREEMENT that is subject to Article 13.1(b).

 

7.3.                            For clarity, LICENSEE shall pay royalties to YALE on NET SALES of SUBLICENSEES in accordance with this AGREEMENT based on the same royalty rate as apply to NET SALES by LICENSEE and its AFFILIATES, regardless of the royalty rates payable by SUBLICENSEES to LICENSEE under a sublicense agreement. In addition, LICENSEE shall pay to YALE a percentage of all SUBLICENSE INCOME not included in the calculation of EARNED ROYALTIES as follows:

 

	
Stage of development with respect to any
   LICENSED PRODUCT
    	
 
    	
Percentage of
   SUBLICENSE INCOME
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    

 

7.4.                            LICENSEE agrees that it has sole responsibility to promptly:

 

(a)                                 provide YALE with a copy of any amendments to sublicenses granted by LICENSEE under this AGREEMENT and to notify YALE of termination of any sublicense; and

 

(b)                                 summarize and deliver copies of all reports provided to LICENSEE by SUBLICENSEES, subject to redaction of any competitively sensitive information required under applicable confidentiality obligations to the extent that such information is not required to demonstrate compliance with this AGREEMENT; provided, further, that in the case where YALE reasonably requests that information be un-redacted in order for YALE to determine compliance with this AGREEMENT, LICENSEE shall provide YALE such information or allow for such information to be reviewed by an independent reviewer (selected by YALE and reasonably acceptable to LICENSEE, such acceptance not to be unreasonably withheld, conditioned or delayed) on behalf of YALE, subject to a confidentiality agreement between LICENSEE and such independent reviewer.

 

8.  CONFIDENTIALITY AND PUBLICITY

 

8.1.                            Subject to the parties’ rights and obligations pursuant to this AGREEMENT, YALE and LICENSEE agree that during the TERM and for five (5) years thereafter, each of them:

 

(a)                                 will keep confidential and will cause their AFFILIATES and, in the case of LICENSEE, its SUBLICENSEES, to keep confidential, CONFIDENTIAL INFORMATION disclosed to it by the other party, by taking such actions the party receiving the CONFIDENTIAL INFORMATION would take to preserve the confidentiality of its own CONFIDENTIAL INFORMATION, which in no event shall be less than reasonable care; and

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

20

 

 

(b)                                 will only disclose the other party’s CONFIDENTIAL INFORMATION to its officers, employees or agents, under requirements of confidentiality, for purposes of carrying out its rights and responsibilities under this AGREEMENT; and

 

(c)                                  will not use the other party’s CONFIDENTIAL INFORMATION other than as expressly permitted by this AGREEMENT or disclose the other party’s CONFIDENTIAL INFORMATION to any third parties (other than to AFFILIATES, SUBLICENSEES or other agents under requirements of confidentiality) under any circumstance without advance written permission from the other party; and

 

(d)                                 will, within sixty (60) days of termination of this AGREEMENT, return or destroy (with certification of such destruction) all the CONFIDENTIAL INFORMATION disclosed to it by the other party pursuant to this AGREEMENT except for one copy which may be retained by the recipient for monitoring compliance with this Article 8 and any surviving clauses.

 

8.2.                            The obligations of confidentiality described above shall not pertain to that part of the CONFIDENTIAL INFORMATION that:

 

(a)                                 is shown to have been known to or developed by the recipient prior to the disclosure by the disclosing party; or

 

(b)                                 is at the time of disclosure or has become thereafter publicly known through no fault or omission attributable to the recipient; or

 

(c)                                  is rightfully given to the recipient from sources independent of the disclosing party; or

 

(d)                                 is independently developed by the receiving party without use of or reference to the CONFIDENTIAL INFORMATION of the other party; or

 

(e)                                  is required to be disclosed by law in the opinion of recipient’s attorney, but only after the disclosing party is given prompt written notice and an opportunity to seek a protective order.

 

8.3.                            The financial terms of this AGREEMENT constitute CONFIDENTIAL INFORMATION of each party.

 

8.4.                            Notwithstanding anything to the contrary contained herein, during the term of the SRA, YALE and its employees, students and volunteers may publically disclose CONFIDENTIAL INFORMATION of either party to the extent permitted under, but subject to the terms and procedures set forth in, Article 6 of the SRA.

 

9.  REPORTS, RECORDS AND INSPECTIONS

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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9.1.                            LICENSEE shall, within [***] after the calendar year in which NET SALES first occur, and within [***] after each calendar quarter (March 31, June 30, September 30 and December 31) thereafter, provide YALE with a written report setting forth in reasonable detail the information required by this Article 9.1, including the NET SALES during the preceding calendar quarter and calculating the payments due to YALE pursuant to Article 6. Each such report shall be signed by an officer of LICENSEE (or the officer’s designee), and must include:

 

(a)                                 the number or amount, as appropriate, of LICENSED PRODUCTS sold by LICENSEE, its AFFILIATES and SUBLICENSEES;

 

(b)                                 a calculation of NET SALES for the applicable reporting period in each country, including the gross invoice prices charged for the LICENSED PRODUCTS and any permitted deductions made in accordance with the definition of NET SALES;

 

(c)                                  a calculation of total royalties or other payment(s) due, including any exchange rates used for conversion, and, as applicable, the extent to which such royalties offset the MRP;

 

(d)                                 names and addresses of all SUBLICENSEES and the type and amount of any SUBLICENSE INCOME received from each SUBLICENSEE; and

 

(e)                                  identification of any INVENTOR AGREEMENT(S) in effect during the previous calendar quarter.

 

9.2.                            LICENSEE, its AFFILIATES and SUBLICENSEES shall keep and maintain books and records containing an accurate accounting of all data consistent with ACCOUNTING STANDARDS and in sufficient detail to enable verification of EARNED ROYALTIES and other payments due to YALE under this AGREEMENT. LICENSEE shall preserve such books and records for at least three (3) years after the calendar year to which they pertain. Such books and records shall be open to inspection by a nationally recognized independent certified public accountant selected by YALE and reasonably acceptable to LICENSEE, at YALE’s expense, during normal business hours upon at least ten (10) business days’ prior written notice, for the purpose of verifying the accuracy of the reports delivered to YALE under Article 9.1 and payments rendered by LICENSEE. Any auditor’s report issued under this Article 9.2 shall be shared with LICENSEE. In the event LICENSEE underpaid the amounts due to YALE with respect to the audited period by more than [***], LICENSEE shall pay the reasonable cost of such examination, together with the deficiency not previously paid and interest from the due date of such payment, calculated at the rate set forth in Article 6.8, within thirty (30) days of receiving notice thereof from YALE. In the event LICENSEE overpaid the amounts due to YALE with respect to the audited period, then LICENSEE may reduce any subsequent payment to YALE by the amount of such overpayment.

 

9.3.                            On or before the [***] following the close of LICENSEE’s fiscal year, LICENSEE shall provide YALE with LICENSEE’s financial statements for the preceding fiscal year

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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certified by an officer of LICENSEE including, at a minimum, a balance sheet and an income statement; provided, that if LICENSEE’s audited financial statements are not delivered to LICENSEE until after such [***], LICENSEE may deliver the certified financial statements contemplated by this Article 9.3 to YALE within [***] after the delivery to LICENSEE of such audited financial statements. Such financial statements and the contents thereof shall be CONFIDENTIAL INFORMATION of LICENSEE hereunder, and may be reasonably redacted by LICENSEE to preserve the confidentiality of any competitively sensitive information contained therein, to the extent that such information is not required to demonstrate compliance with this AGREEMENT; provided, that in the case where YALE reasonably requests that information be un-redacted in order for YALE to determine compliance with this AGREEMENT, LICENSEE shall provide YALE such information or allow for such information to be reviewed by an independent reviewer (selected by YALE and reasonably acceptable to LICENSEE, such acceptance not to be unreasonably withheld, conditioned or delayed) on behalf of YALE, subject to a confidentiality agreement between LICENSEE and such independent reviewer.

 

10.  PATENT PROTECTION

 

10.1.                     LICENSEE shall be responsible for all documented past, present and future costs of filing, prosecution and maintenance of all United States patent applications and patents directly associated with the LICENSED PATENTS which have not otherwise been reimbursed, or that are not otherwise reimbursable, by another third party. Any and all such United States patent applications, and resulting issued patents, shall remain the property of YALE.

 

10.2.                     LICENSEE shall be responsible for all documented past, present and future costs of filing, prosecution and maintenance of all foreign patent applications and patents directly associated with the LICENSED PATENTS in the countries outside the United States in the TERRITORY selected by YALE and agreed to in writing by LICENSEE which have not otherwise been reimbursed, or that are not otherwise reimbursable, by another third party.

 

10.3.                     If, upon the request of YALE, LICENSEE fails to pay the expenses of filing, prosecuting or maintaining a patent application or patent in any country, then YALE may terminate this AGREEMENT to the extent permitted in accordance with Article 13.1(b).

 

10.4.                     With respect to the payment of costs payable by LICENSEE under Articles 10.2 and 10.3:

 

(a)                                 LICENSEE shall pay all such documented patent expenses incurred prior to the EFFECTIVE DATE within thirty (30) days of its receipt of an invoice therefor; provided, that such expenses shall be consistent with such patent expenses as disclosed to LICENSEE prior to the EFFECTIVE DATE.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

23

 

(b)                                 LICENSEE shall pay all such documented patent expenses incurred on or following the EFFECTIVE DATE within sixty (60) days of its receipt of an invoice therefor.

 

10.5.                     The costs mentioned in Articles 10.2 and 10.3 shall include, but are not limited to, any past, present and future taxes, annuities, working fees, maintenance fees, renewal and extension charges.  Payment of such costs shall be made, at YALE’s sole discretion, either directly to patent counsel, or by reimbursement to YALE. In either case, LICENSEE shall make payment directly to the appropriate party within sixty (60) days of receiving its invoice. Failure of LICENSEE to pay such costs shall be grounds for termination by YALE under and to the extent permitted in accordance with Article 13.1(b).

 

10.6.                     Except as provided herein or in the SRA (including with respect to any patent application with respect to a JOINT INVENTION (as defined in the SRA), which shall be subject to the terms and conditions of the SRA), all patent applications under the LICENSED PATENTS shall be prepared, prosecuted, filed and maintained by independent patent counsel chosen by YALE and reasonably acceptable to LICENSEE. Said independent patent counsel shall be ultimately responsible to YALE. YALE shall instruct patent counsel to keep both YALE and LICENSEE fully informed of the progress of all patent applications and patents, and to give both YALE and LICENSEE reasonable opportunity to comment on the type and scope of useful claims and the nature of supporting disclosures. YALE will not abandon any patent application for which LICENSEE is bearing expenses without LICENSEE’s consent. Notwithstanding the foregoing, YALE shall have no obligation to file, prosecute, or maintain any of the LICENSED PATENTS if LICENSEE has failed to make any payments required under, or is otherwise in material breach of, this AGREEMENT or any other agreement with YALE. YALE shall have no liability to LICENSEE for damages, whether direct, indirect or incidental, consequential or otherwise, allegedly arising from its good faith decisions, actions and omissions in connection with such prosecution. Notwithstanding anything to the contrary contained herein, should YALE elect not to file, prosecute or maintain any patent or patent application included within the LICENSED PATENTS or LICENSED INFORMATION, LICENSEE may do so at its own cost on behalf of YALE. YALE shall reasonably cooperate with LICENSEE, at LICENSEE’s expense, in its attempt to secure patent rights to any such patent or patent application.

 

10.7.                     LICENSEE shall mark, and shall require its AFFILIATES and SUBLICENSEES to mark, all LICENSED PRODUCTS, that are tangible products, with the numbers of all patents included in LICENSED PATENTS that cover the LICENSED PRODUCTS. Without limiting the foregoing, all LICENSED PRODUCTS shall be marked in such a manner as to conform with the patent marking notices required by the law of any country where such LICENSED PRODUCTS are made, sold, used or shipped, including, but not limited to, the applicable patent laws of that country.

 

11.  INFRINGEMENT AND LITIGATION

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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11.1.                     Each party shall promptly notify the other in writing in the event that it obtains knowledge of infringing activity by third parties, or is sued or threatened with an infringement suit, in any country in the TERRITORY as a result of activities that concern the LICENSED PATENTS, and shall supply the other party with documentation of the infringing activities that it possesses.

 

11.2.                     During the TERM:

 

(a)                                 LICENSEE shall have the first right and obligation to defend the LICENSED PATENTS against infringement or interference in the FIELD and in the TERRITORY by third parties. This right and obligation includes bringing any legal action for infringement and defending any counter claim of invalidity or action of a third party for declaratory judgment for non-infringement or noninterference. If, in the reasonable opinion of both LICENSEE’s and YALE’s respective counsel, YALE is required to be a named party to any such suit for standing purposes, LICENSEE may join YALE as a party; provided, however, that (i) YALE shall not be the first named party in any such action, (ii) the pleadings and any public statements about the action shall state that the action is being pursued by LICENSEE and that LICENSEE has joined YALE as a party; and (iii) LICENSEE shall keep YALE reasonably apprised of all developments in any such action. LICENSEE may settle such suits solely in its own name and solely at its own expense and through counsel of its own selection; provided, however, that no settlement shall be entered without YALE’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed. Without limiting the foregoing, YALE may withhold its consent to any settlement that would in any manner constitute or incorporate an admission by YALE or require YALE to take or refrain from taking any action. LICENSEE shall bear the expense of such legal actions. Except for providing reasonable assistance, at the request and expense of LICENSEE, YALE shall have no obligation regarding the legal actions described in Article 11.2 unless required to participate by law. However, YALE shall have the right to participate in any such action through its own counsel and at its own expense. Any recovery shall first be applied to LICENSEE’s out of pocket expenses and second shall be applied to YALE’s out of pocket expenses, including legal fees. Any excess recovery over those expenses shall be treated as if it were SUBLICENSE INCOME with the applicable percentage under Article 7.3 payable to YALE and the balance retained by LICENSEE.

 

(b)                                 In the event LICENSEE fails to initiate and pursue or participate in the actions described in Article 11.2(a) within sixty (60) days of (a) notification of infringement from YALE or (b) the date LICENSEE otherwise first becomes aware of an infringement, whichever is earlier, YALE shall have the right to initiate legal action such as that described in Article 11.2(a) at its own expense and YALE may use the name of LICENSEE as party plaintiff to uphold the LICENSED PATENTS. In such case, LICENSEE shall provide reasonable assistance to YALE if requested to do so. YALE may settle such actions solely

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

25

 

through its own counsel. Any recovery shall first be applied to YALE’s out of pocket expenses and second shall be applied to LICENSEE’s out of pocket expenses, including legal fees. Any excess recovery over those expenses shall be allocated as follows: [***] shall be paid to LICENSEE and [***] shall be retained by YALE.

 

(c)                                  In the event LICENSEE is permanently enjoined from exercising its LICENSE under this AGREEMENT pursuant to an infringement action brought by a third party, or if both LICENSEE and YALE elect not to undertake the defense or settlement of a suit alleging infringement for a period of twelve (12) months from notice of such suit, then either party shall have the right to terminate this AGREEMENT in the country where the suit was filed with respect to the licensed patent following thirty (30) days’ written notice to the other party in accordance with the terms of Article 13.

 

(d)                                 Notwithstanding the foregoing, neither LICENSEE nor YALE shall take any action to enforce the LICENSED PATENTS against any third party engaged in providing global access to affordable pharmaceutical products in low- or lower-middle-income countries, as designated by the Word Bank, in any such countries, where such action is intended to prevent the sale of LICENSED PRODUCTS in any such countries at prices below prices in those countries that are not low- or lower-middle income countries. However, LICENSEE and/or YALE may take such action in any such country if such action is intended to prevent the sale or manufacturing of LICENSED PRODUCTS in such countries for commercialization in countries that are not low- or lower-middle-income countries.

 

12.  USE OF YALE’S NAME

 

LICENSEE shall not use the name “Yale” or “Yale University,” nor any variation or adaptation thereof, nor any trademark, tradename or other designation owned by YALE, nor the names of any of its trustees, officers, faculty, students, employees or agents, for any purpose without the prior written consent of YALE in each instance, such consent to be granted or withheld by YALE in its sole discretion, except that LICENSEE may state that it has licensed from YALE one or more of the patents and/or patent applications comprising the LICENSED PATENTS.

 

13.  TERMINATION

 

13.1.                     YALE shall have the right to terminate this AGREEMENT upon written notice to LICENSEE in the event LICENSEE:

 

(a)                                 fails to make any payment whatsoever due and payable pursuant to this AGREEMENT unless LICENSEE shall make all such payments (and all interest due on such payments under Article 6.4) within the thirty (30) day period after receipt of written notice from YALE;

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

26

 

(b)                                 commits a material breach of any other provision of this AGREEMENT which is not cured within the sixty (60) day period after receipt of written notice thereof from YALE;

 

(c)                                  fails to obtain or maintain adequate insurance as described in Article 14.2, unless LICENSEE shall restore such insurance (without a gap in coverage) within the thirty (30) day period after receipt of written notice from YALE;

 

(d)                                 if LICENSEE or any of its AFFILIATES brings a PATENT CHALLENGE against YALE, or materially assists others in bringing a PATENT CHALLENGE against YALE (except as required under a court order or subpoena), whereupon YALE may terminate this AGREEMENT upon written notice to LICENSEE; or

 

(e)                                  if a SUBLICENSEE brings a PATENT CHALLENGE or materially assists another party in bringing a PATENT CHALLENGE (except as required under a court order or subpoena), then YALE may send a written demand to LICENSEE to terminate such sublicense; if LICENSEE fails to so terminate such sublicense within thirty (30) days after YALE’s demand, YALE may terminate this AGREEMENT upon written notice to LICENSEE.

 

To the extent YALE has a right to terminate this AGREEMENT for a material uncured breach under Article 13.1(b), except in the case of any breach of a payment obligation, if the material uncured breach giving rise to such right to terminate is limited to specific product(s) or country(ies), YALE’s right to terminate this AGREEMENT shall be on a product-by-product and country-by-country basis, and apply to the relevant product(s) and country(ies); provided, that this clause shall not limit YALE’s right to terminate this AGREEMENT in its entirety, subject to Article 13.1(b), in the event of a material uncured breach relating to the LICENSED PRODUCTS, generally.

 

13.2.                     This AGREEMENT shall terminate automatically without any notice to LICENSEE in the event LICENSEE shall cease to carry on its business or becomes INSOLVENT, or a petition in bankruptcy is filed against LICENSEE and is consented to, acquiesced in or remains undismissed for sixty (60) days, or LICENSEE makes a general assignment for the benefit of creditors, or a receiver is appointed for LICENSEE.

 

13.3.                     LICENSEE shall have the right to terminate this AGREEMENT upon written notice to YALE:

 

(a)                                 at any time on six (6) months’ notice to YALE, provided LICENSEE is not in material breach and upon payment of all amounts due YALE through the effective date of termination; or

 

(b)                                 in the event YALE commits a material breach of any of the provisions of this AGREEMENT and such breach is not cured within the sixty (60) day period after receipt of written notice thereof from LICENSEE.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

27

 

13.4.                     Subject to Article 3.5, upon termination of this AGREEMENT (but not expiration), for any reason, all rights and licenses granted to LICENSEE under the terms of this AGREEMENT are terminated and YALE has the option, in its discretion, to terminate any sublicense granted by LICENSEE. Upon such termination, LICENSEE shall cease to make, have made, use, sell, have sold, distribute, practice, import or export LICENSED PRODUCTS. Within sixty (60) days of the effective date of termination LICENSEE shall:

 

(a)                                 destroy or return to YALE all materials relating to or containing the LICENSED PATENTS, LICENSED PRODUCTS or CONFIDENTIAL INFORMATION disclosed by YALE;

 

(b)                                 deliver to YALE the last report required under Article 4 or Article 9; and

 

(c)                                  make all payments to YALE incurred up to the effective date of termination.

 

13.5.                     Termination of this AGREEMENT shall not affect any rights or obligations accrued prior to the effective date of such termination and specifically LICENSEE’s obligation to pay all royalties and other payments due and owing under Article 5 and Article 6 as of the effective date of such termination. Notwithstanding anything contained herein to the contrary, the following provisions shall survive any termination: Article 2 (to the extent necessary to interpret surviving provisions hereof), Article 3.2, Article 3.7, Article 8, Article 9 (for the time periods provided therein), Article 11.2 (to the extent of any litigation initiated prior to such termination), Article 12, Article 13.4, this Article 13.5, Article 13.6, Article 13.8, Article 14, Article 15, Article 17 and Article 18. For the avoidance of doubt, the foregoing shall not limit Article 3.6 in the event of any expiration of the TERM of this AGREEMENT. The parties agree that claims giving rise to indemnification may arise after the expiration or termination of the LICENSE granted herein.

 

13.6.                     The rights provided in this Article 13 shall be in addition and without prejudice to any other rights, whether at law or in equity, which the parties may have with respect to any default or breach of the provisions of this AGREEMENT.

 

13.7.                     Waiver by either party of one or more defaults or breaches shall not deprive such party of the right to terminate because of any subsequent default or breach.

 

13.8.                     [***]

 

14.  INDEMNIFICATION; INSURANCE; DISCLAIMER OF WARRANTIES

 

14.1.                     LICENSEE shall indemnify, defend, and hold harmless YALE and its trustees, officers, students, volunteers and employees (collectively, “YALE INDEMNITEES”), from and against any claim, liability, cost, expense, damage, deficiency, loss, or obligation, of any kind or nature (including, without limitation, reasonable attorneys’ fees and other costs and expenses of defense) (collectively, “CLAIMS”), based upon, arising out of or

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

28

 

otherwise relating to this LICENSE, including, without limitation, any cause of action relating to product liability, or any theory of liability (including, without limitation, tort, warranty, or strict liability) or the death, personal injury, or illness of any person or out of damage to any property related in any way to the rights granted under this AGREEMENT; or resulting from the production, manufacture, sale, use, lease, or other disposition or consumption or advertisement of the LICENSED PRODUCTS by LICENSEE, its AFFILIATES, SUBLICENSEES or any other transferees; or in connection with any statement, representation or warranty of LICENSEE, its AFFILIATES, SUBLICENSEES or any other transferees with respect to the LICENSED PRODUCTS, except, in each case, to the extent such CLAIM arose out of or resulted from or is attributable to the gross negligence or wrongful intentional acts or omissions of YALE or its AFFILIATES, or their respective trustees, officers, students, volunteers or employees. In the event a YALE INDEMNITEE is seeking indemnification under this Article 14.1 for a third party CLAIM, YALE will inform LICENSEE of such CLAIM as soon as reasonably practicable after it receives notice of the CLAIM; provided, that the failure to give notice of a CLAIM will not relieve LICENSEE of its indemnification obligation under this AGREEMENT except to the extent that it is actually and materially prejudiced as a result of such failure to give notice. The YALE INDEMNITEE(S) will permit LICENSEE to assume direction and control of the defense of the third party CLAIM using counsel selected by LICENSEE and reasonably acceptable to YALE (such acceptance not to be unreasonably withheld, conditioned or delayed), and, at LICENSEE’s expense, will cooperate as reasonably requested in the defense of the CLAIM. The YALE INDEMNITEE will have the right to retain its own counsel at its own expense. LICENSEE shall not settle or compromise the CLAIM without the prior written consent of YALE, such consent not to be unreasonably withheld, conditioned or delayed. Without limiting the foregoing, YALE may withhold its consent to any settlement or compromise that would in any manner constitute or incorporate an admission by YALE or require YALE to take or refrain from taking any action.

 

14.2.                     LICENSEE shall purchase and maintain in effect and shall require its SUBLICENSEES to purchase and maintain in effect a policy of commercial, general liability insurance to protect YALE with respect to events described in Article 14.1. Such insurance shall:

 

(a)                                 list “YALE, its trustees, directors, officers, students, volunteers and employees” as additional insureds under the policy;

 

(b)                                 provide that such policy is primary and not excess or contributory with regard to other insurance YALE may have;

 

(c)                                  be endorsed to include product liability coverage in amounts no less than $1,000,000 per incident and $10,000,000 annual aggregate;

 

(d)                                 be endorsed to include contractual liability coverage for LICENSEE’s indemnification under Article 14.1; and

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

29

 

(e)                                  by virtue of the minimum amount of insurance coverage required under Article 14.2(c), not be construed to create a limit of LICENSEE’s liability with respect to its indemnification under Article 14.1.

 

14.3.                     By signing this AGREEMENT, LICENSEE certifies that the requirements of Article 14.2 will be met on or before the earlier of (a) the date of FIRST SALE of any LICENSED PRODUCT or (b) the date any LICENSED PRODUCT is tested or used on or in humans, and will continue to be met thereafter. Upon YALE’s request, LICENSEE shall furnish a certificate of insurance and a copy of its current insurance policy to YALE. LICENSEE shall secure agreement from its insurer to give written notice to YALE prior to any cancellation of or material change to the policy.

 

14.4.                     YALE hereby represents, warrants and covenants to LICENSEE as of the EFFECTIVE DATE:

 

(i)                                     YALE has the right to grant to LICENSEE the rights and licenses under the LICENSED PATENTS and LICENSED INFORMATION that it purports to grant hereunder and has not granted any third party rights that would otherwise interfere or conflict with the rights granted by YALE to LICENSEE hereunder or under the SRA;

 

(ii)                                  it is not a party to any agreement or commitment that would prevent it from granting the rights granted or intended to be granted to LICENSEE under this AGREEMENT or the SRA or performing its obligations under this AGREEMENT or the SRA; and

 

(iii)                               without the prior approval of LICENSEE, YALE will not use or practice, in its conduct of the RESEARCH (as defined in the SRA), or in any other research or development of the LICENSED PRODUCTS or the INITIAL TARGETS by YALE (if any), any (A) patent right or, (B) to the best of YALE’s knowledge, know-how, in the case of (A) and (B), exclusively licensed by YALE to a third party, or with respect to which a third party has an option to obtain an exclusive license from YALE. For purposes of this Article 14.4(iii), (1) “YALE’s knowledge” means the knowledge of CHEN and the actual knowledge of YALE’s Office of Cooperative Research following reasonable investigation, and (2) “know-how” means inventions, biological materials, reagents, concepts, processes, information, data, know-how and the like, in any form.

 

Except as expressly stated in Article 14.4:

 

(a)                                 YALE MAKES NO, AND EXPRESSLY DISCLAIMS ALL, REPRESENTATIONS OR WARRANTIES THAT ANY CLAIMS OF THE LICENSED PATENTS, ISSUED OR PENDING, ARE VALID, OR THAT THE MANUFACTURE, USE, PRACTICE, SALE OR OTHER DISPOSAL OF THE LICENSED PRODUCTS DOES NOT OR WILL NOT INFRINGE UPON ANY PATENT OR OTHER RIGHTS NOT VESTED IN YALE.

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

30

 

(b)                                 YALE MAKES NO, AND EXPRESSLY DISCLAIMS ALL, REPRESENTATIONS AND WARRANTIES WHATSOEVER WITH RESPECT TO THE LICENSED PATENTS AND LICENSED PRODUCTS, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

(c)                                  LICENSEE SHALL MAKE NO STATEMENTS, REPRESENTATION OR WARRANTIES WHATSOEVER TO ANY THIRD PARTIES THAT ARE INCONSISTENT WITH THE DISCLAIMERS BY YALE IN ARTICLE 14.4(a) AND (b).

 

(d)                                 IN NO EVENT SHALL EITHER PARTY, OR ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER SUCH PARTY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

(e)                                  IN NO EVENT SHALL YALE, OR ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES, BE LIABLE FOR DAMAGES IN EXCESS OF AMOUNTS YALE HAS RECEIVED FROM LICENSEE UNDER THIS LICENSE.

 

(f)                                   Notwithstanding anything to the contrary contained in this AGREEMENT or the SRA, in the event of a claim by LICENSEE against YALE for breach of contract by YALE, LICENSEE’s recourse against YALE in respect of any third party claim against LICENSEE resulting from such breach by YALE, shall (instead of the limitations set forth herein or in the SRA, including under Articles 14.4(d) and 14.4(e) hereof), be subject to the extent of applicable liability cap(s) under applicable YALE insurance policies providing coverage for YALE in the event of breach of contract claims (e.g., YALE’s then-applicable commercial, general liability insurance and any applicable umbrella policies, etc.) such that YALE does not experience an uninsured loss in respect thereof; provided, that if LICENSEE’s liability with respect to any such third party claim exceeds such YALE liability cap(s), LICENSEE may offset any such unrecovered excess against future payments to YALE under Articles 5.2, 6 or 7 of this AGREEMENT (i.e., reduce such payments by the amount of any such unrecovered excess not previously offset against payments to YALE). For the avoidance of doubt, in no event shall LICENSEE be permitted under this Article 14.4(f) to offset or reduce payments to YALE: (i) under Article 5.1 for the LMR; (ii) under this AGREEMENT or the SRA in respect of patent costs or expenses; or (iii) under the SRA in respect of RESEARCH (as defined in the SRA) performed by YALE thereunder. During the TERM, Yale shall maintain insurance providing coverage for YALE in the event of breach of contract claims against YALE with respect to

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

31

 

this AGREEMENT and the SRA consistent with YALE policies and standard practices applicable to YALE licensing and sponsored research arrangements, generally.

 

14.5.                     For the avoidance of doubt, except as expressly provided in this AGREEMENT or in the SRA, LICENSEE makes no representations or warranties, express or implied, with respect to any product. Further, the parties acknowledge and agree that nothing in this AGREEMENT, the PLAN or any report delivered hereunder shall be construed as a representation or warranty with respect to any estimate or projection of the research, development or sales of any product. Neither party makes any representation or warranty, either express or implied, that either party will be able to successfully research, develop, manufacture or commercialize any product, regarding the likelihood of success of any application for regulatory approval relating to any product or, if commercialized, that any particular sales of such product will be achieved.

 

15.  NOTICES

 

Any monetary payment, notice or other communication required by this AGREEMENT (a) shall be in writing, (b) may be (i) delivered personally, (ii) sent by reputable overnight courier, postage prepaid, with written verification of receipt, (iii) sent by registered or certified first class United States Mail, postage prepaid, return receipt requested, or (iv) delivered by confirmed facsimile or e-mail transmission (provided any notice of breach, default, or termination shall be followed immediately by an additional notice pursuant to clause (i) or (ii) above), (c) shall be sent to the following addresses or to such other address or facsimile number as such party shall designate by written notice to the other party, and (d) shall be effective upon receipt (or in the case of facsimile or email transmission, upon confirmed receipt during normal business hours of the recipient, or on the following business day):

 

	
FOR   YALE:
    	
FOR   LICENSEE:
    
	
 
    	
 
    
	
Managing   Director
    	
Chief   Executive Officer
    
	
Yale   University
    	
NextCure, Inc.
    
	
Office   of Cooperative Research
    	
[***]
    
	
433   Temple Street
    	
 
    
	
New   Haven, CT 06511
    	
E-mail:   [***]
    
	
E-mail:   [***]
    	
 
    

 

16.  INVENTOR AGREEMENTS

 

If LICENSEE and CHEN enter (or have entered) into an INVENTOR AGREEMENT while CHEN is MEANINGFULLY INVOLVED with YALE, LICENSEE shall so notify YALE in writing within thirty (30) days. The LICENSEE acknowledges that as of the EFFECTIVE DATE: (i) CHEN is a faculty member of YALE; (ii) CHEN is subject to certain policies of YALE, as such policies may be revised from time to time, including policies concerning consulting, conflicts of interest, and

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

32

 

intellectual property (“YALE POLICIES”); and (iii) to the extent any provision of the INVENTOR AGREEMENT conflicts with YALE POLICIES, or imposes obligations or responsibilities compliance with which would require CHEN to act in violation of YALE POLICIES, to the extent of any such conflict with applicable YALE POLICIES, such provision shall be void. Upon reasonable request by LICENSEE, YALE shall notify LICENSEE of applicable YALE POLICIES and any material changes thereto. CHEN is a third party beneficiary of this paragraph.

 

17.  LAWS, FORUM; DISPUTE RESOLUTION

 

17.1.                     Any matter arising out of or related to this AGREEMENT shall be governed by and in accordance with the substantive laws of the State of New York, without regard to any conflict of law principle that would result in the application of the law of any other jurisdiction, except where the federal laws of the United States are applicable and have precedence. Except as provided in Article 17.2, any dispute arising out of or related to this AGREEMENT shall be brought exclusively in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Supreme Court of the State of New York, New York County, and the parties hereby irrevocably submit to the jurisdiction of such courts.

 

17.2.                     Notwithstanding anything else herein to the contrary, in the event of a dispute between the parties relating to the calculation or payment of SUBLICENSE INCOME, including the valuation of any equity or other consideration and the portion of any consideration reasonably allocable to the LICENSED PATENTS and LICENSED INFORMATION, the matter shall be resolved pursuant to this Article 17.2.

 

(a)                                 The parties shall use all reasonable efforts to resolve any such dispute by good faith negotiation and discussion. In the event that the parties are unable to resolve any such dispute within ten (10) business days, either party may submit the dispute to the EXECUTIVE OFFICERS for resolution by written notice to the other party specifying the nature of the dispute and providing sufficient information to permit adequate consideration by the EXECUTIVE OFFICERS.

 

(b)                                 The EXECUTIVE OFFICERS shall diligently and in good faith attempt to resolve the referred dispute within ten (10) business days following delivery of such written notification to the recipient. In the event the EXECUTIVE OFFICERS are unable to resolve the dispute within such ten (10) business day period, or such longer period as may be agreed in writing between the EXECUTIVE OFFICERS, the dispute shall be resolved in accordance with Article 17.2(c).

 

(c)                                  Any dispute subject to resolution under this Article 17.2(c) shall be resolved by binding appraisal of an independent appraiser who shall be an independent expert in the pharmaceutical or biotechnology industry mutually acceptable to the parties. The parties shall use their reasonable best efforts to mutually agree upon

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

33

 

one (1) appraiser; provided, that if the parties have not done so within ten (10) business days after initiation of the appraisal process under this Article 17.2(c), or such longer period of time as the parties may agree in writing, then such appraiser shall be an independent expert as described in the preceding sentence selected by the New York office of the American Arbitration Association. Such appraisal process shall be limited to determining the amount or percentage of SUBLICENSE INCOME payable to YALE. In connection therewith, each party shall submit to the appraiser in writing its position on and desired resolution of such dispute. Such submission shall be made within ten (10) business days of the selection or appointment of the appraiser, and the appraiser shall rule on the matter within ten (10) business days of receipt of the written submissions by both parties. The appraiser shall select one of the parties’ positions as his or her decision, and shall not have authority to render any substantive decision other than to so select the position of either party. Except as provided in the preceding sentence, such appraisal process shall be conducted in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association. The appraiser’s ruling shall be final and binding upon the parties, and shall be the sole and exclusive remedy of the parties with respect to the subject matter of the dispute. The parties hereby expressly agree to waive the right to appeal from the decision of the appraiser, and there shall be no appeal to any court or other authority (government or private) from the decision of the appraiser. Judgment on the award rendered by the appraiser may be enforced in any court having competent jurisdiction, subject only to it being vacated on grounds of fraud or clear bias on the part of the appraiser, as demonstrated by clear and convincing evidence. The costs of any appraisal process conducted pursuant to this Article 17.2(c) (not including legal fees of the parties) shall be borne equally by the parties. The parties shall use diligent efforts to cause the completion of any such appraisal process within sixty (60) days following the initiation thereof.

 

17.3.                     LICENSEE shall comply, and shall cause its AFFILIATES and SUBLICENSEES to comply, with all foreign and United States federal, state, and local laws, regulations, rules and orders applicable to the testing, production, transportation, packaging, labeling, export, practice, sale and use of the LICENSED PRODUCTS. In particular, LICENSEE shall be responsible for assuring compliance with all United States export laws and regulations applicable to this LICENSE and LICENSEE’s activities under this AGREEMENT.

 

18.  MISCELLANEOUS

 

18.2                        This AGREEMENT shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns.

 

18.3                        This AGREEMENT, together with the SRA (including any material transfer agreement entered into thereunder) and VISITING SCIENTIST AGREEMENT, constitute the entire agreement of the parties relating to the LICENSED PATENTS and LICENSED

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

34

 

PRODUCTS, and all prior representations, agreements and understandings, written or oral, are merged into it and are superseded thereby.

 

18.4                        The provisions of this AGREEMENT shall be deemed separable. If any part of this AGREEMENT is rendered void, invalid, or unenforceable by a court of competent jurisdiction, such determination shall not affect the validity or enforceability of the remainder of this AGREEMENT unless the part or parts which are void, invalid or unenforceable shall substantially impair the value of the entire AGREEMENT as to either party, in which case the parties shall negotiate in good faith and reasonably agree upon a valid and enforceable provision which shall be a reasonable substitute for such part or parts in light of the intent of this AGREEMENT.

 

18.5                        Article, Section and paragraph headings are inserted for convenience of reference only and do not form a part of this AGREEMENT.

 

18.6                        Except as expressly provided with respect to CHEN in Article 16, no person not a party to this AGREEMENT, including any employee of any party to this AGREEMENT, shall have or acquire any rights by reason of this AGREEMENT. Nothing contained in this AGREEMENT shall be deemed to constitute the parties partners or joint venturers with each other or any third party, and neither party shall be deemed the agent of the other.

 

18.7                        This AGREEMENT may not be amended or modified except by written agreement executed by each of the parties. Except as provided in Article 5.4, this AGREEMENT shall not be assigned by YALE without the prior written consent of LICENSEE (not to be unreasonably withheld, conditioned or delayed). This AGREEMENT is personal to LICENSEE and shall not be assigned by LICENSEE without the prior written consent of YALE (not to be unreasonably withheld, conditioned or delayed); provided, that LICENSEE may assign this AGREEMENT, in whole or in part, without YALE’s prior written consent to any AFFILIATE of LICENSEE or to any acquirer of LICENSEE or all or substantially all of the business of LICENSEE to which this AGREEMENT relates. LICENSEE shall notify YALE of any assignment under this Article 18.6 within thirty (30) days thereof. Any attempted assignment in contravention of this Article 18.7 shall be null and void and shall constitute a material breach of this AGREEMENT.

 

18.8                        LICENSEE, or any SUBLICENSEE or assignee, will not create, assume or permit to exist any lien, pledge, security interest or other similar encumbrance on this AGREEMENT or any sublicense, and any attempt to create, assume or permit such an encumbrance shall be void.

 

18.9                        The failure of any party hereto to enforce at any time, or for any period of time, any provision of this AGREEMENT shall not be construed as a waiver of either such provision or of the right of such party thereafter to enforce each and every provision of this AGREEMENT.

 

18.10                 Notwithstanding anything contained herein to the contrary, LICENSEE shall not be liable for failure of or delay in performing obligations set forth in this AGREEMENT, and shall

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

35

 

not be deemed in breach of its obligations, and no right of termination shall arise, if such failure or delay is due to any occurrence beyond the reasonable control of LICENSEE, its AFFILIATES or SUBLICENSEES that (a) prevents or substantially interferes with the performance by LICENSEE of any of its obligations hereunder and (b) occurs by reason of any act of God, flood, fire, explosion, earthquake, storm or like catastrophe, strike, lockout, labor dispute, casualty or accident, war (whether or not declared), revolution, civil commotion, act of terrorism, blockage or embargo, epidemic, failure or default of public utilities or common carriers, failure of plant or machinery (provided that such failure would not have been prevented by the exercise of skill, diligence, and prudence that would be reasonably and ordinarily expected from a skilled and experienced person engaged in the same type of undertaking under the same or similar circumstances), or any injunction, law, order, proclamation, regulation, ordinance, demand or requirement of any government or of any subdivision, authority or representative of any such government (a “FORCE MAJEURE”). In event of a FORCE MAJEURE, LICENSEE shall use reasonable efforts to cure or overcome the same and resume performance of its obligations hereunder. If a FORCE MAJEURE persists for more than ninety (90) days, then the parties will discuss in good faith a modification of the parties’ obligations under this AGREEMENT in order to mitigate the delays caused by such FORCE MAJEURE, but, at YALE’s discretion and upon written notice to LICENSEE, such FORCE MAJEURE shall no longer be deemed to excuse LICENSEE’s performance hereunder. For clarity, the duration of any FORCE MAJEURE prior to LICENSEE’s receipt of such notice shall not count toward any termination notice or cure period otherwise provided under this AGREEMENT.

 

18.11                 The parties agree and acknowledge that each party and its counsel reviewed and negotiated the terms and provisions of this AGREEMENT and have contributed to its revision and, therefore, no rule of construction to the effect that any ambiguities are resolved against the drafting party shall be employed in the interpretation of this AGREEMENT. In addition, unless the context otherwise requires, wherever used in this AGREEMENT: (a) the singular shall include the plural, and the plural the singular; (b) the use of any gender shall be applicable to all genders; (c) the word “notice” shall require notice in writing (whether or not specifically stated); (d) the words “will” and “shall” have the same meaning and effect; (e) the word “including” and words of similar import are used without limitation and shall mean “including without limitation;” (f) references to “this AGREEMENT” are to this entire AGREEMENT, including any Schedules, Exhibits, Annexes or Appendices attached hereto; (g) the words “hereof,” “hereto” and words of similar import refer to this entire AGREEMENT; (h) the words “day,” “year” and “quarter” shall refer to calendar days, years and quarters, respectively, unless otherwise specified; and (i) “business day” shall refer to any day other than a Saturday or Sunday or a day on which banks in New York, New York are authorized or required by law to close, or on which YALE’s business offices are closed.

 

18.12                 This AGREEMENT may be executed in any number of counterparts and any party may execute any such counterpart, each of which when executed and delivered by facsimile or by electronic scanned copy (including .pdf) exchanged by electronic transmission, shall

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

36

 

be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.

 

[Signature Page Follows]

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

37

 

IN WITNESS WHEREOF, the parties have caused this License Agreement to be executed by their duly authorized representatives as of the EFFECTIVE DATE.

 

	
YALE UNIVERSITY
    	
NEXTCURE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   E. Jonathan Soderstrom
    	
 
    	
By:
    	
/s/ Michael Richman
    
	
Name:
    	
E. Jonathan Soderstrom,   Ph.D.
    	
 
    	
Name:
    	
Michael Richman
    
	
Title:
    	
Managing Director
   Office of Cooperative Research
    	
Title:
    	
President and CEO
    

 

[NextCure — Signature Page to License Agreement]

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

Appendix A

 

LICENSED PATENTS

 

[***]

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

Appendix B

 

PLAN

 

PLAN to be provided by LICENSEE [***].

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

Appendix C

 

EXCLUDED TARGETS

 

[***]

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

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