Document:

stlt_ex1038.htm

EXHIBIT 10.38

 

[***] Indicates redacted information subject to a request for confidential treatment.

 

STANDARD EXCLUSIVE LICENSE AGREEMENT

WITH SUBLICENSING TERMS

 

TABLE OF CONTENTS

 

	
Section 1
	
Definitions 

	
Section 2
	
Grant

	
Section 3
	
Due Diligence 

	
Section 4
	
Payments 

	
Section 5
	
Certain Warranties and Disclaimers of FSURF

	
Section 6
	
Record Keeping

	
Section 7
	
Patent Prosecution

	
Section 8
	
Infringement and Invalidity

	
Section 9
	
Term and Termination 

	
Section 10
	
Assignability 

	
Section 11
	
Dispute Resolution Procedures

	
Section 12
	
Product Liability; Conduct of Business

	
Section 13
	
Use of Names

	
Section 14
	
Miscellaneous

	
Section 15
	
Notices

	
Section 16
	
Contract Formation and Authority

	
Section 17
	
United States Government Interests

	
Section 18
	
Confidentiality 

	
Section 19
	
University Rules and Regulations 

	
Appendix A – 
	
Inter-institutional Agreement

	
Appendix B – 
	
Development Plan 

	
Appendix C – 
	
Development Report

	
Appendix D – 
	
FSURF Royalty Report

	
Appendix E – 
	
Due Diligence

  
	 
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This Agreement is made effective the ____ day of _____________, 2016, (the “Effective Date”) by and between the Florida State University Research Foundation, Inc. (hereinafter called “FSURF”), a nonstock, nonprofit Florida corporation, having its principal place of business at 2000 Levy Avenue, Suite 351, Tallahassee, Florida 32310, and Spotlight Innovation Inc. (hereinafter called “Licensee”), a corporation organized and existing under the laws of Nevada, having its principle place of business at 6750 Westown Pkwy, Ste. 200-226, Des Moines, Iowa 50266;

 

WHEREAS, U.S. Department of Health and Human Services, as represented by National Center for Advancing Translational Sciences (HHS), and Johns Hopkins University (JHU) are co-owners with Florida State University Research Foundation of certain inventions that are described in the “Licensed Patents” (defined below) and has granted FSURF the right to license its undivided rights pursuant to that certain Inter-institutional Agreement effective [***] and attached as Appendix A;

   

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, the parties covenant and agree as follows:

  

Section 1 Definitions

 

1.1 The term “Affiliate” shall mean: (a) any person or entity which controls at least fifty percent (50%) of the equity or voting stock of the Licensee or (b) any person or entity fifty percent (50%) of whose equity or voting stock is owned or controlled by the Licensee or (c) any person or entity of which at least fifty percent (50%) of the equity or voting stock is owned or controlled by the same person or entity owning or controlling at least fifty percent (50%) of Licensee or (d) any entity in which any officer or employee is also an officer or employee of Licensee or any person who is an officer or employee of Licensee.

 

1.2 “Development Plan” shall mean a written report summarizing the development activities that are to be undertaken by the Licensee to bring Licensed Products and/or Licensed Processes to the market. The Development Plan is attached as Appendix B.

 

1.3 “Development Report” shall mean a written account of Licensee’s progress under the Development Plan having at least the information specified on Appendix C to this Agreement, and shall be sent to the address specified on Appendix C.

 

1.4 “Licensed Field” shall include treatment of viral infection(s). 

 

1.5 “Licensed Patents” shall refer to and mean all of the following FSURF intellectual property:

 

1.5.1 the United States patent(s)/patent application(s) U.S. Provisional patent applications [***], and all U.S. patents and foreign patents and patent applications based on these U.S. applications. 

 

1.5.2 United States and foreign patents issued from the applications listed in 1.5.1 above and from divisionals and continuations of these applications, to the extent the claims are directed to subject matter specifically described in the applications listed in 1.5.1 above and are dominated by the claims of those patent applications and patents issuing thereon or reissues thereof, and any and all foreign patents and patent applications corresponding thereto, all to the extent owned or controlled by Florida State University.

 

1.6 “Licensed Product” and “Licensed Process” shall mean:

 

1.6.1 In the case of a Licensed Product, any product or part thereof developed by or on behalf of Licensee that:

 

	
 
	(a)	is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Licensed Patents, in any country in which any product is made, used or sold;
	
 
	(b)	is manufactured by using a process which is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Licensed Patents, in any country in which any such process is used or in which any such product is used or sold.

 

1.6.2 In the case of a Licensed Process, any process which:

 

	
 
	(a)	is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Licensed Patents in any country in which such process is practiced.

 
	 
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1.7 “Licensed Territory” shall be worldwide. 

 

1.8 “Liquidation Event” means (a) a merger, share exchange or other reorganization, (b) the sale by one or more stockholders of a majority of the voting power of Licensee, (c) the sale of all or substantially all of the assets of Licensee, or (d) an asset sale of a Licensed Product(s) and or Licensed Process(es), in which, with respect to (a), (b), and (c), the stockholders of Licensee prior to such transaction do not own, directly or indirectly, a majority of the voting power of the acquiring, surviving or successor entity, as the case may be. For the avoidance of doubt, a Liquidation Event shall not include the issuance and sale of Licensee’s equity securities, or securities convertible into Licensee’s equity securities, in a private placement transaction or other transaction that is not an Initial Public Offering or the issuance of Licensee’s equity securities to a bona fide creditor of Licensee in exchange for the cancellation of indebtedness owed by Licensee, in each case, even if such sale or issuance transaction results in the stockholders of Licensee immediately prior to such transaction not owning, directly or indirectly, a majority of the voting power of Licensee after such transaction.

 

1.9 “Net Sales” shall mean the gross invoice price charged by, and the value of non-cash consideration owed to, Licensee, an Affiliate or a Sublicensee for sales of Licensed Products and Licensed Processes, less (a) sales taxes or other taxes (other than income taxes), (b) shipping and insurance charges, (c) actual allowances, rebates, credits, or refunds for returned or defective goods, chargeback payments (or the equivalent thereof), (d) trade, quantity, and other discounts, retroactive price reductions, or other allowances actually allowed or granted from the billed amount and taken (provided that such discounts shall be limited to discounts in amounts customary in the trade), and (e) any import or export duties, tariffs, or similar charges incurred with respect to the import or export of Licensed Products or Licensed Processes into or out of any country in the Licensed Territory. Licensed Products and Licensed Processes will be considered sold when it is shipped, delivered, or invoiced, whichever is earlier, by Licensee, an Affiliate or a Sublicensee, as the case may be. Notwithstanding the foregoing, Net Sales shall not include, and shall be deemed zero with respect to (a) the distribution of reasonable quantities of promotional samples of Licensed Products and (b) Licensed Products and Licensed Processes provided for clinical trials and research purposes. For purposes of calculating Net Sales, a sale to a Sublicensee for end use by the Sublicensee will be treated as a sale at Licensee’s list price. For clarity, the term “Net Sales” does not include consideration received by Licensee for the grant of rights under a Sublicense (for which payment shall be governed solely by Section 2.2.2 hereof) or for royalties under a Sublicense (for which payment shall be governed solely by Section 2.2.2 hereof).

 

1.10 The term “Sublicensee” shall mean any third party to whom Licensee confers the right to make, use or sell Licensed Product and/or Licensed Processes and/or any of the intellectual property rights embodied in Licensed Patents.

 

Section 2 Grant 

 

2.1 License.

 

2.1.1 License Under Licensed Patents

 

FSURF hereby grants to Licensee an exclusive license, limited to the Licensed Field and the Licensed Territory, under the Licensed Patents to make, use and sell Licensed Products and/or Licensed Processes. FSURF reserves to itself, Florida State University, HHS, and JHU the right to make and use the Licensed Patents, Licensed Products and/or Licensed Processes solely for their internal research, clinical (including, but not limited to patient care), and educational purposes. In addition, FSURF reserves to itself, as well as to Florida State University, HHS, JHU and to all non-profit research institutions, the right to use materials that might be covered under Licensed Patents solely for their internal research, educational, and clinical purposes and to meet all applicable governmental requirements governing the ability to transfer materials. This license grant is subject to the government license rights in Section 17 herein.

 
	 
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2.2 Sublicense.

 

2.2.1 Licensee may grant written, Sublicenses to third parties. Any agreement granting a Sublicense shall state that the Sublicense is subject to the termination of this Agreement. Licensee shall have the same responsibility for the activities of any Sublicensee or Affiliate as if the activities were directly those of Licensee. This right is subject to the requirement that any sublicense is subject to the HHS Inter-Institutional Agreement attached as Appendix A. 

 

2.2.2 In respect to Sublicenses granted by Licensee under 2.2.1 above, Licensee shall pay to FSURF an amount equal to what Licensee would have been required to pay to FSURF had Licensee sold the amount of Licensed Products or Licensed Processes sold by such Sublicensee. In addition, if Licensee receives any fees, minimum royalties, or other payments in consideration for any rights granted under a Sublicense, and such payments are not based directly upon the amount or value of Licensed Products or Licensed Processes sold by the Sublicensee, then Licensee shall pay FSURF an amount equal to [***] of such payments for any Sublicense entered into during the first two years following the Effective Date, and an amount equal to [***] of such payments for a Sublicense entered into thereafter, of such payments in the manner specified in Section 4. Licensee shall not receive from Sublicensees anything of value in lieu of cash payments in consideration for any Sublicense under this Agreement without the express prior written permission of FSURF. 

 

2.2.3 Licensee shall provide FSURF with an unredacted copy of each sublicense agreement and any agreement which transfers intellectual property rights granted hereunder, at least thirty (30) days prior to the execution of the sublicense agreement and a fully executed version within thirty (30) days of execution.

 

2.2.4 In the event that FSURF notifies Licensee in writing of a third party’s interest in a field of use which Licensee is not addressing at the time of receipt of the notice, Licensee shall respond to FSURF in writing within thirty (30) days of receipt of such notice to inform FSURF whether Licensee intends to pursue the Field of Use. If in such response, Licensee elects to forego the Field of Use, FSURF may terminate the Licensee’s license in said field and negotiate and execute said license directly.

 
	 
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Section 3 Due Diligence

 

3.1 Development. 

 

3.1.1 Licensee agrees to and warrants that: 

 

	
 
	(a)	it has, or will obtain, the expertise necessary to independently evaluate the inventions of the Licensed Patents;
	
 
	(b)	it will establish and actively and diligently pursue the Development Plan (see Appendix B) to the end that the inventions of the Licensed Patents will be utilized to provide Licensed Products and/or Licensed Processes for sale in the retail market within the Licensed Field;
	
 
	(c)	it will diligently develop markets for Licensed Products and Licensed Processes; and
	
 
	(d)	until the date of first commercial sale of Licensed Products or Licensed Processes, it will supply FSURF with a written Development Report annually fifteen (15) days after the end of the calendar year (see Appendix C).

 

3.1.2 Licensee agrees that the first commercial sale of products to the retail customer shall occur on or before January 1, 2023 or FSURF shall have the right to terminate the Agreement pursuant to Section 9.3 hereto. In addition, Licensee agrees to pay the product development milestone payments listed in Section 4.3.3 and to complete the due diligence activities listed in Appendix E or FSURF shall have the right to terminate the Agreement pursuant to Section 9.3. Licensee will notify FSURF in writing as each milestone or due diligence activity is met. 

 

3.1.3 Licensee may issue a written request to negotiate extensions of individual milestones listed in Section 4.3.3 or due dates for individual due diligence activities listed in Appendix E. Provided that such requests are received by FSURF no less than ninety (90) days prior to the original due date in the case of milestone payments, or no less than forty five (45) days prior to the original due date in the case of due diligence activities, and that each request describes fully Licensee’s diligent efforts to achieve the milestones or complete the due diligence activities, FSURF shall consider in good faith such requests. Upon granting each such request, FSURF and Licensee shall negotiate in good faith the length of the extension. FSURF shall not unreasonably withhold requests to negotiate extensions. 

 

3.1.4 Florida State University policies may require approval of clinical trials involving technology invented at the University. Accordingly, Licensee will notify FSURF prior to commencing any clinical trials at Florida State University or its affiliated medical facilities. 

 
	 
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Section 4 Payments 

 

4.1 Obligation in Lieu of License Issue Fee (Alternative Fee). 

 

In lieu of a license issue fee, in the case of a Liquidation Event after the Effective Date, Licensee agrees to pay to FSURF an amount equal to [***] of the transaction value ascribed to those assets, products, and properties related to or stemming from the licensed technology defined in the Agreement (the “Alternative Fee”). Payment of the Alternative Fee shall be due thirty (30) days following the closing of such Liquidation Event.

 

4.2 Royalty.

 

Licensee agrees to pay to FSURF as earned royalties a royalty calculated as a percentage of Net Sales from the sale of Licensed Product and/or Licensed Process. The royalty is deemed earned as of the earlier of the date the Licensed Product and/or Licensed Process is actually sold and paid for, the date an invoice is sent by Licensee or its Sublicensee(s), or the date a Licensed Product and/or Licensed Process is transferred to a third party for any promotional reasons. The royalty shall remain fixed while this Agreement is in effect at a rate of [***] of Net Sales.

 

4.3 Other Payments. 

 

4.3.1 Licensee agrees to pay FSURF maintenance fees according to the schedule below upon each anniversary of the Effective Date.

 

			
Payment 
	
 
	
[***]
	
			
$ [***]
	
 
	
[***]
	
			
$ [***]
	
 
	
[***]
	
			
$ [***]
	
 
	
[***] 
	
			
$ [***]
	
 
	
[***] 
	
			
$ [***]
	
 
	
[***] 
	and every [***] thereafter on the same date, for the life of this Agreement.

 

4.3.2 Upon the first quarter that sales are made, the maintenance fee shall no longer be required, and minimum royalty payments shall be made according to the schedule below and shall be creditable against royalties.

 

			
Payment 
	
 
	
[***]
	
			
$ [***]
	
 
	
[***]
	
			
$ [***]
	
 
	
[***]
	
			
$ [***]
	
 
	
[***]
	
			
$ [***]
	
 
	
[***]
	
and every [***] thereafter on the same date, for the life of this Agreement

 

Upon the first quarter following the quarter in which commercial sales of the applicable Licensed Product and/or Licensed Process begin, the above minimum royalties shall be paid on a quarterly basis, with such amounts due within thirty (30) days of the end of the calendar quarter, such calendar quarters ending on March 31, June 30, September 30, and December 31. Any minimum royalty paid in a calendar year will be credited against the earned royalties for that calendar year. Any earned royalties paid in a calendar year will be credited against the minimum royalties due for said calendar year. It is understood that earned royalties will be applied against minimum royalties on a calendar year basis, and that sales of Licensed Products and/or Licensed Processes requiring the payment of earned royalties made during a prior or subsequent calendar year shall have no effect on the annual minimum royalty due FSURF for other than the same calendar year in which the royalties were earned.

 
	 
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4.3.3 In addition to all other payments required under this Agreement, Licensee agrees to pay FSURF milestone payments, as follows:

 

Milestone payments for the first product:

 

[***]– upon the earlier of (a) the [***], or (b) [***]anniversary of the date of this license.

[***]– upon the earlier of (a) [***], or (b) [***]anniversary of the Effective Date. 

[***]– upon the [***].

[***]– upon filing of the [***].

[***]– within [***]after the [***].

 

Milestones payments for each additional product:

 

[***]– upon [***]. 

[***]– upon [***]

[***]– within [***]after the [***].

 

4.4 Accounting for Payments. 

 

4.4.1 Amounts owing to FSURF under Sections 4.1 and 4.2 shall be paid on a quarterly basis after the amount of minimum royalties paid is exceeded, with such amounts due and received by FSURF on or before the thirtieth day following the end of the calendar quarter ending on March 31, June 30, September 30 or December 31 in which such amounts were earned. Any amounts which remain unpaid after the date they are due to FSURF shall accrue interest from the due date at the rate of [***]. However, in no event shall this interest provision be construed as a grant of permission for any payment delays. Licensee shall also be responsible for repayment to FSURF of any attorney, collection agency, or other out-of-pocket FSURF expenses required to collect overdue payments due from this Section, or any other applicable section of this Agreement.

 

4.4.2 Except as otherwise directed, all amounts owing to FSURF under this Agreement shall be paid in U.S. dollars to FSURF at the following address: 

 

President

Florida State University Research Foundation, Inc.

Attn: Gary K. Ostrander 

2000 Levy Avenue, Suite 351

Tallahassee, FL 32310

 

All royalties owing with respect to Net Sales stated in currencies other than U.S. dollars shall be converted at the rate shown in the Federal Reserve Noon Valuation - Value of Foreign Currencies on the day preceding the payment due date. 

 
	 
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4.4.3 A certified full accounting statement showing how any amounts payable to FSURF under Section 4.3 have been calculated shall be submitted to FSURF on the date of each such payment. In addition to being certified, such accounting statements shall contain a written representation signed by an executive officer of Licensee that states that the statements are true, accurate, and fairly represent all amounts payable to FSURF pursuant to this Agreement. Such accounting shall be on a per-country and product line, model or trade name basis and shall be summarized on the form shown in Appendix D – FSURF Royalty Report of this Agreement. 

 

4.4.4 FSURF is exempt from paying income taxes under U.S. law. Therefore, all payments due under this Agreement shall be made without deduction for taxes, assessments, or other charges of any kind which may be imposed on FSURF by any government outside of the United States or any political subdivision of such government with respect to any amounts payable to FSURF pursuant to this Agreement. All such taxes, assessments, or other charges shall be assumed by Licensee.

 

Section 5 Certain Warranties and Disclaimers of FSURF

 

5.1 FSURF warrants that, except as otherwise provided under Section 17.1 of this Agreement and the Inter-Institutional Agreement attached as Appendix A, with respect to U.S. Government interests, it is the co-owner of the Licensed Patents or otherwise has the right to grant the licenses granted to Licensee in this Agreement. However, nothing in this Agreement shall be construed as: 

 

5.1.1 a warranty or representation by FSURF as to the validity or scope of any right included in the Licensed Patents;

 

5.1.2 a warranty or representation that anything made, used, sold or otherwise disposed of under the license granted in this Agreement will or will not infringe patents of third parties;

 

5.1.3 an obligation to bring or prosecute actions or suits against third parties for infringement of Licensed Patents;

 

5.1.4 an obligation to furnish any know-how not provided in Licensed Patents or any services other than those specified in this Agreement; or

 

5.1.5 a warranty or representation by FSURF that it will not grant licenses to others to make, use or sell products not covered by the claims of the Licensed Patents which may be similar and/or compete with products made or sold by Licensee.

 
	 
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5.2 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, FSURF MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF LICENSED PATENTS CLAIMS, ISSUED OR PENDING. FSURF ASSUMES NO RESPONSIBILITIES WHATSOEVER WITH RESPECT TO USE, SALE, OR OTHER DISPOSITION BY LICENSEE, ITS SUBLICENSEE(S), OR THEIR VENDEES OR OTHER TRANSFEREES OF PRODUCT INCORPORATING OR MADE BY USE OF INVENTIONS LICENSED UNDER THIS AGREEMENT.

 

Section 6 Record Keeping

 

6.1 Licensee and its Sublicensee(s) shall keep books and records sufficient to verify the accuracy and completeness of Licensee’s and its Sublicensee(s)’s accounting referred to above, including without limitation, inventory, purchase and invoice records, manufacturing records, sales analysis, general ledgers, financial statements, and tax returns relating to the Licensed Products and/or Licensed Processes. Such books and records shall be preserved for a period not less than six years after they are created or as required by federal law, both during and after the term of this Agreement.

 

6.2 Licensee and its Sublicensee(s) shall take all steps necessary so that FSURF may, within thirty (30) days of its written request, audit, review and/or copy all of the books and records at a single U.S. location to verify the accuracy of Licensee’s and its Sublicensee(s)’s accounting. Such review may be performed by any authorized employees of FSURF as well as by any attorneys and/or accountants designated by FSURF, upon reasonable notice and during regular business hours. If a deficiency with regard to any payment hereunder is determined, Licensee and its Sublicensee(s) shall pay the deficiency within thirty (30) days of receiving notice thereof along with applicable interest as described in Section 4.4.1. If a royalty payment deficiency for a calendar year exceeds [***] of the royalties paid for that year, then Licensee and its Sublicensee(s) shall be responsible for paying FSURF’s out-of-pocket expenses incurred with respect to such review.

 

6.3 At any time during the term of this agreement, FSURF may request in writing that Licensee verify the calculation of any past payments owed to FSURF through the means of a self-audit. Within ninety (90) days of the request, Licensee shall complete a self-audit of its books and records to verify the accuracy and completeness of the payments owed. Within thirty (30) days of the completion of the self-audit, Licensee shall submit to FSURF a report detailing the findings of the self-audit and the manner in which it was conducted in order to verify the accuracy and completeness of the payments owed. If Licensee has determined through its self-audit that there is any payment deficiency, Licensee shall pay FSURF the deficiency along with applicable interest under Section 4.4.1 with the submission of the self-audit report to FSURF.

 

Section 7 Patent Prosecution

 

7.1 FSURF shall diligently prosecute and maintain the Licensed Patents using counsel of its choice. FSURF shall provide Licensee with copies of all patent applications amendments, and other filings with the United States Patent and Trademark Office and foreign patent offices. FSURF will also provide Licensee with copies of office actions and other communications received by FSURF from the United States Patent and Trademark Office and foreign patent offices relating to Licensed Patents. Licensee agrees to keep such information confidential. 

 
	 
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7.2 Licensee shall pay to FSURF the sum of [***], within thirty (30) days of the Effective Date to reimburse any and all expenses associated with preparation, filing, prosecution, issuance, maintenance, defense, and reporting of the Licensed Patents incurred prior to the Effective Date. (NOTE: the above referenced dollar amount in this Section 7.2 is subject to change, as all related patent prosecution expense invoices may not have been received from the law firm at the time of license terms negotiation. In addition, the amounts in this article are separate from other amounts due for payment listed elsewhere.)

 

7.3 Licensee shall be responsible for and pay all costs and expenses incurred by FSURF related to the preparation, filing, prosecution, issuance, maintenance, defense and reporting of the Licensed Patents subsequent to and separate of those expenses cited in Section 7.2 within thirty (30) days of receipt of an invoice from FSURF. It shall be the responsibility of Licensee to keep FSURF fully apprised of the “small entity” status of Licensee and all Sublicensees with respect to the U.S. patent laws and with respect to the patent laws of any other countries, if applicable, and to inform FSURF of any changes in writing of such status, within thirty (30) days of any such change. In the event that additional licenses are granted to licensees for alternate fields-of-use, patent expenses associated with Licensed Patents will be divided proportionally between the number of existing licensees. In the case of foreign patent protection, if a licensee declines to reimburse FSURF for its proportional share of patent expenses in any particular country, then said licensee relinquishes the right to commercialize Licensed Products in the specified country.

 

Section 8 Infringement and Invalidity

 

8.1 In the event that any Licensed Patents are infringed by a third party, Licensor and joint owners of the Licensed Patents (subject to and as described in the Inter-Institutional Agreement attached as Appendix A) shall have the first right and choice, but not obligation, to defend the Licensed Patents. Licensee shall have the right, but not the obligation, to defend the Licensed Patents after Licensor and joint owners elect not to commence a suit either by formal notice to Licensee or by failure to act within the ninety (90) day period following notification of the infringer, to institute, prosecute and control any action or proceeding with respect to such infringement, by counsel of its choice, including any declaratory judgment action arising from such infringement provided, however, prior to instituting such action, Licensee shall first meet with FSURF and provide FSURF with (i) a written estimate of the expenses that would reasonably be incurred in connection with such action or proceeding and (ii) financial records reasonably sufficient to reasonably demonstrate that it has the financial wherewithal to pay such expenses as they fall due through the conclusion of such action or proceeding by means of judgment or other final, non-appealable decision or a plan to raise such funds. In the event that any Patent Rights licensed to Licensee are infringed by a third party prior to Licensee filing an investigational new drug application (“IND”) for a Licensed Product, prior to any enforcement action being taken by either FSURF or Licensee regarding such infringement, FSURF and Licensee shall discuss, and will mutually agree, in writing, as to how to handle such infringement by such third party. Licensee shall be free to enter into a settlement, consent judgment, or other voluntary disposition with respect to any such action, provided that any settlement, consent judgment or other voluntary disposition thereof which (i) materially limits the scope, validity, or enforceability of patents included in the Patent Rights or (ii) admits fault or wrongdoing on the part of FSURF must be approved by FSURF, such approval not to be unreasonably withheld. Licensee’s request for such approval shall include complete copies of final settlement documents, a detailed summary of such settlement, and any other information material to such settlement. FSURF shall provide Licensee notice of its approval or denial within fifteen (15) business days of any request for such approval by Licensee, provided that (i) in the event FSURF wishes to deny such approval, such notice shall include a detailed written description of FSURF’s reasonable objections to the proposed settlement, consent judgment, or other voluntary disposition and (ii) FSURF shall be deemed to have approved of such proposed settlement, consent judgment, or other voluntary disposition in the event it fails to provide such notice within such fifteen (15) day period in accordance herewith. If Licensee recovers monetary damages in the form of lost profits from a third party infringer as a remedy for the infringement of Patent Rights licensed hereunder, then Licensee shall first apply such recovery to the costs and expenses incurred in obtaining or negotiating for such recovery (including attorneys’ fees) and reimburse FSURF for the costs and expenses it reasonably incurred in obtaining or negotiating for such recovery (including attorneys’ fees), and pay to FSURF the royalties on the remaining portion of such lost profits at the rate specified in Section 4.2. If Licensee recovers monetary damages in the form of a reasonable royalty as a remedy for the infringement of Patent Rights, then, after applying such royalty to the recovery of the costs and expenses incurred in obtaining or negotiating for such royalty (including attorneys’ fees) and reimbursing FSURF for the costs and expenses it reasonably incurred in obtaining or negotiating for such recovery (including attorneys’ fees), the remaining amount of any such royalty shall be treated as Sublicensing Royalty Revenue in accordance with Section 2.2.2. 

 
	 
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8.2 Notwithstanding the foregoing, and in FSURF’s sole discretion, FSURF shall be entitled to participate through counsel of its own choosing in any legal action involving the invention and Patent Rights. Nothing in the foregoing Sections shall be construed in any way which would limit the authority of the Florida Attorney General. FSURF and Licensee agree to notify each other promptly of each infringement or possible infringement of Licensed Patents, as well as any facts which may affect the validity, scope or enforceability of the patent rights of which any party becomes aware. 

 

Section 9 Term and Termination

 

9.1 The term of this license shall begin on the Effective Date of this Agreement and continue until the date that no Licensed Patent remains an enforceable patent, unless earlier terminated as provided herein. 

 

9.2 Licensee may terminate this Agreement at any time by giving at least sixty (60) days written notice of such termination to FSURF. Such a notice shall be accompanied by a statement of the reasons for termination.

 

9.3 FSURF may terminate this Agreement by giving Licensee at least thirty (30) days written notice if Licensee:

 

9.3.1 is delinquent on any report or payment;

 

9.3.2 is not diligently developing and commercializing Licensed Product and Licensed Process;

 

9.3.3 is in breach of any provision;

 
	 
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9.3.4 provides any false report;

 

9.3.5 goes into bankruptcy, liquidation or proposes having a receiver control any assets; 

 

9.3.6 violates any laws or regulations of applicable government entities; 

 

9.3.6 shall cease to carry on its business pertaining to Licensed Patents; or

 

9.3.8 fails for more than two (2) calendar quarters to make payments of earned royalties under Section 4.2.

 

Termination under this Section 9.3 will take effect thirty (30) days after written notice by FSURF unless Licensee remedies the problem in that 30-day period.

 

9.4 FSURF may immediately terminate this Agreement upon the occurrence of the second separate default by Licensee within any consecutive three-year period for failure to pay royalties, patent or any other expenses when due.

 

9.5 Upon the termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such termination. Licensee shall remain obligated to provide an accounting for and to pay royalties earned to the date of termination, and any minimum royalties shall be prorated as of the date of termination by the number of days elapsed in the applicable calendar year. Licensee may, however, after the effective date of such termination, sell all Licensed Products, and complete Licensed Products in the process of manufacture at the time of such termination and sell the same, provided that Licensee shall remain obligated to provide an accounting for and to pay running royalties thereon.

 

9.6 Licensee shall be obligated to deliver to FSURF, within ninety (90) days of the date of termination of this agreement, complete and unredacted copies of all documentation prepared for or submitted for all regulatory approvals of Licensed Products or Licensed Processes.

 

Section 10 Assignability

 

This Agreement may not be transferred or assigned by Licensee except with the prior written consent of FSURF, which will not be unreasonably withheld. Licensee may, on written notice to FSURF and with FSURF’s consent, assign this Agreement to an acquirer of all or substantially all of Licensee's stock or assets, in which case assignee assumes all responsibilities under this license, however Licensee shall not be released of its obligations that matured prior to assignment.

 
	 
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Section 11 Dispute Resolution Procedures

 

11.1 Mandatory Procedures.

 

In the event either party intends to file a lawsuit against the other with respect to any matter in connection with this Agreement, compliance with the procedures set forth in this Section shall be a condition precedent to the filing of such lawsuit, other than for injunctive relief. Either party may terminate this Agreement as provided in this Agreement without following the procedures set forth in this section.

 

11.1.1 When a party intends to invoke the procedures set forth in this section, written notice shall be provided to the other party. Within thirty (30) days of the date of such notice, the parties agree that representatives designated by the parties shall meet at mutually agreeable times and engage in good faith negotiations at a mutually convenient location to resolve such dispute.

 

11.1.2 If the parties fail to meet within the time period set forth in Section 11.1.1 above or if either party subsequently determines that negotiations between the representatives of the parties are at an impasse, the party declaring that the negotiations are at an impasse shall give notice to the other party stating with particularity the issues that remain in dispute.

 

11.1.3 Not more than fifteen (15) days after the giving of such notice of issues, each party shall deliver to the other party a list of the names and addresses of at least three individuals, any one of whom would be acceptable as a neutral advisor in the dispute (the “Neutral Advisor”) to the party delivering the list. Any individual proposed as a Neutral Advisor shall have experience in determining, mediating, evaluating, or trying intellectual property litigation and shall not be affiliated with the party that is proposing such individual.

 

11.1.4 Within ten (10) days after delivery of such lists, the parties shall agree on a Neutral Advisor. If they are unable to so agree within that time, within five (5) days, they shall each select one individual from the lists. Within five (5) days, the individuals so selected shall meet and appoint a third individual from the lists to serve as the Neutral Advisor. Within thirty (30) days after the selection of a Neutral Advisor: 

 

	
 
	(a)	The parties shall each provide a written statement of the issues in dispute to the Neutral Advisor.
	
 
	
 
	
 

	
 
	(b)	The parties shall meet with the Neutral Advisor in Tallahassee, Florida on a date and time established by the Neutral Advisor. The meeting must be attended by persons authorized to make final decisions on behalf of each party with respect to the dispute. At the meeting, each party shall make a presentation with respect to its position concerning the dispute. The Neutral Advisor will then discuss the issues separately with each party and attempt to resolve all issues in the dispute. At the meeting, the parties will enter into a written settlement agreement with respect to all issues that are resolved. Such settlement agreement shall be final and binding with respect to such resolved issues and may not be the subject of any lawsuit between the parties, other than a suit for enforcement of the settlement agreement.

 
	 
	13

	

	 

 

11.1.5 The expenses of the Neutral Advisor shall be shared by the parties equally. All other out-of-pocket costs and expenses for the alternative dispute resolution procedure required under this Section shall be paid by the party incurring the same. 

 

11.1.6 Positions taken and statements made during this alternative dispute resolution procedure shall be deemed settlement negotiations and shall not be admissible for any purpose in any subsequent proceeding.

 

11.2 Failure to Resolve Dispute. 

 

If any issue is not resolved at the meeting with the Neutral Advisor, either party may file appropriate administrative or judicial proceedings with respect to the issue that remains in dispute. No new issues may be included in the lawsuit without the mandatory procedures set forth in this section having first been followed.

 

11.3 If Licensee or any of its Affiliates (i) brings a Patent Challenge against FSURF, or (ii) Licensee or any of its Affiliates assists another party in bringing a Patent Challenge against FSURF (except as required under a court order or subpoena), and (iii) FSURF does not choose to exercise its rights to terminate this Agreement pursuant to Section 9.3 then, in the event that such a Patent Challenge is successful, Licensee will have no right to recoup any consideration, including royalties, paid during the period of challenge. In the event that a Patent Challenge is unsuccessful, Licensee shall reimburse FSURF for all reasonable legal fees and expenses incurred in its defense against the Patent Challenge. 

 

Section 12 Product Liability; Conduct of Business

 

12.1 Licensee and its Sublicensee(s) shall, at all times during the term of this Agreement and thereafter, indemnify, defend and hold FSURF, the Florida Board of Governors, the Florida State University Board of Trustees, Florida State University, JHU, The Johns Hopkins Hospital, The Johns Hopkins Health System Corporation, U.S. Department of Health and Human Services, as represented by National Center for Advancing Translational Sciences (HHS) and each of their directors, officers, employees, and agents, and the inventors of the Licensed Patents “Indemnitees”, regardless of whether such inventors are employed by Florida State University, and/or HHS, and/or JHU at the time of the claim, harmless against all claims and expenses, including legal expenses and reasonable attorneys’ fees, whether arising from a third party claim or resulting from FSURF’s enforcing this indemnification clause against Licensee, arising out of the death of or injury to any person or persons or out of any damage to property and against any other claim, proceeding, demand, expense and liability of any kind whatsoever (other than patent infringement claims) resulting from the production, manufacture, sale, use, lease, consumption, marketing, or advertisement of Licensed Products or Licensed Process(es) or arising from any right or obligation of Licensee hereunder. Notwithstanding the above, FSURF at all times reserves the right to retain counsel of its own to defend FSURF, the Florida Board of Governors’, the Florida State University Board of Trustees, Florida State University, and the inventor’s interests.

 

12.2 Licensee warrants that it now maintains and will continue to maintain liability insurance coverage at a minimum level of [***] per claim until first commercial use, and at a minimum level of [***] per claim at and continuing after first initial human testing or first commercial sale and that such insurance coverage lists Indemnitees’ as additional insureds. Within ninety (90) days after the execution of this Agreement and thereafter annually between January 1 and January 31 of each year, Licensee will present evidence to FSURF that the coverage is being maintained with Indemnitees listed as additional insureds. In addition, Licensee shall provide FSURF with at least thirty (30) days prior written notice of any change in or cancellation of the insurance coverage.

 
	 
	14

	

	 

 

Section 13 Use of Names

 

Licensee and its Sublicensee(s) shall not use the names of FSURF and joint owners (see Appendix A), or of Florida State University, nor of any of either institution's employees, agents, or affiliates, nor the name of any inventor of Licensed Patents, nor any adaptation of such names, in any promotional, advertising or marketing materials or any other similar form of publicity, or to suggest any endorsement by the such entities or individuals, without the prior written approval of FSURF in each case.

 

Section 14 Miscellaneous

 

14.1 This Agreement shall be construed in accordance with the internal laws of the State of Florida. Venue for any legal action shall be the state or federal courts in Leon County, Florida. 

 

14.2 The parties hereto are independent contractors and not joint venturers or partners.

 

14.3 Licensee shall ensure that it applies patent markings that meet all requirements of U.S. law, 35 U.S.C. §287, with respect to all Licensed Products subject to this Agreement.

 

14.4 This Agreement constitutes the full understanding between the parties with reference to the subject matter hereof, and no statements or agreements by or between the parties, whether orally or in writing, shall vary or modify the written terms of this Agreement. This Agreement supercedes and replaces any and all previous agreements between the Parties. Neither party shall claim any amendment, modification, or release from any provisions of this Agreement by mutual agreement, acknowledgment, or otherwise, unless such mutual agreement is in writing, signed by the other party, and specifically states that it is an amendment to this Agreement. Failure of either party to require performance by the other of any provision herein shall in no way affect the rights of that party to enforce same. The waiver of either party of any breach shall never be construed to be a waiver of any succeeding breach or a waiver of the provision itself.

 

14.5 Licensee shall not encumber or otherwise grant a security interest in any of the rights granted hereunder to any third party.

 

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

 

14.7 Licensee is responsible for any and all wire/bank fees associated with all payments due to FSURF pursuant to this agreement.

 
	 
	15

	

	 

 

14.8 Survival. 

 

The provisions of this Section shall survive termination of this Agreement. Upon termination of the Agreement for any reason, the following sections of the License Agreement will remain in force as non-cancelable obligations:

 

		·	Section 6 Record Keeping
		·	Section 9 Requirement to pay royalties on sale of Licensed Products made, and in process, at time of License Agreement termination
		·	Section 12 Product Liability; Conduct of Business
		·	Section 13 Use of Names
		·	Section 18 Confidentiality

 

14.9 This Agreement is subject to the terms and conditions of Appendix A, the terms of which are incorporated herein, which is an agreement between the U.S. Department of Health and Human Services, Johns Hopkins University, and Florida State University Research Foundation regarding technology collaboratively developed and jointly owned. 

 

Section 15 Notices

 

Any notice required to be given pursuant to the provisions of this Agreement shall be in writing and shall be deemed to have been given 

 

		·	when delivered personally, or
		·	if sent by facsimile transmission, when receipt thereof is acknowledged at the facsimile number of the recipient as set forth below, or
		·	the second day following the day on which the notice has been delivered prepaid to a national air courier service, or
		·	five (5) business days following deposit in the U.S. mail if sent certified mail, (return receipt acknowledgement is not required to certify delivery). 

   

15.1 If to Florida State University Research Foundation, Inc.:

 

	
 
	
 
	
President

Florida State University Research Foundation, Inc.

Attn: Gary K. Ostrander 

2000 Levy Avenue, Suite 351

Tallahassee, FL 32310

Facsimile Number: (850) 644-3658
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
with a copy to:
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

			
Office of Commercialization
	
 
	
FSU Office of Research Legal Counsel
	
			
Florida State University 
	
 
	
3012 Westcott N. Annex
	
			
Attn: Executive Director
	
 
	
222 S. Copeland Street
	
			
95 Chieftan Way, 312 Dittmer Bldg.
	
 
	
Tallahassee, FL 32306-1330
	
			
Tallahassee, FL 32306-4391
	
 
	
850-645-0108 (facsimile)
	

 
	 
	16

	

	 

 

15.2 If to Licensee:

 

	
 
	
 
	
President

Spotlight Innovation Inc.

Attn: Cris Grunewald

6750 Westown Pkwy, Ste. 200-226

West Des Moines, Iowa 50266
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

Section 16 Contract Formation and Authority

 

The submission of this Agreement does not constitute an offer, and this document shall become effective and binding only upon the execution by duly authorized representatives of both Licensee and FSURF. Copies of this Agreement that have not been executed and delivered by both FSURF and Licensee shall not serve as a memorandum or other writing evidencing an agreement between the parties. This Agreement shall automatically terminate and be of no further force and effect, without the requirement of any notice from FSURF to Licensee, if FSURF does not receive the License Issue Fee or certificates representing shares issued to FSURF pursuant to this Agreement, as applicable, within thirty (30) days of the Effective Date.

 

16.1 FSURF and Licensee hereby warrant and represent that the persons signing this Agreement have authority to execute this Agreement on behalf of the party for whom they have signed.

 

16.2 Force Majeure.

 

No default, delay, or failure to perform on the part of Licensee or FSURF shall be considered a default, delay or failure to perform otherwise chargeable hereunder, if such default, delay or failure to perform is due to epidemics, war, embargoes, fire, earthquake, hurricane, flood, acts of God, or default of common carrier. In the event of such default, delay or failure to perform, any date or times by which either party is otherwise scheduled to perform shall be extended automatically for a period of time equal in duration to the time lost by reason of the excused default, delay or failure to perform.

 

Section 17 United States Government Interests

 

17.1 It is understood that the United States Government (through any of its agencies or otherwise) has funded research during the course of or under which any of the inventions of the Licensed Patents were conceived or made. The United States Government, as a co-owner of the Licensed Patents, is entitled, to certain rights, under the provisions of 35 U.S.C. §202-212 and applicable regulations of Title 37 of the Code of Federal Regulations. These include a non-exclusive, nontransferable, irrevocable, paid-up license to practice or have practiced the inventions of such Licensed Patents for governmental purposes. Any license granted to Licensee in this Agreement shall be subject to such right. FSURF shall have the right to share all Sublicensees’ confidential information with JHU and HHS for the purpose of compliance with the Inter-Institutional Agreement attached as Appendix A.

 

17.2 Licensee agrees that for Licensed Products covered by the Licensed Patents that are subject to the non-exclusive royalty-free license to the United States Government, said Licensed Products will be manufactured substantially in the United States. Licensee further agrees that it shall abide by all the requirements and limitations of U.S. Code, Title 35, Chapter 18, and implementing regulations thereof, for all patent applications and patents invented in whole or in part with federal money.

 
	 
	17

	

	 

 

Section 18 Confidentiality

 

Each Party shall maintain all information of the other Party which is treated by such other Party as proprietary or confidential and appropriately marked “proprietary” or “confidential” (referred to herein as “Confidential Information”) in confidence, and shall not disclose, divulge or otherwise communicate such confidential information to others, or use it for any purpose, except pursuant to, and in order to carry out, the terms and objectives of this Agreement, and each party hereby agrees to exercise every reasonable precaution to prevent and restrain the unauthorized disclosure of such confidential information by any of its Affiliates, directors, officers, employees, consultants, subcontractors, Sublicensees or agents. The parties agree to keep the terms of this Agreement confidential, provided that each party may disclose this Agreement to their authorized agents and investors who are bound by similar confidentiality provisions. Notwithstanding the foregoing, Confidential Information of a party shall not include information which: (a) was lawfully known by the receiving party prior to disclosure of such information by the disclosing party to the receiving party; (b) was or becomes generally available in the public domain, without the fault of the receiving party; (c) is subsequently disclosed to the receiving party by a third party having a lawful right to make such disclosure; (d) is required by law, rule, regulation or legal process to be disclosed, provided that the receiving party making such disclosure shall take all reasonable steps to restrict and maintain to the extent possible confidentiality of such disclosure and shall provide reasonable notice to the other party to allow such party the opportunity to oppose the required disclosure; or (e) has been independently developed by employees or others on behalf of the receiving party without access to or use of disclosing party’s information as demonstrated by written record. Each party’s obligations under this Section 18 shall extend for a period of five (5) years from termination or expiration of this Agreement. 

 

Section 19 University Rules and Regulations

 

Licensee understands and agrees that Florida State University personnel who are engaged by Licensee, whether as consultants, employees or otherwise, or who possess a material financial interest in Licensee, are subject to the Florida State University’s policies regarding outside activities and financial interests and, Florida State University’s Intellectual Property Policy, and a monitoring plan which addresses conflicts of interests associated therewith as required by Chapter 112, Florida Statutes. Any term or condition of an agreement between Licensee and such Florida State University personnel which seeks to vary or override such personnel’s obligations to Florida State University may not be enforced against such personnel, Florida State University or FSURF, without the express written consent of an individual authorized to vary or waive such obligations on behalf of Florida State University and FSURF. Furthermore, should an interest of Licensee conflict with the interest of Florida State University, Florida State University personnel are obligated to resolve such conflicts according to the guidelines and policies set forth by Florida State University.

 
	 
	18

	

	 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the dates indicated below.

 

FLORIDA STATE UNIVERSITY RESEARCH FOUNDATION, INC.

 

______________________________________ Date: ____________, 2016

Gary K. Ostrander

President, Florida State University Research Foundation

 

LICENSEE

 

By: ___________________________________ Date: ____________, 2016

 

Name and Office: ______________________________________________

 
	 
	19

	

	 

 

Appendix A - Inter-institutional Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	 
	20

	

	 

  

Appendix B - Development Plan

 

The starting point for the Development Plan will be the group of compounds previously identified by Prof. Hengli Tang and collaborators and described in Provisional Patent Application [***]. Novel compounds (prodrugs or other derivatives) will be synthesized with the aim of optimizing characteristics such as oral bioavailability, CNS penetration, pharmacodynamic (PD) and pharmacokinetic (PK) properties, and safety. The ultimate goals of the Development Program are to complete preclinical and clinical testing of one or more lead drug candidates, prepare and file a New Drug Application, obtain marketing approval, and commence product manufacturing and sales.

 

	
 
	A.	Development activities to be undertaken
	
 
	
 
	
 

	
 
	
 
	
(Please break activities into subunits)

 

	
 
	1.	Testing of lead compounds in small animal and human brain organoid model for ZIKV inhibition. We will test the efficacy of lead compounds in both IFNAR-/- mice and C57BL/6 mice. Multiple assays, including body weight loss, lethality, and viral load in blood and tissues, will be used to determine if a compound is effective against ZIKV infection. We will also use the human brain organoid system as a complementary model to avoid pitfalls of species-specific differences and safeguard the success of our project.
	
 
	
 
	
 

	
 
	2.	Determination of mechanism of action (this project is concurrent with other activities and not part of a sequence of activities). We will use a combined approach of biochemistry, molecular biology, and virology to identify the compound target and dissect its mechanism of action (MOA). We will label the compound and identify its binding partner in cells and in vitro; we will map any drug resistant mutations in cell culture and determine the specific steps of the virus life cycle to which the compound targets.
	
 
	
 
	
 

	
 
	3.	Optimization of lead compounds in each class. For both classes of compounds, we will perform iterative rounds of analog synthesis and testing, typically on a biweekly or monthly schedule. The chemistry team will design and synthesize compounds; the biology team will test the compounds in assays; and the Drug Metabolism and Pharmacokinetics (DMPK) team will evaluate compound physical properties. During lead optimization, it is necessary to address ADME and toxicological liabilities and to improve the lead compound’s DMPK properties. The goal lead optimization is to identify an advanced lead candidate with drug-like properties, efficacy in animal models, and low toxicity.
	
 
	
 
	
 

	
 
	4.	Advanced safety testing for lead candidates. Once advanced lead candidates are identified, we will begin to build a safety package for the compound. This in general will consist of non-GLP toxicology studies in a rodent and a non-rodent species. Upon successful completion of the exploratory toxicology studies, we will manufacture sufficient amounts of application program interface (API) under GMP conditions to support GLP toxicology studies in two species under GLP conditions, including GLP genotoxicity and safety pharmacology studies under GLP conditions. The results from these studies will form the body of the regulatory filing to open an IND with the FDA.

 

	
 
	B.	Estimated total development time
	
 
	
 
	
 

	II.	Governmental Approval
	
 
	
 
	
 

	
 
	A.	Types of submissions required
	
 
	
 
	
 

	
 
	B.	Government agency, e.g., FDA, EPA, etc.
	
 
	
 
	
 

	
III.
	
Proposed Market Approach (this may include/involve an exit strategy)

 

	 
	21

	

	 

 

Appendix C - Development Report

 

When appropriate, indicate estimated start date and finish date for activities.

 

	
I.
	Date Development Plan Initiated and Time Period Covered by this Report.
	
  
	
 
	
 

	
II.
	Development Report.
	
  
	
 
	
 

	
 
	A.	Activities completed since last report including the object and parameters of the development, when initiated, when completed and the results.
	
  
	
 
	
 

	
 
	B.	Activities currently under investigation, i.e., ongoing activities including object and parameters of such activities, when initiated, and projected date of completion.
	
  
	
 
	
 

	
III.
	Future Development Activities.

 

	
 
	A.	Activities to be undertaken before next report including, but not limited to, the type and object of any studies conducted and their projected starting and completion dates.
	
  
	
 
	
 

	
 
	B.	Estimated total development time remaining before a product will be commercialized.
	
  
	
 
	
 

	
IV.
	Changes to Initial Development Plan.
	
  
	
 
	
 

	
 
	A.	Reasons for change.
	
  
	
 
	
 

	
 
	B.	Variables that may cause additional changes.
	
  
	
 
	
 

	
V.
	Items to be Provided if Applicable:
	
  
	
 
	
 

	
 
	A.	Information relating to Licensed Products or Licensed Processes that has become publicly available, e.g., published articles, competing products, patents, etc.
	
  
	
 
	
 

	
 
	B.	Development work being performed by third parties, other than Licensee, to include name of third party, reasons for use of third party, planned future uses of third parties including reasons why and type of work.
	
  
	
 
	
 

	
 
	C.	Update of competitive information trends in industry, government compliance (if applicable) and market plan.
	
  
	
 
	
 

	
 
	D.	Information and copies of relevant materials evidencing the status of any patent applications or other protection relating to Licensed Products, or Licensed Processes or the Licensed Patents.

 

PLEASE SEND DEVELOPMENT REPORTS TO:

 

	
 
	
with a copy to:

		
 

	
President
	
Office of Commercialization 

	
Florida State University Research Foundation, Inc.
	
Florida State University

	
Attn: Gary K. Ostrander
	
Attn: Executive Director 

	
2000 Levy Avenue, Suite 351
	
95 Chieftan Way, 312 Dittmer Bldg.

	
Tallahassee, FL 32310
	
Tallahassee, FL 32306-4391

	
Facsimile Number: (850) 644-3658
	
Facsimile Number: (850) 644-3675

 
	 
	22

	

	 

 

Appendix D - FSURF Royalty Report

 

		
Licensee:  __________________________________
		
Agreement No.:_______________________
	
 

		
Inventor: ___________________________________
		
P#:  P                                                                       
	
 

		
Period Covered:   From: ____/___ /2_____          Through: ____/____ /2___

		
Prepared By:________________________________
		
Date: ______________________________
	
 

		
Approved By:________________________________
		
Date: ______________________________
	

 

If license covers several major product lines, please prepare a separate report

for each line. Then combine all product lines into a summary report. 

 

		
Report Type:
	
 ̈ Single Product Line Report:________________________________________________________

		
 
	
 ̈ Multiproduct Summary Report. Page 1 of ______ Pages

		
 
	
 ̈ Product Line Detail. Line: __________________ Tradename: ________________ Page: __________

		
Report Currency:
	
 ̈ U. S. Dollars                           ̈ Other __________________________________

 

			
 

Unit
		
 

Gross
		
 

* Less:
		
 

Net
		
 

Royalty
		
 

Period Royalty Amount

	
Country
		
Sales
		
$$ Sales
		
Allowances
		
$$ Sales
		
Rate
		
This Year
		
Last Year

	
 
		
 
		
 
		
 
		
 
		
 
		
 
		
 

	
U.S.A.
				
 
										
	
 
		
 
		
 
		
 
		
 
		
 
		
 
		
 

	
Canada
														
	
 
		
 
		
 
		
 
		
 
		
 
		
 
		
 

	
Europe:
														
															
															
															
															
	
 
		
 
		
 
		
 
		
 
		
 
		
 
		
 

	
Japan
														
	
 
		
 
		
 
		
 
		
 
		
 
		
 
		
 

	
Other:
														
															
	
TOTAL: 
														

 

Total Royalty: _______________ Conversion Rate: ____________ Royalty in U.S. Dollars: $                                                 

 

The following royalty forecast is non-binding and for FSURF’s internal planning purposes only:

 

Royalty Forecast Under This Agreement: Next Quarter:__________ Q2:__________ Q3:__________ Q4:__________

 

 

	
* On a separate page, please indicate the reasons for returns or other adjustments if significant.

Also note any unusual occurrences that affected royalty amounts during this period.

To assist FSURF's forecasting, please comment on any significant expected trends in sales volume.

 
	 
	23

	

	 

 

Appendix E – Due Diligence

 

	
Due Diligence Activity
	
Completion Date

	
Synthesis of novel analog(s) of parent compound(s) to create a First Lead Compound (“FLC”)
	
[***]

	
ZIKV inhibition testing of FLC in mice
	
[***]

	
ZIKV inhibition testing of FLC in human brain organoid system
	
[***]

	
GMP Manufacturing of FLC (small scale)
	
[***]

	
Non-GLP toxicology testing in rodents and non-rodents
	
[***]

	
Pre-IND meeting with FDA
	
[***]

	
Identification of packaging, labeling and compatibility testing
	
[***]

	
GLP toxicology testing of FLC in rodents and non-rodents
	
[***]

	
Submission of IND
	
[***]

	
Initiation of Phase 1 clinical trial
	
[***]

	
ADME, PK, GLP testing of FLC
	
[***]

	
Initiation of Phase 2 clinical trial
	
[***]

	
CMC development (product characterization, purity, potency, qualification, validation of analytical methods and processes, bioequivalence and bioavailability) 
	
[***]

	
End of Phase 2 meeting with FDA
	
[***]

	
Two-year stability testing
	
[***]

	
Initiation of Phase 3 clinical trial
	
[***]

	
Pre-NDA meeting with FDA
	
[***]

	
Submission of NDA
	
[***]

	
Sale of first FDA-approved drug
	
[***]

  

  

	
 
	
24Exhibit 10.1

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”)
is entered into as of February 7, 2017, by and between Varonis Systems, Inc., a Delaware corporation (the “Company”),
and Guy Melamed (“Executive”), to be effective on the Effective Date
(as defined below). Where the context permits, references to “the Company” shall include the Company and any successor
of the Company.

 

W I T N E S S E T H:

 

WHEREAS, the Company and Executive previously
entered into an Offer Letter and Agreement, dated September 18, 2014 (the “Original
Agreement”), pursuant to which Executive serves as Vice President of Finance of the Company;

 

WHEREAS, the Company desires to engage
Executive and Executive represents that he has the requisite skills, qualifications and knowledge to serve the Company in the position
of Chief Financial Officer and

 

WHEREAS, upon April 1, 2017 (the “Effective
Date”), the Company and Executive mutually desire to terminate the Original Agreement and enter into this Agreement,
which sets forth the terms and conditions of Executive’s employment as of the Effective Date.

 

NOW, THEREFORE, in consideration of the
mutual promises, covenants and agreements herein contained, together with other good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.  SERVICES
AND DUTIES. As of the Effective Date, Executive shall serve as Chief Financial Officer of the Company and in such position
shall have the duties, responsibilities and authority commensurate with the status of an individual holding such position in a
company similarly situated to the Company and shall render services consistent with such position. In all cases, Executive shall
be subject to the supervision and authority of, and shall report to, the Chief Executive Officer and Board of Directors of the
Company (the “Board of Directors”). While employed by the Company, Executive agrees to devote substantially
all of his working time and efforts to the business and affairs of the Company and its subsidiaries, subject to periods of vacation
and sick leave to which he is entitled pursuant to this Agreement and in accordance with the Company’s policies in effect
at such time. Notwithstanding the foregoing, nothing herein shall preclude Executive, so long as Executive delivers advance written
notice to the Company, from participating in or serving on the board of directors or similar governing body of a corporation or
other business entity (other than a business entity in a competitive business as described in Section 6(c)) or of charitable,
religious, social or educational organizations in so far as such participation or service does not unreasonably interfere, individually
or in the aggregate, with Executive’s performance of his obligations to the Company. Executive agrees to discharge his duties
diligently, faithfully and in the best interests of the Company. Notwithstanding the foregoing or anything else contained in this
Agreement, the Company retains the right to terminate Executive’s employment at any time for any reason or no reason (and
whether or not for Cause (as defined below)).

    

     

    

2.  EMPLOYMENT
TERM. Unless Executive’s employment shall sooner terminate pursuant to Section 5 of this Agreement, the Company shall
employ Executive under the terms of this Agreement for the period commencing on the Effective Date and ending on the third (3rd)
anniversary of the Effective Date (the “Initial Term”); provided,
however, that commencing on the expiration of the Initial Term and each anniversary thereafter, the term of this Agreement
shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one (1) year each (each,
an “Extended Term”), unless Executive or the Company, as the case may
be, at least ninety (90) days prior to the expiration of the Initial Term or any Extended Term, provides written notice to the
other of its intention not to renew this Agreement. The period during which Executive is employed pursuant to this Agreement, including
any Extended Term in accordance with the preceding sentence, shall be referred to as the “Term.”

3.  COMPENSATION.

 

(a)       
Base Salary. As compensation for Executive’s services to the Company, the Company shall pay Executive an annual
base salary (as in effect from time to time, the “Base Salary”) at
a rate of $300,000 per year (pro-rated for any partial year). The Base Salary shall be paid to Executive in accordance with the
usual payroll practices of the Company in effect from time to time. The Base Salary may be increased (but not decreased other than
pursuant to an across-the-board reduction that applies to all employees or solely to senior executives of the Company) during the
Term in the sole discretion of the Compensation Committee of the Board of Directors (the “Compensation
Committee”) or the Board of Directors.

 

(b)      
Annual Bonus. Executive shall have an annual discretionary target bonus opportunity equal to $100,000, to be paid
upon satisfaction of certain criteria established by the Compensation Committee and subject to the terms of any annual bonus plan
established by the Compensation Committee, or by any other committee or officer having authority over executive compensation. Such
bonus (the “Annual Bonus”) shall be paid in accordance with the terms
of any annual bonus plan governing such Annual Bonus.

 

(c)       
Withholding. All taxable compensation payable to Executive pursuant to this Agreement shall be subject to any applicable
withholding taxes and such other taxes as are required under Federal law or the law of any state or governmental body to be collected
with respect to compensation paid by the Company to Executive.

 

4.  BENEFITS
AND PERQUISITES.

 

(a)       
Welfare Benefits; Paid Time Off. While employed by the Company, Executive will be entitled to participate, to the
extent eligible thereunder, in all benefit plans and programs maintained from time to time for the Company’s employees, including,
without limitation, medical, dental and other benefits such as a 401(k) plan, in accordance with the terms thereof in effect from
time to time, on a basis no less favorable than other senior management employees of the Company. For purposes of clarification,
nothing contained in this Agreement shall limit or otherwise affect the ability of the Company or any of its Affiliates (if applicable)
to amend, terminate or otherwise modify any such benefit plan or program now or hereafter in existence in accordance with its terms
and applicable law. Notwithstanding any other policy, plan or program of the Company, Executive shall be entitled to not less than
thirty days of paid vacation per calendar year, which may be carried over one year to the extent not used in any given calendar
year.

    	 	2	 

     

    

(b)      
Reimbursement of Expenses. The Company shall reimburse Executive for any expenses reasonably and necessarily incurred
by Executive during the Term in furtherance of Executive’s duties hereunder, including travel, meals and accommodations,
upon submission by Executive of vouchers or receipts and in compliance with such rules and policies relating thereto as the Company
may from time to time adopt.

 

5.  TERMINATION.
Executive’s employment shall be terminated at the earliest to occur of the following: (i) the end of the Term; (ii) the date
on which the Board delivers written notice that Executive is being terminated for “Disability” (as defined below);
or (iii) the date of Executive’s death. In addition, Executive’s employment may be earlier terminated (1) by the Company
for “Cause” (as defined below), effective on the date on which a written notice to such effect is delivered to Executive;
(2) by the Company at any time without Cause, effective on the date on which a written notice to such effect is delivered to Executive
or such other date as is reasonably designated by the Company in such notice; (3) by Executive for “Good Reason” (as
defined below), effective thirty-one (31) days following the date on which a written notice to such effect is delivered to the
Company; or (4) by Executive without Good Reason at any time, effective ninety (90) days following the date on which a written
notice to such effect is delivered to the Company; provided, however, that the Company may specify an earlier effective
date for a termination effected pursuant to clauses (3) or (4).

(a)       
For Cause Termination. If Executive’s employment with the Company is terminated by the Company for Cause, Executive
shall not be entitled to any further compensation or benefits other than: (i) any accrued but unpaid Base Salary, payable as provided
in Section 3(a) hereof; (ii) any accrued but unused paid time off, payable at the same time as the Base Salary and in accordance
with Section 3(a) hereof; (iii) reimbursement for any business expenses properly incurred by Executive prior to the date of termination
in accordance with Section 4(b) hereof, payable in accordance with Section 4(b) hereof; and (iv) vested benefits, if any, to which
Executive may be entitled under the Company’s employee benefit plans as of the date of termination, payable in accordance
with the terms of the relevant employee benefit plans (collectively, the “Accrued Benefits”).

 

(b)      
Termination by the Company without Cause or by Executive for Good Reason. If Executive’s employment is terminated
by the Company other than for Cause or by Executive for Good Reason and Section 5(c) is not then applicable, then Executive shall
be entitled to the Accrued Benefits payable as provided in Section 5(a) hereof and subject to Executive’s execution
and non-revocation of a general release of claims relating to Executive’s employment and service as an officer with the Company
in a form reasonably satisfactory to the Company (the “Release”) within
thirty (30) days following the date of termination (or such longer period as may be required by applicable law for the effectiveness
of the Release):

 

(i) an amount equal to one-half (1/2)
times the Base Salary as of the date of termination, payable in a lump sum on the 60th day following the date of termination;
and

 

    	 	3	 

     

    

(ii)               an
amount equal to the amount of the Annual Bonus, if any, that Executive would have earned for the year of termination, had he remained
employed, based on the actual financial performance of the Company, as determined by the Company following the end of such year,
multiplied by a fraction the numerator of which is the number of days in the year of termination that Executive was employed by
the Company and the denominator of which is 365 (the “Pro-Rata Bonus”),
to be paid in a cash lump sum on the date on which annual bonuses are otherwise paid by the Company to its active employees.

 

(c)       
Termination in Connection with a Change in Control. If Executive’s employment hereunder is terminated (i) by
the Company other than for Cause or (ii) by Executive with Good Reason in either case within one year following a “Change
in Control” (as such term is defined in the Company’s 2013 Omnibus Equity Incentive Plan, as may be amended from time
to time, and provided that no Change in Control for this purpose shall occur unless the relevant transaction constitutes a “change
in control event” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)),
then Executive shall be entitled to (i) the Accrued Benefits and (ii) upon Executive’s execution and non-revocation of the
Release within thirty (30) days following the date of termination (or such longer period as may be required by applicable law for
the effectiveness of the Release):

 

(i)
               an amount equal to one (1.0) times the Base
Salary as of the date of termination, payable in a lump sum on the 60th day following the date of termination;

 

(ii)
              an amount equal to Executive’s target Annual Bonus for the year of termination, to be paid in a cash lump sum on the
60th day following the date of termination; and

 

(iii)
             notwithstanding anything in the contrary in the applicable option or equity-incentive plans, immediate vesting of all of
Executive’s outstanding equity-based awards.

 

(d)      
Voluntary Resignation by Executive without Good Reason; Termination upon Death or Disability. If Executive voluntarily
resigns his employment without Good Reason or if Executive’s employment is terminated by reason of Executive’s death
or Disability, in lieu of any other payments or benefits, Executive (or Executive’s beneficiary or estate, as applicable)
shall be entitled to the Accrued Benefits only.

 

(e)       
Expiration of Term. For the avoidance of doubt, upon the expiration of the Term in accordance with Section 2 hereof,
the parties’ obligations hereunder, other than with respect to the provisions set forth in Sections 6, 8 and 9 hereof, shall
expire.

 

(f)       
Clawback. Notwithstanding anything herein to the contrary, if (A) Executive breaches any of the restrictive covenants
set forth in Section 6 hereof or any other restrictive covenants (including those restrictive covenants contained in the Restrictive
Covenant Agreement) and (B) the Company provides Executive with written notice of such breach, the Company shall not be required
to pay any amount pursuant to Section 5(b) or Section 5(c) and the Company shall have the right to require Executive (and any heir,
representative, successor or assign of Executive) to repay any amount previously paid to Executive pursuant to Section 5(b) or
5(c).

 

    	 	4	 

     

    

(g)      
Definitions. For purposes of this Agreement:

 

“Affiliate”
means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, the person specified.

 

“Cause”
means (i) an act of dishonesty made by Executive in connection with Executive’s responsibilities as an employee which is
materially injurious to the financial condition or business reputation of the Company; (ii) Executive’s conviction of or
plea of nolo contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude; (iii) Executive’s
gross misconduct; (iv) Executive’s willful unauthorized use or disclosure of any proprietary information or trade secrets
of the Company; (v) Executive’s willful and material violation of any written policies of the Company; (vi) Executive’s
material breach of any obligations under any material written agreement or covenant with the Company; or (vii) Executive’s
continued failure to perform his employment duties after Executive has received a written demand for performance from the Company
which specifically sets forth the factual basis for the Company’s belief that Executive has not substantially performed his
duties.

 

“Disability”
means Executive’s inability, due to disability or incapacity, to perform all of Executive’s duties hereunder on a full-time
basis for (i) periods aggregating one hundred eighty (180) days, whether or not continuous, in any continuous period of three hundred
and sixty five (365) days or (ii) where Executive’s absence is adversely affecting the performance of the Company in a significant
manner, periods greater than ninety (90) days and Executive is unable to resume Executive’s duties on a full time basis within
ten (10) days after receipt of written notice of the Board’s determination under this clause (ii).

 

“Good
Reason” means the occurrence, without the express prior written consent of Executive, of any of the following
circumstances, unless such circumstances are corrected by the Company within thirty (30) days following written notification by
Executive (which written notice must be delivered within thirty (30) days following the date Executive becomes aware of the occurrence
of such circumstances) that Executive intends to terminate Executive’s employment for one of the reasons set forth below:
(i) any material reduction in Executive’s title, duties, authorities, or responsibilities; (ii) any material breach by the
Company of any agreement between the Company and Executive; (iii) any material reduction in the Base Salary (including, once Executive’s
Base Salary is increased, any material reduction in Executive’s Base Salary below such increased amount) other than, in each
case, an across-the-board reduction that applies to all employees or solely to senior executives of the Company; or (iv) any relocation
of Executive’s principal place of employment to a location more than fifty (50) miles outside of the Company’s headquarters
in New York, New York or Herzliya, Israel.

 

“Restrictive
Covenant Agreement” means the Confidential Information, Invention Assignment, At-Will Employment and Arbitration
Agreement entered into between Executive and the Company, as the same may be amended or replaced from time to time or any successor
agreement.

 

    	 	5	 

     

    

(h)      
Resignation as Officer or Director. Upon a termination of employment for any reason, Executive shall resign each
position that Executive then holds as an officer of the Company or as an officer or director of any of the Company’s subsidiaries
or Affiliates. Executive’s execution of this Agreement shall be deemed the grant by Executive to the officers of the Company
of a limited power of attorney to sign in Executive’s name and on Executive’s behalf any such documentation as may
be required to be executed solely for the limited purposes of effectuating such resignations.

 

(i)        
Section 409A. It is intended that (i) each installment of the payments provided under this Agreement is a separate
“payment” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and (ii) the payments satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Code
provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(9)(iii), and 1.409A-1(b)(9)(v). Notwithstanding anything contained
to the contrary in this Agreement, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section
409A of the Code, Executive shall not be considered to have terminated employment with the Company for purposes of this Agreement
and no payments shall be due to Executive under Section 5 of this Agreement until Executive would be considered to have incurred
a “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)) with the Company. Notwithstanding
anything to the contrary in this Agreement, if the Company determines (1) that on the date Executive’s employment with the
Company terminates or at such other time that the Company determines to be relevant, Executive is a “specified employee”
(as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of the Company and (2) that any payments to be provided to Executive
pursuant to this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other
taxes or penalties imposed under Section 409A of the Code, if provided at the time otherwise required under this Agreement, then
such payments shall be delayed until the date that is six (6) months after the date of Executive’s “separation from
service” (as such term is defined under Treasury Regulation 1.409A-1(h)) with the Company, or, if earlier, the date of Executive’s
death. Any payments delayed pursuant to this Section 5(g) shall be made in a lump sum on the first day of the seventh (7th) month
following Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)),
or, if earlier, the date of Executive’s death. In addition, to the extent that any reimbursement, fringe benefit or other,
similar plan or arrangement in which Executive participates during his employment with the Company or thereafter provides for a
“deferral of compensation” within the meaning of Section 409A of the Code, (x) the amount eligible for reimbursement
or payment under such plan or arrangement in one (1) calendar year may not affect the amount eligible for reimbursement or payment
in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on
the amount that may be reimbursed or paid), and (y) subject to any shorter time periods provided herein or the applicable plans
or arrangements, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day
of the calendar year following the calendar year in which the expense was incurred.

 

6.  COVENANTS.

 

    	 	6	 

     

    

(a)       
Non-Solicitation of Employees and Contractors. Executive agrees that during the term of his employment and for a
period of twelve (12) months following Executive’s termination of employment for any reason, whether such termination is
initiated by the Company or Executive, Executive shall not, directly or indirectly, without the prior written consent of the Company,
whether or not such action is initiated by Executive: (i) solicit, encourage or attempt to solicit or encourage any employee or
contractor of the Company to terminate such work relationship, (ii) solicit, encourage or attempt to solicit or encourage any employee
or contractor of the Company to be employed by or provide services to any person or entity other than the Company, or (iii) hire,
employ or engage any employee or contractor of the Company to work for a person or entity other than the Company. The foregoing
obligations shall apply to any employee or contractor of the Company at the time Executive’s employment is terminated as
well as any such individuals who, either coincident with or within twelve (12) months before the termination of Executive’s
employment hereunder, terminated their employment or engagement with the Company.

 

(b)      
Non-Interference With Business Relations. Executive agrees that during the term of his employment and for a period
of twelve (12) months immediately following the termination of his relationship with the Company for any reason, whether such termination
is initiated by the Company or Executive, he will not, directly or indirectly, without the prior written consent of the Company,
whether or not such action is initiated by Executive: (i) do anything or attempt to do anything to discredit or otherwise injure
the reputation or goodwill of the Company; (ii) solicit, induce, encourage or attempt to solicit, induce or encourage any party
or any existing or prospective counterparty including, but not limited to, any advertiser, vendor, customer, employee, contractor,
distributor, manufacturer or any other existing or prospective professional or business relation of the Company to not conduct
business with the Company, divert away any business from the Company, or to cease, limit or reduce the level of business conducted
between such business relation and the Company; or (iii) in any way interfere or attempt to interfere with the Company’s
relationship with any party or existing or prospective counterparty, including, but not limited to, any advertiser, customer, employee,
independent contractor, distributor, manufacturer or other professional or business relation of the Company.

 

(c)       
Non-Competition. Executive agrees that during the term of his employment and for a period of twelve (12) months immediately
following the termination of his relationship with the Company for any reason, whether such termination is initiated by the Company
or Executive, he will not, directly or indirectly, without the prior written consent of the Company, whether paid or not: (i) serve
as a partner, principal, licensor, licensee, employee, consultant, contractor, officer, director, manager, agent, affiliate, representative,
advisor, promoter, associate, investor, creditor, or otherwise in any other capacity for, (ii) own, purchase, organize, or take
preparatory steps for the organization or competition of, or (iii) build, design, finance, acquire, lease, operate, manage, control,
invest in, advise, work or consult for or otherwise join, participate in or affiliate himself with, any business whose business,
products or operations are competitive (including by planning or proposing to be competitive) with the Company’s data management
and data protection business. The foregoing covenant shall cover Executive’s activities in every part of the world. Should
Executive obtain other employment during his employment with the Company or within twelve (12) months immediately following the
termination of his relationship with the Company, Executive agrees to provide written notification to the Company as to the name
and address of his new employer, the position that he expects to hold, and a general description of his duties and responsibilities,
at least five (5) business days prior to starting such employment.

 

    	 	7	 

     

    

(d)      
Restrictive Covenant Agreement. Executive agrees and acknowledges that Executive has agreed to be bound by and comply
with the terms, conditions and restrictions contained in the Restrictive Covenant Agreement.

 

(e)       
Acknowledgement. Executive acknowledges and agrees that: (i) the business in which the Company is engaged is intensely
competitive, (ii) Executive’s employment by the Company will require Executive to have access to, and knowledge of confidential
information, which is of vital importance to the success of the Company, (iii) the disclosure or improper use of any confidential
information could place the Company at a serious competitive disadvantage and could do them serious damage, financial and otherwise,
(iv) Executive will develop relationships with clients and business partners pursuant to this Agreement at the time and expense
of the Company, and (v) by Executive’s training, experience and expertise, Executive’s services to the Company are
extraordinary, special and unique. Executive agrees and acknowledges that each restrictive covenant in this Section 6 (including,
for all purposes of this Section 6(e), each restrictive covenant contained in the Restricted Covenant Agreement) is reasonable
as to duration, terms and geographical area and that the same protects the legitimate interests of the Company and its Affiliates,
including the protection and continuity of the business and goodwill of the Company, imposes no undue hardship on Executive, is
not injurious to the public, and that, notwithstanding any provision in this Agreement to the contrary, any violation of this restrictive
covenant shall be specifically enforceable in any court of competent jurisdiction. Executive agrees and acknowledges that a portion
of the compensation paid to Executive under this Agreement will be paid in consideration of the covenants contained in this Section
6, the sufficiency of which consideration is hereby acknowledged. If any provision of this Section 6 as applied to Executive or
to any circumstance is adjudged by a court with competent jurisdiction to be invalid or unenforceable, the same shall in no way
affect any other circumstance or the validity or enforceability of any other provisions of this Section 6. If the scope of any
such provision, or any part thereof, is too broad to permit enforcement of such provision to its full extent, Executive agrees
that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete
specific words or phrases, and in its reduced form, such provision shall then be enforceable and shall be enforced. Executive agrees
and acknowledges that the breach of this Section 6 will cause irreparable injury to the Company and upon breach of any provision
of this Section 6, the Company shall be entitled to injunctive relief, specific performance or other equitable relief by any court
with competent jurisdiction without the need to prove the inadequacy of monetary damages or post a bond; provided, however,
that this shall in no way limit any other remedies which the Company may have (including, without limitation, the right to seek
monetary damages). Each of the covenants in this Section 6 shall be construed as an agreement independent of any other provisions
in this Agreement.

 

(f)       
Definition of “the Company” for Section 6. For purposes of this Section 6, “the Company”
refers to the Company and any incorporated or unincorporated Affiliates, including any entity which becomes Executive’s employer
as a result of any transaction, reorganization or restructuring of the Company for any reason.

 

Nothing contained in this Section 6 shall limit any common law
or statutory obligation that Executive may have to the Company or an Affiliate. The Company shall be entitled, in connection with
its tax planning or other reasons, to terminate Executive’s employment (which termination shall not be considered a termination
without Cause for purposes of this Agreement or otherwise) in connection with an invitation from an Affiliate to accept employment
with such Affiliate.

 

    	 	8	 

     

    

7.  SECTION
280G. Notwithstanding anything in this Agreement to the contrary, in the event that any payment or benefit received or to be
received by Executive (including any payment or benefit received in connection with a “Change in Control” (as defined
in the Company 2013 Omnibus Equity Incentive Plan) or the termination of Executive’s employment, whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits being hereinafter referred
to as the “Total Payments”) would not be deductible (in whole or part)
by the Company or any of its subsidiaries or Affiliates making such payment or providing such benefit as a result of Section 280G
of the Code, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account
any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement),
the portion of the Total Payments that do not constitute deferred compensation within the meaning of Section 409A of the Code shall
first be reduced (if necessary, to zero), and all other Total Payments shall thereafter be reduced (if necessary, to zero).

8.  ASSIGNMENT.
This Agreement, and all of the terms and conditions hereof, shall bind the Company and its successors and assigns and shall bind
Executive and Executive’s heirs, executors and administrators. No transfer or assignment of this Agreement shall release
the Company from any obligation to Executive hereunder. Neither this Agreement, nor any of the Company’s rights or obligations
hereunder, may be assigned or otherwise subject to hypothecation by Executive, and any such attempted assignment or hypothecation
shall be null and void. The Company may assign the rights and obligations of the Company hereunder, in whole or in part, to any
of the Company’s subsidiaries, Affiliates or parent corporations, or to any other successor or assign in connection with
the sale of all or substantially all of the Company’s assets or stock or in connection with any merger, acquisition and/or
reorganization, provided the assignee assumes the obligations of the Company hereunder.

9.  GENERAL.

 

(a)       
Notices. All notices or other communications required or permitted under this Agreement shall be made in writing
and shall be deemed given if delivered personally or sent by nationally recognized overnight courier service. Any notice or other
communication shall be deemed given on the date of delivery or on the date one (1) business day after it shall have been given
to a nationally-recognized overnight courier service. All such notices or communications shall be delivered to the recipient at
the addresses indicated below:

 

To the Company:

 

Varonis Systems, Inc.

1250 Broadway, 29th Floor

New York, NY 10001

Attention: General Counsel

 

    	 	9	 

     

    

To Executive:

 

at the address as it appears in the Company’s books
and records or at such other place as Executive shall have designated by notice as herein provided to the Company.

 

(b)      
Severability. Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. To the fullest extent permitted by applicable law, the parties hereby waive any provision of law which
may render any provision hereof prohibited or unenforceable in any respect.

 

(c)       
Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter
hereof and may not be modified or amended except by a written agreement signed by the Company and Executive. As of the Effective
Date, this Agreement supersedes any prior agreements or understandings between the parties with respect to the subject matter hereof,
including the Original Agreement. Executive represents that he is free to enter into this Agreement without violating any agreement
or covenant with, or obligation to, any other entity or individual.

 

(d)      
Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall together constitute one and the same agreement, and
all signatures need not appear on any one counterpart.

 

(e)       
Amendments. No amendments or other modifications to this Agreement may be made except by a writing signed by all
parties. No amendment or waiver of this Agreement requires the consent of any individual, partnership, corporation or other entity
not a party to this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any third person any rights
or remedies under or by reason of this Agreement.

 

(f)       
Governing Law; Dispute Resolution. This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware, without regard to any choice-of-law rules thereof which might apply the laws of any other
jurisdiction. To the fullest extent permitted by law, the resolution of all disputes arising under, or relating to, this Agreement
shall be governed by, and construed and enforced in accordance with, the arbitration provision of the Restrictive Covenant Agreement.

 

(g)      
Survivorship. The provisions of this Agreement necessary to carry out the intention of the parties as expressed herein
shall survive the termination or expiration of this Agreement.

 

(h)      
Waiver. The waiver by either party of the other party’s prompt and complete performance, or breach or violation,
of any provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation, and the
failure by any party hereto to exercise any right or remedy which it may possess hereunder shall not operate nor be construed as
a bar to the exercise of such right or remedy by such party upon the occurrence of any subsequent breach or violation. No waiver
shall be deemed to have occurred unless set forth in a writing executed by or on behalf of the waiving party. No such written waiver
shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific
term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than
that specifically waived.

 

    	 	10	 

     

    

(i)        
Section Headings. The section headings contained herein are for the purposes of convenience only and are not intended
to define or limit the contents of said sections.

 

(j)        
Construction. The parties acknowledge that this Agreement is the result of arm’s-length negotiations between
sophisticated parties, each afforded representation by legal counsel. Each and every provision of this Agreement shall be construed
as though both parties participated equally in the drafting of the same, and any rule of construction that a document shall be
construed against the drafting party shall not be applicable to this Agreement.

 

(k)      
Cooperation. Executive agrees that, subsequent to any termination of his employment, he will continue to cooperate
with the Company in the prosecution and/or defense of any claim in which the Company may have an interest (with the right of reimbursement
for reasonable out-of-pocket expenses actually incurred) which may include, without limitation, being available to participate
in any proceeding involving the Company, permitting interviews with representatives of the Company, appearing for depositions and
trial testimony, and producing and/or providing any documents or names of other persons with relevant information in Executive’s
possession or control arising out of his employment in a reasonable time, place and manner.

 

 

[Signature Page Follows]

 

 

 

 

 

 

 

    	 	11	 

     

    

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the first date written above.

 

 

	 	VARONIS SYSTEMS, INC.	 
	 	 	 
	 	By:	/s/ Yakov Faitelson	
	 	 	Name:	Yakov Faitelson	 
	 	 	Title:	Chief Executive Officer	 
	 	 	 	 	 
	 	EXECUTIVE	 
	 	 	 	 	 
	 	By:	/s/ Guy Melamed	 
	 	 	Name:	Guy Melamed

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