Document:

EXHIBIT 4.12

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [***] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

LICENSE AGREEMENT

 

This License Agreement (hereinafter, “Agreement”), dated as of May 14, 2014 (“Execution Date”), between XenoPort, Inc., a Delaware corporation having a place of business at 3410 Central Expressway, Santa Clara, CA 95051 (“XenoPort”), and Reckitt Benckiser Pharmaceuticals Inc., a Delaware corporation having a place of business at 10710 Midlothian Turnpike, Suite 430, Richmond, VA 23235 (“Reckitt”).

 

BACKGROUND

 

A.            XenoPort has developed arbaclofen placarbil, a Transported ProdrugTM of the R-isomer of baclofen (as further defined below, “Compound”) for the treatment of spasticity and other indications. XenoPort owns or controls certain patents, know-how and other intellectual property relating to such Compound.

 

B.            Reckitt desires to further develop and commercialize products containing a Compound (as further defined below, “Products”) in the Territory (as defined below).

 

C.            XenoPort is willing to grant to Reckitt rights and licenses to further develop and commercialize Products in the Territory, on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

1.1          “Addiction Indication(s)” shall mean any and all indications for the treatment and/or prophylaxis of any disease, disorder and/or condition of addiction, abuse and/or dependency, including alcohol addiction, abuse and/or dependency, and/or addiction, dependency upon and/or abuse of narcotics and/or other substances (including opioids, cocaine and nicotine).

 

1.2          “Affiliate” of a Party shall mean any person, corporation or other entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party, as the case may be, for so long as such control exists. As used in this Section 1.2, “control” shall mean: (a) to possess, directly or indirectly, the power to affirmatively direct the management and policies of such person, corporation or other entity, whether through ownership of voting securities or by contract relating to voting rights or corporate governance; or (b) direct or indirect beneficial ownership of at least fifty percent (50%) (or such lesser percentage that is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting share capital in such person, corporation or other entity. A “Controlled Affiliate” is an Affiliate [***].

 

 

EXECUTION COPY

 

1.3          “Annual Net Sales” shall mean the total Net Sales of all Products sold in the Territory in a particular calendar year.

 

1.4          “Annual US Net Sales” shall mean the total Net Sales of all Products sold in the United States in a particular calendar year.

 

1.5          “Annual Ex-US Net Sales” shall mean the total Net Sales of all Products sold in all countries of the Territory outside of the United States in a particular calendar year.

 

1.6          “Compound” shall mean: (a) arbaclofen placarbil (also referred to internally at XenoPort as XP19986), the structure of which is set forth in Exhibit 1.6A attached to this Agreement; (b) [***] Prodrug of baclofen or Prodrug of R-baclofen; and/or (c) any salts or esters of any of the foregoing. The [***] set forth in Exhibit 1.6B attached to this Agreement.

 

1.7          “Control” (including any variations such as “Controlled” or “Controlling”), in the context of intellectual property rights, shall mean rights to intellectual property sufficient to grant the applicable assignment, license or sublicense under this Agreement, without violating the terms of any agreement or other arrangement with a Third Party.

 

1.8          “Data” shall mean: (a) all research data, pharmacology data, preclinical data, and/or clinical data for any Compound and/or any Product generated by, or on behalf of, a Party; and/or (b) all regulatory documentation, information, correspondence and submissions pertaining to, or made in association with, an IND, Marketing Approval Application, Marketing Approval or the like for any Compound or any Product; in each case, that are Controlled by a Party as of the Effective Date or during the term of this Agreement after the Effective Date.

 

1.9          “Effective Date” shall mean the HSR Clearance Date.

 

1.10        “EMA” shall mean the European Medicines Agency, or any successor entity thereto performing similar functions.

 

1.11        “Existing Inventory” shall mean those quantities of [***] in XenoPort’s possession or control as of the Effective Date and listed on Exhibit 1.11 attached to this Agreement.

 

1.12        “FDA” shall mean the United States Food and Drug Administration, or any successor entity thereto performing similar functions.

 

1.13        “FTE” shall mean a full-time equivalent employee (i.e., one fully committed or multiple partially-committed employees aggregating to one full-time employee) employed by XenoPort and assigned to perform specific work.

 

1.14        “GAAP” shall mean United States generally accepted accounting principles or the international financial reporting standards as in effect from time to time, consistently applied by a Party across its entire business.

 

1.15        “IND” shall mean any Investigational New Drug Application (including any amendments thereto, whenever filed) filed with the FDA pursuant to 21 C.F.R. §321 before the

 

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commencement of clinical trials involving a pharmaceutical product (including a Product), or any comparable filings with any Regulatory Authority in any other jurisdiction.

 

1.16        “Indications” shall mean any and all Addiction Indications and/or Other Indications.

 

1.17        “Initiate” shall mean[***].

 

1.18        “Know-How” shall mean, collectively, XenoPort Know-How and Reckitt Know-How.

 

1.19        “Major Market” shall mean [***].

 

1.20        “Major EU Market” shall mean [***].

 

1.21        “Marketing Approval” shall mean approval of a New Drug Application (or its equivalent) submitted to the FDA in the United States or approval of a comparable application that has been submitted to a Regulatory Authority in another country or jurisdiction. For clarity, “Marketing Approval” shall not include any governmental pricing and/or reimbursement approvals and/or authorizations issued by a Regulatory Authority or any other governmental agency in any country or jurisdiction.

 

1.22        “Marketing Approval Application” (or “MAA”) shall mean a New Drug Application (or its equivalent) submitted to the FDA in the United States, or a comparable application that has been submitted to a Regulatory Authority in another country or jurisdiction.

 

1.23        “Net Sales” shall mean the gross amount invoiced for all Products sold by Reckitt, its Affiliates and/or Sublicensees (each, a “Selling Party”) less [***] on such sales for:

 

(a)           [***] and [***];

 

(b)           [***] and [***] and [***], or [***]; and

 

(c)           [***] provided that [***] shall be [***].

 

Sales [***] shall be excluded from the computation of Net Sales except [***].

 

If a Product is sold or transferred for consideration other than cash, or in a transaction not at arm’s length, the Net Sales from such sale or transfer shall be deemed the then-current fair market value of such Product.

 

1.24        “Other Indications” shall mean any and all indications other than the Addiction Indications.

 

1.25        “Party” shall mean XenoPort or Reckitt, individually, and “Parties” shall mean XenoPort and Reckitt, collectively.

 

1.26        “Patent(s)” shall mean any patents and patent applications (whether provisional or non-provisional), together with all additions, divisions, continuations, continuations-in-part,

 

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substitutions, reissues, re-examinations, extensions, registrations, patent term adjustments, patent term extensions, supplemental protection certificates and renewals of any of the foregoing, and including any patent resulting from other post-grant proceedings, including a post-grant review, an inter partes review or an opposition.

 

1.27        “Phase II” shall mean a human clinical trial, the principal purpose of which is to establish a dose or dose range for Phase III clinical trials in a patient population that has the disease or condition being studied, as further described in 21 C.F.R. §312.21(b).

 

1.28        “Phase III” shall mean a human clinical trial, the principal purpose of which is to establish safety and efficacy in patients with the disease or condition being studied, as further described in 21 C.F.R. §312.21(c), which is designed and intended to be of a size and statistical power sufficient to serve as a pivotal study to support the filing of an MAA for the indication being studied.

 

1.29        “Post-Grant Proceedings” shall mean proceedings conducted with respect to a Patent before a patent office or other administrative agency that is not a court of law following the grant or issuance of such Patent and pursuant to which the validity, enforceability or scope of such Patent is challenged by a Third Party, including a post-grant opposition proceeding, ex parte reexamination (but only if such a reexamination is requested by a Third Party), inter partes review and other post-grant review proceedings. An appeal, including to a court of law, from such a Post-Grant Proceeding, shall be understood to be encompassed by the term Post-Grant Proceedings.

 

1.30        “Prodrug” shall mean a compound that may or may not be pharmacologically active that undergoes an in vivo metabolism producing a second compound exhibiting a pharmacological effect. By way of example only, arbaclofen placarbil is a Prodrug of R-baclofen, i.e., arbaclofen placarbil is metabolized in vivo to form R-baclofen.

 

1.31        “Product” shall mean any pharmaceutical product containing a Compound, alone or in combination with one or more other active pharmaceutical ingredients, in any dosage form or formulation.

 

1.32        “Prosecution and Maintenance” (including variations such as “Prosecute and Maintain”) shall mean, with respect to a Patent, the preparing, filing, prosecuting and maintenance of such Patent, as well as continuations, divisionals, re-examinations, reissues and requests for patent term extensions and the like with respect to such Patent, together with the conduct of interferences, and other similar proceedings with respect to a Patent, but excluding Post-Grant Proceedings.

 

1.33        “Reckitt Know-How” shall mean any and all scientific, medical, technical, manufacturing, regulatory and other information relating to any Compound and/or any Product, including Data, that are owned or Controlled by Reckitt as of the Effective Date or during the term of this Agreement after the Effective Date, [***] any of XenoPort’s obligations under this Agreement and/or to exercise XenoPort’s rights under this Agreement [***]. Notwithstanding the foregoing [***] Reckitt Know-How shall [***].

 

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1.34        “Reckitt Patents” shall mean any Patents [***] made by or under the authority of Reckitt (without XenoPort’s participation) as described in Section 9.1.1(a).

 

1.35        “Regulatory Authority” shall mean the FDA, EMA or a regulatory body with similar regulatory authority in any other jurisdiction in the Territory.

 

1.36        “Regulatory Exclusivity” shall mean any exclusive marketing rights or data exclusivity rights conferred by an applicable Regulatory Authority or other governmental authority in a particular country or jurisdiction within the Territory, including any regulatory data protection exclusivity and any extensions to such exclusivity rights.

 

1.37        “Sublicensee” shall mean [***] in the Territory (or a country(ies) or territory(ies) within the Territory); and “Sublicense” shall mean [***]. As used in this Agreement, “Sublicensee” [***].

 

1.38        “Territory” shall mean worldwide.

 

1.39        “Third Party” shall mean any person, corporation, joint venture or other entity, other than Reckitt, XenoPort and their respective Affiliates.

 

1.40        “Valid Claim” means [***] that: (a) has not been revoked, cancelled or held unenforceable, unpatentable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be, or has been, taken; and (b) has not otherwise been rendered unenforceable for any reason, including abandonment, an admission of invalidity or unenforeceability, or as a result of a disclaimer (however or in whatever context made, including in or through reissue, re-examination or Post-Grant Proceedings), or was otherwise dedicated to the public.

 

1.41        “XenoPort Know-How” shall mean all scientific, medical, technical, manufacturing, regulatory and/or other information relating to any Compound and/or Product and Data, that are Controlled by XenoPort or its Controlled Affiliates as of the Effective Date or during the term of this Agreement after the Effective Date, that were generated or utilized by XenoPort in developing or producing any Compound [***] Reckitt to exercise its rights and perform its obligations with respect to Compounds and/or Products under this Agreement.

 

1.42        “XenoPort Patents” shall mean: (a) the Patents Controlled by XenoPort or its Controlled Affiliates listed on Exhibit 1.42, together with all additions, divisions, continuations, substitutions, re-issues, re-examinations, extensions, registrations, patent term adjustments, patent term extensions, supplemental protection certificates and renewals of any such Patents; and (b) any other Patents, including [***] Joint Patents, to the extent Controlled by XenoPort or its Controlled Affiliates as of the Effective Date or during the term of this Agreement after the Effective Date, [***]

 

1.42.1     [***]

 

1.42.2     [***].

 

1.42.3     [***].

 

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1.42.4     Additional Definitions. Each of the following terms shall have the meaning described in the corresponding section of this Agreement below.

 

	
Term
    	
 
    	
Section Defined
    	
 
    	
Term
    	
 
    	
Section Defined
    
	
Agreement
    	
 
    	
Introduction
    	
 
    	
Orange Book
    	
 
    	
9.6
    
	
[***]
    	
 
    	
[***]
    	
 
    	
Other Indication Option
    	
 
    	
2.3
    
	
Brand Name Marks
    	
 
    	
10.3
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    	
 
    	
Patent Dispute Notice
    	
 
    	
9.2.1(b)
    
	
Controlled Affiliate
    	
 
    	
1.2
    	
 
    	
Paragraph IV Certification
    	
 
    	
9.3.2
    
	
Confidential Information
    	
 
    	
11.1
    	
 
    	
Paying Party
    	
 
    	
7.3
    
	
Cooperating Party
    	
 
    	
11.5
    	
 
    	
Potentially Infringing Product
    	
 
    	
9.3.1
    
	
Dispute
    	
 
    	
16.1
    	
 
    	
Prior NDA
    	
 
    	
11.6
    
	
DOJ
    	
 
    	
17.2
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Execution Date
    	
 
    	
Introduction
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Election Notice
    	
 
    	
2.3.1
    	
 
    	
Product Materials
    	
 
    	
13.2.7
    
	
[***]
    	
 
    	
[***]
    	
 
    	
Product Plan(s)
    	
 
    	
4.1.2
    
	
Existing Inventory Payment
    	
 
    	
6.4
    	
 
    	
Publishing Party
    	
 
    	
11.4
    
	
FTC
    	
 
    	
17.2
    	
 
    	
Reckitt
    	
 
    	
Introduction
    
	
Generic Product
    	
 
    	
6.3.4
    	
 
    	
Reckitt Indemnitees
    	
 
    	
15.2
    
	
Hart-Scott-Rodino Act
    	
 
    	
17.1
    	
 
    	
Requesting Party
    	
 
    	
11.5
    
	
HSR Clearance Date
    	
 
    	
17.1
    	
 
    	
Selling Party
    	
 
    	
1.20
    
	
HSR Conditions
    	
 
    	
17.1
    	
 
    	
Senior Executives
    	
 
    	
16.1
    
	
Indemnitee
    	
 
    	
15.3
    	
 
    	
Sublicense
    	
 
    	
1.32
    
	
Indemnitor
    	
 
    	
15.3
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Infringement Actions
    	
 
    	
9.4.1
    	
 
    	
Third Party Claim
    	
 
    	
15.1
    
	
Joint Inventions
    	
 
    	
9.1.2
    	
 
    	
Trademark Guidelines
    	
 
    	
10.1
    
	
Joint Oversight Committee / JOC
    	
 
    	
3.1.1
    	
 
    	
Trigger Notice
    	
 
    	
2.3.1
    
	
Joint Patents
    	
 
    	
9.1.2
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Liabilities
    	
 
    	
15.1
    	
 
    	
Withdrawal Notice
    	
 
    	
3.5
    
	
Listed Patents
    	
 
    	
14.2.3
    	
 
    	
XenoPort
    	
 
    	
Introduction
    
	
[***]
    	
 
    	
[***]
    	
 
    	
XenoPort Indemnitees
    	
 
    	
15.1
    

 

ARTICLE 2
 GRANT OF LICENSE

 

2.1          License. Subject to the terms and conditions of this Agreement, XenoPort hereby grants to Reckitt, during the term of this Agreement, the exclusive right and license under the XenoPort Patents and XenoPort Know-How: (a) to develop, make, have made, use, offer for

 

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sale, sell, import, export, market, distribute and promote Products; and (b) to develop, use, make, have made and import Compounds, and intermediates thereof, solely for the purposes of developing, making or having made Products; in each case, (i) for the Addiction Indications and the Other Indications, subject to Section 2.3, and (ii) in the Territory. XenoPort shall not assign any rights under the XenoPort Patents, unless such assignments are made subject to the rights granted to Reckitt in this Agreement.

 

2.2          Affiliates; Sublicenses. Subject to the terms and conditions of this Section 2.2, Reckitt shall have the right to: (a) exercise the license granted under Section 2.1 through its Affiliates solely for so long as such entity remains an Affiliate of Reckitt; and (b) grant sublicenses under its rights under Section 2.1 to Third Parties, provided that Reckitt may engage Sublicensees [***]. Reckitt shall ensure that each such Affiliate and each of its Sublicensees is bound by a written agreement containing provisions at least as protective of the Compound, Products and XenoPort as this Agreement, [***] In any event, Reckitt shall [***].  Promptly following the execution of each Sublicense, Reckitt shall provide XenoPort with [***].

 

2.3          Other Indications; XenoPort Option. Notwithstanding any other provision of this Agreement, XenoPort shall have the option to negotiate with Reckitt the terms on which Reckitt and XenoPort would collaborate to develop and commercialize any Product(s) for any Other Indications as set forth in this Section 2.3 (such option, the “Other Indication Option”).

 

2.3.1       If Reckitt, [***] Reckitt shall provide written notice thereof to XenoPort and shall identify in such notice [***] with respect to which Reckitt [***] (any such notice, a “Trigger Notice”):

 

(a)           [***]Reckitt’s delivery of a Trigger Notice, Reckitt shall [***] as well as an [***].

 

(b)           XenoPort may exercise its Other Indication Option with respect to the Other Indications [***] by providing written notice (each such notice, an “Election Notice”) to Reckitt [***] Upon XenoPort’s issuance of an Election Notice[***] Reckitt shall negotiate in good faith exclusively with XenoPort the terms upon which Reckitt and XenoPort would collaborate to develop and/or commercialize [***]. For clarity, [***]

 

(c)           [***]

 

2.3.2       For the avoidance of doubt, neither [***] Further if, subject to Section 2.3.1 above, Reckitt [***] XenoPort shall have [***] and Reckitt shall require [***]

 

2.4          No Other Rights. Except for the rights and licenses expressly granted in this Agreement, XenoPort retains all rights under its intellectual property, and no additional rights shall be deemed granted to Reckitt by implication, estoppel or otherwise. For clarity, the licenses and rights granted to Reckitt under this Agreement shall not be construed to convey any licenses or rights under the XenoPort Patents with respect to any compound or subject matter other than Compounds and/or Products, and/or the manufacture or use thereof as more fully set forth in the relevant provisions of this Agreement. [***] Except for the rights and licenses expressly granted in this Agreement, Reckitt retains all rights under its intellectual property, and no additional rights shall be deemed granted to XenoPort by implication, estoppel or otherwise. Reckitt agrees

 

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that neither it, nor any of its Affiliates or sublicensees, will use or otherwise exploit XenoPort Patents and/or XenoPort Know-How, except as expressly licensed and permitted in this Agreement. XenoPort agrees that neither it, nor any of its Affiliates or sublicensees, will use or otherwise exploit Reckitt Patents or Reckitt Know-How, except as expressly licensed and permitted in this Agreement.

 

ARTICLE 3
 GOVERNANCE

 

3.1          Joint Oversight Committee.

 

3.1.1       Establishment. [***] after the Effective Date, XenoPort and Reckitt shall establish a joint oversight committee (“Joint Oversight Committee” or “JOC”) to perform the oversight and coordination functions prescribed for such committee in this Agreement.

 

3.1.2       Duties. The JOC shall:

 

(a)           Facilitate the exchange of Know-How, Data and other information and/or materials between the Parties;

 

(b)           Review and discuss the then-current Product Plan (and any updates thereto provided by Reckitt), as well as progress towards implementation of the then-current Product Plan and achievement of the milestones set forth in Section 6.2;

 

(c)           Provide a forum [***];

 

(d)           Provide a forum for providing timely updates [***]; and

 

(e)           Perform such other duties as are specifically assigned to the JOC in this Agreement or otherwise agreed in writing by the Parties.

 

3.2          Committee Membership. The JOC shall be composed of an equal number of representatives from each of Reckitt and XenoPort, selected by such Party. Unless the Parties otherwise agree, the exact number of representatives for each of Reckitt and XenoPort shall be [***]. Either Party may replace its respective JOC representatives at any time with prior written notice to the other Party; provided that the criteria for composition of the JOC set forth in the preceding sentence continues to be satisfied following any such replacement of a Party’s representative on the JOC.

 

3.3          Committee Meetings.

 

3.3.1       The JOC shall meet at least once each calendar half year, or more or less often as otherwise agreed to by the Parties. The JOC meetings may be conducted by telephone, video-conference or in person as agreed to by the Parties; provided, however, that the JOC shall meet in person at least once each calendar year. Unless otherwise agreed by the Parties, all in-person meetings for the JOC shall be held on an alternating basis between XenoPort’s U.S. facilities and Reckitt’s U.S. facilities. Each Party shall bear its own personnel and travel costs and expenses relating to such Party’s participation in JOC meetings. With the consent of the

 

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other Party (not to be unreasonably withheld or delayed), other employee representatives of a Party may attend any JOC meeting.

 

3.3.2       Either Party may call for an additional JOC meeting upon reasonable written notice to the other Party, [***].

 

3.4          [***]. The Parties agree that the purpose of the JOC shall be to provide a forum for discussion and exchange of information between the Parties, as provided in this Agreement, and the JOC shall [***].

 

3.5          Withdrawal from JOC. Notwithstanding Sections 3.1, 3.2 and 3.3 above, it is understood that XenoPort’s participation in the JOC is not an obligation of, or a deliverable to be provided by, XenoPort under this Agreement and that such participation is a right of XenoPort that XenoPort may exercise or waive, in its discretion. At any time during the term of the Agreement and for any reason, XenoPort shall have the right to withdraw from participation in the JOC upon written notice to Reckitt, which notice shall be effective immediately upon receipt (“Withdrawal Notice”). Following the issuance of a Withdrawal Notice, any plans, information, materials and/or other Know-How that either Party is obligated to provide to the JOC shall be provided directly to the other Party. Following the delivery of a Withdrawal Notice, this Article 3 (excluding the immediately preceding sentence) will become null and void and there will no longer be any obligation for Reckitt to participate in any future request by XenoPort to re-establish the JOC.

 

ARTICLE 4
 DEVELOPMENT AND REGULATORY ACTIVITIES; TECHNOLOGY TRANSFER

 

4.1          Development and Regulatory Activities.

 

4.1.1       Responsibility. Reckitt shall be responsible[***] for all preclinical, clinical and other development activities required to obtain Marketing Approval for the Products in the Territory. Reckitt shall also be responsible, at its expense, for filing, obtaining and maintaining approvals for the development and commercialization of the Products for all Indications in the Territory, including any such IND, MAA or Marketing Approval, as well as liaising with, and managing all interactions with Regulatory Authorities in the Territory with respect thereto.

 

4.1.2       Product Plan. [***], Reckitt shall provide to the JOC an initial plan outlining the planned activities for the development of Compounds and Products by or under the authority of Reckitt [***]. Thereafter [***] Reckitt shall provide to the JOC an updated plan for the development of Compounds and Products by Reckitt, its Affiliates and/or Sublicensees [***] (each such plan, including the initial plan, a “Product Plan”), it being understood that the Product Plan [***] Each Product Plan shall include an outline [***] and the timelines and budget for all such activities.

 

4.1.3       Communications Regarding Development and Regulatory Activities with respect to Compounds and Products. Without limiting Section 4.1.2 above, Reckitt shall keep the JOC reasonably informed as to Reckitt’s (and its Affiliates’ and Sublicensees’) plans for, and the

 

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progress of, the development and regulatory activities relating to each Compound and each Product in the Territory, [***].

 

4.1.4       Conduct of Activities. Reckitt shall, and shall ensure that its Affiliates and Sublicensees, carry out all development and regulatory activities with respect to Compounds and/or Products: [***].

 

4.2          Exchange of Data and Know-How; Assignment of INDs.

 

4.2.1       Data and Know-How. Subject to the timelines set forth in Section 4.2.2 below for the transfer of the Existing INDs [***] the Effective Date, XenoPort will make available to Reckitt [***].

 

4.2.2       Assignment of INDs. Within [***], XenoPort shall transfer (and/or cause to be transferred) to Reckitt [***] (the “Existing INDs”). Prior to the assignment and transfer of the Existing INDs: (a) [***]; and (b) [***].

 

4.2.3       Transfer Date. “Transfer Date” shall mean [***].

 

4.3          Regulatory Cooperation. XenoPort shall [***].

 

4.4          Supply Transition; Transfer of Existing Inventory.

 

4.4.1       Supply Transition. Promptly following [***]. For clarity, except for the delivery to Reckitt of the Existing Inventory pursuant to Section 4.4.2 below, XenoPort [***].

 

4.4.2       Transfer of Existing Inventory. Subject to Reckitt’s payment of the Existing Inventory Payment in accordance with Section 6.4, XenoPort hereby conveys and assigns to Reckitt all XenoPort’s right, title and interest in and to the Existing Inventory. Within [***], XenoPort shall deliver such Existing Inventory to Reckitt [***] the applicable item of Existing Inventory as set forth on Exhibit 1.11. For the avoidance of doubt, [***]. In no event will XenoPort [***]. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 14.2.7, NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE [***] IS BEING TRANSFERRED AS IS, WHERE IS, WITH ALL FAULTS AND XENOPORT MAKES NO REPRESENTATIONS NOR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE [***] INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR AS TO THE CONDITION, VALUE OR QUALITY OF THE [***].

 

4.5          Formulation Development and CMC Activities. Within [***], XenoPort and Reckitt shall [***] provided that any such [***].

 

4.6          Adverse Event Reporting. As between the Parties, Reckitt shall [***]. Reckitt shall [***] Notwithstanding the foregoing, XenoPort shall timely report to Reckitt any adverse drug reactions/experiences, product quality complaints, product complaints and safety data relating to a Compound or a Product, which XenoPort becomes aware of after the Effective Date, in accordance with [***]

 

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ARTICLE 5
 COMMERCIALIZATION

 

5.1          Commercialization of Products in the Territory. Subject to the terms and conditions set forth in this Agreement (including XenoPort’s Other Indication Option under Section 2.3), Reckitt shall be responsible, [***], for distribution, marketing, promotion and other commercialization of Products in the Territory, including obtaining all necessary and appropriate pricing and/or reimbursement approvals therefor in each country of the Territory.

 

5.2          Conduct of Commercialization Activities. Reckitt shall, and shall ensure that its Affiliates and Sublicensees, carry out all activities with respect to the distribution, marketing, promotion and other commercialization of Products in accordance with [***] and the provisions of this Agreement, and in compliance in all material respects with all applicable laws, rules and regulations within the portion of the Territory in which such activities are conducted.

 

5.3          Communications Regarding Commercialization of Products. Reckitt shall [***]Without limiting the foregoing, [***].

 

ARTICLE 6
 PAYMENTS AND ROYALTIES

 

6.1          Initial License Fee. Reckitt shall pay to XenoPort an initial license fee of Twenty Million United States Dollars (US$20,000,000) [***] following the Effective Date in accordance with the payment provisions in Article 7. The initial license fee set forth in this Section 6,1 shall not be refundable or creditable against any future milestone payments, royalties or other payments by Reckitt to XenoPort under this Agreement.

 

6.2          Milestones.

 

6.2.1       Development Milestone Payments. In addition, Reckitt shall pay to XenoPort the development milestone payments set forth below following the first achievement by Reckitt, or any of its Affiliates or Sublicensees, of the corresponding milestone below, in accordance with this Section 6.2 and the payment provisions in Article 7. For the avoidance of doubt, each milestone is payable one time only upon the first occurrence of the event triggering the respective milestone as provided in Section 6.2.5 below.

 

	
Development Milestone Event
    	
 
    	
Milestone Payment
    
	
 
    	
 
    	
 
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    

 

11

 

6.2.2       Commercial Milestone Payments. Reckitt shall pay to XenoPort the commercial milestone payments set forth below following the first achievement of the corresponding milestone below, in accordance with this Section 6.2 and the payment provisions in Article 7. For the avoidance of doubt, each milestone is payable one time only upon the first occurrence of the event triggering the respective milestone as provided in Section 6.2.5 below.

 

	
Commercial Milestone Event
    	
 
    	
Milestone Payment
    
	
 
    	
 
    	
 
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    

 

For the avoidance of doubt, [***].

 

6.2.3       Certain Definitions. For the purposes of this Article 6:

 

(a)           [***]

 

6.2.4       [***].

 

6.2.5       Reports and Payments. Reckitt shall notify XenoPort in writing [***] Any milestone payable by Reckitt pursuant to this Section 6.2 shall be made no more than once with respect to the achievement of such milestone by Reckitt or any of its Affiliates or Sublicensees and in no event shall the aggregate amount to be paid by Reckitt under this Section 6.2 exceed One Hundred Twenty Million Dollars ($120,000,000). For the avoidance of doubt, each milestone payment set forth in this Section 6.2 shall not be refundable and shall not be creditable against future milestone payments, royalties or other payments to XenoPort under this Agreement.

 

6.3          Royalty Payments. Subject to the terms and conditions of this Agreement, in further consideration of the license and rights granted by XenoPort to Reckitt under this Agreement, Reckitt shall pay to XenoPort royalties on the Net Sales of Products by Reckitt, its Affiliates and/or Sublicensees in the Territory as set out in this Section 6.3.

 

6.3.1       Sales in the United States. Reckitt shall pay to XenoPort tiered royalties at the rates set out below on Net Sales of Products sold in the United States by Reckitt, its Affiliates and/or Sublicensees:

 

	
Annual US Net Sales of Products
    	
 
    	
Royalty Rate
    
	
 
    	
 
    	
 
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    

 

12

 

6.3.2       Sales outside the United States. Reckitt shall pay to XenoPort tiered royalties at the rates set out below on Net Sales of Products sold in each country of the Territory outside the United States by Reckitt, its Affiliates and/or Sublicensees:

 

	
Annual Ex-US Net Sales of Products
    	
 
    	
Royalty Rate
    
	
 
    	
 
    	
 
    
	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    

 

6.3.3       Royalty Term. Reckitt’s obligation to pay royalties under Sections 6.3.1 and 6.3.2 shall commence on the first commercial sale of the first Product [***] and shall continue[***] until the later to occur of: (a) expiration of the last to expire Valid Claim [***] and (b) expiration of all Regulatory Exclusivity with respect to [***]. The Parties acknowledge and agree that the royalty payments set forth hereunder are to be made in consideration for the licenses and rights granted by XenoPort to Reckitt with respect to the XenoPort Patents and the XenoPort Know-How (including regulatory filings made, and Data generated by, XenoPort) and have been agreed to by the Parties for the purpose of reflecting and advancing their mutual interest and convenience, including the ease of calculation of such royalties and the payment of such royalties by Reckitt to XenoPort.

 

6.3.4       Generic Competition. On a country-by-country and Product-by-Product basis, if [***] then:

 

(a)           With respect to the United States, Reckitt shall not [***] pay a royalty under Section 6.3.1 above [***] after [***] first Generic Product [***] for [***] Generic Products remains on the market [***]; and

 

(b)           With respect to each country of the Territory other than the United States,

 

(i)            if Generic [***] such Product and such Generic [***], then the royalties payable pursuant• to Section 6.3.2 above with respect to such Product sold in such country shall be reduced [***]; or

 

(ii)           if such Generic [***] such Product and such Generic [***] then Reckitt shall not be obligated to pay a royalty under this Agreement with respect to such Product in such country for the remaining term of the Agreement[***].

 

(c)           If [***] a Product [***] a country outside of the United States and a Generic [***], the royalties payable pursuant to Section 6.3.2 shall be reduced [***] for a period [***] If any time after [***] such [***] period[***] (a) [***] such Product and such Generic [***] then the royalties payable pursuant to Section 6.3.2 shall continue to be reduced [***], and (b) [***] such Product and such Generic [***] then Reckitt shall not be obligated to pay a royalty under Section 6.3.2 above with respect to such Product in such country for the remaining term of the Agreement.

 

(d)           “Generic Product” means [***].

 

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(e)           As used in this Section 6.3.4, the phrase “[***]” means [***].

 

6.3.5       Reports and Payments. Commencing [***] Reckitt shall deliver to XenoPort a report setting out in reasonable detail the information necessary to calculate the royalty payments due under this Section 6.3 with respect to Net Sales of Products made during such calendar quarter[***]:

 

(a)           [***] the relevant calendar quarter on a country-by-country basis;

 

(b)           [***] the relevant calendar quarter on a country-by-country basis;

 

(c)           [***] the relevant calendar quarter on a country-by-country basis;

 

(d)           all relevant [***] in accordance with the terms of this Agreement;

 

(e)           all relevant [***] in accordance with [***].

 

Any amounts due under Section 6.3.1 or Section 6.3.2, as applicable, for such calendar quarter shall accompany such statement.

 

6.4          Payment for Existing Inventory. In consideration for the Existing Inventory transferred to Reckitt, Reckitt shall pay XenoPort Five Million Dollars ($5,000,000) (the “Existing Inventory Payment”) [***] after XenoPort’s delivery of the Existing Inventory in accordance with Section 4.4.2 above.

 

ARTICLE 7
 PAYMENTS; BOOKS AND RECORDS

 

7.1          Payment Method. Unless otherwise expressly stated in this Agreement, all payments under this Agreement shall be made by bank wire transfer in immediately available funds to an account designated by the Party to which such payments are due. All dollar amounts specified in, and all payments made under, this Agreement shall be in U.S. dollars. If any currency conversion shall be required in connection with the payment of royalties under this Agreement, such conversion shall be calculated using the average exchange rate for the conversion of foreign currency into United States Dollars, quoted for current transactions for both buying and selling United States Dollars, as reported in The Wall Street Journal (Internet Edition) for the last business day of each month of the calendar quarter to which such payment pertains.

 

7.2          Late Payments. Any payments or portions thereof due under this Agreement that are not paid by the date such payments are due under this Agreement shall bear interest at a rate equal to: [***]. This Section 7.2 shall in no way limit any other remedies available to the Parties.

 

7.3          Withholding Taxes. If laws or regulations require withholding by a Party (“Paying Party”) of any taxes imposed upon the other Party on account of any royalties or other payments paid under this Agreement, such taxes shall be deducted by the Paying Party as required by law from such payment and shall be paid by the Paying Party to the proper taxing authorities. Official receipts of payment of any withholding tax shall be secured and sent to the other Party

 

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as evidence of such payment. The Parties will exercise their reasonable efforts to ensure that any withholding taxes imposed are reduced as far as possible under the provisions of any applicable tax treaty, and shall cooperate in filing any forms required for such reduction.

 

7.4          Records; Inspection. Reckitt shall keep, and require its Affiliates and Sublicensees to keep, complete, true and accurate books of accounts and records for the purpose of determining the amounts payable to XenoPort pursuant to this Agreement. Such books and records shall be kept for [***], or for such longer periods as required by applicable laws. Such records will be open for inspection during [***] (or such longer period as required by applicable laws, if relevant) by an independent auditor chosen by [***], for the purpose of verifying the amounts payable by Reckitt hereunder. Such inspections may be made [***] at reasonable times and on reasonable prior written notice. Such records [***] shall be subject to [***]. The independent auditor shall be obligated to execute a reasonable confidentiality agreement prior to commencing any such inspection. Inspections conducted under this Section 7.4 shall be at the expense of[***], unless a variation or error producing [***] in amounts payable [***] in which case, all reasonable costs relating to the inspection for such period and any [***] amounts that are discovered shall be paid by [***]. The Parties will endeavor in such inspection to minimize disruption of Reckitt’s normal business activities to the extent reasonably practicable.

 

ARTICLE 8
 DILIGENCE

 

8.1          Diligent Efforts of Reckitt. Reckitt shall use Commercially Reasonable Efforts to develop, achieve Marketing Approval for, and launch [***]. and [***] to market, promote and sell Products and to maximize the Net Sales of Products [***] Without limiting the foregoing, [***]; and Reckitt also agrees to use Commercially Reasonable Efforts to achieve the milestones set forth in Section 6.2. As used in this Section 8.1, “Commercially Reasonable Efforts” shall mean [***]

 

ARTICLE 9
 INTELLECTUAL PROPERTY

 

9.1          Ownership.

 

9.1.1       [***]

 

(a)           “[***]” means any inventions or other intellectual property made by, or on behalf of, each Party, whether alone or jointly with the other Party, [***].

 

(b)           Reckitt hereby grants to XenoPort [***]

 

9.1.2       Ownership of Inventions. As between the Parties, XenoPort shall have sole and exclusive ownership of all right, title and interest in and to all XenoPort Patents and XenoPort Know-How, subject to the rights and licenses granted to Reckitt in the Territory under this Agreement. Each Party shall own any inventions and other intellectual property [***] made solely by employee(s) and/or agent(s) of such Party. The Parties shall jointly own any inventions and other intellectual property [***] made jointly by (i) employee(s) and/or agent(s) of XenoPort and (ii) employee(s) and/or agent(s) of Reckitt in performance of activities under this Agreement (“Joint Inventions”). Prosecution of any Patent with respect to such Joint Inventions (“Joint

 

15

 

Patents”) shall be solely as mutually agreed. Inventorship of all inventions and discoveries conceived, reduced to practice, discovered or made in performance of activities under this Agreement, whether or not patentable, shall be determined in accordance with United States patent laws. Except as expressly provided in this Agreement, it is understood that neither Party shall have any obligation to obtain any approval of, nor pay a share of the proceeds to, the other Party to practice, enforce, license, assign or otherwise exploit Joint Inventions and each Party hereby waives any right it may have under the laws of any jurisdiction to require such approval, joinder or accounting.

 

9.1.3       Disclosure. Each Party agrees to disclose to the other Party all [***] made by, on behalf of or under the authority of, such Party, as applicable, [***]. Any such disclosure shall be made [***]. To the extent XenoPort [***], XenoPort will notify Reckitt [***].

 

9.1.4       [***]

 

9.2          Prosecution and Maintenance; Post-Grant Review Proceedings.

 

9.2.1       Prosecution and Maintenance of XenoPort Patents.

 

(a)           XenoPort shall control the Prosecution and Maintenance of the XenoPort Patents [***] but excluding any Joint Patents. Reckitt shall [***]. XenoPort shall bear the burden of its own costs for its Prosecution and Maintenance of the [***]. XenoPort shall: [***], XenoPort shall also update Reckitt on the overall status of the Prosecution and Maintenance of [***] In the event that the Parties have a disagreement relating to Prosecution and Maintenance of [***], either Party may refer that dispute for prompt resolution pursuant to the dispute resolution provisions set forth in Section 16.1 hereof. Notwithstanding the foregoing, if prior to the resolution of a dispute pursuant to Section 16.1 hereof, XenoPort, [***]

 

(b)           If XenoPort determines not to file any Patent, or to abandon any Patent, [***], XenoPort shall provide Reckitt with written notice of such decision [***] In such event, Reckitt may assume control of the Prosecution and Maintenance of any such Patent [***]; provided that any such Prosecution and Maintenance by Reckitt shall be at Reckitt’s sole cost and expense [***]

 

9.2.2       Post-Grant Review Proceedings Involving XenoPort Patents. XenoPort shall have the right, at its own expense, to defend any Post-Grant Proceeding [***]. Reckitt shall have the right, at its own expense, to defend any Post-Grant Proceeding [***]. In the event that Reckitt declines to control the defense of such a Post-Grant Proceeding, Reckitt shall timely so advise XenoPort in writing [***] and XenoPort may, at its cost and expense, assume control of the defense of such Post-Grant Proceeding. [***]

 

9.2.3       Reckitt Patents. Reckitt shall control the Prosecution and Maintenance of [***], excluding any Joint Patents. Reckitt shall bear the burden of its own costs for its patent Prosecution and Maintenance for Reckitt Patents. Reckitt shall keep XenoPort reasonably

 

16

 

informed regarding the Prosecution and Maintenance of the Reckitt Patents. If Reckitt determines not to file any Patent, or to abandon any Patent [***], Reckitt shall provide XenoPort with written notice of such decision [***] In such event, XenoPort shall [***]. Reckitt shall have the right, at its own expense, to defend any Post-Grant Proceeding to the extent that such Post-Grant Proceeding involves a Reckitt Patent. In the event that Reckitt declines to control the defense of such a Post-Grant Proceeding, Reckitt shall [***] and XenoPort may, at its cost and expense, assume control of the defense of such Post-Grant Proceeding.

 

9.2.4       Cooperation. Each Party shall cooperate with the other Party in connection with all activities relating to the Prosecution and Maintenance and defense of Post-Grant Proceedings undertaken by such other Party pursuant to this Section 9.2, including: {a) making available in a timely manner any documents or information such other Party reasonably requests to facilitate such other Party’s Prosecution and Maintenance and defense of Post-Grant Proceedings of the applicable Patents pursuant to this Section 9.2; and (b) if and as appropriate, signing (or causing to have signed) all documents relating to the Prosecution and Maintenance and defense of Post-Grant Proceedings of any applicable Patents by such other Party. Each Party shall also promptly provide to the other Party all information reasonably requested by such other Party with regard to such Party’s activities pursuant to this Section 9.2. The Parties shall hold all information disclosed to it under this Section 9.2 as Confidential Information of the other Party.

 

9.3          Enforcement.

 

9.3.1       Notice. In the event that XenoPort or Reckitt becomes aware of a product that contains a Compound as an active pharmaceutical ingredient that may infringe any (a) XenoPort Patent, (b) [***], (c) Reckitt Patent, or (d) any Joint Patent (a “Potentially Infringing Product”), that Party shall promptly notify the other Party in writing.

 

9.3.2       Initiating Enforcement Actions. Reckitt shall have the first right, at its own expense, to bring an action to enforce any applicable [***] against a Potentially Infringing Product; provided that if the relevant [***] obtain XenoPort’s consent to enforce [***], which consent shall not be unreasonably withheld. For clarity, Reckitt shall only have the right to enforce [***] against a Potentially Infringing Product with XenoPort’s consent. XenoPort shall have the right, at its own expense, to participate in any such action by Reckitt against a Potentially Infringing Product with counsel of its own choice, subject to Reckitt’s control of such action. If Reckitt does not initiate such an enforcement action [***], then XenoPort shall have the right, but not the obligation, to initiate infringement proceedings or take other appropriate action against a Potentially Infringing Product, at its own expense and under its sole control; provided however that in the situation where the Potentially Infringing Product is the subject of a paragraph IV certification under the Hatch Waxman statute, 21 U.S.C. § 355(b)(2)(A) or 355(j)(2)(A)(vii)(IV), or their successor provisions (“Paragraph IV  Certification”), Reckitt shall notify XenoPort whether Reckitt elects to not initiate an infringement suit in response to such a Paragraph IV Certification [***] so that XenoPort may, but shall not be required to, initiate and exercise sole control over such an infringement action. The Party conducting such action under this Section 9.3.2 shall have full control over the conduct of such action, including settlement thereof; provided, however, that the Party conducting such action may not settle any such action, or make any admissions or assert any position in such action, in a manner that would materially adversely affect the rights or interests of the other Party (including by making any admission or assertion of any position that

 

17

 

would materially adversely affect the validity, enforceability or scope of any XenoPort Patent or [***]), without the prior written consent of the other Party, which shall not be unreasonably withheld or delayed. In any event, the Parties shall assist one another and cooperate in a timely manner in any such action at the other’s reasonable request. For the avoidance of doubt, Reckitt shall not have any rights to enforce or otherwise assert any XenoPort Patent against any person or entity with respect to any activity other than the manufacture, use or sale of a Potentially Infringing Product.

 

9.3.3       Recovery. Reckitt and XenoPort shall [***], associated with any action against a Potentially Infringing Product undertaken pursuant to Section 9.3.2 above or any settlement thereof [***]

 

9.3.4       Cooperation. The Parties shall keep one another informed of the status of their respective activities regarding any litigation or settlement thereof concerning a Potentially Infringing Product and shall assist one another and cooperate in a timely manner in any such litigation and in pre-litigation activities at the other’s reasonable request (including joining as a party plaintiff to the extent necessary and requested by the other Party).

 

9.4          Third Party Infringement Claims.

 

9.4.1       Notice., Control of Defense. If the production or use of any Compound or the production, sale or use any Product in the Territory pursuant to this Agreement results in a claim, suit or proceeding alleging patent infringement against XenoPort or Reckitt (or, to the extent applicable, their respective Affiliates or (Sub)licensees) (collectively, “Infringement Actions”), such Party shall promptly notify the other Party hereto in writing. The Party subject to such Infringement Action shall have the right to direct and control the defense thereof.; provided, however, that the other Party may participate in the defense and/or settlement thereof at its own expense with counsel of its choice. In any event, the Party that is subject to the Infringement Action agrees to keep the other Party hereto reasonably informed of all material developments in connection with any such Infringement Action.

 

9.4.2       Settlement of Infringement Actions Involving a Compound or a Product. The Party who is subject to any Infringement Action described in Section 9.4.1 above agrees not to settle such Infringement Action, or make any admissions or assert any position in such Infringement Action, in a manner that would adversely affect any (i) Compound or any Product, (ii) the ability to develop, make, have made, use, offer for sale, sale, import, export, market, distribute and/or promote any Compound or any Product in the Territory or (iii) any XenoPort Patent [***], in each case without the prior written consent of the other Party, which shall not be unreasonably withheld or delayed.

 

9.5          Patent Marking. Reckitt [***] in accordance with [***] In addition, in those countries where a license must be recorded, on Reckitt’s written request and at its expense (but not including the costs of any legal fees incurred by XenoPort), the Parties will cooperate in the preparation and execution of a form of license agreement appropriate for recordation purposes (on terms that are consistent with, and no broader or more onerous than, the terms of this Agreement) and Reckitt will arrange for the recordation of such license agreement with the appropriate governmental authority, promptly following execution of any such form of license.

 

18

 

9.6          Regulatory Data Protection. Subject to this Section 9.6, Reckitt will list, and/or cause to be listed, with the applicable Regulatory Authorities during the term of the Agreement all applicable Patents for any Product that is, or will be, commercialized in the Territory (including any Product that has become the subject of an NDA submitted to FDA), such listings to include all Patents required to be listed in the Orange Book under the Hatch-Waxman Act and all so called “Patent Register” listings as required in Canada. In connection with such listings, the Parties will meet to evaluate and identify all applicable XenoPort Patents and Reckitt Patents. Notwithstanding the foregoing, [***]. “Orange Book” means the Approved Drug Products with Therapeutic Equivalence Evaluation published by the FDA’s Center for Drug Evaluation and Research, as updated and modified from time to time.

 

ARTICLE 10
 TRADEMARKS

 

10.1        Display. Reckitt shall [***]; provided that all labeling, packaging materials and promotional materials shall display the phrase “Under license by XenoPort, Inc.” in reasonable size and prominence consistent with the trademark usage guidelines (“Trademark Guidelines”) described on Exhibit 10.1. XenoPort may update the Trademark Guidelines by delivering amended Trademark Guidelines to Reckitt. The trademarks of Reckitt, trade dress, style of packaging and the like with respect to each Product in the Territory may be determined by Reckitt in a manner that is consistent with Reckitt’s standard trade dress and style.

 

10.2        Grant of License to XenoPort Trade Name. Subject to the terms and conditions of this Agreement, including the Trademark Guidelines, XenoPort hereby grants to Reckitt an exclusive license to use the XenoPort trade name in the Territory for the packaging, marketing, distribution, sale and/or promotion of the Products in accordance with Section 10.1 above. As between the Parties, XenoPort shall own all right, title and interest in and to the XenoPort trade name and all goodwill from the use of the XenoPort trade name under this Agreement shall vest in and inure to the benefit of XenoPort. To the extent Reckitt obtains any right, title or interest in or to the XenoPort trade name, Reckitt shall take all such steps as XenoPort may reasonably request to transfer to XenoPort all rights, registration, recordation and the like for such trade name. Reckitt shall not use, nor authorize the use of, the XenoPort trade name except as expressly permitted in this Agreement and described in the Trademark Guidelines, nor take any action that would materially adversely affect the value of XenoPort’s trade name.

 

10.3        Brand Name Marks. Reckitt shall have the exclusive right to determine the brand name under which the Product will be sold in the Territories, and shall have the sole right to create and select the trademark and any accompanying logos for the brand name (the “Brand Name Marks”), to file for and obtain registrations for the Brand Name Marks, and to own all right, title and interest in and to the Brand Name Marks during the term in the Territory, provided that the Brand Name Marks shall not be confusingly similar to the XenoPort trade name or logos.

 

10.4        [***] Packaging and Promotional Materials. To the extent necessary [***] with respect to any such promotional materials, packaging or Product that have been developed during such calendar year and [***], in each case, [***] the Trademark Guidelines [***], such confirmation will be deemed to have been received.

 

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10.5        Termination of Trademark License. Reckitt’s right to use the XenoPort trade name in the Territory shall terminate with the termination of this Agreement; provided that Reckitt’s right to use the XenoPort trade name shall continue to the extent necessary for Reckitt to fulfill its obligations after termination of this Agreement set forth in Section 13.2.

 

ARTICLE 11
 CONFIDENTIALITY

 

11.1        Confidential Information. Except as expressly provided in this Agreement, the Parties agree that the receiving Party shall not publish or otherwise disclose and shall not use for any purpose any information furnished to it by the other Party hereto pursuant to this Agreement (collectively, “Confidential Information”). For clarity, all information and Data shared by Reckitt with the JOC or XenoPort shall be deemed Confidential Information of Reckitt. Notwithstanding the foregoing, Confidential Information shall not include information that, in each case as demonstrated by written documentation:

 

(a)           was already known to the receiving Party, other than under an obligation of  confidentiality, at the time of disclosure or, as shown by written documentation, was developed by the receiving Party prior to its disclosure by the disclosing Party;

 

(b)           was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving Party;

 

(c)           became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving Party in breach of this Agreement;

 

(d)           was subsequently lawfully disclosed to the receiving Party by a person other than the disclosing Party, and who did not directly or indirectly receive such information from disclosing Party; or

 

(e)           is developed by the receiving Party without use of, or reference to, any information or materials disclosed by the disclosing Party.

 

11.2        Permitted Disclosures. Notwithstanding the provisions of Section 11.1 above and subject to Sections 11.3 and 11.4 below, each Party hereto may use and disclose the other Party’s Confidential Information to its Affiliates, (Sub)licensees, contractors and any other Third Parties to the extent such use and/or disclosure is reasonably necessary to exercise the rights granted to it, or reserved by it, under this Agreement, in prosecuting or defending litigation, complying with applicable governmental laws or regulations, submitting information to tax or other governmental authorities or conducting clinical trials as permitted hereunder with respect to any Compound or any Product. If a Party is required by law or regulations to make any such disclosure of the other Party’s Confidential Information, to the extent it may legally do so, it will give reasonable advance notice to the other Party of such disclosure and, save to the extent inappropriate in the case of patent applications or otherwise, will use its good faith efforts to secure confidential treatment of such Confidential Information prior to its disclosure (whether through protective orders or otherwise). For any other disclosures of the other Party’s Confidential Information, including to Affiliates, (Sub)licensees, contractors and other Third

 

20

 

Parties, a Party shall ensure that the recipient thereof is bound by a written confidentiality agreement as materially protective of such other Party and its Confidential Information as this Article 11.

 

11.3        Confidential Terms. Each Party agrees not to disclose to any Third Party [***], except each Party may disclose [***]. Notwithstanding the foregoing, [***].

 

11.4        Publication of Product Information. [***], Reckitt shall [***] (unless Reckitt [***], (“Publishing Party”) [***]). The Publishing Party shall [***] provided by XenoPort [***]. In addition, the Publishing Party shall, at the request of XenoPort, remove any Confidential Information of XenoPort from such publication, presentation or submission [***], except the Publishing Party shall have the right to publicly disclose any information, including Confidential Information, pertaining to safety or efficacy of any Compound and/or any Product that such party believes in good faith it is legally obligated or ethically bound to disclose. The contribution of each Party shall be noted in all publications or presentations by acknowledgment or co-authorship, whichever is appropriate.

 

11.5        General Publicity. The Parties acknowledge the importance of supporting each other’s efforts to publicly disclose results and significant developments regarding Compounds and Products and other activities in connection with this Agreement, beyond what is required by applicable laws such as SEC disclosure rules and the like, and each Party may make such non-mandated disclosures from time to time [***]. When a Party (the “Requesting Party”) elects to make any such public disclosure under this Section 11.5, it will give the other Party (the “Cooperating Party”) [***] such statement, it being understood that if the Cooperating Party does not notify the Requesting Party in writing [***], as contemplated in this Section 11.5, such disclosure shall be deemed approved; and in any event, the Cooperating Party shall [***]. The principles to be observed in such disclosures shall be accuracy, compliance with applicable law and regulatory guidance documents, reasonable sensitivity to potential negative reactions of the FDA (and its foreign counterparts) and the need to keep investors informed regarding the Requesting Party’s business. Accordingly, the Cooperating Party shall not withhold its approval of a proposed disclosure that complies with such principles.

 

11.6        Prior Non-Disclosure Agreements. Upon execution of this Agreement, the terms of this Article 11 shall supersede the Parties’ obligations under that certain Confidentiality Agreement between XenoPort and Reckitt dated March 12, 2013 (as amended) (“Prior NDA”) solely with respect to non-use and non-disclosure of any information relating to Compounds or Products or either Party’s activities (actual or proposed) relating to Compounds or Products (but not, for clarity, to the extent the Prior NDA includes non-use and non-disclosure obligations with respect to any other information disclosed by one Party to the other (or any of its Affiliates) under the Prior NDA, including any information relating to any compound or product of XenoPort other than Compounds and/or Products disclosed by XenoPort to Reckitt or any of its Affiliates under the Prior NDA). Any information disclosed under such prior agreements shall be deemed disclosed under this Agreement.

 

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ARTICLE 12
 TERM AND TERMINATION

 

12.1        Term. This Agreement shall commence on the Execution Date and, unless terminated earlier as provided in this Article 12, shall continue in full force and effect on a Product-by-Product basis until Reckitt has no remaining payment obligations with respect to such Product. Upon expiration (but not an earlier termination) of this Agreement in the Territory with respect to a Product, Reckitt shall [***] with respect to such Product (and the Compound contained in such Product), except such [***] throughout the Territory.

 

12.2        Breach. Either Party to this Agreement may terminate this Agreement in the event the other Party shall have materially breached or defaulted in the performance of any of its material obligations hereunder, and such default shall have continued for [***] after written notice thereof was provided to the breaching Party by the non-breaching Party. Any such termination shall become effective at the end of [***] period unless the breaching Party has (a) cured any such breach or default or (b) delivered to the other Party a reasonable plan to cure such breach or default, prior to [***]. In the event that a plan is delivered pursuant to subpart (b) in the foregoing sentence, the cure period shall be extended for [***]. If, as of the end of such [***], such breach or default has not been cured, such termination shall become effective.

 

12.3        Termination For Convenience. Reckitt may terminate this Agreement in its entirety for any reason upon one hundred twenty (120) days’ prior written notice to XenoPort. If at any time commencing fifteen (15) months after the Transfer Date [***], XenoPort may terminate this Agreement on written notice to Reckitt, except that XenoPort shall not have the right to so terminate this Agreement to the extent [***]

 

12.4        Termination for Patent Challenge. XenoPort shall have the right to terminate this Agreement upon notice to Reckitt in the event that Reckitt, any Affiliate of Reckitt, or any Sublicensee, or any Third Party assigned or designated by Reckitt or any of its Affiliates or Sublicensees, [***] in connection with a challenge to the validity, enforceability, scope, inventorship or ownership of any of the XenoPort Patents in any court or tribunal or before the United States Patent and Trademark Office or, any other patent office or in any arbitration proceeding, including in connection with an opposition proceeding or re-examination, unless such challenge is withdrawn [***].

 

ARTICLE 13
 EFFECT OF TERMINATION

 

13.1        Accrued Obligations. The expiration or termination of this Agreement for any reason shall not release either Party from any liability that, at the time of such expiration or termination, has already accrued to the other Party or that is attributable to a period prior to such expiration or termination, nor will any termination of this Agreement preclude either Party from pursuing all rights and remedies it may have under this Agreement, or at law or in equity, with respect to any breach of this Agreement.

 

13.2        Rights on Termination. This Section 13.2 shall apply upon any termination of this Agreement in its entirety, excluding only a termination of this Agreement by Reckitt pursuant to Section 12.2 above for XenoPort’s uncured material breach.

 

22

 

13.2.1     Wind-down Period.

 

(a)           Development. In the event there are any ongoing clinical trials of any Product in the Territory and/or any ongoing pre-clinical studies and/or formulation studies (e.g., stability studies) of any Product in the Territory, following the date a notice of termination has been issued by XenoPort or Reckitt, as applicable, the Parties agree that, [***]

 

(b)           Commercialization. To avoid a disruption in the availability of Products to patients, if this Agreement is terminated after the first commercial sale of any Product in the Territory, Reckitt shall continue to distribute in the Territory all Products for which Marketing Approval has been obtained, in accordance with the terms and conditions of this Agreement, [***] Without limiting the foregoing, XenoPort shall have the right to engage one or more other distributor(s) and/or licensee(s) in the Territory. Any Products sold or disposed by or under the authority of Reckitt in the Territory during [***] shall be subject to the terms and conditions of this Agreement as described in Section 13.3, including without limitation, the applicable royalty payment obligations under Section 6.3 above. Reckitt shall, [***]

 

13.2.2     Assignment of Regulatory Filings and Marketing Approvals; Provision of Know-How. At XenoPort’s [***], Reckitt shall transfer to XenoPort or its designee [***] all regulatory filings and registrations (including INDs, MAAs and Marketing Approvals) for Products in the Territory, as well as any global safety database for Products developed by or under the authority of Reckitt. In each case, unless otherwise required by any applicable law or regulation, the foregoing transfer (or availability) shall be made [***]. In addition, Reckitt shall [***] provide to XenoPort [***] all Data and other Reckitt Know-How pertaining to all Compounds and Products in the Territory (or any portion thereof), or otherwise relied upon by Reckitt in association with any IND, MAA or other approval for any Product in the Territory [***], and XenoPort shall have the right to use (and authorize the use of), and to disclose, all such Data and other Reckitt Know-How following termination of this Agreement.

 

13.2.3     Remaining Inventory; Supply. [***], Reckitt shall notify XenoPort of any quantity of any Compound, any Product and/or any starting materials for the manufacture of any Compound and/or any Product remaining in its and/or its Affiliates’ inventory and XenoPort shall [***] and further to have any quantities of such Compound, Products and/or starting materials, as applicable transferred to XenoPort (or its designee) [***]; provided, however, that if, [***] In addition, [***], Reckitt shall [***] transition to XenoPort, [***] supply of any Compound and/or any Product and/or any starting materials for the manufacture of any Compound and/or any Product, [***]. In any event, Reckitt shall continue to provide to (or procure for) XenoPort Compound and/or Product [***]; provided that XenoPort shall [***] such alternative source as soon as practicable. With the exception of any existing inventory transferred to XenoPort (or its designee) as described above, [***] in connection with any such termination of this Agreement. Without limiting the foregoing provisions of this Section 13.2.3 or Section 13.2.2 above, [***], Reckitt shall, [***], transition to XenoPort or [***] all technology, methods, specifications and other Know-How necessary for the manufacture of such Compound and/or Product. Further, [***], Reckitt shall [***] to allow XenoPort [***] to implement the manufacture of such Compound and/or Product [***].

 

13.2.4     Transition. Without limiting the foregoing, Reckitt shall [***] transition of all activities relating to the development, manufacture, sale and ongoing marketing, promotion

 

23

 

and commercialization of Compound and Products in the Territory. [***], Reckitt shall have [***]; and such [***] shall automatically terminate [***].

 

13.2.5     Assignment of Brand Name Marks. If as of the effective date of termination of this Agreement, an MAA for a Product has been submitted to a Regulatory Authority in one or more jurisdictions, Reckitt shall assign, or cause to be assigned, to XenoPort or its designee all right, title and interest in and to the Brand Name Marks, together with all registrations or applications for registration of such trademarks, in any such jurisdiction. In each case, [***], the foregoing assignment shall be made [***]. XenoPort hereby grants to Reckitt [***]. Such [***] shall become effective [***] and shall automatically terminate [***]. In any event, Reckitt shall [***]

 

13.2.6     Licenses. Reckitt hereby agrees to grant, and hereby grants, to XenoPort an exclusive, worldwide, royalty-free license, with the right to grant and authorize sublicenses, to any Reckitt Know-Flow (including Data), [***] and/or any other Patents owned or Controlled by Reckitt or its Affiliates necessary or utilized during the term of the Agreement in connection with the development, manufacture or commercialization of any Compound and/or Product for the purposes of making, having made, using, developing, importing, selling, distributing, marketing, promoting and otherwise commercializing any Compound and/or any Product in the Territory; [***]

 

13.2.7     Return of Materials. [***] Reckitt shall either return to XenoPort or destroy, [***]. In addition, [***]. For the avoidance of doubt, [***], Reckitt, its Affiliates and/or its Sublicensees shall not [***]; provided that the foregoing shall not [***]

 

13.2.8     Sublicensees; Other Third Party Agreements. To the extent [***], Reckitt shall assign [***] to XenoPort [***] any contracts with Sublicensees of any Product in the Territory engaged by Reckitt [***] as well as any other contract with a Third Party relating to the development and/or commercialization of a Compound and/or Product. In the event [***] Reckitt shall [***] transition all Compounds and all Products back to XenoPort [***] and Reckitt shall [***] ensure [***] will comply with this Agreement[***].

 

13.3        Survival. Upon the expiration or termination of this Agreement, all rights and obligations of the Parties under this Agreement shall terminate except those described in the following Articles and Sections: [***] Further, to the extent any Product is distributed or sold by or under the authority of Reckitt pursuant to Section 13.2.1 following any termination of this Agreement to which Section 13,2 applies, the following shall survive: [***]. In addition, [***].

 

ARTICLE 14
 REPRESENTATIONS AND WARRANTIES

 

14.1        General Representations. Each Party represents and warrants to the other as of the Execution Date as follows:

 

14.1.1     Duly Organized. Such Party is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification

 

24

 

and failure to have such would prevent such Party from performing its obligations under this Agreement.

 

14.1.2     Due Execution: Binding Agreement. This Agreement is a legal and valid obligation binding upon such Party and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by such Party have been duly authorized by all necessary corporate action and do not and will not: (a) require any consent or approval of its stockholders; (b) to such Party’s knowledge, violate any law, rule, regulation, order, writ, judgment, decree, determination or award of any court, governmental body or administrative or other agency having jurisdiction over such Party; nor (c) conflict with, or constitute a default under, any agreement, instrument or understanding, oral or written, to which such Party is a party or by which it is bound.

 

14.2        Representations and Warranties of XenoPort. XenoPort represents and warrants to Reckitt that, as of the Execution Date:

 

14.2.1     it has the full right and authority to grant to Reckitt the rights and licenses as provided herein;

 

14.2.2     it has not previously granted any right, license or interest in or to the XenoPort Patents, or any portion thereof, that is in conflict with the rights or licenses granted to Reckitt under this Agreement;

 

14.2.3     to XenoPort’s knowledge: XenoPort is the sole owner of all XenoPort Patents listed on Exhibit 1.42 (the “Listed Patents”), all of which have been duly and properly assigned to XenoPort; [***] and with respect to any United States Patents within the Listed Patents, XenoPort has complied with 37 C.F.R. 1.56 during the prosecution theretofore, and the Listed Patents have not been abandoned or disclaimed and none of the issued or granted XenoPort Patents within the Listed Patents have been found invalid by any administrative tribunal or court in the Territory, [***]

 

14.2.4     to its knowledge, there are no actual, pending, alleged or threatened actions, suits, claims, interference or governmental investigations in the Territory involving a Compound, the XenoPort Patents or the XenoPort Know-How by or against XenoPort or any of its Affiliates. In particular, to its knowledge, there is no pending or threatened product liability action nor intellectual property right litigation, including any post-grant review or opposition or other administrative patent office proceeding requested or pending, in the Territory in relation to a Compound;

 

14.2.5     subject to Article 17, all necessary consents, approvals and authorizations of all Regulatory Authorities, other governmental authorities and other persons or entities required to be obtained by XenoPort in order to enter into this Agreement have been obtained; and

 

14.2.6     to its knowledge, no Third Party is making, using, or selling [***] which would arise to actual, pending, alleged or threatened infringement by such Third Party of any of the XenoPort Patents or misappropriation by such Third Party of the XenoPort Know-How in the Territory; and

 

25

 

14.2.7     the conveyance of the Existing Inventory, pursuant to Section 4.4.2 above, is free and clear of any encumbrances.

 

14.3        Representations and Warranties of Reckitt. Reckitt represents and warrants to XenoPort that, as of the Execution Date:

 

14.3.1     it has the full right and authority to grant to XenoPort the rights granted herein;

 

14.3.2     subject to Article 17, all necessary consents, approvals and authorizations of all Regulatory Authorities, other governmental authorities and other persons or entities required to be obtained by Reckitt in order to enter into this Agreement have been obtained; and

 

14.3.3     except for any government review or actions related to, or arising from, filings required under the Hart-Scott-Rodino Act, there are no actual or pending, or, to the knowledge of Reckitt or any of. its Affiliates, alleged or threatened actions, suits, claims, interference or governmental investigations against Reckitt or any of its Affiliates, which would prevent the consummation of this Agreement or Reckitt’s or any of its Affiliate’s ability to perform under this Agreement.

 

14.4        DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR VALIDITY OF ANY PATENTS ISSUED OR PENDING.

 

14.5        LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR OTHERWISE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT, WHETHER UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOSS OF USE, DAMAGE TO GOODWILL OR LOSS OF BUSINESS) EXCEPT IN THE CASE OF (A) BREACH OF ARTICLE 2 BY XENOPORT, (B) BREACH OF ARTICLE 8 BY RECKITT, (C) BREACH OF ARTICLE 11 BY A PARTY, OR (D) SUCH DAMAGES OWED TO THIRD PARTIES PURSUANT TO ARTICLE 15.

 

ARTICLE 15
 INDEMNIFICATION

 

15.1        Indemnification of XenoPort. Reckitt shall indemnify and hold harmless each of XenoPort and its Affiliates and their respective directors, officers and employees and the respective successors and assigns of any of the foregoing (the “XenoPort Indemnitees”), from and against any and all liabilities, damages, penalties, fines, costs and expenses (including reasonable attorneys’ fees and other expenses of litigation) (“Liabilities”) from any claims, actions, suits, investigations or proceedings brought by a Third Party (including any regulatory or governmental authority) (a “Third  Party Claim”) incurred by any XenoPort Indemnitee,

 

26

 

arising from, or occurring as a result of: (a) the manufacture, use, marketing, distribution, sale, importation or promotion of any Compound and/or any Product by or under the authority of Reckitt, its Affiliates or Sublicensees in the Territory after the Effective Date (including the use, distribution, sale or importation of any Existing Inventory by or under the authority of Reckitt, its Affiliate or Sublicensees after the Effective Date); (b) any material breach of any of the representations, warranties or covenants given by Reckitt in Article 14 above; or (c) failure, or alleged failure, of Reckitt, its Affiliates or Sublicensees to comply with applicable laws, rules or regulations; except to the extent such Third Party Claim falls within the scope of XenoPort’s indemnification obligations set forth in Section 15,2 below or results from the fault of a XenoPort Indemnitee.

 

15.2        Indemnification of Reckitt. XenoPort shall indemnify and hold harmless each of Reckitt, its Affiliates and Sublicensees and their respective directors, officers and employees and the respective successors and assigns of any of the foregoing (the “Reckitt Indemnitees”), from and against any and all Liabilities from any Third Party Claims incurred by any Reckitt Indemnitee, arising from, or occurring as a result of: (a) any material breach of any of the representations, warranties or covenants given by XenoPort in Article 14 above; or (b) the manufacture, use, marketing, distribution, sale, importation or promotion of any Compound and/or any Product by or under the authority of XenoPort or its Affiliates in the Territory prior to the Effective Date, other than any Third Party Claims arising from, or occurring as a result of, the manufacture of the Existing Inventory prior to the Effective Date or the use, distribution, sale or importation of any Existing Inventory by or under the authority of Reckitt, its Affiliates or Sublicensees following the Effective Date; or (c) failure, or alleged failure, of XenoPort or its Controlled Affiliates to comply with applicable laws, rules or regulations; except to the extent any such Third Party Claim falls within the scope of Reckitt’s indemnification obligations set forth in Section 15.1 above, or results from the fault of a Reckitt Indemnitee.

 

15.3        Procedure. A Party that intends to claim indemnification under this Article 15 (the “Indemnitee”) shall promptly notify the other Party (the “Indemnitor”) in writing of any Third Party Claim, in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have sole control of the defense and/or settlement thereof The indemnity arrangement in this Article 15 shall not apply to amounts paid in settlement of any action with respect to a Third Party Claim if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed unreasonably. The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any action with respect to a Third Party Claim, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 15, but the omission to so deliver written notice to the Indemnitor shall not relieve the Indemnitor of any liability that it may have to any Indemnitee otherwise than under this Article 15. The Indemnitee under this Article 15 shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action with respect to a Third Party Claim covered by this indemnification..

 

15.4        Insurance. Reckitt shall[***], comprehensive general liability insurance, including products liability insurance and coverage for clinical trials, [***] consistent with [***] activities and indemnification obligations under this Agreement, [***]. Reckitt shall [***]

 

27

 

ARTICLE 16
 DISPUTE RESOLUTION

 

16.1        Senior Executives. In the event that there is a dispute, controversy, or claim between the Parties arising out of or relating to this Agreement, or its interpretation, performance, or any breach of any obligations hereunder (each, a “Dispute”), the Dispute shall first be presented to the Chief Executive Officer of each Party, or their respective designees (“Senior Executives”) for attempted resolution. The Senior Executives will meet in-person and use good faith efforts to resolve any such dispute [***], and if such dispute is not resolved [***] after commencing such in-person negotiations, or if either Party reasonable believes that resolution of such Dispute will not be reached within such time period, then either Party may initiate legal proceedings with respect thereto.

 

16.2        Interim Relief. Notwithstanding anything in this Article 16 to the contrary, XenoPort and Reckitt shall each have the right to apply to any court of competent jurisdiction for appropriate interim or provisional relief, as necessary to protect the rights or property of that Party.

 

16.3        Exclusive Jurisdiction. Each of the Parties; (a) irrevocably consents to the exclusive jurisdiction and venue in the Delaware Court of Chancery within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any court of the United States located in the State of Delaware, or, if any such court of the United States located in the State of Delaware declines to accept jurisdiction over a particular matter, any state court located in the State of Delaware); and (b) agrees that process shall be served upon such Party in the manner set forth in Section 18.7, and that service in such manner shall constitute valid and sufficient service of process. Each Party waives and covenants not to assert or plead any objection that such Party might otherwise have to such jurisdiction, venue, and process. Each Party hereby agrees not to commence any legal proceedings relating to or arising out of this Agreement or the transactions contemplated hereby in any jurisdiction or courts other than as provided in this Section 16.3. Notwithstanding the foregoing, a Party will be entitled to seek enforcement of a judgment entered pursuant to this Section 16.3 in any court having competent jurisdiction thereof where enforcement is deemed necessary.

 

ARTICLE 17
 HART-SCOTT-RODINO

 

17.1        Hart-Scott-Rodino Act Compliance. Notwithstanding anything to the contrary in this Agreement, this Agreement shall be binding upon the Parties as of the Execution Date; however, the provisions of Articles 2-10 shall not take effect until the HSR Clearance Date. As used herein, the “HSR Clearance Date” shall mean such time as: (a) the Parties shall have complied with all applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended the (“Hart-Scott-Rodino Act”); (b) the waiting period under the Hart-Scott-Rodino Act shall have expired or been early terminated; (c) no judicial or administrative proceeding opposing consummation of all or any part of this Agreement shall be pending; (d) no injunction (whether temporary, preliminary or permanent) prohibiting consummation of the transactions contemplated by this Agreement or any material portion hereof shall be in effect; and (e) no requirements or conditions shall have been formally requested or imposed by the DOS

 

28

 

or FTC in connection therewith that are not reasonably and mutually satisfactory to the Parties (collectively, the “HSR Conditions”). In the event that the HSR Conditions are not met [***], then either Party may terminate this Agreement upon notice, in which case, notwithstanding any provisions that are stated to survive under Section 13.3 above, all provisions of this Agreement shall terminate and be of no force or effect whatsoever, except only that any liability of either Party for failing to comply this Article 17 shall survive.

 

17.2        HSR Filing. Both Parties shall promptly file following execution of this Agreement their respective pre-merger notification and report forms with the Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”) pursuant to the Hart-Scott-Rodino Act, which forms shall specifically request early termination of the initial Hart-Scott-Rodino Act waiting period. Reckitt shall pay the filing fee.

 

17.3        Cooperation.

 

17.3.1     The Parties shall use their commercially reasonable efforts to obtain promptly clearance required under the Hart-Scott-Rodino Act for the consummation of this Agreement and the transactions contemplated herein and shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC and the DOJ and shall comply promptly with any such inquiry or request; provided, however, that neither Party shall be required to consent to the divestiture or other disposition of any of its or its Affiliates’ assets or to consent to any other structural or conduct remedy, and each Party and its Affiliates shall have no obligation to contest, administratively or in court, any ruling, order or other action of the FTC or DOJ or any third party respecting the transactions contemplated by this Agreement.

 

17.3.2     The Parties hereto commit to instruct their respective counsel to cooperate with each other and use commercially reasonable efforts to facilitate and expedite the identification and resolution of any such issues and, consequently, the expiration of the applicable Hart-Scott-Rodino Act waiting period. In the context of this Section 17.3, [***]

 

ARTICLE 18
 MISCELLANEOUS

 

18.1        Force Majeure. If the performance of any part of this Agreement (except for any payment obligation under this Agreement) by either Party is prevented, restricted, interfered with or delayed by reason of force majeure (including fire, earthquake, flood, embargo, power shortage or failure, acts of war or terrorism, insurrection, riot, lockout or other labor disturbance, governmental acts or orders or restrictions, or acts of God), the Party so affected shall, upon giving written notice to the other Party, be excused from such performance to the extent of such prevention, restriction, interference or delay; provided that the affected Party shall use its reasonable efforts to avoid or remove such causes of non-performance and shall continue performance with the utmost dispatch whenever such causes are removed.

 

18.2        Governing Law, Venue. This Agreement and all questions regarding its validity or interpretation, or the breach or performance of this Agreement, shall be governed by, and construed in accordance with, the laws of the State of Delaware, without reference to conflicts of

 

29

 

laws principles. The Parties agree that the provisions of the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement and are strictly excluded.

 

18.3        Waiver of Breach. Except as otherwise expressly provided in this Agreement, any term of this Agreement may be waived only by a written instrument executed by a duly authorized representative of the Patty waiving compliance. The delay or failure of either Party at any time to require performance of any provision of ‘this Agreement shall in no manner affect such Party’s rights at a later time to enforce the same. No waiver by either Party of any condition or term in any one or more instances shall be construed as a further or continuing waiver of such condition Or term or of any other condition or term.

 

18.4        Modification. No amendment or modification of any provision of this Agreement shall be effective unless in writing signed by a duly authorized representative of each Party. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by a duly authorized representative of each Party.

 

18.5        Severability. In the event any provision of this Agreement should be held invalid, illegal or unenforceable in any jurisdiction in the Territory, the Parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties and all other provisions hereof shall remain in full force and effect in such jurisdiction. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction in the Territory. In the event a Party seeks to avoid a provision of this Agreement by asserting that such provision is invalid, illegal or otherwise unenforceable, the other Party shall have the right to terminate this Agreement [***], unless such assertion is eliminated and the effect of such assertion is cured within [***]. Any termination in accordance with the foregoing sentence shall be deemed an election by Reckitt to terminate pursuant to Section 123 if XenoPort exercises its right to terminate under this Section 18.5, and a termination for the breach of XenoPort pursuant to Section 12.2 if Reckitt exercises its right to terminate under this Section 18.5.

 

18.6        Entire Agreement. This Agreement (including the Exhibits attached hereto), constitutes the entire agreement between the Parties relating to its subject matter, and supersedes all prior or contemporaneous agreements, understandings or representations, either written or oral, between XenoPort and Reckitt with respect to such subject matter, including the Prior NDA to the extent provided in Section 11.6.

 

18.7        Notices. Unless otherwise agreed by the Parties or specified in this Agreement, all communications between the Parties relating to, and all written documentation to be prepared and provided under, this Agreement shall be in the English language. Any notice required or permitted under this Agreement shall be in writing in the English language: (a) delivered personally; (b) sent by registered or certified mail (return receipt requested and postage prepaid); (c) sent by express courier service providing evidence of receipt, postage pre-paid where applicable; or (d) sent by facsimile (complete transmission confirmed and a copy promptly sent by another permissible method of providing notice described in paragraphs (a), (b) or (c) above),

 

30

 

to the following addresses of the Parties or such other address for a Party as may be specified by like notice:

 

	
To XenoPort:
    	
 
    	
To Reckitt:
    
	
 
    	
 
    	
 
    
	
XenoPort, Inc.
    	
 
    	
Reckitt Benckiser Pharmaceuticals Inc.
    
	
3410 Central Expressway
    	
 
    	
10710 Midlothian Turnpike, Suite 430
    
	
Santa Clara, California 95051,
    	
 
    	
Richmond, VA 23235
    
	
Attention: Secretary
    	
 
    	
[***]
    
	
Phone: (408) 616-7200
    	
 
    	
Phone: [***]
    
	
Facsimile: (408) 616-7211
    	
 
    	
Facsimile: [***]
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
With a copy to:
    
	
 
    	
 
    	
 
    
	
Wilson Sonsini Goodrich & Rosati
    	
 
    	
[***]
    
	
650 Page Mill Road
    	
 
    	
Attention: [***]
    
	
Palo Alto, California 94304-1050
    	
 
    	
Telephone: [***]
    
	
Attention: Kenneth A. Clark
    	
 
    	
Facsimile: [***]
    
	
Miranda Biven
    	
 
    	
 
    
	
Telephone: (650)493-9300
    	
 
    	
 
    
	
Facsimile: (650) 493-6811
    	
 
    	
 
    

 

Any notice required or permitted to be given concerning this Agreement shall be effective [***], or [***], whichever is earlier.

 

18.8        Assignment. This Agreement shall not be assignable by either Party to any Third Party without the written consent of the other Party hereto; except either Party may assign this Agreement without the other Party’s consent to an entity that acquires substantially all of the business or assets of the assigning Party, whether by merger, acquisition or otherwise, provided that the entity to whom this Agreement is assigned assumes this Agreement in writing or by operation of law and the non-assigning Party receives prompt written notice thereof. In addition, either Party shall have the right to assign this Agreement to an Affiliate upon written notice to the non-assigning Party; provided that the assigning Party guarantees the performance of this Agreement by such Affiliate; and further provided that if the non-assigning Party reasonably believes such assignment could result in material adverse tax consequences to the non-assigning Party, such assignment shall not be made without the non-assigning Party’s consent. For clarity, the Parties agree that, for purposes of this Section 18,8, neither a name change by a Party nor the change in ownership of the parent entity of either Party, shall be considered an assignment; however, in either event, the affected Party shall deliver written notice to the other Party [***]. Subject to the foregoing, this Agreement shall inure to the benefit of each Party, its successors and permitted assigns. Any assignment of this Agreement in contravention of this Section 18.8 shall be null and void.

 

18.9        Independent Contractors. Nothing contained in this Agreement is intended, or shall be deemed or construed, to establish a joint venture or partnership between XenoPort or Reckitt. No Party to this Agreement shall have any express or implied right or authority to

 

31

 

assume or create any obligations on behalf of, or in the name of, the other Party, or to bind the other Party to any contract, agreement or undertaking with any Third Party.

 

18.10      Interpretation. The captions to the several Articles and Sections of this Agreement are not a part of this Agreement, but are included for convenience of reference and shall not affect its meaning or interpretation. In this Agreement: (a) the word “including” shall be deemed to be followed by the phrase “without limitation” or like expression; (b) the singular shall include the plural and vice versa; (c) masculine, feminine and neuter pronouns and expressions shall be interchangeable; (d) the word “will” shall be construed as having the same meaning and effect as the word “shall”; (e) the word “notice” shall require notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement; and (f) provision of information, documents or material to the JOC shall mean provision of such information, documents or material to each Parties’ representatives to the JOC and, unless timing is otherwise specified, shall occur reasonably in advance of the next scheduled JOC meeting. Each accounting term used herein that is not specifically defined herein shall have the meaning given to it under GAAP, or other generally accepted cost accounting principles in the United States, but only to the extent consistent with its usage and the other definitions in this Agreement.

 

18.11      Export Laws. Notwithstanding anything to the contrary contained herein, all obligations of XenoPort and Reckitt are subject to prior compliance with the export regulations of the United States, the European Union or any other relevant country and such other laws and regulations in effect in the United States, the European Union or any other relevant country as may be applicable, and to obtaining all necessary approvals required by the applicable agencies of the governments of the United States, the countries within the European Union and any other relevant countries. XenoPort and Reckitt shall cooperate with each other and shall provide assistance to the other as reasonably necessary to obtain any required approvals.

 

18.12      Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures to this Agreement delivered by facsimile or similar electronic transmission (e.g., portable document format (PDF)) will be deemed binding as originals.

 

[Remainder of page intentionally left blank; signature page follows]

 

32

 

IN WITNESS WHEREOF, the Parties hereto have caused this License Agreement to be duly executed as of the date first above written.

 

	
XENOPORT, INC.
    	
RECKITT BENCKISER   PHARMACEUTICALS INC.
    
	
 
    	
 
    
	
By:
    	
/s/ Ronald   W. Barrett
    	
 
    	
By:
    	
/s/ Javier   Rodriguez
    
	
Name:
    	
Ronald W. Barrett
    	
 
    	
Name:
    	
Javier Rodriguez
    
	
Title:
    	
CEO
    	
 
    	
Title:
    	
VP, General Counsel
    

 

 

	
APPROVED
    	
 
    
	
LEGAL DEPT.
    	
 
    
	
 
    	
 
    	
 
    
	
14   May 2014
    	
 
    
			

 

 

EXHIBIT 1.6A

 

XP19986

 

 

 

EXHIBIT 1.6B

 

[***]

 

 

EXHIBIT 1.11

 

Existing Inventory

 

[***]

 

 

EXHIBIT 1.42

 

XenoPort Patents

 

[***]

 

 

EXHIBIT 1.42.1

 

[***]

 

 

EXHIBIT 1.42.2

 

[***]

 

 

EXHIBIT 1.42.3

 

[***]

 

 

EXHIBIT 10.1

 

Trademark Guidelines

 

XENOPORT® is a registered trademark of XenoPort, Inc. The XENOPORT trademark is registered in the US, Switzerland and in the European Union. The countries in the European Union are: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech, Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. There is also a XENOPORT trademark application pending in India.

 

Use of the XENOPORT® trademark by Reckitt should be attributed to XenoPort, Inc. An example of the correct format would be, “XENOPORT® is a registered trademark of XenoPort, Inc.” or XENOPORT is a trademark of XenoPort, Inc.

 

While use of the trademark is not limited to any particular type font or color, acceptable type fonts include Ariel and Times New Roman; and preferred type font colors include black and dark blue. Type font size is not limited, but is preferable large enough to comfortably read without magnification (e.g., font size 8 or larger). The trademark can be used with either (i) all capital letters (XENOPORT®), (ii) with only the X and P capitalized and the other letters remaining lower case (XenoPort®) or (iii) with only the X being capitalized and the other letters remaining lower case (Xenoport®), the first of these three options being preferred.

 

The trademark should be used with either a superscript TM or ® symbol. The ® symbol should be used in those jurisdictions where the trademark is registered (US and the Europe Union) and the TM symbol should be used elsewhere.

 

The trademark should be used as an adjective, not as a noun. For example, the [name] product uses XENOPORT® engineered prodrug technology.

 

Care should be taken to distinguish use of the XenoPort company name from the XENOPORT® trademark. For example XENOPORT® is a registered trademark of XenoPort, Inc. The superscript TM and/or symbols should not be used directly with the company name. For example, the [name] product uses technology licensed from XenoPort®, Inc. would be incorrect usage.

 

All use by Reckitt of the XENOPORT trademark shall enure to the benefit of XenoPort, Inc.

 

 

EXHIBIT 11.3

 

Press Release

 

(See attached)

 

 

	

    	

    

 

FOR IMMEDIATE RELEASE

 

Reckitt Benckiser Pharmaceuticals and XenoPort Enter Into Global Licensing

Agreement for Arbaclofen Placarbil

 

Reckitt Benckiser Pharmaceuticals Plans to Initiate Phase II Trial of Novel Product Candidate

as Potential Treatment for Alcohol Use Disorders

 

RICHMOND, Va. and SANTA CLARA, Calif. (May 15, 2014) — Reckitt Benckiser Pharmaceuticals Inc. and XenoPort, Inc. (NASDAQ: XNPT) announced today that they have entered into a license agreement pursuant to which Reckitt Benckiser Pharmaceuticals will be granted exclusive worldwide rights for the development and commercialization of XenoPort’s clinical-stage oral product candidate arbaclofen placarbil for all indications. Arbaclofen placarbil is a patent protected new chemical entity that Reckitt Benckiser Pharmaceuticals plans to advance into a Phase IIB proof-of-concept study for the treatment of alcohol use disorders — a condition affecting more than 140 million people worldwide.(1),(2)

 

Alcohol use disorders are a global public health issue,(2) with an annual economic burden of $224 billion in the United States alone.(3) Alcoholism is directly responsible for more than 2.5 million deaths each year and is a causal factor in over 60 other major types of disease.(2) The current treatment approach is predominantly psychosocial support and is largely non-medicalized.(4) The majority of healthcare professionals feel underequipped to manage patients with substance abuse — including alcoholism — based on currently available standards of care.(4)

 

“Reckitt Benckiser Pharmaceuticals recognizes that there is a tremendous need for more effective, well-tolerated treatment options among the growing patient population with alcohol use disorders, and we believe arbaclofen placarbil is a natural fit for our growing addiction treatment pipeline,” said Shaun Thaxter, CEO, Reckitt Benckiser Pharmaceuticals Inc. “Over the past decade, we have demonstrated our leadership in the challenging addiction space by helping patients struggling with the chronic disease of opioid dependence access treatment. We are proud to focus our clinical development experience along with our global regulatory and go-to-market infrastructure to potentially bring arbaclofen placarbil to market as a new choice for the many patients with alcohol use disorder” and the healthcare professionals who treat them.”

 

Arbaclofen placarbil will be tested for its ability to suppress alcohol cravings, reduce alcohol intake and to possibly facilitate maintenance of abstinence in alcohol dependent people.(5),(6)  In prior clinical trials, arbaclofen placarbil has demonstrated attributes that may enable convenient dosing, stable plasma exposure and good tolerability.(7)

 

“We believe that Reckitt Benckiser Pharmaceuticals will be an excellent partner for the further development of arbaclofen placarbil, given their track record of success in the treatment of

 

 

addiction disorders. XenoPort has completed a substantial amount of preclinical, clinical pharmacology and manufacturing work and has dosed over 1,300 human subjects with arbaclofen placarbil in various clinical trials,” said Ronald W. Barrett, Ph.D., CEO, XenoPort, Inc. “We are very pleased to leverage this work with a partner that now has an exciting opportunity to develop a potential new effective, safe and conveniently dosed medicine that could address an important medical and societal problem.”

 

Under the terms of the agreement, Reckitt Benckiser Pharmaceuticals will receive exclusive rights to develop and commercialize arbaclofen placarbil worldwide for all indications, subject to certain rights by XenoPort to negotiate with Reckitt Benckiser Pharmaceuticals on collaborations for non-addiction indications. In exchange for these rights and upon effectiveness of the agreement, XenoPort is entitled to receive an up-front, non-refundable cash payment of $20 million and another $5 million upon the transfer of certain technology and materials to Reckitt Benckiser Pharmaceuticals. XenoPort also will be eligible to receive aggregate cash payments of up to $70 million upon the achievement by Reckitt Benckiser Pharmaceuticals of certain development and regulatory milestones, as well as up to $50 million for commercial milestones. In addition, XenoPort is entitled to receive tiered double-digit royalty payments up to the mid-teens on a percentage basis on potential future net sales of arbaclofen placarbil in the United States and high single-digit royalty payments on potential future net sales outside the United States.

 

The agreement is subject to review by the U.S. Government under the Hart-Scott-Rodino Antitrust Improvements Act, as amended, and will become effective only after clearing review.

 

About Reckitt Benckiser Pharmaceuticals Inc.

 

Reckitt Benckiser Pharmaceuticals Inc. is a specialty pharmaceutical company with a decade of heritage in serving the opioid dependence treatment community. Committed to expanding education and access to medical therapies, the company innovates, manufactures and markets medications that, in conjunction with counseling and psychosocial support, treat opioid dependence. Reckitt Benckiser Pharmaceuticals Inc. continues to invest resources in raising awareness of opioid dependence within the community, while also sponsoring training programs for physicians to become certified to treat opioid addicted patients. The company aims to help patients, while also protecting communities from the financial and societal burdens of addiction through mediation-assisted treatment, enabling opioid dependence to be managed within mainstream medical practice. Reckitt Benckiser Pharmaceuticals Inc. is a wholly owned subsidiary of Reckitt Benckiser Group plc, a global company publicly traded on the UK stock exchange.

 

About XenoPort

 

XenoPort, Inc. is a biopharmaceutical company focused on developing and commercializing a portfolio of internally discovered product candidates for the potential treatment of neurological disorders. XenoPort is currently commercializing HORIZAN® (gabapentin enacarbil) Extended-Release Tablets in the United States and developing its novel fumaric acid ester product candidate, XP23829, as a potential treatment for patients with moderate-to-severe chronic plaque type psoriasis and/or relapsing forms of multiple sclerosis. REGNITE® (gabapentin enacarbil)

 

 

Extended-Release Tablets is being marketed in Japan by Astellas Pharma Inc. XenoPort’s pipeline of product candidates also includes a potential treatment for patients with Parkinson’s disease.

 

To learn more about XenoPort, please visit the website at www XenoPort com.

 

XenoPort Forward-Looking Statements

 

This press release contains “forward-looking” statements, including, without limitation, all statements related to the anticipated effectiveness of XenoPort’s license agreement with Reckitt Benckiser Pharmaceuticals; Reckitt Benckiser Pharmaceuticals’ future clinical development program for arbaclofen placarbil; the therapeutic and commercial potential of arbaclofen placarbil; and XenoPort’s receipt of potential future development, regulatory and commercial milestone payments, as well as potential royalty payments. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believe,” “could,” “intend,” “plans,” “potential,” “will” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon XenoPort’s current expectations. Forward-looking statements involve risks and uncertainties. XenoPort’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation: risks related to the ability of the parties to satisfy all the conditions to effectiveness of XenoPort’s license agreement with Reckitt Benckiser Pharmaceuticals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, as amended; the difficulty and uncertainty of pharmaceutical product development and the uncertain results and timing of clinical trials and other studies, including the risk that success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful; the uncertainty of the FDA approval process and other regulatory requirements; the uncertain therapeutic and commercial value of arbaclofen placarbil; XenoPort’s dependence on collaborative partners, including the risks that if Reckitt Benckiser Pharmaceuticals were to breach or terminate the license agreement or otherwise fail to successfully develop and commercialize products thereunder and in a timely manner, XenoPort would not obtain the anticipated financial and other benefits of the license agreement and the clinical development or commercialization of arbaclofen placarbil could be delayed or terminated; as well as risks related to future opportunities and plans, including the uncertainty of future operating results. These and other risk factors are discussed under the heading “Risk Factors” in XenoPort’s Securities and Exchange Commission filings and reports, including in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed with the Securities and Exchange Commission on May 9, 2014. XenoPort expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

 

 

	
Reckitt Benckiser   Pharmaceuticals
    	
 
    
	
IR Contact
    	
Media Contacts
    
	
Richard Joyce
    	
Alana Rockland
    
	
Director, Investor   Relations, RB
    	
Biosector 2
    
	
Phone: +44 (0) 1753   217800
    	
Phone: 212-845-5651
    
	
Email:   richard.joyce@rb.com
    	
Email: ARocklandABiosector2.com
    
	
 
    	
 
    
	
 
    	
Alice Sofield
    
	
 
    	
Biosector 2
    
	
 
    	
Phone: 703-861-5654
    
	
 
    	
Email:   ASofield@Biosector2.com
    
	
XenoPort IR Contact
    	
 
    
	
Jackie Cossmon
    	
 
    
	
Phone: 408-616-7295
    	
 
    
	
Email: ir@XenoPort.com
    	
 
    

 

 

References

 

(1)  World Health Organization Press Release. WHO to meet beverage company representatives to discuss health-related alcohol issues. January 31, 2003. Accessed on May 6, 2014. Available at: http://www.who.int/mediacentre/news/releases/2003/pr6/en/.

 

(2)  World Health Organization. Global status report on alcohol and health. 2011. Accessed on May 6, 2014. Available at: http://www.who.int/substance abuse/publications/global alcohol report/msbcgsruprofiles.pdf?ua=1.

 

(3)  National Institute on Alcohol Abuse and Alcoholism. Alcohol Facts and Statistics. Accessed on May 6, 2014. Available at: http://www.niaaa.nih.gov/alcohol-health/overview-alcohol-consumption/alcohol-facts-and-statistics.

 

(4)  The National Center on Addiction and Substance Abuse at Columbia University. Addiction Medicine: Closing the Gap between Science and Practice. June 2012. Accessed on May 6, 2014. Available at: http://www.casacolumbia.org/addiction-research/reports/addiction-medicine.

 

(5)  Heidbreder C. Recent Advances in the Pharmacotherapeutic Management of Drug Dependence and Addiction. Current Psychiatry Reviews, 2005, 1, 45-67.

 

(6)  Johnson, B. Update on Neuropharmacological Treatments for Alcoholism: Scientific Basis and Clinical Findings. Biochem Pharmacol. 2008 January 1; 75(1): 34-56.

 

(7)  Lal et al. The Journal of Pharmacology and Experimental Therapeutics. Arbaclofen Placarbil, a Novel R-Baclofen Prodrug: Improved Absorption, Distribution, Metabolism, and Elimination Properties Compared with R-Baclofen 330:911-921, 2009.Exhibit 4.13

 

RULES OF THE INDIVIOR LONG-TERM INCENTIVE PLAN

 

	
Directors’ Adoption:
    	
 
    	
5 November, 2014
    
	
 
    	
 
    	
 
    
	
Expiry Date:
    	
 
    	
5 November, 2024
    

 

SLAUGHTER AND MAY
 One Bunhill Row,
 London EC1Y 8YY

 

 

Table of Contents

 

	
Contents
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1
    	
 
    	
Granting Awards
    	
 
    	
3
    
	
2
    	
 
    	
Awards
    	
 
    	
4
    
	
3
    	
 
    	
Options and Conditional Awards
    	
 
    	
5
    
	
4
    	
 
    	
Vesting of Awards
    	
 
    	
5
    
	
5
    	
 
    	
Consequences of Vesting
    	
 
    	
6
    
	
6
    	
 
    	
Leaving the Group
    	
 
    	
9
    
	
7
    	
 
    	
Variations in share capital, demergers and special   distributions
    	
 
    	
11
    
	
8
    	
 
    	
Takeovers and restructurings
    	
 
    	
12
    
	
9
    	
 
    	
Exchange of Awards
    	
 
    	
13
    
	
10
    	
 
    	
Plan limits
    	
 
    	
14
    
	
11
    	
 
    	
Terms of employment
    	
 
    	
15
    
	
12
    	
 
    	
General
    	
 
    	
16
    
	
13
    	
 
    	
Changing the Plan and termination
    	
 
    	
17
    
	
14
    	
 
    	
Governing law and jurisdiction
    	
 
    	
18
    

 

 

The Indivior Long-term Incentive Plan

 

Introduction

 

An Award under the Plan can take the form of:

 

·                                     A Nil-cost Option - which is a right to buy Shares on Vesting for nothing or a nominal amount.

 

·                                    A Market Value Option - which is a right to buy Shares at a price set by reference to the market value of the Shares at the Award Date.

 

·                                     A Conditional Award - which is a right to be given Shares on Vesting.

 

Grant and Vesting of all types of Award work in similar ways but there are some differences in the mechanics of how they are granted and what happens after they Vest.

 

The schedules allow for grants of particular types of Awards in a way which attracts favourable tax treatment or complies with special rules in various countries.

 

This introduction does not form part of the rules.

 

Definitions

 

In these rules:

 

“Acquiring Company” means a person who obtains Control of the Company;

 

“Award” means a Conditional Award or an Option;

 

“Award Date” means the date which the Committee sets for the grant of an Award;

 

“Business Day” means a day on which the London Stock Exchange (or, if relevant and if the Committee determines, any stock exchange nominated by the Committee on which the Shares are traded) is open for the transaction of business;

 

“Committee” means, subject to rules 8.4 and 9.3, in the case of Awards to executive of directors of the Company, the remuneration committee or a sub-committee of it, and in other cases, any committee or body authorised to operate the Plan;

 

“Company” means Indivior plc;

 

“Conditional Award” means a conditional right to acquire Shares granted under the Plan;

 

“Control” means in relation to a body corporate, the power of a person to secure by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association, or other document regulating that or any other body corporate, that the affairs of the first mentioned body corporate are conducted in accordance with the wishes of that person;

 

“Dealing Restrictions” means restrictions imposed by statute, order, regulation or Government directive, or by the Model Code or any code adopted by the Company based on the Model Code;

 

“Expiry Date” means 30 November, 2024;

 

“Listing Rules” means the rules relating to admission to the Official List; 

 

“London Stock Exchange” means London Stock Exchange plc;

 

 

“Market Value” means on any day not less than the average of the closing middle market quotations of a Share (taken from the Daily Official List of the London Stock Exchange) over the immediately preceding 5 Business Days;

 

“Market Value Option” means an Option, the Option Price of which is set by reference to the Market Value of a Share on the Award Date;

 

“Member of the Group” means:

 

(i)          the Company; and

 

(ii)       its Subsidiaries from time to time; and

 

(iii)    any other company which is associated with the Company and is so designated by the Committee;

 

“Model Code” means the Model Code on dealings in securities set out in Listing Rule 9 annex 1;

 

“Official List” means the list maintained by the Financial Conduct Authority for the purposes of section 74(1) of the Financial Services and Markets Act 2000;

 

“Option” means a right to acquire Shares granted under the Plan;

 

“Option Price” means zero, or the amount payable on the exercise of an Option, as specified under rules 2.1 and 2.2;

 

“Participant” means a person holding an Award or his personal representatives;

 

“Performance Conditions” means any performance conditions imposed under rule 1.4 (Performance Conditions);

 

“Performance Period” means the period in respect of which the Performance Conditions are to be satisfied which will not normally be less than 3 financial years of the Company;

 

“PIP” means a service that is approved by the Financial Conduct Authority as meeting the primary information provider criteria and is on the list of such providers maintained by the Financial Conduct Authority;

 

“Plan” means these rules known as “The Indivior Long-term Incentive Plan” as changed from time to time;

 

“Shares” means fully paid ordinary shares in the capital of the Company;

 

“Social Security Liability” means a liability to pay national insurance contributions in the United Kingdom (or their equivalent, in the opinion of the Committee, outside the United Kingdom) in relation to an Award or the benefits received or capable of being received in respect of an Award;

 

“Subsidiary” means a company which is a subsidiary of the Company within the meaning of Section 1159 of the Companies Act 2006;

 

“Vesting” in relation to an Option, means an Option becoming exercisable and in relation to a Conditional Award, means a Participant becoming entitled to have the Shares transferred to him subject to these rules;

 

“Vesting Date” means the date set under rule 2.1 (Terms of Awards) and which will normally be the third anniversary of the Award Date.

 

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1                                   Granting Awards

 

1.1                         Awards

 

Awards will be made by the Company or the Committee. Where an Award is granted by the Company, the terms of that Award must be approved in advance by the Committee.

 

1.2                         Eligibility

 

The Company may grant an Award to any employee (including an executive director) of the Company or any Subsidiary. However, unless the Committee considers that special circumstances exist, an Award may not be granted to an employee who on the Award Date has given or received notice of termination of employment, whether or not such termination is lawful.

 

1.3                         Timing of Award

 

Awards may not be granted at any time after the Expiry Date and Awards may only be granted within 42 days starting on the date that the Company is first listed on the London Stock Exchange and thereafter 42 days starting on any of the following:

 

(i)                                the day after the announcement of the Company’s results through a PIP for any period;

 

(ii)                             any day on which the Committee resolves that exceptional circumstances exist which justify the grant of Awards;

 

(iii)                          any day on which changes to the legislation or regulations affecting share plans are announced, effected or made; or

 

(iv)                         the lifting of Dealing Restrictions which prevented the granting of Awards during any period specified above.

 

1.4                         Performance Conditions

 

When granting an Award, the Company may, or in the case of directors of the Company must (except as noted below), make its Vesting conditional on the satisfaction of one or more conditions determined by the Committee at least one of which must be linked to the performance of the Company. Performance Conditions must be objective and specified at the Award Date and may provide that an Award will lapse if the Performance Conditions are not satisfied. However where an award is granted to a director by way of replacement of an award previously held by that director under the Reckitt Benckiser Group 2007 Long Term Incentive Plan which was not subject to any performance condition, the replacement award also need not be subject to any such condition. The Committee may waive or change the Performance Conditions if anything happens which causes the Committee reasonably to consider it appropriate, provided that any changed Performance Conditions will not be materially easier or more difficult to satisfy.

 

1.5                         Other conditions

 

The Company may impose other conditions when granting an Award.  Any such condition must be objective, specified at the Award Date and may provide that an Award will lapse if it is not satisfied. The other conditions may include a condition that the Participant must reimburse any person for some or all of any Social Security Liability arising on any event in connection with his Award or that the Participant must enter into an election and transfer some or all of that Social Security Liability to himself.  The Company, with the consent of the Committee, may waive or change a condition in

 

3

 

accordance with its terms or if anything happens which causes the Company reasonably to consider it appropriate provided that any changed condition will be no more difficult to satisfy. Notwithstanding anything else in the Plan, an Award will only Vest to the extent that any condition is satisfied or waived.

 

1.6                         Award statement

 

Each Participant will receive a statement setting out the terms of the Award as soon as practicable after the Award Date. The statement may be the deed referred to in 2.1 (Terms of Awards) or any other document. If any statement is lost or damaged the Company may replace it on such terms as it decides.

 

1.7                         No payment

 

A Participant is not required to pay for the grant of any Award.

 

1.8                         Disclaimer of Award

 

A Participant may disclaim all or part of his Award within 30 days after the Award Date by notice in writing to any person nominated by the Company. If this happens, the Award will be deemed never to have been granted under the Plan. A Participant is not required to pay for the disclaimer.

 

1.9                         Administrative errors

 

If the Company tries to grant an Award which is inconsistent with rule 10 (Plan limits), the Award will be limited and will take effect from the Award Date on a basis consistent with those rules.

 

2                                   Awards

 

2.1                         Terms of Awards

 

Awards must be granted by deed. The terms of the Award, as determined by the Company and approved by the Committee, must be specified in the deed and must include:

 

(i)                                whether the Award is:

 

(I)                             a Conditional Award;

 

(II)                        an Option; or

 

(III)                   a Market Value Options;

 

or a combination of these;

 

(ii)                             the number of Shares subject to the Award;

 

(iii)                          the Performance Conditions;

 

(iv)                         where the Award is not subject to Performance Conditions, the Vesting Date;

 

(v)                            any other condition specified under rule 1.5 (Other conditions);

 

(vi)                         whether the Participant is entitled to receive any cash or shares under rule 5.4 (Dividend equivalent);

 

(vii)                      the Award Date; and

 

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(viii)                   the Option Price (if relevant).

 

2.2                         Option Price of Market Value Options

 

In the case of a Market Value Option, the Option Price will not be less than the Market Value of a Share on the Award Date.

 

2.3                         Individual Limit

 

Each Award must be limited and must therefore take effect so that the total Market Value of the Shares which are subject to the Award when then added to total Market Value of the Shares, if any, subject to Awards granted to the Participant in the same financial year of the Company does not exceed ten times the Participant’s pay. For these purposes a Participant’s pay on any date is the rate of his basic annual salary (excluding bonus, commissions and benefits in kind) from all Members of the Group on that date.

 

3                                   Options and Conditional Awards

 

3.1                         Rights

 

A Participant shall not be entitled to vote, to receive dividends or to have any other rights of a shareholder in respect of Shares subject to an Option or a Conditional Award until the Shares are issued or transferred to the Participant.

 

3.2                         Transfer

 

A Participant may not transfer, assign or otherwise dispose of an Option or Conditional Award or any rights in respect of it. If he does, whether voluntarily or involuntarily, then it will immediately lapse. This rule 3.2 does not apply to the transmission of an Option or Conditional Award on the death of a Participant to his personal representatives.

 

4                                   Vesting of Awards

 

4.1                         Timing of Vesting

 

Subject to rules 6 (Leaving the Group) and 8 (Takeovers and restructurings), an Award shall Vest on the latest of the following:

 

(i)                                the date on which the Committee makes its determination under rule 4.2 of the extent to which any Performance Conditions are satisfied or waived;

 

(ii)                             in the case of Awards with no Performance Condition, the Vesting Date;

 

(iii)                          the date the Committee decides that any other condition (rule 1.5) are satisfied or waived; and

 

(iv)                         the date on which any Dealing Restrictions which prevent Vesting on the dates specified above cease to apply.

 

4.2                         Determination of Performance Conditions and other conditions

 

As soon as reasonably practicable after the end of the Performance Period, the Committee will determine whether and to what extent any Performance Conditions and any other conditions under rule 1.5 (Other conditions) have been satisfied and how many Shares Vest for each Award. To the extent that any Performance Conditions or other conditions are not satisfied, the Award lapses. Where an Award has been granted

 

5

 

to a director of the Company the Performance Conditions and any other conditions may only be tested once; there may not be any re-testing.

 

4.3                         Lapse

 

If an Award lapses under the Plan it cannot Vest and a Participant has no rights in respect of it.

 

5                                   Consequences of Vesting

 

5.1                         Conditional Award

 

As soon as reasonably practicable after the Vesting of a Conditional Award, the Company will arrange (subject to rule 5.6 (Withholding) and 12.7 (Consents)) for the transfer (including a transfer out of treasury) or issue to or to the order of the Participant of the number of Shares in respect of which the Award has Vested.

 

5.2                         Options

 

(i)                              A Participant may exercise his Option at any time during the Exercise Period (see rule 6.7) by giving notice in the prescribed form to the Company or any person nominated by the Company and by:

 

(I)                              paying the Option Price (if any) for the number of Shares being acquired (or giving details of arrangements agreed between the Participant and the Company for the payment of the Option Price for the number of Shares being acquired); and

 

(II)                        enclosing the relevant award certificate (if required by the Company).

 

(ii)                           The “Option Exercise Date” will be the date of receipt by the Company or other duly appointed agent of the notice and, if appropriate, documents and the payment referred to in rule (i). However, if an option exercise notice is delivered at a time when any statute, regulation or code adopted by the Company based on the Model Code, prohibits the exercise of Options, the Option Exercise Date will be the date when the Participant is permitted to exercise an Option under such statute, regulation or code.

 

(iii)                        An Option will lapse as set out in rules 6.7 and 6.8.

 

(iv)                       Subject to rule 5.6 (Withholding) and 12.7 (Consents) the Company will arrange for Shares to be transferred to or issued to the Participant within 30 days of the Option Exercise Date.

 

5.3                         Rights

 

Shares issued on the exercise of an Option or the Vesting of an Award will rank equally in all respects with the Shares in issue on the date of allotment. They will not rank for any rights attaching to Shares by reference to a record date preceding the date of allotment. Where Shares are transferred (including a transfer out of treasury) on the exercise of an Option or the Vesting of an Award, the Participant will be entitled to all rights attaching to the Shares by reference to a record date on or after the transfer date. The Participant will not be entitled to rights before that date.

 

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5.4                         Dividend equivalent

 

The Committee may determine that a Conditional Award or Option will include the right to receive an amount equal in value to the dividends which were payable on the number of Vested Shares during the Performance Period (“dividend equivalents”), subject to rule 5.6 (Withholding). This amount will be paid in cash unless the Committee decides it will be paid in Shares. Dividend equivalents will be paid to any relevant Participant as soon as practicable after Vesting or, in the case of an Option, after exercise. For the avoidance of doubt the dividend does not include the tax credit.

 

The Committee may at any time decide to disapply this rule 5.4 in relation to all or part of a special dividend or dividend in specie which may otherwise be included in rule 5.4.

 

This rule 5.4 does not apply to Market Value Options.

 

5.5                         Alternative ways to satisfy Options and Conditional Awards

 

The Company may, subject to the approval of the Committee, decide to satisfy an Option or a Conditional Award by paying an equivalent amount in cash (subject to rule 5.6 (Withholding)). For Options, the cash amount must be equal to the amount by which the Market Value of the Shares in respect of which the Option is exercised exceeds the Option Price on the Option Exercise Date (see rule 5.2(ii)). Alternatively, the Company may, subject to the approval of the Committee, decide to satisfy an Option by procuring the issue or transfer of Shares to the value of the cash amount specified above.

 

If the Committee does this, the Participant need not pay the Option Price or, if he has paid it, the Company will repay it to him.

 

The Company may determine that Awards will be satisfied in cash at the Award Date or at any time subsequently.

 

5.6                         Withholding

 

The Company, any employing company or the trustee of any employee benefit trust may make such arrangements as it considers necessary to meet any liability to taxation, duties, social security contributions or other amounts in respect of Awards or otherwise in connection with a person’s participation in the Plan, whether the liability is a liability of, or is payable by, the Participant, the Company, the employing company or the trustee and whether such liability arises before or after the adoption of this Rule.  These arrangements may include a reduction in the number of Shares subject to an Award and/or the exercise of an Option on behalf of the Participant and/or the sale on behalf of the Participant of any of the Shares to which he is entitled under the Plan and the retention of the sale proceeds to meet the liability.  References to social security contributions include anything in a jurisdiction outside the United Kingdom which, in the opinion of the Committee, is reasonably comparable to social security contributions.

 

5.7                         Joining a competitor

 

The following will apply if a Participant ceases to be an employee or director of a Member of the Group and within 12 months of cessation joins a competitor organisation (as determined by the Committee). All unvested Awards will lapse. In respect of Awards that have Vested on or after the Participant’s cessation of employment for which the Participant has received Shares or cash in respect of the Award the Committee will issue the Participant with a notice requiring him to make a payment to the Company equal to the Market Value of the Shares comprised in the Award as at the date of

 

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Vesting less any tax paid, and less in the case of an Option, the Option Price. The payment must be made within two months of receipt of the notice.

 

5.8                         Adjustments in event of Misstatement and Misconduct

 

(i)                                       This rule 5.8 applies in circumstances where there has been, as the Committee determines in its absolute discretion, either:

 

(I)                                       (having taken advice from the Company’s auditors) a material misstatement of the Company’s or its group’s results in respect of any of the Company’s financial years which fall wholly or partly within a Performance Period; or

 

(II)                                  at any time during a Participant’s employment, serious misconduct by that Participant.

 

(ii)                                 If this rule applies then the Committee may, to the extent that it considers appropriate, taking account of the extent of the relevant misstatement or misconduct, determine, in respect of any Awards which are not exercised but relate to the Performance Period, that any of the following actions may be undertaken:

 

(I)                                       the number of Shares or number of Shares which have vested subject to any unexercised Award may be adjusted in such manner as the Committee considers appropriate; or

 

(II)                                  the unexercised Award shall lapse with immediate effect; or

 

(III)                              the Performance Period may be extended (provided that a Performance Period may not end later than the day before the ninth anniversary of the relevant Grant Date) and the Performance Target adjusted; or

 

(IV)                               the Exercise Period may be deferred (provided that it may not end later than the day before the tenth anniversary of the relevant Grant Date).

 

5.9                         Clawback

 

This Rule 5.9 applies in circumstances where at any time before the later of (i) the second anniversary of the date a Conditional Award vests or an Option becomes exercisable, as applicable, and (ii) the fifth anniversary of the Award Date the Committee determines in its absolute discretion either:

 

(I)                                 (having taken advice from the Company’s auditors) there is a material mis- statement of the Company’s or its group’s results in respect of any of the Company’s financial years which fall wholly or partly between the Date of Grant of an Award and the date the Award vests or becomes exercisable; or

 

(II)                            there has been, at any time during a Participant’s employment, serious misconduct by that Participant.

 

If this Rule 5.9 applies then the Committee may, to the extent that it considers appropriate, taking account of the extent of the relevant misconduct or mis-statement, determine in its absolute discretion:

 

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(A)                               in respect of any Conditional Awards which have vested or Options that have been exercised that the relevant Participant must by way of clawback repay to the Company such amount as the Committee may determine in cash or transfer to the Company such number of Shares as the Committee may determine, in each case taking account of the number of Shares which were comprised in the relevant Award and their value.

 

Following any such determination the Committee may:

 

(1)                              make a reduction of an equivalent amount to:

 

(i)                                  any unvested Awards which the Participant may have under the Plan or any other employee share scheme operated by the Company; and/or

 

(ii)                               any future bonus payment which would otherwise have been payable; and/or

 

(iii)                            any salary payments or other remuneration which are due or would otherwise have been payable, and/or

 

(2)                              require the relevant Participant to repay to the Company an equivalent amount or to transfer a specified number of Shares to the Company within such period as it determines, 

 

 in each case, to the extent permitted under applicable law; and

 

(B)                               in respect of any Options that have not been exercised, to reduce the number of Shares subject to the Option or to cancel the Option in its entirety.

 

6                                      Leaving the Group

 

6.1                       General rule on leaving employment

 

An Award which has Vested will not lapse on the date the Participant ceases to be an employee.

 

An Award which has not Vested will lapse on the date the Participant ceases to be an employee unless rule 6.2 applies. Where rule 6.2 applies to an Option, rules 6.7 and 6.8 will apply to determine the Exercise Period.

 

6.2                       Leaving in exceptional circumstances - unvested Awards

 

(i)                                If a Participant ceases to be an employee of any Member of the Group for any of the reasons set out below, then his Awards which have not Vested will Vest as described in rule 6.3 and lapse as to the balance. The reasons are:

 

(I)                             ill-health, injury or permanent disability, established to the satisfaction of the Company;

 

(II)                        retirement with the agreement of the Company;

 

(III)                   the Participant’s employing company ceasing to be under the Control of the Company;

 

(IV)                    a transfer of the undertaking, or the part of the undertaking, in which the Participant works to a person

 

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which is neither under the Control of the Company nor a Member of the Group;

 

(V)                                 redundancy;

 

(VI)                            any other reason, at the discretion of the Committee.

 

(ii)                                  The Committee must exercise any discretion provided for in rule (i) within 14 days after cessation of the relevant Participant’s employment or office and the Award will lapse or Vest (as appropriate) on the earlier of the date on which the discretion is exercised and the end of the 14 day period.

 

6.3                       Vesting - Awards subject to Performance Conditions

 

(i)                                Where rule 6.2 applies, the Award does not lapse, and the extent to which it will Vest, subject to rule 1.5 (Other conditions), is measured in accordance with rule 4.2 (Determination of Performance Conditions and other conditions) at the end of the financial year in which the cessation of employment occurs. The Award will also be reduced pro rata to reflect the period from the date of cessation of employment until the end of the Performance Period, as a proportion of the Performance Period unless the Committee decides otherwise. The Award then lapses as to the balance.

 

(ii)                             As an alternative to rule (i) and subject to rule 1.5 (Other conditions), the Committee may decide in its discretion in any particular case that an Award will Vest at the end of the Performance Period, in accordance with rule 4.2 (Determination of Performance Conditions and other conditions). The Award will also be reduced pro rata to reflect the period from the date of cessation of employment until the date of the end of the Performance Period as a proportion of the Performance Period unless the Committee decides otherwise. The Award then lapses as to the balance.

 

6.4                       Vesting — Award not subject to Performance Condition

 

Where rule 6.2 applies, and the Award is not subject to a Performance Condition, then, the Award does not lapse but will Vest, subject to rule 1.5 (Other conditions), on the Vesting Date. The Committee may decide in its discretion in any particular case that the Award should Vest either immediately or on any other date, subject to rule 1.5 (Other conditions). Unless the Committee decides otherwise, the amount of the Award which Vests will also be reduced pro rata to reflect the period from the date of cessation of employment to the original Vesting Date as a proportion of the period from the Award Date until the original Vesting Date.

 

6.5                       Death

 

If a Participant dies, his Awards will Vest on the date of death and any Performance Conditions will not apply but the Award will be reduced pro rata to reflect the period from the date of death until the end of the Performance Period or where there was no Performance Period, to the original Vesting Date, as a proportion of the original Performance Period where there was no Performance Period the period from the Award Date to the original Vesting Date unless the Committee decides otherwise. The Award will then lapse as to the balance.

 

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6.6                       Meaning of “ceasing to be an employee”

 

For the purposes of this rule 6, a Participant will not be treated as ceasing to be an employee of a Member of the Group until he ceases to be an employee of all Members of the Group or if he recommences employment with a Member of the Group within 7 days.

 

6.7                       Lapsing of Options and Exercise Periods

 

This rule sets out when an Option will lapse. An Option will lapse on the earlier of:

 

(i)                               the end of the Exercise Period (see rule 6.8);

 

(ii)                            in the case of a Vested Option, the date the Participant ceases to be an employee or a director of a Member of the Group by reason of dismissal for misconduct (unless the Committee decides otherwise);

 

(iii)                          in the case of a Vested Market Value Option 12 months after the date on which the Participant ceased to be an employee of a Member of the Group or such longer period (not exceeding 42 months) as the Committee may decide;

 

(iv)                         in the case of an Option which Vests under this rule 6, 12 months after the date on which the Committee determines that the Performance Conditions are satisfied or waived or in the case of a Market Value Option such longer period (not exceeding 42 months) as the Committee may decide;

 

(v)                            6 months after an event which gives rise to a Vesting under rule 8 (Takeovers and restructurings) unless ((vi) below applies);

 

(vi)                        6 weeks after the date on which a notice to acquire Shares under Chapter 3 of Part 28 of the Companies Act 2006 (compulsory purchase of shares) is first served;

 

(vii)                     the date on which a Participant joins a competitor organisation (rule 5.7); and

 

(viii)                  12 months from the date of death.

 

6.8                       “Exercise Period” means:

 

(i)                                for an Option which is not a Market Value Option, the 12 month period following Vesting (unless the Committee determines a different period under rule 2.1); and

 

(ii)                             for a Market Value Option, the period starting on Vesting and ending on the tenth anniversary of the Award Date (unless the Committee determines a different period under rule 2.1).

 

If more than one Exercise Period or lapse date applies then the provision which results in the shortest Exercise Period and the earliest lapse of the Option will apply. However, the Committee may permit a Participant to exercise Options within any applicable longer periods set out in these rules.

 

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7                                 Variations in share capital, demergers and special distributions

 

7.1                       Adjustment of Awards

 

If there is:

 

(i)                                a variation in the equity share capital of the Company, including a capitalisation or rights issue, sub-division, consolidation or reduction of share capital; or

 

(ii)                             a demerger (in whatever form) or exempt distribution by virtue of Section 1075 of the Corporation Tax Act 2010; or

 

(iii)                          a special dividend or distribution

 

the Committee may adjust the number or class of Shares or securities comprised in an Option or Conditional Award and, in the case of an Option, the Option Price.

 

The Option Price to subscribe for Shares may be adjusted to a price less than nominal value only if the Committee resolves to capitalise the reserves of the Company, subject to any necessary conditions. This capitalisation will be of an amount equal to the difference between the adjusted Option Price payable for the Shares to be issued on exercise and the nominal value of such Shares on the date of allotment of the Shares. If, at the time of exercise, the Committee does not resolve to capitalise the reserves of the Company for this purpose then the adjustment under this rule 7.1 will be deemed not to have taken place.

 

7.2                       Notice

 

The Company may notify Participants of any adjustment made under this rule 7.

 

8                                 Takeovers and restructurings

 

8.1                       Takeovers

 

Subject to rule 8.5, where a person (or a group of persons acting in concert) obtains Control of the Company as a result of making an offer to acquire Shares, an Award Vests, subject to rule 1.5 (Other conditions), on the date the person obtains Control but only to the extent that any Performance Conditions have been satisfied at that date as determined by the Committee, unless the Committee determines that the Performance Conditions and other conditions should not apply. In addition, unless the Committee decides otherwise, the extent to which the Award Vests shall be reduced pro rata to reflect the period from the date of the event until the date of the end of the Performance Period as a proportion of the Performance Period. The Award lapses as to the balance.

 

8.2                       Schemes of arrangement

 

Subject to rule 8.5, when a court sanctions a compromise or arrangement in connection with the acquisition of Shares, an Award Vests, subject to rules 1.5 (Other conditions), but only to the extent that any Performance Conditions have been satisfied at that date as determined by the Committee unless the Committee determines that the Performance Conditions and other conditions should not apply. In addition, unless the Committee decides otherwise, the extent to which the Award Vests shall be reduced pro rata to reflect the period from the date of the event until the date of the end of the Performance Period as a proportion of the Performance Period. The Award lapses as to the balance.

 

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8.3                       Demergers or other corporate events

 

If the Committee becomes aware that the Company is or is expected to be affected by any demerger, distribution (other than an ordinary dividend) or other transaction not falling within rules 8.1 (Takeover), or 8.2 (Schemes of arrangement) which, in the opinion of the Committee would affect the current or future value of any Award, the Committee may allow an Award to Vest subject to rule 1.5 (Other conditions) but only to the extent that any Performance Condition has been satisfied at that date as determined by the Committee unless the Committee determines that the Performance Conditions and other conditions should not apply. In addition, unless the Committee decides otherwise, the extent to which the Award Vests shall be reduced pro rata to reflect the period from the date of the event until the date of the end of the Performance Period as a proportion of the Performance Period. The Award lapses as to the balance.

 

8.4                       Committee

 

In this rule, “Committee” means those people who were members of the remuneration committee of the Company immediately before the change of Control.

 

8.5                       Exchange

 

An Award will not Vest under rules 8.1, 8.2 or 8.3 but will be exchanged under rule 9 (Exchange of Awards) to the extent that:

 

(i)                     an offer to exchange the Award is made and accepted by the Participant; or

 

(ii)                  the Committee decides that the Award will be automatically exchanged.

 

9                                 Exchange of Awards

 

9.1                       Timing of exchange

 

Where an Award is to be exchanged under rule 8 (Takeovers and restructurings) the exchange will take place as soon as practicable after the relevant event.

 

9.2                       Exchange terms

 

Where a Participant is granted a new award in exchange for an existing Award, the new Award:

 

(i)                               must confer a right to acquire shares in the Acquiring Company or another body corporate determined by the Acquiring Company;

 

(ii)                            must be equivalent to the existing Award, subject to rule (iv);

 

(iii)                          is treated as having been acquired at the same time as the existing Award and, subject to rule (iv), Vests in the same manner and at the same time;

 

(iv)                         may, at the discretion of the Committee, be subject to a performance condition which is, so far as possible, equivalent to any Performance Condition applying to the existing Award;

 

(v)                            is governed by the Plan as if references to Shares were references to the shares over which the new award is granted and references to the Company were references to the Acquiring Company or the body corporate determined under rule (i).

 

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9.3                       Committee

 

In this rule 9, “Committee” means those people who were members of the remuneration committee immediately before the change of Control which led to the exchange.

 

10                          Plan limits

 

10.1                 The nominal amount of Shares over which the Committee may grant Awards on any date shall be limited so that it does not exceed the limits set out in Rule 10.2 .  This limitation only applies to Awards which are to be satisfied (directly or indirectly) by the issue of new Shares or the transfer of treasury Shares.

 

10.2                 The limit is 10% of the nominal amount of the Company’s equity share capital on the day preceding the Date of Grant less the aggregate of the nominal amounts of:

 

(i)                                Shares allocated in respect of awards granted within the previous 10 years under any employee share scheme; and

 

(ii)                             Shares remaining to be allocated in respect of awards granted on the same date or within the previous 10 years under any employee share scheme; and

 

(iii)                          Shares allocated on the same date or within the previous 10 years under any employee share scheme otherwise than in respect of an award.

 

10.3                For the purposes of Rule 10:

 

(i)                                “allocate” means the issue of new Shares or the transfer of treasury Shares in satisfaction (directly or indirectly) of a person’s right under an award;

 

(ii)                             an “award” means any right to acquire or receive Shares whether conditional or unconditional and whether or not for payment;

 

(iii)                         an “employee share scheme” means any scheme for employees of the Group which has been approved by the Company prior to its admission to listing on the London Stock Exchange or thereafter in general meeting;

 

(iv)              “equity share capital” has the meaning given to it by Section 548 of the Companies Act 2006;

 

(v)                 “treasury Shares” has the same meaning as in Chapter 6 of the Companies Act 2006;

 

(vi)                        no account will be taken of Shares acquired by an employee or former employee (or the personal representatives of such a person) where the Shares are acquired for a price equal to their market value at or about the date of acquisition and the cost of those Shares is borne by (or by the estate of) the employee or former employee;

 

(vii)                      subject to Rule 10.3(viii), no account will be taken of an award if and to the extent to which the Committee considers that it will be satisfied by the transfer of existing Shares other than treasury Shares;

 

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(viii)                   any Shares allocated or remaining to be allocated to the trustee of any trust which were used or which are to be sued to satisfy awards granted under an employee shares scheme must be treated as having been allocated or as remaining to be allocated in respect of those awards unless the Shares were acquired by the trustee pursuant to a rights issue or other opportunity offered to the trustee in respect of Shares, other than Shares previously allocated to it; and

 

(ix)                         where an award was granted in consideration of the release by the holder of an award previously granted to him under an employee share scheme, then the earlier award shall be ignored and the later award shall be deemed to have been granted at the same time as the earlier award.

 

10.4                 Where an individual is granted two options on terms that the exercise of one will automatically result in a reduction to the extent to which the other may be exercised and vice versa, then for the purposes of this Rule 10 it shall only be necessary to take into account that number of Shares which could be acquired in respect of those options having regard to those terms.

 

11                          Terms of employment

 

11.1                For the purposes of this rule, “Employee” means any employee of a Member of the Group.

 

11.2      This rule applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.

 

11.3      Nothing in the rules or the operation of the Plan forms part of the contract of employment of an Employee. The rights and obligations arising from the employment relationship between the Employee and the Company are separate from, and are not affected by, the Plan. Participation in the Plan does not create any right to, or expectation of, continued employment.

 

11.4      No employee has a right to participate in the Plan. Participation in the Plan or the grant of Awards on a particular basis in any year does not create any right to or expectation of participation in the Plan or the grant of Awards on the same basis, or at all, in any future year.

 

11.5      The terms of the Plan do not entitle the Employee to the exercise of any discretion in his favour.

 

11.6      The Employee will have no claim or right of action in respect of any decision, omission or discretion, which may operate to the disadvantage of the Employee even if it is unreasonable, irrational or might otherwise be regarded as being in breach of the duty of trust and confidence (and/or any other implied duty) between the Employee and his employer.

 

11.7      No Employee has any right to compensation for any loss in relation to the Plan, including any loss in relation to:

 

(i)                                any loss or reduction of rights or expectations under the Plan in any circumstances (including lawful or unlawful termination of employment);

 

(ii)                             any exercise of a discretion or a decision taken in relation to an Award or to the Plan, or any failure to exercise a discretion or take a decision;

 

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(iii)               the operation, suspension, termination or amendment of the Plan.

 

11.8                   Participation in the Plan is permitted only on the basis that the Participant accepts all the provisions of the rules, including this rule. By participating in the Plan, an Employee waives all rights under the Plan, other than the right to acquire shares subject to and in accordance with the express terms of the Plan and the Performance Condition, in consideration for, and as a condition of, the grant of an Award under the Plan.

 

11.9                   Nothing in this Plan confers any benefit, right or expectation on a person who is not an Employee. No such third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Plan. This does not affect any other right or remedy of a third party which may exist.

 

12                          General

 

12.1                Committee’s decisions final and binding

 

The decision of the Committee on the interpretation of the Plan or in any dispute relating to an Award or matter relating to the Plan will be final and conclusive.

 

12.2                Documents sent to shareholders

 

The Company may send to Participants copies of any documents or notices normally sent to the holders of its Shares at or around the same time as issuing them to the holders of its Shares.

 

12.3                Costs

 

The Company will pay the costs of introducing and administering the Plan. The Company may ask a Participant’s employer to bear the costs in respect of an Award to that Participant.

 

12.4                Regulations

 

The Committee has the power from time to time to make or vary regulations for the administration and operation of the Plan but these must be consistent with its rules.

 

12.5                Employee trust

 

The Company and any Subsidiary may provide money to the trustee of any trust or any other person to enable them or him to acquire Shares to be held for the purposes of the Plan, or enter into any guarantee or indemnity for those purposes, to the extent permitted by Chapter 2 of Part 18 of the Companies Act 2006.

 

12.6                Data protection

 

By participating in the Plan the Participant consents to the holding and processing of personal data provided by the Participant to any Member of the Group, trustee or third party service provider, for all purposes relating to the operation of the Plan. These include, but are not limited to:

 

(i)         administering and maintaining Participant records;

 

(ii)        providing information to Members of the Group, trustees of any employee benefit trust, registrars, brokers or third party administrators of the Plan;

 

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(iii)       providing information to future purchasers of the Company or the business in which the Participant works;

 

(iv)       transferring information about the Participant to a country or territory outside the European Economic Area that may not provide the same statutory protection for the information as the Participant’s home country.

 

12.7                Consents

 

All allotments, issues and transfers of Shares will be subject to any necessary consents under any relevant enactments or regulations for the time being in force in the United Kingdom or elsewhere. The Participant will be responsible for complying with any requirements he needs to fulfil in order to obtain or avoid the necessity for any such consent.

 

12.8                Articles of association

 

Any Shares acquired under the Plan are subject to the articles of association of the Company from time to time in force.

 

12.9                Listing

 

If and so long as the Shares are listed on the Official List and traded on the London Stock Exchange, the Company will apply for listing of any Shares issued under the Plan as soon as practicable.

 

12.10         Notices

 

(i)         Save as otherwise provided in this Plan any notice or communication to be given to any person who is or will be eligible to be a Participant may be:

 

(i)          delivered by electronic mail and it shall be deemed to have been received upon electronic confirmation of such delivery; or

 

(ii)         personally delivered or sent by ordinary post to his last known address and where a notice or communication is sent by post it shall be deemed to have been received 48 hours after the same was put into the post properly addressed and stamped.

 

Share certificates and other communications sent by post will be sent at the risk of the recipient concerned and neither the Company nor any of its Subsidiaries shall have any liability whatsoever to any such person in respect of any notification, document, share certificate or other communication so given, sent or made.

 

(ii)         Any notice to be given to the Company or the Trustees shall be delivered or sent to the Company at its registered office, marked for the attention of the Company Secretary, and shall be effective upon receipt. The Board may make other arrangements to receive notices.

 

13                          Changing the Plan and termination

 

13.1                Committee’s powers

 

Except as described in the rest of this rule 13, the Committee may at any time change the Plan in any way.

 

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13.2                Shareholder approval

 

(i)                                Except as described in rule (ii), the Company in general meeting must approve in advance by ordinary resolution any proposed change to the Plan to the advantage of present or future Participants, which relates to the following:

 

(I)                              the persons to or for whom Shares may be provided under the Plan;

 

(II)                        the limitations on the number of Shares which may be issued under the Plan;

 

(III)                   the rights of a Participant in the event of a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital of the Company;

 

(IV)                    the terms of this rule (i).

 

(ii)                             The Committee can change the Plan and need not obtain the approval of the Company in general meeting for any minor changes:

 

(I)                                     to benefit the administration of the Plan;

 

(II)                                to comply with or take account of the provisions of any proposed or existing legislation;

 

(III)                           to take account of any changes to legislation; or

 

(IV)                          to obtain or maintain favourable tax, exchange control or regulatory treatment of the Company, any Subsidiary or any present or future Participant.

 

13.3                Notice

 

The Committee may give written notice of any changes made to any Participant affected.

 

14                          Governing law and jurisdiction

 

English law governs the Plan and all Awards and their construction. The English Courts have non-exclusive jurisdiction in respect of disputes arising under or in connection with the Plan or any Award.

 

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Schedule

 

United Kingdom — Approved Options

 

The Company may designate a Market Value Option as an approved option granted under this schedule (“Approved Option”). If it does, the provisions of the rules relating to Market Value Options will apply to such Approved Option, as amended by this schedule. No other types of Awards may be designated as Approved Options under this schedule.

 

The following definitions apply to this Schedule as well as those set out in the Definitions section of the rules:

 

“HMRC” means “HM Revenue and Customs”;

 

“ITEPA” means “Schedule 4 to the Income Tax (Earnings and Pensions) Act 2003”.

 

The purpose of the Plan (including, without limitation, this Schedule) is to provide benefits for employees and directors in the form of Options.

 

1                                   Eligibility to be granted Approved Options

 

Approved Options cannot be granted to anybody who is:

 

(i)                                excluded from participation because of paragraph 9 of ITEPA (material interest provisions); or

 

(ii)                            a director who is required to work less than 25 hours a week (excluding meal breaks) for the Company.

 

2                                   Timing of grant and conditions

 

2.1                         Any additional conditions imposed under rule 1.5 must relate to the vesting or exercise of Approved Options.

 

2.2                         If the Shares under Option are subject to any restriction, then details of that restriction must be stated and notified to the Participant.  The Participant must also be notified at the time of grant of the Option Price, the number of Shares, the exercise period, details of any performance conditions and the circumstances in which the Options may lapse.

 

3                                   Shares subject to an Approved Option

 

The Shares subject to an Approved Option (both at the time of grant and at the time of exercise) must satisfy paragraphs 16 to 20 of ITEPA. If they cease to satisfy paragraphs 16 to 20 of ITEPA the Committee will notify HMRC that it wishes the terms of Approved Options to be disapproved, so that the definition of “Market Value Option” will continue in effect, but the Market Value Option will cease to be an Approved Option and will be treated, for the purposes of the rules, as a Market Value Option.

 

4                                   Individual limit on Approved Options

 

The Committee must not grant an Approved Option to an employee which would cause the aggregate market value of:

 

(i)                               the Shares subject to that Approved Option; and

 

(ii)                            the Shares which he may acquire on exercising other Approved Options; and

 

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(iii)                         the shares which he may acquire on exercising his options under any other HMRC approved discretionary scheme established by the Company or by any of its associated companies (as defined in paragraph 35 of ITEPA)

 

to exceed the amount permitted under paragraph 6(1) of ITEPA (currently £30,000). For the purposes of this paragraph, market value is calculated as at the date of grant of the options as described in the relevant plan rules.

 

If the Committee tries to grant an Approved Option which is inconsistent with this paragraph 4, the Approved Option will be limited and will take effect from the Award Date on a basis consistent with this paragraph 4.

 

5                                   Variations in share capital, demergers and special distributions

 

5.1                          Adjustments may not be made to Approved Options under rule 7 where there is a demerger (in whatever form), an exempt distribution by virtue of Section 1075 of the Corporation Tax Act 2010 or a special dividend or distribution.

 

5.2                         The Committee cannot adjust the class of Shares comprised in an Approved Option.

 

5.3                         Any adjustment of Approved Options under rule 7 must secure:

 

(a)                                    that the total market value of the Shares which may be acquired by the exercise of the Option is immediately after the variation substantially the same as what it was immediately before the variation; and

 

(b)                                    the total Option Price at which those Shares may be acquired is immediately after the variation substantially the same as what it was immediately before the variation.

 

6                                   Restrictions on exercise of an Approved Option

 

A Participant may not exercise an Approved Option while he is excluded from being granted an Approved Option under paragraph 9 of ITEPA (material interest provisions).

 

7                                   Redundancy

 

Redundancy, for the purposes of rule 6.2, has the meaning given to that term by the Employment Rights Act 1996.

 

8                                   Death

 

If the Participant dies, the Approved Option may be exercised by his personal representatives within 12 months after his death, after which it will lapse.

 

9                                   Exercise and lapse of Approved Options

 

If the Committee exercises any discretion in relation to an Approved Option, it must do so fairly and reasonably.

 

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10                            Takeovers and restructurings

 

10.1              Rule 8.2 shall only apply where the court has sanctioned a compromise or arrangement under Section 899 of the Companies Act 2006 applicable to or affecting:

 

(a)                       all the ordinary share capital of the Company or all the shares in the same class of the shares to which the Approved Option relates, or

 

(b)                       all the Shares or all the shares in that same class which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in the Plan.

 

10.2                  Rule 8.3 shall not apply.

 

10.3                   The following replaces rule 8.5 in relation to Approved Options: If:

 

8.5.1                     the events referred to in rules 8.1 or 8.2 are part of an arrangement which will mean that the Company will be under the Control of another company; and

 

8.5.2                     the persons who own Shares in the Company immediately before the change of Control will immediately afterwards own at least 75% of the shares in that other company; and

 

8.5.3                    Participants are to be offered substitute options under rule 11,

 

options, which are not exercisable otherwise than under rule 8.1 or 8.2, as the case may be, may not be exercised.

 

11                            Exchange of Approved Options

 

11.1                  If HMRC approval of the terms of Approved Options is to be maintained, Approved Options can only be exchanged, as described in rule 9, if the Acquiring Company:

 

obtains Control of the Company as a result of making a general offer to acquire:

 

the whole of the issued ordinary share capital of the Company (other than that which is already owned by it and its subsidiary or holding company) made on a condition such that, if satisfied, the Acquiring Company will have Control of the Company; or

 

all the Shares (or all those Shares not already owned by the Acquiring Company or its subsidiary or holding company); or

 

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11.1.2    obtains Control of the Company under a compromise or arrangement sanctioned by the court under Section 899 of the Companies Act 2006 applicable to or affecting:

 

(a)                      all the ordinary share capital of the Company or all the shares in the same class of the shares to which the Approved Option relates, or

 

(b)                       all the Shares or all the shares in that same class which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in the Plan; or

 

becomes bound or entitled to acquire Shares under Chapter 3 of Part 28 of the Companies Act 2006 or other local legislation which HMRC agrees is equivalent.

 

11.2                  Approved Options must be exchanged within the period referred to in paragraph 26(3) of ITEPA and subject to paragraph 11.4, by agreement between the Participant and the Acquiring Company.

 

11.3                  The new Award will be in respect of shares which satisfy the conditions of paragraph 27(4) of ITEPA, in a body corporate falling within paragraph 16(b) or (c) of ITEPA and any performance condition applying to the new Award must be no more difficult to satisfy than the Performance Condition applying to the existing Award.

 

11.4                  The new Award must be equivalent to the old options and thus for the new Awards

 

(a)                                    the shares to which they relate must meet the conditions in paragraphs 16 to 20 (types of share that may be used),

 

(b)                                    they must be exercisable in the same manner as the old options and subject to the provisions of the Plan as it had effect immediately before the release of the old options,

 

(c)                                     the total market value of the shares subject to the old options immediately before the release of those options by the participant must be substantially the same as the total market value, immediately after the grant of the new Awards to the participant, of the shares subject to those Awards, and

 

(d)                                    the total amount payable by the participant for the acquisition of shares under the new Awards must be substantially the same as the total amount that would have been so payable under the old options.

 

For the purposes of this paragraph the market value of any shares is to be determined using a methodology agreed by HMRC.

 

11.5                  The following replaces rule 9.2.5:

 

9.2.5                     is governed by the Plan as if references to Shares were references to shares over which the new award is granted and as if references to the Company in rules 3-14 and the Schedule (other than rule 13) (including any such references as occur in expressions which are defined in rule 1 and used in those rules) were references to the Acquiring Company or the body corporate determined under rule 9.2.1.

 

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12                            Alternative ways to satisfy Options and adjustment

 

Rules 5.5 and 5.8 do not apply in relation to Approved Options.

 

13                            Joining a competitor

 

The following replaces rule 5.7 in relation to Approved Options:

 

If a Participant ceases to be an employee or director of a Member of the Group and within 12 months of cessation joins a competitor organisation (as determined by the Committee), all unvested Approved Options will forthwith lapse.

 

14                            Changing the terms of Approved Options

 

14.1                   The Committee need not obtain the approval of the Company in general meeting for any minor changes which are necessary or desirable in order to obtain or maintain HMRC approval for the terms of Approved Options under ITEPA or any other enactment.

 

15                            Withholding of tax

 

The following replaces rule 5.6 in relation to Approved Options:

 

Unless the Optionholder discharges any liability that may arise himself, the Company, any employing company or the trustee of any employee benefit trust from which Shares may be provided may make the necessary arrangements after the exercise of an Option to withhold an amount sufficient to meet any liability to taxation or social security contributions in respect of that exercise for which the Company is obliged to account on behalf of an Optionholder. These arrangements may include the sale of sufficient Shares on behalf of an Optionholder.

 

16                            Terms of employment

 

The following replaces rule 11 in relation to Approved Options:

 

16.1                  For the purposes of this rule, “Employee” means any employee of a Member of the Group.

 

16.2                  This rule applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.

 

16.3                  Nothing in the rules or the operation of the Plan forms part of the contract of employment of an Employee. The rights and obligations arising from the employment relationship between the Employee and the Company are separate from, and are not affected by, the Plan.  Participation in the Plan does not create any right to, or expectation of, continued employment.

 

16.4                  No employee has a right to participate in the Plan. Participation in the Plan or the grant of Options on a particular basis in any year does not create any right to or expectation of participation in the Plan or the grant of Approved Options on the same basis, or at all, in any future year.

 

16.5                  Subject to paragraph 9 of this Schedule, the terms of the Plan do not entitle the Employee to the exercise of any discretion in his favour.

 

16.6                   The Employee will have no claim or right of action in respect of any decision, omission or discretion, not relating to a subsisting option, which may operate to the disadvantage

 

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of the Employee even if it is unreasonable, irrational or might otherwise be regarded as being in breach of the duty of trust and confidence (and/or any other implied duty) between the Employee and his employer.

 

16.7                   Subject to paragraph 9 of this Schedule, the Employee will have no claim or right of action in respect of any decision, omission or discretion relating to a subsisting option which may operate to the disadvantage of the Employee.

 

16.8                   Subject to paragraph 9 of this Schedule, no Employee has any right to compensation for any loss in relation to the Plan, including any loss in relation to:

 

(i)                                any loss or reduction of rights or expectations under the Plan in any circumstances (including lawful or unlawful termination of employment);

 

(ii)                            any exercise of a discretion or a decision taken in relation to an Approved Option or to the Plan, or any failure to exercise a discretion or take a decision;

 

(iii)                         the operation, suspension, termination or amendment of the Plan.

 

16.9                   Participation in the Plan is permitted only on the basis that the Participant accepts all the provisions of the Rules, including this Rule. By participating in the Plan, an Employee waives all rights under the Plan, other than the right to exercise an Approved Option subject to and in accordance with the express terms of the rules and the Performance Condition, in consideration for, and as a condition of, the grant of an Approved Option under the Plan.

 

Nothing in this Plan confers any benefit, right or expectation on a person who is not an Employee. No such third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Plan. This does not affect any other right or remedy of a third party which may exist.

 

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