Document:

Exhibit

Exhibit 10.1
EXECUTION VERSION

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN
(As Amended and Restated by the Board of Directors on March 6, 2020)

Table of Contents
    
	
			
	SECTION 1. ESTABLISHMENT AND PURPOSE.

	1
	

	 
	 

	SECTION 2. DEFINITIONS.
	1
	

	(a)“Affiliate”
	1
	

	(b)“Award”
	1
	

	(c)“Award Agreement”
	1
	

	(d)“Board of Directors” or “Board”
	1
	

	(e)“Cash-Based Award”
	1
	

	(f)“Change in Control”
	1
	

	(g)“Code”
	3
	

	(h)“Committee”
	3
	

	(i)“Company”
	3
	

	(j)“Consultant”
	3
	

	(k)“Employee”
	3
	

	(l)“Exchange Act”
	3
	

	(m)“Exercise Price”
	3
	

	(n)“Fair Market Value”
	3
	

	(o)“ISO”
	4
	

	(p)“Nonstatutory Option” or “NSO”
	4
	

	(q)“Option”
	4
	

	(r)“Outside Director”
	4
	

	(s)“Parent”
	4
	

	(t)“Participant”
	4
	

	(u)“Performance Based Award”
	4
	

	(v)“Plan”
	4
	

	(w)“Purchase Price”
	4
	

	(x)“Restricted Share”
	4
	

	(y)“SAR”
	4
	

	(z)“Service”
	4
	

	(aa)“Share”
	5
	

	(bb)“Stock”
	5
	

	(cc)“Stock Unit”
	5
	

	(dd)“Subsidiary”
	5
	

	(ee)“Total and Permanent Disability”
	5
	

	 
	 

	SECTION 3. ADMINISTRATION.
	5
	

	(a)Committee Composition
	5
	

	(b)Committee for Non-Officer Grants
	5
	

	(c)Committee Procedures
	6
	

i

	
			
	(d)Committee Responsibilities
	6
	

	 
	 

	SECTION 4. ELIGIBILITY.
	7
	

	(a)General Rule
	7
	

	(b)Ten-Percent Stockholders
	7
	

	(c)Attribution Rules
	7
	

	(d)Outstanding Stock
	7
	

	 
	 

	SECTION 5. STOCK SUBJECT TO PLAN.
	8
	

	(a)Basic Limitation
	8
	

	(b)Award Limitation
	8
	

	(c)Additional Shares
	8
	

	(d)Substitution and Assumption of Awards
	9
	

	 
	 

	SECTION 6. RESTRICTED SHARES.
	9
	

	(a)Restricted Share Award Agreement
	9
	

	(b)Payment for Awards
	9
	

	(c)Vesting
	9
	

	(d)Voting and Dividend Rights
	9
	

	(e)Restrictions on Transfer of Shares
	9
	

	 
	 

	SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
	9
	

	(a)Stock Option Award Agreement
	9
	

	(b)Number of Shares
	10
	

	(c)Exercise Price
	10
	

	(d)Withholding Taxes
	10
	

	(e)Exercisability and Term
	10
	

	(f)Exercise of Options
	10
	

	(g)Effect of Change in Control
	11
	

	(h)No Rights as a Stockholder
	11
	

	(i)Modification, Extension and Renewal of Options
	11
	

	(j)Restrictions on Transfer of Shares
	11
	

	(k)Buyout Provisions
	11
	

	 
	 

	SECTION 8. PAYMENT FOR SHARES.
	11
	

	(a)General Rule
	11
	

	(b)Surrender of Stock
	11
	

	(c)Services Rendered
	11
	

	(d)Cashless Exercise
	12
	

	(e)Exercise/Pledge
	12
	

	(f)Net Exercise
	12
	

	(g)Promissory Note
	12
	

ii

	
			
	(h)Other Forms of Payment
	12
	

	(i)Limitations under Applicable Law
	12
	

	 
	 

	SECTION 9. STOCK APPRECIATION RIGHTS.
	12
	

	(a)SAR Award Agreement
	12
	

	(b)Number of Shares
	12
	

	(c)Exercise Price
	12
	

	(d)Exercisability and Term
	13
	

	(e)Effect of Change in Control
	13
	

	(f)Exercise of SARs
	13
	

	(g)Modification or Assumption of SARs
	13
	

	(h)Buyout Provisions
	13
	

	 
	 

	SECTION 10. STOCK UNITS.
	13
	

	(a)Stock Unit Award Agreement
	13
	

	(b)Payment for Awards
	14
	

	(c)Vesting Conditions
	14
	

	(d)Voting and Dividend Rights
	14
	

	(e)Form and Time of Settlement of Stock Units
	14
	

	(f)Death of Participant
	14
	

	(g)Creditors’ Rights
	15
	

	 
	 

	SECTION 11. CASH-BASED AWARDS
	15
	

	 
	 

	SECTION 12. ADJUSTMENT OF SHARES.
	15
	

	(a)Adjustments
	15
	

	(b)Dissolution or Liquidation
	15
	

	(c)Reorganizations
	15
	

	(d)Reservation of Rights
	16
	

	 
	 

	SECTION 13. DEFERRAL OF AWARDS.
	16
	

	(a)Committee Powers
	16
	

	(b)General Rules
	17
	

	 
	 

	SECTION 14. AWARDS UNDER OTHER PLANS.
	17
	

	 
	 

	SECTION 15. INDUCEMENT AWARDS POOL.
	17
	

	(a)Inducement Share Reserve
	17
	

	(b)Inducement Award Rules
	18
	

	 
	 

	SECTION 16. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.
	18
	

	(a)Effective Date
	18
	

	(b)Elections to Receive NSOs, SARs, Restricted Shares or Stock Units
	18
	

iii

	
			
	(c)Number and Terms of NSOs, SARs, Restricted Shares or Stock Units
	18
	

	 
	 

	SECTION 17. LEGAL AND REGULATORY REQUIREMENTS.
	18
	

	 
	 

	SECTION 18. TAXES.
	19
	

	(a)Withholding Taxes
	19
	

	(b)Share Withholding
	19
	

	(c)Section 409A
	19
	

	 
	 

	SECTION 19. TRANSFERABILITY
	19
	

	 
	 

	SECTION 20. PERFORMANCE BASED AWARDS.
	19
	

	 
	 

	SECTION 21. NO EMPLOYMENT RIGHTS.
	21
	

	 
	 

	SECTION 22. DURATION AND AMENDMENTS.
	21
	

	(a)Term of the Plan
	21
	

	(b)Right to Amend the Plan
	21
	

	(c)Effect of Termination
	21
	

	 
	 

	SECTION 23. EXECUTION.
	21
	

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INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN

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SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was adopted by the Board of Directors on January 8, 2015 and became effective immediately prior to the closing of the initial offering of Stock to the public pursuant to a registration statement filed by the Company with the Securities and Exchange Commission (the “Effective Date”), was amended and restated on June 11, 2019, and was further amended and restated on March 6, 2020.  The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership.  The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory stock options), stock appreciation rights or cash-based awards.

SECTION 2. DEFINITIONS.
    

(a)    “Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

(b)    “Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit or a Cash-Based Award under the Plan.

(c)    “Award Agreement” shall mean the agreement between the Company and the recipient of an Award which contains the terms, conditions and restrictions pertaining to such Award.

(d)    “Board of Directors” or “Board” shall mean the Board of Directors of the Company, as constituted from time to time.

(e)    “Cash-Based Award” shall mean an Award that entitles the Participant to receive a cash-denominated payment.

(f)    “Change in Control” shall mean the occurrence of any of the following events:
		
	(i)
	A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who either:

		
	(A)
	Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or

		
	(B)
	Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or 

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nomination was previously so approved (the “continuing directors”);
provided, however, that for this purpose, the “original directors” and “continuing directors” shall not include any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or
		
	(ii)
	Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or

		
	(iii)
	The consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or

		
	(iv)
	The sale, transfer or other disposition of all or substantially all of the Company’s assets.

For purposes of subsection (e)(i) above, the term “look-back” date shall mean the later of (1) the Effective Date or (2) the date 24 months prior to the date of the event that may constitute a Change in Control.
For purposes of subsection (e)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock.

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Any other provision of this Section 2(e) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial or secondary public offering of securities or debt of the Company to the public.

(g)    “Code” shall mean the Internal Revenue Code of 1986, as amended.

(h)    “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof.

(i)    “Company” shall mean Invitae Corporation, a Delaware corporation.

(j)    “Consultant” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.

(k)    “Employee” shall mean any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

(l)    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(m)    “Exercise Price” shall mean, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement.  “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.

(n)    “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows:
		
	(i)
	If the Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the Pink Quote system;

		
	(ii)
	If the Stock was traded on any established stock exchange (such as the New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Global Select Market) or national market system on the date in question, 

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then the Fair Market Value shall be equal to the closing price reported for such date by the applicable exchange or system; and
		
	(iii)
	If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

(o)    “ISO” shall mean an employee incentive stock option described in Section 422 of the Code.

(p)    “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.

(q)    “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

(r)    “Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary.

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

(t)    “Participant” shall mean a person who holds an Award.

(u)    “Performance Based Award” shall mean any Restricted Share Award, Stock Unit Award or Cash-Based Award granted to a Participant pursuant to the terms set forth in Section 20.

(v)    “Plan” shall mean this 2015 Stock Incentive Plan of Invitae Corporation, as amended from time to time.

(w)    “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.

(x)    “Restricted Share” shall mean a Share awarded under the Plan.

(y)    “SAR” shall mean a stock appreciation right granted under the Plan.

(z)    “Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement.  Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued 

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Service crediting, or when continued Service crediting is required by applicable law.  However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating three months after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract.  Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work.  The Company determines which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan.

(aa)    “Share” shall mean one share of Stock, as adjusted in accordance with Section 12 (if applicable).

(bb)    “Stock” shall mean the Common Stock of the Company.

(cc)    “Stock Unit” shall mean a bookkeeping entry representing the Company’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Stock Unit Award Agreement.

(dd)    “Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation.  A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

(ee)    “Total and Permanent Disability” shall mean any permanent and total disability as defined by Section 22(e)(3) of the Code.

SECTION 3. ADMINISTRATION.
    

(a)    Committee Composition.  The Plan shall be administered by a Committee appointed by the Board, or by the Board acting as the Committee.  The Committee shall consist of two or more directors of the Company.  In addition, to the extent required by the Board, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code.

(b)    Committee for Non-Officer Grants.  The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants.  Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence.  To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be 

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received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award.

(c)    Committee Procedures.  The Board of Directors shall designate one of the members of the Committee as chairman.  The Committee may hold meetings at such times and places as it shall determine.  The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee.

(d)    Committee Responsibilities.  Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:
		
	(i)
	To interpret the Plan and to apply its provisions;

		
	(ii)
	To adopt, amend or rescind rules, procedures and forms relating to the Plan;

		
	(iii)
	To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws;

		
	(iv)
	To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

		
	(v)
	To determine when Awards are to be granted under the Plan;

		
	(vi)
	To select the Participants to whom Awards are to be granted;

		
	(vii)
	To determine the type of Award and number of Shares or amount of cash to be made subject to each Award;

		
	(viii)
	To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;

		
	(ix)
	To amend any outstanding Award Agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;

		
	(x)
	To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

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	(xi)
	To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

		
	(xii)
	To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;

		
	(xiii)
	To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award Agreement;

		
	(xiv)
	To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and

		
	(xv)
	To take any other actions deemed necessary or advisable for the administration of the Plan.

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Awards under the Plan to persons subject to Section 16 of the Exchange Act.  All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants and all persons deriving their rights from a Participant.  No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan or any Award under the Plan.

SECTION 4. ELIGIBILITY.
    

(a)    General Rule.  Only Employees, Consultants and Outside Directors shall be eligible for the grant of Awards.  Only common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.

(b)    Ten-Percent Stockholders.  An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

(c)    Attribution Rules.  For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants.  Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

(d)    Outstanding Stock.  For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding 

8

stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

SECTION 5. STOCK SUBJECT TO PLAN.
    

(a)    Basic Limitation.  Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares.  The aggregate number of Shares authorized for issuance as Awards under the Plan (other than Inducement Awards as set forth in Section 15) shall not exceed the sum of (x) 4,250,000 Shares, plus (y) the sum of the number of Shares subject to outstanding awards under the Company’s 2010 Stock Plan (the “Predecessor Plan”) on the Effective Date that are subsequently forfeited or terminated for any reason before being exercised or settled, plus the number of Shares subject to vesting restrictions under the Predecessor Plan on the Effective Date that are subsequently forfeited, plus the number of reserved Shares not issued or subject to outstanding grants under the Predecessor Plan on the Effective Date, plus (z) an annual increase on the first day of each fiscal year, for a period of not more than ten years, beginning on January 1, 2016, and ending on (and including) January 1, 2025, in an amount equal to the lesser of (i) four percent (4%) of the outstanding Shares on the last day of the immediately preceding fiscal or (ii) if the Board acts prior to the first day of the fiscal year, such lesser amount (including zero) that the Board determines for purposes of the annual increase for that fiscal year.  Notwithstanding the foregoing, the number of Shares that may be delivered in the aggregate pursuant to the exercise of ISOs granted under the Plan shall not exceed 16,833,333 Shares plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section 5(c). The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 12. The number of Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.

(b)    Award Limitation.  No Participant eligible for an Award may receive Options or SARs under the Plan, excluding Inducement Awards, in any calendar year that relate to an aggregate of more than 2,000,000 Shares, and no more than two times this amount in the first year of employment.  In applying the foregoing limitation with respect to a Participant, if any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the maximum number of Shares with respect to which Options and SARs may be granted to the Participant.  For this purpose, the repricing of an Option or SAR shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.

(c)    Additional Shares.  If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan.  If Stock Units, Options or SARs are forfeited or terminate for any reason before being exercised or settled, or an Award is settled in cash without the delivery of Shares to the holder, then any Shares subject to the Award shall again become available for Awards under the Plan.  Only the number of Shares (if any) actually issued in settlement of Awards (and not forfeited) shall reduce the number available in Section 5(a) and the balance shall again become available for Awards 

9

under the Plan.  Any Shares withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again become available for Awards under the Plan.  Notwithstanding the foregoing provisions of this Section 5(c), Shares that have actually been issued shall not again become available for Awards under the Plan, except for Shares that are forfeited and do not become vested.

(d)    Substitution and Assumption of Awards.  The Committee may make Awards under the Plan by assumption, substitution or replacement of stock options, stock appreciation rights, stock units or similar awards granted by another entity (including a Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate).  The terms of such assumed, substituted or replaced Awards shall be as the Committee, in its discretion, determines is appropriate.  Any such substitute or assumed Awards shall not count against the Share limitation set forth in Section 5(a).

SECTION 6. RESTRICTED SHARES.
    

(a)    Restricted Share Award Agreement.  Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Award Agreement between the Participant and the Company.  Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Restricted Share Award Agreements entered into under the Plan need not be identical.

(b)    Payment for Awards.  Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services.

(c)    Vesting.  Each Award of Restricted Shares may or may not be subject to vesting.  Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Award Agreement.  A Restricted Share Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events.  The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.

(d)    Voting and Dividend Rights.  The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders.  A Restricted Share Award Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares.  Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid.

(e)    Restrictions on Transfer of Shares.  Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine.  

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Such restrictions shall be set forth in the applicable Restricted Share Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
    

(a)    Stock Option Award Agreement.  Each grant of an Option under the Plan shall be evidenced by a Stock Option Award Agreement between the Participant and the Company.  Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Award Agreement.  The Stock Option Award Agreement shall specify whether the Option is an ISO or an NSO.  The provisions of the various Stock Option Award Agreements entered into under the Plan need not be identical.

(b)    Number of Shares.  Each Stock Option Award Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 12.

(c)    Exercise Price.  Each Stock Option Award Agreement shall specify the Exercise Price.  The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in 4(c), and the Exercise Price of an NSO shall not be less 100% of the Fair Market Value of a Share on the date of grant.  Notwithstanding the foregoing, Options may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.  Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee in its sole discretion.  The Exercise Price shall be payable in one of the forms described in Section 8.

(d)    Withholding Taxes.  As a condition to the exercise of an Option, the Participant shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise.  The Participant shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

(e)    Exercisability and Term.  Each Stock Option Award Agreement shall specify the date when all or any installment of the Option is to become exercisable.  The Stock Option Award Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for ISOs granted to Employees described in Section 4(c)).  A Stock Option Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service.  Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited.  Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.

11

(f)    Exercise of Options.  Each Stock Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Participant’s estate or any person who has acquired such Option(s) directly from the Participant by bequest or inheritance.  Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

(g)    Effect of Change in Control.  The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company.

(h)    No Rights as a Stockholder.  A Participant shall have no rights as a stockholder with respect to any Shares covered by his Option until the date of the issuance of a stock certificate for such Shares.  No adjustments shall be made, except as provided in Section 12.

(i)    Modification, Extension and Renewal of Options.  Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price, or in return for the grant of a different Award for the same or a different number of Shares, without stockholder approval.  The foregoing notwithstanding, no modification of an Option shall, without the consent of the Participant, materially impair his or her rights or obligations under such Option.

(j)    Restrictions on Transfer of Shares.  Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine.  Such restrictions shall be set forth in the applicable Stock Option Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

(k)    Buyout Provisions.  The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize a Participant to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

SECTION 8. PAYMENT FOR SHARES.
    

(a)    General Rule.  The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(h) below.

(b)    Surrender of Stock.  To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, 

12

Shares which have already been owned by the Participant or his representative.  Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan.  The Participant shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

(c)    Services Rendered.  At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary.  If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the Award) of the value of the services rendered by the Participant and the sufficiency of the consideration to meet the requirements of Section 6(b).

(d)    Cashless Exercise.  To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.

(e)    Exercise/Pledge.  To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price.

(f)    Net Exercise.  To the extent that a Stock Option Award Agreement so provides, by a “net exercise” arrangement pursuant to which the number of Shares issuable upon exercise of the Option shall be reduced by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate exercise price (plus tax withholdings, if applicable) and any remaining balance of the aggregate exercise price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued shall be paid by the Optionee in cash other form of payment permitted under the Stock Option Agreement.

(g)    Promissory Note.  To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note.

(h)    Other Forms of Payment.  To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

(i)    Limitations under Applicable Law.  Notwithstanding anything herein or in a Stock Option Award Agreement or Restricted Share Award Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

SECTION 9. STOCK APPRECIATION RIGHTS.

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(a)    SAR Award Agreement.  Each grant of a SAR under the Plan shall be evidenced by a SAR Award Agreement between the Participant and the Company.  Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various SAR Award Agreements entered into under the Plan need not be identical.

(b)    Number of Shares.  Each SAR Award Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 12.

(c)    Exercise Price.  Each SAR Award Agreement shall specify the Exercise Price.  The Exercise Price of a SAR shall not be less than 100% of the Fair Market Value of a Share on the date of grant.  Notwithstanding the foregoing, SARs may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.  Subject to the foregoing in this Section 9(c), the Exercise Price under any SAR shall be determined by the Committee in its sole discretion.

(d)    Exercisability and Term.  Each SAR Award Agreement shall specify the date when all or any installment of the SAR is to become exercisable.  The SAR Award Agreement shall also specify the term of the SAR.  A SAR Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s service.  SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited.  A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter.  A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.

(e)    Effect of Change in Control.  The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company.

(f)    Exercise of SARs.  Upon exercise of a SAR, the Participant (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine.  The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price.

(g)    Modification or Assumption of SARs.  Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price, or in return for the grant of a different Award for the same or a different number of Shares, 

14

without stockholder approval.  The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.

(h)    Buyout Provisions.  The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents a SAR previously granted, or (b) authorize a Participant to elect to cash out a SAR previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

SECTION 10. STOCK UNITS.
    

(a)    Stock Unit Award Agreement.  Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Award Agreement between the Participant and the Company.  Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Stock Unit Award Agreements entered into under the Plan need not be identical.

(b)    Payment for Awards.  To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.

(c)    Vesting Conditions.  Each Award of Stock Units may or may not be subject to vesting.  Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Award Agreement.  A Stock Unit Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events.  The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company.

(d)    Voting and Dividend Rights.  The holders of Stock Units shall have no voting rights.  Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents.  Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding.  Dividend equivalents may be converted into additional Stock Units.  Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both.  Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach.

(e)    Form and Time of Settlement of Stock Units.  Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee.  The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors.  Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days.  A Stock Unit Award Agreement may provide that vested Stock Units may be settled in a lump sum or in installments.  A Stock Unit Award Agreement may provide that the distribution may occur or 

15

commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date, subject to compliance with Section 409A of the Code.  The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents.  Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 12.

(f)    Death of Participant.  Any Stock Unit Award that becomes payable after the Participant’s death shall be distributed to the Participant’s beneficiary or beneficiaries.  Each recipient of a Stock Unit Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death.  If no beneficiary was designated or if no designated beneficiary survives the Participant, then any Stock Units Award that becomes payable after the Participant’s death shall be distributed to the Participant’s estate.

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

SECTION 11. CASH-BASED AWARDS
    
The Committee may, in its sole discretion, grant Cash-Based Awards to any Participant in such number or amount and upon such terms, and subject to such conditions, as the Committee shall determine at the time of grant and specify in an applicable Award Agreement.  The Committee shall determine the maximum duration of the Cash-Based Award, the amount of cash which may be payable pursuant to the Cash-Based Award, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Committee shall determine.  Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Committee.  Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash or in shares of Stock, as the Committee determines.

SECTION 12. ADJUSTMENT OF SHARES.
    

(a)    Adjustments.  In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in:
		
	(i)
	The number of Shares available for future Awards under Section 5;

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	(ii)
	The limitations set forth in Sections 5(a) and (b) and Section 19;

		
	(iii)
	The number of Shares covered by each outstanding Award; and

		
	(iv)
	The Exercise Price under each outstanding Option and SAR.

(b)    Dissolution or Liquidation.  To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

(c)    Reorganizations.  In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization.  Subject to compliance with Section 409A of the Code, such agreement shall provide for:
		
	(i)
	The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation;

		
	(ii)
	The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;

		
	(iii)
	The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards;

		
	(iv)
	Immediate vesting, exercisability and settlement of outstanding Awards followed by the cancellation of such Awards upon or immediately prior to the effectiveness of such transaction; or

		
	(v)
	Settlement of the intrinsic value of the outstanding Awards (whether or not then vested or exercisable) in cash or cash equivalents or equity (including cash or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such Awards or the underlying Shares) followed by the cancellation of such Awards (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment); in each case without the Participant’s consent.  Any acceleration of payment of an amount that is subject to section 409A of the Code will be delayed, if necessary, until the earliest time that such payment would be permissible under Section 409A without triggering any additional taxes applicable under Section 409A.

The Company will have no obligation to treat all Awards, all Awards held by a Participant, or all Awards of the same type, similarly.

(d)    Reservation of Rights.  Except as provided in this Section 12, a Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class.  Any issue by the Company of shares of stock of any class, or securities convertible 

17

into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Award.  The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.  In the event of any change affecting the Shares or the Exercise Price of Shares subject to an Award, including a merger or other reorganization, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the occurrence of such event.

SECTION 13. DEFERRAL OF AWARDS.
    

(a)    Committee Powers.  Subject to compliance with Section 409A of the Code, the Committee (in its sole discretion) may permit or require a Participant to:
		
	(i)
	Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books;

		
	(ii)
	Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or

		
	(iii)
	Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books.  Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant.

(b)    General Rules.  A deferred compensation account established under this Section 13 may be credited with interest or other forms of investment return, as determined by the Committee.  A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company.  Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company.  If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 13.

SECTION 14. AWARDS UNDER OTHER PLANS.
    

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The Company may grant awards under other plans or programs.  Such awards may be settled in the form of Shares issued under this Plan.  Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

SECTION 15. INDUCEMENT AWARDS POOL.
    

(a)    Inducement Share Reserve.  An additional pool of Shares (the “Inducement Shares”) are reserved under this Plan to be used exclusively for the grant of Awards in compliance with New York Stock Exchange Rule 303A.08 (the “Inducement Awards”).  The pool of Inducement Shares shall not exceed $95,000,000 in the aggregate, with the number of Shares granted based on Fair Market Value on the vesting date of the Inducement Shares or, if so provided in the Award Agreement, the volume-weighted average trading price of a Share for up to 60 days immediately preceding such vesting date. The number of Inducement Shares shall be subject to adjustment pursuant to Section 12, as applicable. For purposes of clarity, the Inducement Shares that may be awarded are in addition to and shall not reduce the number of Shares reserved under Section 5(a) for Awards other than Inducement Awards. The Shares underlying any Inducement Awards that are forfeited, canceled, held back upon exercise of an Inducement Award or settlement of an Inducement Award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, settled without the issuance of Shares or otherwise terminated (other than by exercise) shall be added back to the number of Inducement Shares available for grant under this Section 15 based on the vesting date Fair Market Value of the Inducement Shares returning to the Plan or other vesting date valuation method set forth in the Award Agreement, but shall not affect the number of Shares available for Awards under Section 5(a).

(b)    Inducement Award Rules.  Notwithstanding anything to the contrary in this Plan, an Inducement Award may be granted only to an Employee as an inducement material to the individual’s entering into employment with the Company or an Affiliate within the meaning of New York Stock Exchange Rule 303A.08 and only if such individual has not previously been an Employee or has experienced a bona fide period of interruption of employment with the Company and its Affiliates prior to grant of the Inducement Award. In addition, notwithstanding any other provision of the Plan to the contrary, all such Inducement Awards must be granted by the Committee. No Inducement Award may be an ISO. 

SECTION 16. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.
    

(a)    Effective Date.  No provision of this Section 16 shall be effective unless and until the Board has determined to implement such provision.

(b)    Elections to Receive NSOs, SARs, Restricted Shares or Stock Units.  An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, SARs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board.  Alternatively, the Board may mandate payment in any of such alternative forms.  Such NSOs, SARs, Restricted Shares and Stock Units shall be issued under the Plan.  An election under this Section 16 shall be filed with the Company on the prescribed form.

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(c)    Number and Terms of NSOs, SARs, Restricted Shares or Stock Units.  The number of NSOs, SARs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board.  The terms of such NSOs, SARs, Restricted Shares or Stock Units shall also be determined by the Board.

SECTION 17. LEGAL AND REGULATORY REQUIREMENTS.    
Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable.  The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has not obtained from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan.

SECTION 18. TAXES.
    

(a)    Withholding Taxes.  To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan.  The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

(b)    Share Withholding.  The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired.  Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash.  In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the minimum legally required tax withholding.

(c)    Section 409A.  Each Award that provides for “nonqualified deferred compensation” within the meaning of Section 409A of the Code shall be subject to such additional rules and requirements as specified by the Committee from time to time in order to comply with Section 409A.  If any amount under such an Award is payable upon a “separation from service” (within the meaning of Section 409A) to a Participant who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service, or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax 

20

imposed pursuant to Section 409A.  In addition, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

SECTION 19. TRANSFERABILITY.    
Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code.  Any purported assignment, transfer or encumbrance in violation of this Section 19 shall be void and unenforceable against the Company.

SECTION 20. PERFORMANCE BASED AWARDS.    
The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals.  The Committee may utilize any performance criteria selected by it in its sole discretion to establish performance goals; provided, however, that in the case of any Performance Based Award, the following conditions shall apply:
		
	(i)
	The amount potentially available under a Performance Based Award shall be subject to the attainment of pre-established, objective performance goals relating to a specified period of service including but not limited to any of the following performance criteria: (a) cash flow, (b) earnings per share, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) return on invested capital, (p) market segment shares, (q) costs, (r) expenses, (s) initiation or completion of research activities, (t) initiation or completion of development programs, (u) other milestones with respect to research activities or development programs, (v) regulatory body approval, (w) implementation or completion of critical projects, (x) commercial milestones or (z) other milestones with respect to the growth of the Company’s business or the development or commercialization of any product or service (“Qualifying Performance Criteria”), any of which may be measured either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee in the Award;

21

		
	(ii)
	The Committee may appropriately adjust the method of evaluating performance under a Qualifying Performance Criteria for a performance period as follows: (i) to exclude asset write-downs, (ii) to exclude litigation or claim judgments or settlements, (iii) to exclude the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) to exclude accruals for reorganization and restructuring programs, (v) to exclude any extraordinary nonrecurring items as determined under generally accepted accounting principles and/or described in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, (vi) to exclude the dilutive effects of acquisitions or joint ventures, (vii) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a performance period following such divestiture, (viii) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends, (ix) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; and (x) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles;

		
	(iii)
	The Committee shall establish the applicable performance goals in writing and an objective method for determining the Award earned by a Participant if the goals are attained, while the outcome is substantially uncertain, and shall determine and certify in writing, for each Participant, the extent to which the performance goals have been met prior to payment or vesting of the Award; and

		
	(iv)
	The maximum aggregate number of Shares that may be subject to Performance Based Awards granted to a Participant in any calendar year (other than Inducement Awards) is 2,000,000 Shares, and no more than two times this amount in the first year of employment (subject to adjustment under Section 12), and the maximum aggregate amount of cash that may be payable to a Participant under Performance Based Awards granted to a Participant in any calendar year that are Cash-Based Awards is $10,000,000.

SECTION 21. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee or Consultant.  

22

The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

SECTION 22. DURATION AND AMENDMENTS.
    

(a)    Term of the Plan.  The Plan, as set forth herein, shall come into existence on the date of its adoption by the Board of Directors; provided, however, that no Award may be granted hereunder prior to the Effective Date.  The Board of Directors may suspend or terminate the Plan at any time.  No ISOs may be granted after the tenth anniversary of the earlier of (i) the date the Plan is adopted by the Board of Directors, or (ii) the date the Plan is approved the stockholders of the Company.

(b)    Right to Amend the Plan.  The Board of Directors may amend the Plan at any time and from time to time.  Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant.  An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.

(c)    Effect of Termination.  No Awards shall be granted under the Plan after the termination thereof.  The termination of the Plan shall not affect Awards previously granted under the Plan.

SECTION 23. EXECUTION.    
To record the amendment and restatement of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same.

INVITAE CORPORATION

By:        /s/ Thomas Brida            
Name    :    Thomas Brida
Title:        General Counsel and Secretary

23ex_185323.htm

 

Exhibit 10.2

 

Execution Version

CONFIDENTIAL

 

Trek Therapeutics, PBC and Vertex Pharmaceuticals Incorporated Assignment and License Agreement 

 

This Assignment and License Agreement (the “Agreement”) is made and entered into as of July 12, 2016 (the “Effective Date”), by and between Vertex Pharmaceuticals Incorporated, with an address at 50 Northern Avenue, Boston, Massachusetts 02210 (together with its Affiliates, “VERTEX”) and Trek Therapeutics, PBC with an address at 125 Cambridge Park Drive, Suite 301, Cambridge, Massachusetts 02140 (“TREKtx”). VERTEX and TREKtx each may be referred to herein individually as a “Party” or collectively as the “Parties.”

 

WHEREAS, VERTEX owns rights to the proprietary compounds identified as VX-222 and VX-497;

 

WHEREAS, TREKtx desires to obtain the rights to develop and commercialize VX-222 and VX-497 and VERTEX desires to grant such rights, subject to TREKtx’s payment of milestones and royalties and consistent with the terms set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the covenants and obligations set forth herein, and other good and valuable consideration, the Parties agree as follows:

 

Article 1.     Definitions. The following definitions shall apply to the defined words where such words are used in this Agreement:

 

1.1.     “Affiliate” of a Person means any other Person, whether de jure or de facto, which directly or indirectly controls, is controlled by, or is under common control with such Person for so long as such control exists, where “control” means the decision- making authority as to such Person and, further, where such control shall be presumed to exist where a Person owns more than fifty percent of the equity (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) having the power to vote on or direct the affairs of the entity.

 

1.2.     “Agreement” has the meaning set forth in the preamble.

 

1.3.     “Anti-Corruption Laws” has the meaning set forth in Section 5.2.

 

1.4.     “Assigned Compound” means a VX-222 Compound and/or VX-497 Compound, as context requires.

 

1.5.     “Assigned Know-How” means the information identified in Exhibit B to the extent Controlled by VERTEX and to the extent solely and specifically related to the Assigned Compounds. Notwithstanding the foregoing or any items listed in Exhibit B, Assigned Know-How does not include: (i) any of VERTEX’s general drug design or delivery technology, whether in hardware or software form, tangible or intangible, or information relating to any compounds or active ingredients other than the Assigned Compounds; or (ii) any formulation or manufacturing technology not applied to an Assigned Compound or Product by or on behalf of VERTEX.

 

Page 1 of 23

 

 

1.6.     “Assigned Patents” means the Patents listed in Exhibit A, including any re-examination, re-issue, continuation, or division thereof (to the extent that each claimed invention in such application is Covered by one or more clams in the patents listed in Exhibit A) and any foreign counterparts filed or issued in the Territory.

 

1.7.     “Associated Persons” has the meaning set forth in Section 5.2.

 

1.8.     “Business Day” means a Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in Boston, Massachusetts are authorized or obligated to close.

 

1.9.     “Calendar Quarter” means the respective periods of three consecutive calendar months ending on March 31, June 30, September 30 or December 31, during the Term, or the applicable part thereof during the first or last calendar quarter of the Term.

 

1.10.     “Calendar Year” means any calendar year ending on December 31, or the applicable part thereof during the first or last year of the Term.

 

1.11.     “Claims” has the meaning set forth in Section 10.1.

 

1.12.     “Combination Product” means (a) any product, process or service which incorporates one or more therapeutically active ingredients, other than an Assigned Compound, in combination or co-formulation with an Assigned Compound; or (b) any combination of a Product and another product that contains at least one other therapeutically active ingredient that is not an Assigned Compound, where such products are not formulated together but are packaged or sold together as a single product and invoiced as one product.

 

1.13.     “Commercialize” or “Commercialization” means (a) to market, promote, distribute, offer for sale, sell, have sold, import, export or otherwise commercialize a Product and (b) to conduct activities other than Research, Development and Manufacturing, in preparation for the foregoing activities, including obtaining pricing approval, and to conduct post-Marketing Authorization studies (including clinical trials).

 

1.14.     “Confidential Information” means all non-public, confidential or proprietary information, data or know-how whether provided in written, oral, graphic, video, computer or other form, provided by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) in any form pursuant to this Agreement, including but, not limited to, information relating to the Disclosing Party’s existing or proposed research, development, patent applications, business or products. VERTEX’s Confidential Information shall include the Licensed Know-How. The Assigned Know- How shall be deemed to be TREKtx’s Confidential Information. The terms of this Agreement shall be deemed to be each Party’s Confidential Information. All information disclosed by a Party under the Mutual Confidentiality Agreement between the Parties dated January 15, 2015 is deemed the Confidential Information of such Party pursuant to this Agreement. Confidential Information shall not include any information or materials that the Receiving Party can document with competent written proof: (i) were already known to the Receiving Party (other than under an obligation of confidentiality) at the time of disclosure by or on behalf of the Disclosing Party; (ii) were available to the public 

 

Page 2 of 23

 

 

or otherwise part of the public domain at the time of its disclosure to the Receiving Party; (iii) became available to the public or otherwise part of the public domain after its disclosure to the Receiving Party, other than through any act or omission of the Receiving Party in breach of its obligations under this Agreement; (iv) were disclosed to the Receiving Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to the Receiving Party or others; or (v) were independently discovered or developed by or on behalf of the Receiving Party without the use of the Confidential Information belonging to the Disclosing Party. Notwithstanding the foregoing, specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the rightful possession of the Receiving Party merely because they are contained within more general public disclosures or more general information in the rightful possession of the Receiving Party.

 

1.15.     “Controlled” means, with respect to any know-how, Patent or other intellectual property right, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise, to assign, or grant a license, sublicense or other right to or under, such know-how, Patent, or right as provided for herein without violating the terms of any agreement or other arrangements with any Third Party, provided, that if the assignment or license of such know-how, Patent or other intellectual property right would trigger a royalty or other payment to a Third Party or would require compliance with any provision of any license between VERTEX and a Third Party, VERTEX will so notify TREKtx and such know-how, Patent or other intellectual property right will only be deemed Controlled if, following receipt of such notice, TREKtx agrees in writing to reimburse VERTEX for all such payments to such Third Party and to comply with any such provision.

 

1.16.     “Cover,” “Covering,” “Covers” or “Covered” means, as to a compound or product and Patent, that, in the absence of a license granted under, or ownership of, such Patent, the making, using, keeping, selling, offering for sale or importation of such compound or product would infringe such Patent or, as to a pending claim included in such Patent, the making, using, selling, offering for sale or importation of such compound or product would infringe such Patent if such pending claim were to issue in an issued patent without modification.

 

1.17.     “Development” means, with respect to a Product, all clinical and non- clinical research and development activities conducted after filing of an IND for such Product, including toxicology, pharmacology test method development and stability testing, process development, formulation development, delivery system development, quality assurance and quality control development, statistical analysis, clinical trials (other than post-Marketing Authorization clinical trials), regulatory affairs, pharmacovigilance, clinical trial regulatory activities and obtaining and maintaining regulatory approval.

 

1.18.     “Disclosing Party” has the meaning set forth in the definition of Confidential Information.

 

1.19.     “Effective Date” has the meaning set forth in the preamble.

 

Page 3 of 23

 

 

1.20.     “Field of Use” has the meaning set forth in Section 2.4.

 

1.21.     “First Commercial Sale” shall mean, with respect to a particular Product in a particular country in the Territory, the first commercial sale of such Product to a Third Party for end use or consumption in such country in an arm’s length transaction by TREKtx or any other Seller after the receipt of Marketing Authorization in such country. Sales for test marketing, sampling and promotional uses, clinical trial purposes or compassionate or similar use shall not be considered to constitute a First Commercial Sale.

 

1.22.     “HCV” means the Hepatitis C Virus.

 

1.23.     “IND” means any Investigational New Drug application filed with the United States Food and Drug Administration pursuant to Part 312 of Title 21 of the U.S. Code of Federal Regulations, including any supplements or amendments thereto. References herein to IND will include, to the extent applicable, any comparable filings outside the United States.

 

1.24.     “Indication” means a separate and distinct disease or medical condition in humans (a) that a Product is being evaluated to treat, or (b) for which a Product has received Marketing Authorization.

 

1.25.     “Initiation” means, with respect to any clinical trial, dosing of the first human subject in such clinical trial.

 

1.26.     “Licensee” has the meaning set forth in Section 2.5.1.

 

1.27.     “Licensed Know-How” means the information other than Assigned Know- How that (a) was Controlled by VERTEX on the Effective Date and remains under the Control of VERTEX during the Term; (b) was used by VERTEX in its Research, Development or Manufacturing of the Assigned Compounds prior to the Effective Date; and (c) is necessary for the Development, use, Manufacturing or Commercialization of any of the Assigned Compounds. Licensed Know-How does not include: (i) any of VERTEX’s general drug design or delivery technology, whether in hardware or software form, tangible or intangible, or information relating to any compounds or active ingredients other than the Assigned Compounds; or (ii) any formulation or manufacturing technology not applied to an Assigned Compound or Product by or on behalf of VERTEX.

 

1.28.     “Manufacture” or “Manufactured” or “Manufacturing” means activities directed to making, having made, producing, manufacturing, processing, filling, finishing, packaging, labeling, quality control testing and quality assurance release, shipping or storage of a Product.

 

1.29.     “Marketing Authorization” means, with respect to a Product in a particular jurisdiction in the Territory, the receipt of all approvals from the relevant regulatory authority necessary to market and sell such Product in any such jurisdiction, excluding any pricing approval or reimbursement authorization.

 

Page 4 of 23

 

 

1.30.     “Materials” means raw materials, pharmaceutical ingredients, intermediates and drug products identified in Exhibit C.

 

1.31.     “Milestone Event” has the meaning set forth in Section 4.2.

 

1.32.     “Milestone Payment” has the meaning set forth in Section 4.2.

 

1.33.     “Monetization Transaction” has the meaning set forth in Section 4.6.

 

1.34.     “Net Sales” means the gross amount billed or invoiced by TREKtx, its Affiliates and their Licensees, assignees, and any other Third Party to which TREKtx grants rights with respect to the Research, Development, Manufacturing, and Commercialization of an Assigned Compound (including by assignment of the Assigned Patents or Assigned Know-How) (collectively referred to as the “Seller”) on sales of any Product to a Third Party, less Permitted Deductions determined under United States generally accepted accounting principles. “Permitted Deductions” means the following;

 

	 	
			(a)

				
			customary transportation charges relating to such Product, including handling charges, outbound freight, shipment and insurance premiums relating thereto;

			

 

	 	
			(b)

				
			sales taxes, excise taxes, use taxes, tariffs and duties paid by and not refunded to the Seller and directly related to sale of such Product, and any other equivalent governmental charges imposed upon the importation, use or sale of such Product, but excluding income and similar taxes;

			

 

	 	
			(c)

				
			government-mandated deductions and other rebates (notably but not limited to those in respect of any state or federal Medicare, Medicaid or similar programs), clawbacks or other forms of payment to any governmental authority or agency and payments or accruals made with respect to any national or local health insurance program, including government fees levied as a result of health care reform policies such as the branded prescription drug fee of the Affordable Care Act;

			

 

	 	
			(d)

				
			customary trade, quantity and cash discounts, allowances and credits allowed or paid in the form of deductions actually allowed or fees actually paid with respect to sales of such Product (to the extent not already reflected in the amount invoiced);

			

 

	 	
			(e)

				
			allowances or credits to customers on account of retrospective price reductions, rejections or returns of Product, including billing errors; and

			

 

	 	
			(f)

				
			customary rebates, charge backs and discounts (or equivalent thereof) actually granted for such Product including those customarily granted to managed care entities or organizations, pharmacy benefit managers (or equivalent thereof), federal,

			

 

Page 5 of 23

 

 

	 	
			 

				
			state/provincial, local or other governments or their agencies or purchasers, reimbursers or trade customers.

			

 

A Permitted Deduction set forth in (a)-(f) above may be deducted only once, regardless of the number of the preceding categories that describe such amount. Sales between or among TREKtx, its Affiliates and Licensees will be excluded from the computation of Net Sales if such sale is not intended for end use, but Net Sales will include the subsequent final sales to Third Parties by TREKtx or any such Affiliates and Licensees. A Product will not be deemed to be sold if the Product is provided free of charge to a Third Party in reasonable quantities as a sample consistent with industry standard promotional and sample practices. For clarity, Net Sales includes sales such as so-called “treatment IND sales,” “named patient sales,” and “compassionate use sales,” even if such sales occur prior to receipt of Marketing Authorization.

 

In the case of any sale that is not invoiced, Net Sales shall be calculated at the time of transfer of title of the Product based on the gross selling price. If a sale, transfer or other disposition with respect to a Product involves consideration other than cash or is not at arm’s length, then the Net Sales from such sale, transfer or other disposition will be calculated based on the fair market value of the Product as reasonably determined by the Parties.

 

Net Sales for a Combination Product in a country shall be calculated by multiplying actual Net Sales of such Combination Product as determined in the first paragraph of the definition of “Net Sales” by the fraction A/(A+B) where A is the weighted average invoice price of such Product, if sold separately, and B is the total of the weighted average invoice price(s) of the other active ingredient(s) in the combination, if sold separately. The weighted average invoice prices referenced above will be calculated with reference to the prevailing prices during the applicable Calendar Quarter in those top selling countries that equate to 80% of Net Sales of the applicable Product in the Territory, with the prices weighted in the calculation to reflect the actual relative sales value of the Product in each of the countries to which the calculation relates. If it is not possible to determine the fraction A/(A+B) based on the criteria specified in the preceding sentence (e.g., if a Product component is not sold separately), the Parties shall determine Net Sales for the Product in such Combination Product by the fraction A/N where A is the weighted average invoice price of such Product, and N is the total number of products including the Product in such Combination Product. Notwithstanding anything contained herein, Net Sales for a Combination Product based on the foregoing calculations shall not fall below an amount equal to fifty percent of the total Net Sales for such Combination Product as calculated based on the first paragraph of this Section 1.34.

 

1.35.     “Party” or “Parties” has the meaning set forth in the preamble.

 

1.36.     “Patents” means patents existing upon the Effective Date and future patents and patent applications including without limitation provisional applications, continuation applications, continuations-in-part, divisional applications, Patent Cooperation Treaty applications, invention patents, utility model patents, industrial design patents, reexaminations, reissues, registrations, confirmations, revalidations, certificates of addition, utility models and petty patents, including extensions or

 

Page 6 of 23

 

 

restorations of terms thereof, pediatric exclusivity extension of a patent, supplementary protection certificates or any other such right.

 

1.37.     “Permitted Deductions” has the meaning set forth in the definition of Net Sales.

 

1.38.     “Person” means any natural person, corporation, general partnership, §312.21(b), or, with respect to a jurisdiction other than the United States, a similar clinical trial.

 

1.39.     “Phase 2 Clinical Trial” means any clinical trial as described in 21 C.F.R. §312.21(b), or, with respect to a jurisdiction other than the United States, a similar clinical trial.

 

1.40.     “Phase 3 Clinical Trial” means any clinical trial as described in 21 C.F.R. 312.21(c), or, with respect to a jurisdiction other than the United States, a similar clinical trial.

 

1.41.     “Product” means any preparation, substance or formulation comprised, in whole or in part, of an Assigned Compound. Product includes any Combination Product.

 

1.42.     “Progress Reports” has the meaning set forth in Section 6.1.

 

1.43.     “Receiving Party” has the meaning set forth in the definition of Confidential Information.

 

1.44.     “Research” means conducting research activities to advance Assigned Compounds and Products, including pre-clinical studies and optimization, but specifically excluding Development and Commercialization.

 

1.45.     “Revenue Buyer” has the meaning set forth in Section 4.6.

 

1.46.     “Royalty Term” means, with respect to a Product in a country, the period commencing on the first sale generating Net Sales of such Product in such country and ending ten years after the First Commercial Sale of such Product in such country.

 

1.47.     “Seller” has the meaning set forth in the definition of Net Sales.

 

1.48.     “Storage Facility” has the meaning set forth in Section 2.6.

 

1.49.     “Term” has the meaning set forth in Section 7.1.

 

1.50.     “Territory” means worldwide.

 

1.51.     “Third Party” means any Person other than VERTEX, TREKtx or their respective Affiliates.

 

1.52.     “Third Party Auditor” has the meaning set forth in Section 4.5.

 

1.53.     “TREXtx” has the meaning set forth in the preamble.

 

Page 7 of 23

 

 

1.54     “TREKtx Indemnitees” has the meaning set forth in Section 10.2.

 

1.55.     “VERTEX” has the meaning set forth in the preamble.

 

1.56.     “VERTEX Indemnitees” has the meaning set forth in Section 10.1.

 

1.57.     “VX-222 Compound” means the VX-222 compound (having the chemical structure depicted in Exhibit D) including, any and all salts, esters, metabolites, prodrugs, acid forms, base forms, steroisomers, racemates, tautomers, polymorphs, solvates, hydrates and crystalline forms thereof.

 

1.58.     “VX-497 Compound” means the VX-497 compound (having the chemical structure depicted in Exhibit D) including, any and all salts, esters, metabolites, prodrugs, acid forms, base forms, steroisomers, racemates, tautomers, polymorphs, solvates, hydrates and crystalline forms thereof.

 

1.59.     “Withheld Taxes” has the meaning set forth in Section 4.4.3.

 

Article 2. License; Assignment.

 

2.1.     Assignment of Rights. Subject to the terms and conditions of this Agreement, VERTEX hereby assigns to TREKtx, and TREKtx hereby accepts, all of VERTEX’s right, title and interest in the Assigned Patents and Assigned Know-How. Notwithstanding anything contained herein, the Parties expressly acknowledge that (i) VERTEX has, prior to the Effective Date, abandoned certain Patents including Patents that may have Covered the Assigned Compounds, (ii) VERTEX has not conducted any search to determine whether the Assigned Patents (or any other Patent that may claim or Cover the Assigned Compounds) have been abandoned or whether any abandoned Assigned Patent (or any other Patent that may Cover the Assigned Compounds) may be revived and (iii) VERTEX makes no representation as to the status, validity or enforceability of any Assigned Patent. If requested by TREKtx, VERTEX will reasonably cooperate with TREKtx in executing any customary and suitable written instruments effectuating the assignment of rights described in this Section 2.1.

 

2.2.     License to VERTEX. Notwithstanding the foregoing, effective upon the assignment of Assigned Patents and Assigned Know-How pursuant to Section 2.1, TREKtx will, and hereby does, grant to VERTEX (a) a perpetual, irrevocable, exclusive, royalty-free, fully paid-up, worldwide, sublicensable (through multiple tiers), license under any such Assigned Patents and Assigned Know-How to research, develop, manufacture, have manufactured, use, keep, sell, offer for sale, import, export and commercialize any compounds Covered in such Assigned Patents or described in such Assigned Know-How that are not the Assigned Compounds in any and all fields, including in the Field of Use; and (b) a perpetual, irrevocable, exclusive, royalty-free, fully paid up, worldwide, license under any such Assigned Patents and Assigned Know- How to Research and Develop the Assigned Compounds in any and all fields outside of the Field of Use, including without limitation the use of Assigned Compounds in any compound screening libraries and VERTEX internal toxicity and DMPK databases that VERTEX maintains.

 

Page 8 of 23

 

 

2.3.     Licensed Know-How. Subject to the terms and conditions of this Agreement, VERTEX hereby grants to TREKtx, and TREKtx hereby accepts, a non- exclusive, royalty-bearing, revocable (as set forth in Section 7.2), sublicenseable (solely as set forth in Section 2.5), nontransferable (except to the extent this Agreement is assigned by TREKtx in accordance with Section 12.2) license, under the Licensed Know- How to Research, Develop, Manufacture, have Manufactured, use, keep, sell, offer for sale, import, export and Commercialize the Assigned Compounds and Products in the Field of Use in the Territory during the Term. Notwithstanding the license granted to TREKtx under this Section 2.3, VERTEX shall not be obligated to provide TREKtx with access to, or copies or physical embodiments of, any Licensed Know-How.

 

2.4.     Field of Use. In no event shall TREKtx (or its Affiliates or Licensees) use the Assigned Compounds, Licensed Know-How, Assigned Know-How, Assigned Patents, or any other materials or information provided hereunder for purposes of or relating to research, development, commercialization, manufacturing of products for use, or any other activities outside of the field of anti-infectives and anti-virals and the diagnosis, treatment, or prevention thereof (collectively, the “Field of Use”).

 

2.5.     Licensing; Sublicensing.

 

	 	
			2.5.1

				
			TREKtx shall have the right to assign or grant licenses or sublicenses (through multiple tiers) under, as the case may be, to its Affiliates and any Third Party (each, a “Licensee” and collectively, the “Licensees”) the rights assigned to TREKtx pursuant to Section 2.1 hereof, without the prior written consent of VERTEX; provided that (i) the terms of any assignment, license or sublicense by TREKtx or a Licensee shall be in a written agreement and consistent with the terms of this Agreement, (ii) TREKtx’s grant of any assignment, license or sublicense shall not relieve TREKtx from any of its obligations under this Agreement, and (iii) TREKtx shall remain responsible for its Licensees’ performance under this Agreement including payment of Milestone Payments and royalties for Products by such Licensee.

			

 

	 	
			2.5.2

				
			TREKtx shall have the right to grant licenses or sublicenses to a Licensee under the rights licensed to TREKtx under Section 2.3 (but may not assign such rights other than as set forth in Section 12.2), provided such license or sublicense is granted in connection with a grant of rights under Section 2.5.1 and is granted for use solely in connection with the Research, Development, Manufacturing or Commercialization of the Assigned Compounds and Products and subject to TREKtx’s compliance with Section 2.5.1(i) through (iii) above.

			

 

2.6       Transfer of Materials. VERTEX hereby transfers title and risk of loss to the Materials to TREKtx in the quantities specified in Exhibit C. Within 60 days of the Effective Date, TREKtx will either (a) make arrangements with the Third Party storing the Materials (the “Storage Facility”) to ship the Materials to TREKtx or (b) enter into an

 

Page 9 of 23

 

 

agreement directly with the Storage Facility to continue storing the Materials at TREKtx’s expense. VERTEX will notify the Storage Facility of the transfer of the Materials to TREKtx as needed to facilitate the shipment of the Materials to TREKtx or the continued storage of the Materials by the Storage Facility at TREKtx’s expense and will execute all transfer letters or other documentation necessary in connection therewith. Notwithstanding anything contained herein, if TREKtx does not notify VERTEX of its election to either ship or continue storing such Materials with the Storage Facility within 60 days after the Effective Date pursuant to this Section 2.6, such Materials will be deemed to be rejected by TREKtx and VERTEX may destroy the Materials. Except as expressly set forth herein, TREKtx will be solely responsible for all Manufacturing and supply of the Assigned Compounds (including without limitation for all costs and expenses associated therewith). In the event that TREKtx elects to ship or continue storing such Materials pursuant to this Section 2.6, with respect to any such Materials that are drug substances or drug products that were previously certified as to their suitability for clinical purposes, TREKtx will be permitted, at its expense, to retest and have recertified, any such Materials, as suitable for human clinical purposes. With respect to any Materials stored by a Storage Facility in any countries or jurisdictions outside of the United States, TREKtx will be responsible for obtaining, completing and presenting to the applicable government authority all export documentation, fees and licenses required to ship such Materials. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, THE MATERIALS ARE PROVIDED “AS-IS” AND VERTEX MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESSED OR IMPLIED, REGARDING THE MATERIALS, INCLUDING ANY WARRANTY OF MERCHANTABILITY, TITLE, INFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE.

 

Article 3.     Performance Obligations.

 

3.1.     Regulatory Approvals. As between the Parties, TREKtx shall be responsible for obtaining all necessary regulatory approvals, including Marketing Authorization with respect to the Development and Commercialization of the Assigned Compounds and Products.

 

3.2.     File/Knowledge Transfer. Following the Effective Date, VERTEX will transfer copies of all Assigned Know-How in electronic format, if currently available, or such other form as selected by VERTEX. VERTEX will use commercially reasonable efforts to transfer such Assigned Know-How and associated documents promptly. Notwithstanding the foregoing, VERTEX will not be obligated to transfer any publically available information or documents pursuant to this Section 3.2. VERTEX will provide TREKtx with no more than 30 hours of transition support at no cost for activities related to the knowledge transfer described in this Section 3.2. Notwithstanding anything contained herein, if any of the information or documents transferred pursuant to this Section 3.2 inadvertently contains any information or documents relating to VERTEX’s drug design, delivery, manufacturing or formulation technologies or know-how, or any other technology or know-how that is related to or applicable to VERTEX’s business in general or other programs, (i) TREKtx shall not use such information and, upon discovery, shall promptly send such information or documents back to VERTEX without retaining any copies thereof and (ii) for the avoidance of doubt, such information and

 

Page 10 of 23

 

 

documents will be deemed VERTEX’s Confidential Information. TREKtx will promptly reimburse VERTEX for all costs resulting from, or otherwise related to, VERTEX’s transfer of Assigned Know-How as described in this Section 3.2, including any costs associated with scanning relevant documents. As of the Effective Date, such costs are estimated to be approximately $50,000. VERTEX shall invoice TREKtx for the foregoing expenses as incurred and TREKtx shall pay all such expenses within 30 days after TREKtx’s receipt of the applicable invoice. VERTEX may hold copies of all Assigned Know-How as required to comply with applicable law.

 

Article 4.     Consideration.

 

4.1.     Upfront Payment. In consideration of the rights granted to TREKtx in the Assigned Patents hereunder, on the Effective Date, TREKtx shall pay VERTEX a one- time, non-refundable, noncreditable upfront fee of $50,000 USD.

 

4.2.     Milestone Payments. In consideration of the rights granted to TREKtx in the Assigned Know-How and Licensed Know-How hereunder, TREKtx will pay VERTEX the milestone payments (each, a “Milestone Payment”) set forth in this Section

4.2 within 30 days after the occurrence of the corresponding milestone event (each, a “Milestone Event”). Each Milestone Payment is payable only once, regardless of the number of Products that achieve the relevant Milestone Event or the number of times the same Product(s) achieve such Milestone Event.

 

	
			Milestone 

			Number

				
			Milestone Event

				
			Milestone 

			Payment

			
	
			1

				
			Initiation of a Phase 2 Clinical Trial of a Product in a non-HCV Indication in the Field of Use.

			 

				
			$1,000,000

			
	
			2

				
			Initiation of a Phase 3 Clinical Trial of a Product in a non-HCV Indication in the Field of Use.

			 

				
			$5,000,000

			
	
			3

				
			First receipt of Marketing Authorization in any country for a Product in a non-HCV Indication in the Field of Use.

			 

				
			$10,000,000

			
	
			4

				
			Second receipt of Marketing Authorization in any country for a Product in a non-HCV Indication in the Field of Use.

			 

				
			$5,000,000

			

 

The Milestone Events numbered 1-4 as set forth above are intended to be successive; if a Product is not required to undergo the event associated with any such Milestone Event, such skipped Milestone Event will be deemed to have been achieved upon (and payment of such milestone shall be due therefor) the achievement by such Product of the next successive Milestone Event. Payment for any such skipped Milestone Event that is owed in accordance with the provisions of the foregoing sentence with

 

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respect to a given Product will be due concurrently with the payment for the next successive Milestone Event by such Product.

 

4.3.     Running Royalties. In consideration of the rights granted to TREKtx in the Assigned Know-How and Licensed Know-How hereunder, on a Product-by-Product and country-by-country basis, during the Royalty Term, TREKtx shall pay VERTEX royalties at a rate of 5% of the aggregate Net Sales of each Product sold by TREKtx and any other Seller in the Territory. The obligation to pay royalties will be imposed only once with respect to the same unit of a Product.

 

4.4.     Payments.

 

	 	
			4.4.1

				
			Reports; Timing and Method. During the Term, following the first sale of a Product giving rise to Net Sales, TREKtx will deliver the following reports to VERTEX: (a) within five Business Days after the end of each Calendar Quarter, a flash report showing on a Product-by-Product and country-by-country basis, estimated Net Sales in the Territory during the relevant Calendar Quarter and royalties payable under this Agreement on account of those Net Sales; and (b) within 30 calendar days after the end of each Calendar Quarter, a report to VERTEX specifying on a Product- by-Product and country-by-country basis (i) gross sales in the relevant Calendar Quarter, (ii) Net Sales in the relevant Calendar Quarter, including an accounting of Permitted Deductions applied to determine Net Sales; (iii) a summary of the exchange rate calculations used by TREKtx, (iv) royalties payable on such Net Sales pursuant to this Agreement, and (v) additional information related to the Net Sales as reasonably requested by VERTEX from time to time. For the avoidance of doubt, the foregoing reports shall clearly identify all Net Sales attributable to TREKtx as well as TREKtx’s Affiliates and Licensees. TREKtx shall pay all royalty payments due hereunder for each Calendar Quarter within 30 days of TREKtx’s delivery of the applicable reports under this Section 4.4.1. All payments due to VERTEX under this Agreement shall be made in U.S. dollars and be submitted via wire transfer of immediately available funds to an account designated by VERTEX. Conversion of any Net Sales made in a foreign currency to U.S. dollars shall be made at the average conversion rate for the applicable Calendar Quarter existing in the United States, as reported in the Wall Street Journal. Such payments shall be without deduction of exchange, collection, or other charges, and specifically, without deduction of withholding or similar taxes or other government-imposed fees or taxes, except as expressly permitted in the definition of Net Sales.

			

 

	 	
			4.4.2

				
			Late Payments. Without limiting any remedy available to VERTEX hereunder, payments made by TREKtx after the due date shall bear compound interest at the rate of one and one-half percent

			

 

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			per full month late (or, if lower, the highest rate allowed by applicable law).

			

 

	 	
			4.4.3

				
			Taxes; Withholding.

			

 

	 	
			4.4.3.1

				
			Each Party shall be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from this Agreement.

			

 

	 	
			4.4.3.2

				
			To the extent TREKtx or any Seller is required to deduct and withhold taxes on any payment to VERTEX under this Agreement, TREKtx shall pay the amounts of such taxes (“Withheld Taxes”) to the proper governmental authority in a timely manner and promptly transmit to VERTEX an official tax certificate or other evidence of such withholding sufficient to enable VERTEX to claim such payment of Withheld Taxes. Subject to the terms of this Section 4.4.3, the sum payable by TREKtx (in respect of which such Withheld Taxes is required) shall be made to VERTEX after deduction of the Withheld Taxes. VERTEX shall provide TREKtx any tax forms that may be reasonably necessary in order for TREKtx to not withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty. VERTEX shall use reasonable efforts to provide any such tax forms to TREKtx at least 30 days prior to the due date for any payment for which VERTEX desires that TREKtx apply a reduced withholding rate. Each Party shall provide the other with reasonable assistance to enable the recovery, as permitted by applicable law, of withholding taxes, value added taxes, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding tax or value added tax.

			

 

4.5     Retention of Records; Audit. TREKtx agrees to make and keep, and shall require its Affiliates and Licensees to make and keep, full, accurate and complete books and records (together with supporting documentation). Such records shall contain sufficient detail to confirm the accuracy of any payments required hereunder. Such records shall be retained for at least three years following the end of the Calendar Year to which they relate. TREKtx agrees, if VERTEX so desires during normal business hours and no more than once per Calendar Year, that VERTEX, or its duly authorized agent, or independent certified public accounting representative acting on VERTEX’s behalf (“Third Party Auditor”) may conduct an audit in order to examine the foregoing books and records described in this Section 4.5 and any other supporting documentation reasonably necessary to verify the royalty reports submitted by TREKtx, at TREKtx’s (or its Affiliates’ or Licensees’ as applicable) business premises or at a place mutually agreed upon by TREKtx and VERTEX for the purpose of verifying reports and payments hereunder. If a payment deficiency is determined by VERTEX or its Third Party Auditor,

 

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TREKtx shall pay the deficiency outstanding within 30 days of receiving written notice thereof. Such examination by VERTEX or its Third Party Auditor shall be at VERTEX’s expense, except that, if such examination shows an underreporting or underpayment in excess of five percent of the sums due to VERTEX as determined by such audit, then TREKtx shall pay the reasonable out of pocket cost of such audit or reimburse VERTEX for the reasonable expenses incurred by VERTEX in connection with such audit. VERTEX will treat all information subject to review under this Section 4.5 in accordance with the confidentiality obligations described in this Agreement and will require its Third Party Auditor to enter into a confidentiality agreement with VERTEX obligating such representative to maintain all such financial information in confidence pursuant to such confidentiality agreement.

 

4.6     Monetization Transaction. VERTEX may, at any time, monetize all or a portion of the value of the payments to which it may be entitled to receive under this Section 4 by assigning to a Third Party (a “Revenue Buyer”) the right to receive such payments and other payments (a “Monetization Transaction”), provided that VERTEX has put in place adequate and customary confidentiality provisions at least as stringent as those applicable to VERTEX hereunder with the Revenue Buyer. In the event of a Monetization Transaction, TREKtx shall make such payments to the Revenue Buyer as directed by VERTEX and shall deliver notices and provide reports directly to the Revenue Buyer as directed by VERTEX.

 

Article 5.     Representations and Warranties.

 

5.1.     Mutual Representations and Warranties. VERTEX and TREKtx each represents and warrants to the other as of the Effective Date that: (i) such Party (a) is a company duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation, (b) is duly qualified as a corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, where the failure to be so qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder, (c) has the requisite corporate power and authority and the legal right to conduct its business as now conducted, and (d) is in compliance with its charter documents; (ii) the execution, delivery and performance of this Agreement by such Party and all instruments and documents to be delivered by such Party hereunder (a) are within the corporate power of such Party, (b) have been duly authorized by all necessary or proper corporate action, (c) do not conflict with any provision of the charter documents of such Party, (d) will not, to such Party’s knowledge, violate any laws or regulation or any order or decree of any court or governmental instrumentality; (e) will not violate or conflict with any terms of any indenture, mortgage, deed of trust, lease, agreement, or other instrument to which such Party is a party, or by which such Party or any of its property is bound, which violation would have a material adverse effect on its financial condition or on its ability to perform its obligations hereunder; and (iii) this Agreement has been duly executed and delivered by such Party and constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except as such enforceability may be limited by applicable insolvency and other laws affecting creditors’ rights generally, or by the availability of equitable remedies.

 

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5.2.     TREKtx Representations; Legal Compliance; Anti-Corruption Laws. TREKtx warrants and represents that TREKtx, as well as all Persons performing services for or on behalf of TREKtx or otherwise acting on its behalf (including, without limitation, any Affiliate, agent, subcontractor, subsidiary, representative, employee, shareholder, director or officer) (“Associated Persons”) will comply with all applicable laws and regulations in connection with all work conducted hereunder, including but not limited to (1) the United States Foreign Corrupt Practices Act and other applicable anti- corruption and anti-bribery laws (collectively, the “Anti-Corruption Laws”), (2) all applicable laws and regulations relating to import and export, and (3) all applicable laws and regulations relating to the development, testing, marketing, sale, commercialization, and other exploitation of pharmaceuticals. Without limiting the foregoing, (i) TREKtx shall not (and shall procure that each Associated Person shall not) do, or omit to do, any act that will cause or lead VERTEX to be in breach of Anti-Corruption Laws, and (ii) TREKtx represents and warrants neither it, nor any Associated Person, offers, agrees or promises to give, or authorizes the giving directly or indirectly, of any money or other thing of value to anyone as an inducement or reward for favorable action or forbearance from action or the exercise of influence (a) to any governmental official or employee (including employees of government-owned and government-controlled corporations or agencies), (b) to any political party, official of a political party, or candidate, (c) to an intermediary for payment to any of the foregoing, or (d) to any other Person or entity in a corrupt or improper effort to obtain or retain business or any commercial advantage, such as receiving a permit or license. TREKtx further warrants and represents that should it learn or have reason to suspect any breach of its covenants in this Section 5.2, it will immediately notify VERTEX.

 

5.3.     VERTEX Representations and Warranties. Subject to Section 2.1, VERTEX hereby represents and warrants that, as of the Effective Date , VERTEX, to its knowledge, has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in and to the Assigned Patents in any way that would prevent TREKtx or its Affiliates and subcontractors from Researching, Developing or Commercializing the Assigned Compounds or Products as set forth herein, or from exploiting its rights and licenses granted under Article 2 above.

 

5.4.     Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN ARTICLE 5, NEITHER VERTEX NOR TREKTX MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT, EACH OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED. WITHOUT LIMITING THE FOREGOING, EXCEPT FOR THE EXPRESS WARRANTY IN SECTION 5.3, VERTEX MAKES NO WARRANTIES OR REPRESENTATIONS OF ANY KIND OR NATURE WITH RESPECT TO THE PATENTABILITY OF THE ASSIGNED COMPOUNDS OR PRODUCTS OR VALIDITY, SCOPE, OR ENFORCEABILITY OF THE ASSIGNED PATENTS OR ANY CLAIMS THEREIN, OR THE PRACTICE, INCLUDING BUT NOT LIMITED TO FREEDOM TO OPERATE, REGARDING ANY OF THE ASSIGNED COMPOUNDS OR PRODUCTS. EXCEPT AS EXPRESSLY SET FORTH IN

 

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SECTION 5.3, ALL RIGHTS GRANTED TO TREKTX HEREUNDER ARE PROVIDED ON AN “AS IS” BASIS.

 

Article 6.     Progress Reports.

 

6.1.     Progress Reports. TREKtx shall submit written annual progress reports on its efforts to Develop and Commercialize the Assigned Compounds (“Progress Reports”). The first Progress Report is due 12 months after the Effective Date, and subsequent Progress Reports shall be made every 12 months thereafter.

 

6.2.     Confidential Treatment. VERTEX acknowledges and agrees that any reports provided pursuant to Sections 4.4.1 or 6.1 shall constitute the Confidential Information of TREKtx. Any information contained in such reports specifically relating to the Licensed Know-How or other VERTEX Confidential Information shall be the Confidential Information of VERTEX.

 

Article 7.     Term.

 

7.1.     Term. This Agreement shall commence on the Effective Date and shall continue in effect until expiration of all royalty obligations under Article 4 (the “Term”).

 

7.2.     License Termination for Cease in Development. If TREKtx provides VERTEX with notification of its intent to cease all Development hereunder, or if no material Development or Commercialization occurs for a period of 12 consecutive calendar months (other than for reason of delays a result of, or caused by, regulatory authorities, and outside of the direct control of TREKtx), VERTEX may terminate the license granted pursuant to Section 2.3 upon written notice to TREKtx and TREKtx shall immediately cease all use of the Licensed-Know How following its receipt of such notice.

 

7.3.     Surviving Provisions. The following Articles and Sections shall survive expiration of this Agreement: 1, 2.1, 2.2, 2.4, 2.5.1, 3.1, 4 (to the extent any amounts are due and payable at the time of expiration), 5.2, 5.4, 6.2, 7.3, 8, 9, 10, 11, and 12.

 

Article 8.     Confidentiality.

 

8.1.     Confidential Information. Each of TREKtx and VERTEX shall (and shall cause their respective Affiliates and Licensees to) (a) keep all Confidential Information received from the Disclosing Party confidential with the same degree of care it maintains the confidentiality of its own Confidential Information; (b) not publish, or allow to be published, and will not otherwise disclose, or permit the disclosure of the Disclosing Party’s Confidential Information in any manner not expressly authorized pursuant to the terms of this Agreement; and (c) not use, or permit to be used, the Disclosing Party’s Confidential Information for any purpose other than as expressly authorized pursuant to the terms of this Agreement. No disclosure of the Disclosing Party’s Confidential Information shall be made by the Receiving Party to its employees, directors, officers, agents and other Persons unless and until such employees, directors, officers, agents, contractors and other Persons have agreed in writing to comply with confidentiality and non-use obligations substantially similar to those described herein. Upon termination of

 

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this Agreement, the Receiving Party shall return or destroy, at the Disclosing Party’s request, all documents, tapes or other media containing Confidential Information of the Disclosing Party that remain in the Receiving Party’s, its agents’ or contractors’ possession, except that the Receiving Party may keep one copy of the Confidential Information in the legal department files of the Receiving Party, solely for archival purposes and neither the Receiving Party, nor any of its agents, contractors or other representatives shall be required to delete or destroy any electronic back-up tapes or other electronic back-up files that have been created solely by the automatic or routine archiving and back-up procedures of the Receiving Party or its representatives, to the extent created and retained in a manner consistent with its or their standard archiving and back-up procedures. Such archival copies shall be deemed to be the property of the Disclosing Party, and shall continue to be subject to the provisions of this Article 8 notwithstanding any expiration of this Agreement or otherwise. Each Party will be liable for breach of this Article 8 by any of its agents, Affiliates, Licensees, subcontractors, or its Affiliates’ sublicensees and subcontractors.

 

8.2.     Permitted Disclosure and Use. Notwithstanding Section 8.1, a Party may disclose Confidential Information belonging to the other Party only to the extent such disclosure is reasonably necessary to: (a) obtain Marketing Authorization of the Product or any other necessary permissions, approvals and other documents issued by governmental authorities, provided that all such disclosures pursuant to this subsection 8.2(a) are covered by terms of confidentiality and non-use substantially similar to those set forth herein; (b) enforce the provisions of this Agreement; or (c) comply with any applicable law or regulation (including the rules and regulations promulgated by the United States Securities and Exchange Commission or any equivalent governmental agency in any country in the Territory), provided that such Party will, to the extent reasonably practical, submit to the other Party the proposed disclosure at least 30 calendar days in advance of the proposed disclosure and shall reasonably consider the comments of the other Party regarding confidential treatment sought for such disclosure. If a Party deems it necessary to disclose Confidential Information of the other Party pursuant to this Section 8.2, such Party shall give reasonable advance notice of such intended disclosure to the other Party to permit such other Party sufficient opportunity to object to such disclosure or to take measures to ensure confidential treatment of such information. The Receiving Party will cooperate reasonably with the Disclosing Party’s efforts to protect the confidentiality of the information. Further, notwithstanding Section 8.1, VERTEX may disclose TREKtx’s Confidential Information to a Revenue Buyer or a bona fide potential Revenue Buyer as reasonably necessary in connection with a Monetization Transaction or proposed Monetization Transaction, including a copy of this Agreement and information related to the Milestone Payments and royalties payable by TREKtx to VERTEX such as financial reports indicating the amounts that are the subject of the Monetization Transaction, audit reports related to such amounts, if any, and notices and other correspondence provided under or relating to the subject matter of this Agreement, that are relevant to the Monetization Transaction, provided further that, each recipient of such Confidential Information shall be under an obligation of confidentiality no less protective than the terms of this Agreement.

 

8.3.     Publications. Each Party shall have the right to publish and to make scientific presentations with respect to the Assigned Compounds and the Products;

 

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provided that prior to publication, each Party shall give notice to the other Party of any proposed publications and scientific presentations at least 21 days prior to submission of any materials (including manuscripts or abstracts) to any Third Party and upon written notice to the publishing Party, the other Party may elect to review and comment on such proposed publications and the publishing Party shall in good faith consider and reasonably incorporate any suggested changes to any submission requested by the other Party that are for the purpose of protecting such Party’s Confidential Information and/or preserving patent rights. Neither Party shall be required to resubmit any previously approved materials in the event of non-material edits and changes. General comments made by a Party relating to the relationship between VERTEX and TREKtx established by this Agreement, including, for example, general comments made in response to inquiries at professional meetings and other similar circumstances, are not intended to be restricted by the provisions of this Section 8.3, provided such information has been disclosed to the public previously or cleared for such disclosure by the other Party. Each Party shall comply with the other Party’s request to delete references to its Confidential Information in any such material and agrees to delay any submission for publication or other public disclosure for a period of up to an additional 90 days for the purpose of preparing and filing appropriate patent applications. Notwithstanding anything contained herein, VERTEX shall retain the right to publish and to make scientific presentations with respect to the Assigned Compounds, Assigned Know-How, Licensed Know-How, and Assigned Patents to the extent that the publication or presentation directly relates to research conducted by or on behalf of VERTEX (i) prior to the Effective Date or (ii) outside the Field of Use.

 

8.4.     Public Announcements. If requested by VERTEX, the Parties will issue an initial press release regarding this Agreement in a form to be mutually agreed upon by the Parties and on a date to be determined by VERTEX. Except as provided in the prior sentence, neither Party shall issue any press release or public announcement relating to the subject matter of this Agreement without the prior written approval of the other Party, provided that, in no event shall any public announcement made by TREKtx include any VERTEX Confidential Information. Notwithstanding the foregoing, to the extent a public announcement relating to the subject matter of this Agreement is required by applicable law, such announcement shall be conducted in accordance with the procedure described in Section 8.2(c) above and in a manner consistent with the terms of this Agreement.

 

8.5.     Survival. The obligations and prohibitions contained in this Article 8 shall survive the expiration of this Agreement for a period of five years, except with respect to Confidential Information which constitutes a trade secret under applicable law, which shall survive for such additional period of time during which such Confidential Information constitutes the Disclosing Party’s trade secret under applicable law.

 

Article 9.     Additional Intellectual Property Matters.

 

TREKtx will be solely responsible for filing, prosecution, and maintenance of all TREKtx Patents and the Assigned Patents, as well as all internal and external costs and expenses associated therewith. VERTEX shall have no responsibility or liability for, or relating to, the Assigned Patents. For the avoidance of doubt, VERTEX shall retain sole ownership of and all intellectual property rights in and to the Licensed Know-How and

 

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does not grant TREKtx any interest in such Licensed Know-How except as expressly set forth in Section 2.3 of this Agreement.

 

Article 10.     Indemnification.

 

10.1.     Indemnification by TREKtx. TREKtx shall defend, indemnify and hold harmless VERTEX and its Affiliates and each of their respective officers, directors, stockholders, employees, agents, successors and assigns (“VERTEX Indemnitees”) from and against all charges, complaints, actions, suits, proceedings, hearings, investigations, claims and demands (“Claims”) of Third Parties, and all associated damages and losses resulting therefrom (including attorneys’ fees), to the extent arising out of (a) TREKtx’s negligence or willful misconduct in its performance under this Agreement, (b) a breach by TREKtx of any of its representations, warranties and covenants contained in Article 5 or any material breach by TREKtx of its obligations under this Agreement, or (c) Research, Development, Manufacturing, Commercialization, use, licensing, handling, storage, marketing, sale, offer for sale, importation, exportation, distribution or other disposition of, any Assigned Compound or Product, including any product Covered by the Assigned Patents or incorporating the Assigned Know-How, by TREKtx, its Affiliates, agents, or Licensees. Notwithstanding the foregoing, TREKtx shall have no obligation under this Agreement to indemnify, defend or hold harmless any VERTEX Indemnitees with respect to any such Claims to the extent that they result from the negligence or willful misconduct of VERTEX or a VERTEX Indemnitee or VERTEX’s breach of its obligations under this Agreement.

 

10.2.     Indemnification by VERTEX. VERTEX shall defend, indemnify and hold harmless TREKtx and its Affiliates and each of their officers, directors, stockholders, employees, agents, successors and assigns (“TREKtx Indemnitees”) from and against all Claims of Third Parties, and all associated damages and losses resulting therefrom, to the extent arising out of any material breach by VERTEX of its obligations under this Agreement. Notwithstanding the foregoing, VERTEX shall have no obligation under this Agreement to indemnify, defend or hold harmless any TREKtx Indemnitees with respect to any such Claims and losses to the extent that they result from the negligence or willful misconduct of TREKtx, a TREKtx Indemnitee or any of their respective employees, officers, directors or agents or that they result from TREKtx’s breach of its obligations under this Agreement. Notwithstanding anything to the contrary in this Agreement, the indemnification provided in this Section 10.2 shall be TREKtx’s sole and exclusive remedy, and VERTEX’s entire liability for, any and all claims, Third Party or otherwise, arising out of or relating to this Agreement or any of the rights granted herein.

 

10.3.     Conditions to Indemnification. The obligations of the indemnifying Party under this Article 10 are conditioned upon the delivery of written notice to the indemnifying Party of any Claim promptly after the indemnified Party becomes aware of such Claim, provided that, the Parties acknowledge and agree that failure of the indemnified Party to promptly notify the indemnifying Party of a Claim shall not constitute a waiver of, or result in the loss of, the indemnified Party’s right to indemnification under Section 10.1 and 10.2, except to the extent that the indemnifying Party’s ability to defend against such Claim is materially prejudiced by such failure to notify. The indemnifying Party shall have the right to assume control of the defense

 

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and/or settlement of any such Claim, provided that the indemnifying Party shall keep the indemnified Party reasonably informed of all material developments in such defense. Notwithstanding the foregoing, the indemnified Party may participate in the defense thereof at its sole cost and expense.

 

10.4.     Settlements. Except for settlements that would solely impose a monetary obligation on the indemnifying Party and for which the indemnifying Party will be fully responsible, the indemnifying Party shall not settle or resolve a claim or action with respect to such a Claim without the prior written consent of the indemnified Party, such consent not be unreasonably withheld. Any payment made by a Party to settle any such claim or action shall be at its own cost and expense.

 

Article 11. Limitation of Liability. EXCEPT FOR (I) A BREACH BY EITHER PARTY OF ARTICLE 8 (CONFIDENTIALITY), (II) TREKTX’S INDEMNIFICATION OBLIGATIONS HEREUNDER OR (III) EITHER PARTY’S FRAUD OR WILFUL MISCONDUCT, NEITHER PARTY WILL BE LIABLE TO THE OTHER WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, LOSS OF GOODWILL, PUNITIVE OR INCIDENTAL DAMAGES. VERTEX’S ENTIRE LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY SUBJECT MATTER REFERENCED HEREIN UNDER ANY LEGAL OR EQUITABLE THEORY, INCLUDING CONTRACT, NEGLIGENCE, STRICT LIABILITY, OR OTHERWISE SHALL NOT EXCEED $50,000 USD.

 

Article 12.     General Provisions

 

12.1.     Insurance. During the Term of this Agreement and for a period of two years after the expiration of this Agreement, TREKtx shall obtain and/or maintain at its sole cost and expense, liability insurance (including without limitation product liability insurance) naming VERTEX as an additional insured in amounts which are reasonable and customary in the Territory for companies who are Developing, Marketing and Commercializing products and services similar to Products. Such liability insurance shall insure against all liability, including without limitation personal injury, physical injury, or property damage arising out of the manufacture, sale, distribution, or marketing of the Product. TREKtx shall provide written proof of the existence of such insurance to VERTEX upon request.

 

12.2.     Assignment. This Agreement may not be assigned by either Party without the prior written consent of the other Party; provided, however, that either Party may assign this Agreement, in whole or in part, to any of its Affiliates if such Party guarantees the performance of this Agreement by such Affiliate; and provided further that either Party may assign this Agreement to a successor to all or substantially all of the assets of such Party pertaining to this Agreement whether by merger, acquisition, sale of stock, sale of assets or other similar transaction. This Agreement shall be binding upon, and subject to the terms of the foregoing sentence, inure to the benefit of the Parties hereto, and their permitted successors, legal representatives and assigns.

 

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12.3.     Notices. All demands, notices, consents, approvals, reports, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally, by mail (first class, postage prepaid, certified), or by overnight delivery using a globally recognized carrier, to the Parties at the addresses set forth below or to such other address as the addressee shall have last furnished in writing in accord with this provision to the addressor. All notices shall be deemed effective (a) when delivered if personally delivered on a Business Day (or if delivered or sent on a non-Business Day, then on the next Business Day); or (b) on receipt if sent by mail or overnight courier.

 

If to VERTEX:

 

Vertex Pharmaceuticals Incorporated

Attn: Business Development

50 Northern Avenue

Boston, Massachusetts 02210

 

With a copy to:

 

Vertex Pharmaceuticals Incorporated

Attn: Corporate Legal

50 Northern Avenue

Boston, Massachusetts 02210

 

If to TREKtx:

 

Trek Therapeutics, PBC

125 Cambridge Park Drive, Suite 301

Cambridge, Massachusetts 02140

 

12.4.     Severability. In the event of the invalidity of any provisions of this Agreement, the Parties agree that such invalidity shall not affect the validity of the remaining provisions of this Agreement. The Parties will replace an invalid provision with valid provisions which most closely approximate the purpose and economic effect of the invalid provision. Nothing in this Agreement shall be interpreted so as to require either Party to violate any applicable laws, rules or regulations.

 

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

 

12.6.     Waiver. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless expressly set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No provision of this Agreement will be waived by any act, omission or knowledge of a Party or its agents or employees except as expressly set forth in this preceding sentence. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on

 

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any future occasion. Except as expressly set forth in this Agreement, all rights and remedies available to a Party, whether under this Agreement or afforded by law or otherwise, will be cumulative and not in the alternative to any other rights or remedies that may be available to such Party.

 

12.7.     Entire Agreement. This Agreement (including the exhibits hereto) constitutes the entire agreement between the Parties hereto with respect to the within subject matter described herein and supersedes all previous agreements and understandings between the Parties, whether written or oral, including the Mutual Confidentiality Agreement between the Parties dated January 15, 2015. This Agreement may be altered, amended or changed only by a writing making specific reference to this Agreement and signed by duly authorized representatives of VERTEX and TREKtx.

 

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

 

12.9.     Third Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any Third Party, including without limitation any creditor of either Party hereto. No such Third Party shall obtain any right under any provision of this Agreement or shall by reasons of any such provision make any Claim in respect of any debt, liability or obligation (or otherwise) against either Party hereto.

 

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

 

12.11.     Language. This Agreement is written and executed in the English language. Any translation into any other language shall not be an official version of this Agreement. In the event of any conflict in interpretation between the English language version of this Agreement and any other instrument or document related to this Agreement or the business relationship between the Parties contemplated hereby, the English language version of this Agreement shall prevail.

 

12.12.     Section 365(n) of the Bankruptcy Code. All rights and licenses granted under or pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. Each Party shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code or equivalent legislation in any other jurisdiction. Upon the bankruptcy of either Party, the other Party shall further be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property for which a license has been granted to such Party hereunder, and such, if not already in its possession, shall be promptly delivered to such other Party, unless the Party in bankruptcy elects to continue, and continues, to perform all of its obligations under this Agreement.

 

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12.13.     Governing Law. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

 

12.14.     Trial by Jury. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

12.15.     Equitable Relief. Notwithstanding the foregoing, nothing in this Section 12 shall preclude either Party from seeking equitable relief in any court of competent jurisdiction to enforce such Party’s intellectual property or other proprietary rights (including any rights in Confidential Information).

 

12.16.     Independent Parties/Entities. The relationship of VERTEX and TREKtx is that of independent parties and not as agents of each other, partners, or participants in a joint venture. VERTEX and TREKtx shall each maintain sole and exclusive control over their respective personnel and operations.

 

[Signature page to follow]

 

 

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their authorized representatives as of the Effective Date.

 

 

	 	Trek Therapeutics, PBC	Vertex Pharmaceuticals Incorporated	 
	 	 	 	 
	 	By: /s/ Ann Kwong	By: /s/ David Altshuler, M.D., Ph.D.	 
	 	 	 	 
	 	Name: Ann Kwong	Name: David Altshuler, M.D., Ph.D.	 
	 	 	 	 
	 	Title: CEO	
			Title: Executive VP, Global Research &

			         Chief Scientific Officer

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