Document:

boty_ex101.htm

EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

  

This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of September 7, 2016, is entered into by and between LINGERIE FIGHTING CHAMPIONSHIPS, INC., a Nevada corporation (the “Company”), and EMA Financial, LLC, a Delaware limited liability company (the “Purchaser”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act” or “1933 Act”), and Rule 506 promulgated thereunder by the United States Securities and Exchange Commission (the “SEC”), the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company a 10% Convertible Note of the Company, in the form attached hereto as Exhibit A, in the principal amount of $35,000.00 (together with any note(s) issued in replacement thereof or as interest thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares (“Conversion Shares”) of common stock, $0.001 par value per share (the “Common Stock”), of the Company, upon the terms and subject to the limitations and conditions set forth in such Note.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

 

1. Purchase and Sale of Note.

 

a) Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, the Note for an aggregate purchase price of $33,250.00 (“Purchase Price”).

   

b) Form of Payment. On the Closing Date (i) the Purchaser shall pay the Purchase Price by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, simultaneously with delivery of the Note, and (ii) the Company shall deliver such Note duly executed on behalf of the Company to the Purchaser, simultaneously with delivery of such Purchase Price.

 

c) Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the first business day following the date hereof or such other mutually agreed upon time (the “Closing Date”) at the offices of Purchaser’s counsel.

 

2. Purchaser’s Representations and Warranties. The Purchaser represents and warrants to the Company that:

 

a) Investment Purpose. Purchaser is acquiring the Securities for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws; provided, however, by making the representations herein, Purchaser does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. The Purchaser is acquiring the Securities hereunder in the ordinary course of its business. The Purchaser does not presently have any agreement or understanding, directly or indirectly, with any person to distribute any of the Securities in violation of applicable securities laws.

 
	 
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b) Accredited Investor Status. The Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

 

c) Reliance on Exemptions. The Purchaser understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities.

 

d) Information. The Purchaser and its advisors, if any, have been, and for so long as the Securities remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been reasonably requested by the Purchaser or its advisors, provided that the Purchaser has not been furnished with, and the Company shall not in the future deliver to the Purchaser without its consent, any material non-public information concerning the Company. The Purchaser and its advisors, if any, have been, and for so long as the Securities remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigation conducted by Purchaser or any of its advisors or representatives shall modify, amend or affect Purchaser’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Purchaser understands that its investment in the Securities involves a significant degree of risk.

 

e) Governmental Review. The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

 

f) Transfer or Re-sale. The Purchaser understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Purchaser shall have delivered to the Company an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be reasonably acceptable to the Company, (c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”) of the Purchaser who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”) and the Purchaser shall have delivered to the Company an opinion of counsel reasonably acceptable to the Company relating to such Regulation S; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of such Rule and further, if such Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

 
	 
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g) Legends. The Purchaser understands that the Securities have been issued (or will be issued in the case of the Conversion Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

	
 
	
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
	
 

 

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel at the Company’s expense, in the form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be reasonably accepted by the Company so that the sale or transfer is effected. The Purchaser agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.

 
	 
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h) Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of the Purchaser, and this Agreement constitutes a valid and binding agreement of the Purchaser enforceable in accordance with its terms.

 

3. Representations and Warranties of the Company. The Company represents and warrants to the Purchaser, as of the date hereof and the Closing Date, that:

 

a) Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

 

b) Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement and the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement and the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion and exercise thereof) have been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note and each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

 
	 
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c) Capitalization. As of the date hereof, the authorized capital stock of the Company, and number of shares issued and outstanding, is as set forth in the Company’s most recent periodic report filed with the SEC. Except as disclosed on Schedule 3(c) hereof, no shares are reserved for issuance pursuant to the Company’s stock option plans. Except as disclosed in the SEC Documents no shares are reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for shares of Common Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the effective date of this Agreement, and except as disclosed in the SEC Documents, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities, notes or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of any of the Securities. The Company has furnished to the Purchaser true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

 

d) Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note, as the case may be, in accordance with their respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.

 

e) Acknowledgment of Dilution. The Company’s executive officers and directors understand the nature of the Securities being sold hereby and recognize that the issuance of the Securities will have a potential dilutive effect on the equity holdings of other holders of the Company’s equity or rights to receive equity of the Company. The board of directors of the Company has concluded, in its good faith business judgment that the issuance of the Securities is in the best interests of the Company. The Company specifically acknowledges that its obligation to issue the Conversion Shares upon conversion of the Notes is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other stockholders of the Company or parties entitled to receive equity of the Company.

 
	 
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f) No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party and that is not filed as an SEC Document or other document filed with the SEC, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Purchaser owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement and the Note in accordance with the terms hereof or thereof or to issue and sell the Securities in accordance with the terms hereof and thereof and to issue the Conversion Shares. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”), or OTCQB, or OTC Pink and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB, or OTCQB, or OTC Pink in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

 
	 
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g) SEC Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). Upon written request the Company will deliver to the Purchaser true and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (“1934 Act” or “Exchange Act”), and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

 

h) Absence of Certain Changes. Since August 15, 2016, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

 

i) Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

 
	 
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j) Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person and/or entity; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.

 

k) No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.

 

l) Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company’s tax returns is presently being audited by any taxing authority.

 

m) Certain Transactions. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of any stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 
	 
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n) Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Purchaser pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

 

o) Acknowledgment Regarding Purchaser’ Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Purchaser or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Purchaser’s purchase of the Securities.

 

p) No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Purchaser. The issuance of the Securities to the Purchaser will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.

 

q) Brokers. The Company hereby represents and warrants that it has not hired, retained or dealt with any broker, finder, consultant, person, firm or corporation in connection with the negotiation, execution or delivery of this Agreement or the transactions contemplated hereunder. The Company covenants and agrees that should any claim be made against Purchaser for any commission or other compensation by any broker, finder, person, firm or corporation, including without limitation, the Broker, based upon the Company’s engagement of such person in connection with this transaction, the Company shall indemnify, defend and hold Purchaser harmless from and against any and all damages, expenses (including attorneys’ fees and disbursements) and liability arising from such claim. The Company shall pay the commission of the Broker, to the attention of the Broker, pursuant to their separate agreement(s) between the Company and the Broker.

 

r) Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since August 15, 2016, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

 
	 
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s) Environmental Matters. 

 

i. There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

ii. Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s or any of its Subsidiaries’ business.

 

iii. There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law.

 

t) Title to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

 
	 
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u) Insurance. The Company and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such coverage amounts as are prudent and customary in the businesses in which the Company is engaged, including, but not limited to, directors and officers insurance coverage with coverage amounts that are at least equal to the aggregate Purchase Price. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

v) Internal Accounting Controls. Except as disclosed in the SEC Documents, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

w) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

x) Solvency. Except as disclosed in the SEC Documents, the Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature.

   

y) No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be, an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment Company.

 
	 
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z) No “Shell”. The Company is not a Shell Company, as defined in Rule 144, and as of the date of this Agreement, the Company has fully complied with Rule 144(i)(2) under the Securities Act.

 

aa) Bad Actor. No officer or director of the Company would be disqualified under Rule 506(d) of the Securities Act as amended on the basis of being a “bad actor” as that term is established in the in the September 19, 2013 Small Entity Compliance Guide published by the Securities and Exchange Commission.

 

4. COVENANTS.

 

a) Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.

 

b) Form D; Blue Sky Laws. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Purchaser promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Purchaser at the applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Purchaser on or prior to the Closing Date.

 

c) Use of Proceeds. The Company shall use the proceeds from the sale of the Securities for general corporate purposes, marketing and sales, product development, key personnel recruiting and business development purposes.

 

d) Financial Information. Upon written request of the Purchaser, the Company agrees to send or make available the following reports to the Purchaser until the Purchaser transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing (or the applicable deadline to so file) with the SEC or OTC Markets Group, a copy of its Annual Report and its Quarterly Reports and any Supplemental Reports; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives to such shareholders. Notwithstanding the foregoing, the Company shall not disclose any material nonpublic information to the Purchaser without its consent unless such information is disclosed to the public prior to or promptly following such disclosure to the Purchaser.

 
	 
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e) Listing. The Company will obtain and, so long as the Purchaser owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB, and OTCQB, or OTC Pink or any equivalent replacement exchange, the NASDAQ Stock Market (“NASDAQ”), the New York Stock Exchange (“NYSE”), or the NYSE MKT, f/k/a American Stock Exchange (“AMEX”), and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to the Purchaser copies of any notices it receives from the SEC, OTC Markets Group and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems, provided that it shall not provide any notices constituting material nonpublic information.

 

f) Corporate Existence. So long as the Purchaser beneficially owns any Securities, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on NASDAQ, NYSE or AMEX.

 

g) No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its securities.

 

h) Securities Laws Disclosure; Publicity. The Company shall comply with applicable securities laws by filing a Current Report on Form 8-K, within four (4) Trading Days following the date hereof, disclosing all the material terms of the transactions contemplated hereby, if the Company deems the transactions contemplated hereby to constitute material non-public information. The Company and Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of Purchaser, with respect to any press release of the Company, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.

 

i) Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Company covenants and agrees that neither it nor any other person acting on its behalf will provide the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

j) Subsidiaries. So long as the Note remains outstanding, the Company shall not transfer any assets or rights to any of its subsidiaries or permit any of its subsidiaries to engage in any significant business or operations, whether such subsidiaries are currently existing or hereafter created.

 
	 
	13
	

 
	 

 

k) Insurance. So long as the Note remains outstanding, the Company and its Subsidiaries shall maintain in full force and effect insurance reasonably believed by the Company to be adequate coverage (a) on all assets and activities, covering property loss or damage and loss of income by fire or other hazards or casualty, and (b) against all liabilities, claims and risks for which it is customary for companies similarly situated to the Company to insure, including without limitation applicable product liability insurance, required workmen’s compensation insurance, and other insurance covering injury or damage to persons or property, but excluding directors and officers insurance coverage. The Company shall promptly furnish or cause to be furnished evidence of such insurance to the Purchaser, in form and substance reasonably satisfactory to the Purchaser.

 

l) Par Value. If the closing bid price at any time the Note is outstanding falls below $0.005, the Company shall cause the par value of its Common Stock to be reduced to $0.0001 or less.

 

m) [Intentionally Omitted]. 

 

n) Future Financings: From the date hereof until such time as the Purchaser no longer holds any of the Securities, in the event the Company issues or sells any shares of Common Stock or securities directly or indirectly convertible into or exercisable for Common Stock (“Common Stock Equivalents”) or amends the transaction documents relating to any sale or issuance of Common Stock or Common Stock Equivalents, if the Purchaser reasonably believes that the terms and conditions thereunder are more favorable to such investors as the terms and conditions granted under the Transaction Documents, upon notice to the Company by such Purchaser, the Transaction Documents shall be deemed automatically amended so as to give the Purchasers the benefit of such more favorable terms or conditions. Promptly following a request to the Company the Company shall provide Purchaser with all executed transaction documents relating to any such sale or issue of Common Stock or Common Stock Equivalents. Company shall deliver acknowledgment of such automatic amendment to the Transaction Documents to Purchaser in form and substance reasonably satisfactory to the Purchaser ( the “Acknowledgment”) within three (3) business days of Company’s receipt of request from Purchaser (the “Deadline”), provided that Company’s failure to timely provide the Acknowledgement shall not affect the automatic amendments contemplated hereby. If the Acknowledgement is not delivered by the Deadline, Company shall pay to the Purchaser $1000.00 per day in cash, for each day beyond the Deadline that the Company fails to deliver such Acknowledgement.

 
	 
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5. Transfer Agent Instructions. Upon receipt of a duly executed Notice of Conversion, the Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Purchaser or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Purchaser to the Company upon conversion of the Note, or any part thereof, in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement and the Securities (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer agent to Company and the Company. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Purchaser upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or direct its transfer agent not to remove or impair, delay, and/or hinder its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Purchaser upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement. Nothing in this Section shall affect in any way the Purchaser’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If the Purchaser provides the Company with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Purchaser provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Purchaser. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchaser, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Purchaser shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

6. Injunction Posting of Bond. In the event the Purchaser shall elect to convert the Note or any parts thereof, the Company may not refuse conversion or exercise based on any claim that Purchaser or anyone associated or affiliated with Purchaser has been engaged in any violation of law, or for any other reason. In connection with any injunction sought or attempted by the Company, the Company shall be required to post a bond at least equal to the greater of either: (i) the outstanding principal amount of the Note; and (ii) the market value of the Conversion Shares sought to be converted, exercised or issued, based on the sale price per share of Common Stock on the principal market on which it is traded.

 
	 
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7. Delivery of Unlegended Shares.

 

a) Within three (3) business days (such third business day being the “Unlegended Shares Delivery Date”) after the business day on which the Company has received (i) a notice that Conversion Shares, or any other Common Stock held by the Purchaser has been sold pursuant to a registration statement or Rule 144 under the 1933 Act, (ii) a representation that the prospectus delivery requirements, or the requirements of Rule 144, as applicable and if required, have been satisfied, (iii) the original share certificates representing the shares of Common Stock that have been sold, and (iv) in the case of sales under Rule 144, customary representation letters of the Purchaser and, if required, Purchaser’s broker regarding compliance with the requirements of Rule 144, the Company at its expense, (y) shall deliver, and shall cause legal counsel selected by the Company to deliver to its transfer agent (with copies to Purchaser) an appropriate instruction and opinion of such counsel, directing the delivery of shares of Common Stock without any legends including the legend set forth in Section 4(h) above (the “Unlegended Shares”); and (z) cause the transmission of the certificates representing the Unlegended Shares together with a legended certificate representing the balance of the submitted Common Stock certificate, if any, to the Purchaser at the address specified in the notice of sale, via express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date.

 

b) The Company understands that a delay in the delivery of the Unlegended Shares later than the Unlegended Shares Delivery Date could result in economic loss to the Purchaser. As compensation to Purchaser for such loss, the Company agrees to pay late payment fees (as liquidated damages and not as a penalty) to the Purchaser for late delivery of Unlegended Shares in the amount of $1,000.00 per business day after the Unlegended Shares Delivery Date. If during any three hundred and sixty (360) day period, the Company fails to deliver Unlegended Shares as required by this Section for an aggregate of thirty (30) days, then Purchaser or assignee holding Securities subject to such default may, at its option, require the Company to redeem all or any portion of the shares subject to such default at a price per share equal to the greater of (i) 200% of the most recent closing price of the Common Stock or (ii) a fraction in which the numerator is the highest closing price of the Common Stock during the aforedescribed thirty (30) day period and the denominator of which is the lowest conversion price during such thirty (30) day period, multiplied by the conversion price or exercise price, as the case may be (“Unlegended Redemption Amount”). The Company shall pay any payments incurred under this Section in immediately available funds upon demand.

 
	 
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8. Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Purchaser at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

 

a) The Purchaser shall have executed this Agreement and delivered the same to the Company.

 

b) The Purchaser shall have delivered the Purchase Price to the Company. 

 

c) The representations and warranties of the Purchaser shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Closing Date.

 

d) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

9. Conditions to The Purchaser’s Obligation to Purchase. The obligation of the Purchaser hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Purchaser’s sole benefit and may be waived by the Purchaser at any time in its sole discretion:

 

a) The Company shall have executed this Agreement and delivered the same to the Purchaser.

 

b) The Company shall have delivered to the Purchaser the duly executed Note (in such denominations as the Purchaser shall request) in accordance with Section 1 above.

 

c) The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Purchaser, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent (a copy of which written acknowledgment shall be provided to Purchaser simultaneously with Closing).

 

d) The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Purchaser shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Purchaser including, but not limited to certificates with respect to the Company’s Certificate of Incorporation, By-laws, incumbency, and Board of Directors’ resolutions relating to the transactions contemplated hereby.

 
	 
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e) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

f) No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

 

g) The Conversion Shares shall have been authorized for quotation on the OTCBB, OTCQB, or OTC Pink and trading of the Common Stock on the OTCBB, OTCQB, and OTC Pink shall not have been suspended by the SEC or the OTC Markets Group.

 

10. Governing Law; Miscellaneous.

 

a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws thereof or any other State. Any action brought by any party against any other party hereto concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other transaction document contemplated hereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 
	 
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b) Removal of Restrictive Legends. In the event that Purchaser has any shares of the Company’s Common Stock bearing any restrictive legends, and Purchaser, through its counsel or other representatives, submits to the Transfer Agent any such shares for the removal of the restrictive legends thereon in connection with a sale of such shares pursuant to any exemption to the registration requirements under the Securities Act, and the Company and or its counsel refuses or fails for any reason (except to the extent that such refusal or failure is based solely on applicable law that would prevent the removal of such restrictive legends) to render an opinion of counsel or any other documents or certificates required for the removal of the restrictive legends, then the Company hereby agrees and acknowledges that the Purchaser is hereby irrevocably and expressly authorized to have counsel to the Purchaser render any and all opinions and other certificates or instruments which may be required for purposes of removing such restrictive legends, and the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Company, issue any such shares without restrictive legends as instructed by the Purchaser, and surrender to a common carrier for overnight delivery to the address as specified by the Purchaser, certificates, registered in the name of the Purchaser or its designees, representing the shares of Common Stock to which the Purchaser is entitled, without any restrictive legends and otherwise freely transferable on the books and records of the Company.

 

c) Filing Requirements. From the date of this Agreement until the Notes are no longer outstanding, the Company will timely and voluntarily comply with all reporting requirements that are applicable to an issuer with a class of shares registered pursuant to Section 12(g) of the 1934 Act, whether or not the Company is then subject to such reporting requirements, and comply with all requirements related to any registration statement filed pursuant to this Agreement. The Company will use reasonable efforts not to take any action or file any document (whether or not permitted by the 1933 Act or the 1934 Act or the rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under said acts until the Notes are no longer outstanding. The Company will maintain the quotation or listing of its Common Stock on the OTCBB, OTCQB, and OTC Pink, NYSE, or NASDAQ Stock Market (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock (the “Principal Market”), and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Principal Market, as applicable. The Company will provide Purchaser with copies of all notices it receives notifying the Company of the threatened and actual delisting of the Common Stock from any Principal Market. As of the date of this Agreement and the Closing Date, the OTC Pink is the Principal Market. Until the Note is no longer outstanding, the Company will continue the listing or quotation of the Common Stock on a Principal Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Principal Market.

 

d) 144 Default. In the event commencing twelve (12) months after the Closing Date and ending twenty-four (24) months thereafter, the Purchaser is not permitted to resell any of the Conversion Shares without any restrictive legend or if such sales are permitted but subject to volume limitations or further restrictions on resale as a result of the unavailability to Subscriber of Rule 144(b)(1)(i) under the 1933 Act or any successor rule (a “144 Default”), for any reason except for Purchasers’ status as an Affiliate or “control person” of the Company, or as a result of a change in current applicable securities laws, then the Company shall pay such Purchaser as liquidated damages and not as a penalty an amount equal to two percent (2%) of the value of Conversion Shares (based on the closing sale of the Common Stock) subject to such 144 Default during the pendency of the 144 Default of each thirty day period thereafter (or portion thereof).

 
	 
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e) Fees and Expenses. On or prior to the Closing, the Company shall pay or reimburse to Purchaser a non-refundable, non-accountable sum equal to $3,500.00 as and for the fees, costs and expenses (including without limitation legal fees and disbursements and due diligence and administrative expenses) incurred by the Purchaser in connection with the Purchaser’s due diligence and negotiation, preparation and execution of the Transaction Documents and consummation of the Transactions. The Purchaser may withhold and offset the balance of such amount from the payment of its Purchase Price otherwise payable hereunder at Closing, which offset shall constitute partial payment of such Purchase Price in an amount equal to such offset. Except as expressly set forth in this Agreement or the Note to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser.

 

f) Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in order to enforce any right or remedy under the Note. Notwithstanding any provision to the contrary contained in herein or under the Note, it is expressly agreed and provided that the total liability of the Company under the Note for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Note or herein exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Note is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Note from the effective date forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Note, such excess shall be applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Purchaser’s election.

 

g) Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

 

h) Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

 
	 
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i) Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the Purchaser.

 

j) Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, email or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile or email, with accurate confirmation generated by the transmitting facsimile machine or computer, at the address, email or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

 

	
 
	
Purchaser:
	
 
	
EMA Financial, LLC

40 Wall Street, Suite 1700

New York, NY 10005

Attn: Felicia Preston

admin@emafin.com

	
 
	
 
	
 
	
 

	
 
	
Company: 
	
 
	
Lingerie Fighting Championships, Inc.

6955 North Durango Drive, Suite 1115-129

Las Vegas, NV 89149

Attn: Shaun Donnelly, CEO

Email: shaun@lingeriefc.com

Fax: 780-464-5524

  

Each party shall provide notice to the other party of any change in address.

 

k) Successors and Assigns. This Agreement shall be binding upon and inure  to the benefit of the parties and their successors and assigns. Neither the Company nor the Purchaser shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Purchaser may assign its rights hereunder to any person that purchases Securities in a private transaction from the Purchaser or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.

 
	 
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l) Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

m) Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Purchaser. The Company agrees to indemnify and hold harmless the Purchaser and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

 

n) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

o) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

p) Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchaser by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Purchaser shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.

 

q) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

 

r) Signatures. Any signature transmitted by facsimile, e-mail, or other electronic means shall be deemed to be an original signature. 

 

 

(Remainder of page intentionally left blank)

  

	 
	22
	

 
	 

  

IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused this Agreement to be duly executed as of the date first above written.

 

 

 

	
 

	
23Exhibit 10.1

 

Execution Version

 

LICENSE AGREEMENT

 

by and between

 

Zealand Pharma A/S

 

and

 

Aventis Pharma Deutschland GmbH

 

Execution Version

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

1

 

TABLE OF CONTENTS

 

	
ARTICLE I —   PREAMBLE, ANNEXES AND HEADINGS
    	
3
    
	
 
    	
 
    
	
ARTICLE II —   DEFINITIONS
    	
4
    
	
 
    	
 
    
	
ARTICLE III —   LICENSE
    	
7
    
	
 
    	
 
    
	
ARTICLE IV —   BACK-UP COMPOUND OPTION
    	
7
    
	
 
    	
 
    
	
ARTICLE V —   MILESTONE PAYMENTS
    	
7
    
	
 
    	
 
    
	
ARTICLE VI —   ROYALTY PAYMENTS
    	
9
    
	
 
    	
 
    
	
ARTICLE VII —   KNOW-HOW DISCLOSURE
    	
11
    
	
 
    	
 
    
	
ARTICLE VIII —   SUPPLY OF INVENTORY OF COMPOUND AND / OR PRODUCT TO AVENTIS
    	
11
    
	
 
    	
 
    
	
ARTICLE IX —   DEVELOPMENT OF THE COMPOUND AND THE PRODUCT
    	
11
    
	
 
    	
 
    
	
ARTICLE X —   MARKETING, SALES AND DISTRIBUTION
    	
12
    
	
 
    	
 
    
	
ARTICLE XI —   IMPROVEMENTS
    	
13
    
	
 
    	
 
    
	
ARTICLE XII —   INTELLECTUAL PROPERTY RIGHTS
    	
13
    
	
 
    	
 
    
	
ARTICLE XIII —   PATENT PROSECUTION AND ENFORCEMENT
    	
14
    
	
 
    	
 
    
	
ARTICLE XIV —   OTHER PRODUCT
    	
17
    
	
 
    	
 
    
	
ARTICLE XV —   REPORTING
    	
18
    
	
 
    	
 
    
	
ARTICLE XVI —   FINANCIAL AUDIT
    	
18
    
	
 
    	
 
    
	
ARTICLE XVII —   GENERAL REPRESENTATIONS AND WARRANTIES
    	
19
    
	
 
    	
 
    
	
ARTICLE XVIII —   CONFIDENTIALITY, PUBLIC DISCLOSURES
    	
19
    
	
 
    	
 
    
	
ARTICLE XIX —   DISCLAIMER OF CONSEQUENTIAL AND OTHER DAMAGES
    	
21
    
	
 
    	
 
    
	
ARTICLE XX —   PAYMENTS AND TAXES
    	
21
    
	
 
    	
 
    
	
ARTICLE XXI —   INSURANCE
    	
22
    
	
 
    	
 
    
	
ARTICLE XXII —   TERM AND TERMINATION
    	
22
    
	
 
    	
 
    
	
ARTICLE XXIII —   GENERAL PROVISIONS
    	
24
    
	
 
    	
 
    
	
Annex 01 Patents
    	
29
    
	
 
    	
 
    
	
Annex 02 Example for   calculating Royalty Payments
    	
31
    
	
 
    	
 
    
	
Annex 03 Know-how   disclosure and transfer
    	
33
    
	
 
    	
 
    
	
Annex 04 Development   Outline
    	
46
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

2

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (the “Agreement”) is entered into this day of June 24, 2003 by and between Zealand Pharma AIS, a company organized under the laws of Denmark with its principal place of business at Smedeland 26B, 2600 Glostrup, Denmark (“Zealand”), and Aventis Pharma Deutschland GmbH, a company organized under the laws of Germany with its principal place of business at 65926 Frankfurt am Main, Germany (“Aventis”), each of Zealand and Aventis referred to as Party and both collectively referred to as Parties.

 

RECITALS

 

WHEREAS, Zealand is the owner of certain patents relating to a compound which is a glucagon-like peptide 1 receptor agonist (GLP-1 receptor agonist) and which is known under Zealand’s code ZP10 for the treatment of diabetes, and Zealand has conducted discovery, research, pre-clinical studies and some clinical studies related to such compound;

 

WHEREAS, Zealand has contractors to manufacture the compound and to process the compound into pharmaceutical preparations on behalf of Zealand;

 

WHEREAS, Zealand is desirous to identify a licensee who would continue development of such compound and register and commercialize finished products manufactured from the compound in all countries of the world;

 

WHEREAS, Aventis is dedicated to the research, development and commercialization of finished products for the treatment of diabetes and is desirous to acquire exclusive license rights relating to such compound;

 

WHEREAS, the Parties agreed on a non-binding Term Sheet dated April 23, 2003 specifying the commercial terms under which the Parties would envisage to enter into a legally binding license agreement relating to such compound;

 

NOW, THEREFORE, in consideration of the rights and obligations set forth in this Agreement, the Parties agree as follows:

 

ARTICLE I — PREAMBLE, ANNEXES AND HEADINGS

 

1.1                               The preamble to this Agreement constitutes an inseparable part hereof.

 

1.2                               The Annexes to this Agreement constitute inseparable parts hereof.

 

1.3                               The headings in this Agreement are for purposes of reference only, are not a material part hereof and shall not be used in its interpretation.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

3

 

ARTICLE II — DEFINITIONS

 

All capitalized terms in this Agreement shall have the meanings ascribed to such terms in this Article 2 or as otherwise defined herein.

 

“Affiliate” — shall mean, at any time during the term of this Agreement, any person, corporation or other entity which, directly or indirectly, controls, is controlled by or is under common control with a Party hereto by means of ownership of fifty (50) percent or more of the voting stock or similar interest in that person, corporation or other entity.

 

“Back-up Compound” — shall mean any compound which is owned by or licensed to Zealand or its Affiliates on the Effective Date and which (1) falls under any claim of the Patents or (2) is a GLP-1 receptor agonist, but does not fall under a claim of a patent from among the Patents.

 

“Calendar Semester” — shall mean the period from January 1 until June 30 and/or the period from July 1 until December 31 of any calendar year.

 

“cGMP” — shall mean the Regulation of current Good Manufacturing Practice for Drugs of the US-Food and Drug Administration (FDA) and the Guidelines to Good Manufacturing Practice of Medicinal Products in the European Union.

 

“Compound” — shall mean the pharmaceutically active ingredient known as ZP10, a GLP-1 receptor agonist, which is an analogue of exendin-4 (des Pro 36-Exendin-4-Lys 6-NH2), including its salts, prodrugs, metabolites, fragments and other derivatives.

 

“Confidential Information” — shall mean the existence and contents of this Agreement and any information, in whatever form, disclosed by a Party hereto, including its Affiliates, (the “Disclosing Party”) to the other Party hereto, including its Affiliates, (the “Receiving Party”) in connection with the performance or implementation of this Agreement including, but not limited to, any and all documents expressly designated as confidential, and information related to the Compound, the Product, the Know-how, the specifications, techniques, methods, processes, prices, marketing and customer information, projections, employees, facilities, equipment, security systems, information systems, finances, product plans, marketing plans, suppliers or distributors. Confidential Information shall not include:

 

(i)                                     information which at the time of disclosure is in the public domain;

 

(ii)                                  information which after the time of disclosure becomes part of the public domain, except by breach of this Agreement or by breach by any third party being under an obligation of confidentiality to the Disclosing Party which is known to the Receiving Party;

 

(iii)                               information which is or was in the possession of the Receiving Party or its Affiliates at the time of disclosure by the Disclosing Party and was not acquired directly or indirectly from the Disclosing Party or from any other party under an agreement of confidentiality to the Disclosing Party which is known to the Receiving Party; and

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

4

 

(iv)                              information, which is or was developed by the Receiving Party or its Affiliates independently of receipt hereunder.

 

“Customers” — shall mean any third party however excluding Aventis, its Affiliates and/or its sub-licensees.

 

“Effective Date” — shall mean the date hereabove written.

 

“EMEA” — shall mean the European Agency for the Evaluation of Medicinal Products or other equivalent regulatory agency.

 

“FDA” — shall mean the United States - Food and Drug Administration.

 

“Field of Use” — shall mean the prevention and/or treatment of type 2 diabetes and any other indication in humans and/or any other species.

 

“NDA-Approval” — shall mean the first approval letter from the FDA of a New Drug Application in the United States of America or, with respect to any other country, any equivalent marketing authorization of a pharmaceutical product containing the Compound, such approval to include also the approval of the manufacturing site of Aventis or its sub-contractors.

 

“Improvements” — shall mean any information relating to any invention, any innovation, improvement, development, discovery, computer program, device, administration aid, trade secret, method, know-how, process, technique or the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which contained and whether or not patentable or copyrightable, conceived or reduced to practice by Aventis (including its Affiliates) or by Zealand (including its Affiliates) or by both Parties, including patent applications filed after the Effective Date and any patent maturing therefrom (defined as “Patents Emerging” hereinafter), which are relating to the Compound, and if applicable Back-up Compound, and/or the Product including, without limitation, any new indications, new form, new strength, new formulation, new carrier or new manufacturing process.

 

“Know-how” — shall mean any and all know-how whether or not patentable including, without limitation, specifications, efficacy data, safety data, stability data, kinetics, synthesis data, manufacturing information or data, quality testing information or data and any other technological information relating to the Compound, and if applicable Back-up Compound, and/or the Product including, without limitation, any new indications, new form, new strength, new formulation, new carrier or new manufacturing process, owned by or licensed to Zealand, its Affiliates or any of its contractors on the Effective Date.

 

“Net Sales” — shall mean the gross amounts invoiced for sales of the Product in the Territory by Aventis, its Affiliates or its sub-licensees to Customers, less the total of (a) trade, cash, and/or quantity discounts granted or paid; (b) excise, sales and other consumption taxes and customs duties to the extent included in the invoice price; (c) freight, insurance and other transportation charges to the extent included in the invoice price and paid; (d) amounts repaid or credited by

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

5

 

reason of rejections and defects; (e) returns or retroactive price reductions credited; (f) rebates accrued for, paid or deducted pursuant to agreements (including, but not limited to managed care agreements) or governmental regulations; and (g) compulsory payments, accrued for, paid or deducted pursuant to agreements (including, but not limited to managed care agreements) or governmental regulations to the extent such compulsory payments are related to sales of the Product.

 

“Patents” — shall mean any approved or registered patent, patent applications, provisional applications and patents maturing from said applications, including all divisions, continuations, continuations in part, and extensions thereof including Supplemental Protection Certificates and extensions under the Waxman-Hatch Patent Term Restorations Act in the United States of America to the extent they are related to the Compound and/or the Product including, without limitation, any new indications, new form, new strength, new formulation, new carrier or new manufacturing process, owned by or licensed to Zealand or any of its Affiliates on the Effective Date which patents and patent application for convenience are specified in Annex 01 hereof and which annex shall be supplemented by the Parties if it proves to be incomplete.

 

“Patents Emerging” — shall mean any patent application or patents which, based on Improvements, are conceived and/or reduced to practice after the Effective Date, whether by one of the Parties or by both Parties, and relating to the Compound and/or the Product including, without limitation, any new indications, new form, new strength, new formulation, new carrier or new manufacturing process.

 

“Product” — shall mean any pharmaceutical preparation in final dosage form containing the Compound including, without limitation, any strengths, forms, formulations whether short acting and depot formulations, combinations or administration routes.

 

“Review Committee” — shall have the meaning as ascribed in Article 9.3 hereof.

 

“Successful Completion” — shall mean the earlier of (1) the relevant primary end-point of the study as set forth in the study protocol is met with an acceptable clinical risk/benefit ratio as reasonably determined by Aventis, or after ninety (90) days following data base lock whatever occurs earlier; or (ii) Aventis’ decision to proceed with the development of the Compound, or if applicable Back-up Compound.

 

“Territory” — shall mean all countries of the world.

 

“Valid Claim” — shall mean a claim of an issued and unexpired patent from among the Patents which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed or unappealable within the time allowed for appeal.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

6

 

ARTICLE III — LICENSE

 

3.1                               Subject to the terms and conditions of this Agreement, Zealand hereby grants to Aventis under the Patents and Know-how an exclusive license (i) to make or have made the Compound and (ii) to make or have made, develop, register, market, sell and/or distribute the Product inside the Field of Use in the Territory under a trademark selected and owned by Aventis. Zealand hereby confirms that during the term of this Agreement Zealand shall not conduct research or development on the Compound and that it shall not grant any license to any party other than Aventis under the Patents and/or the Know-how.

 

3.2                               Aventis may appoint its Affiliates to perform the license or certain parts thereof upon its discretion provided, however, that in the event that Aventis intends to sub-contract in [***], the marketing, sale and/or distribution of the Product to a third party, then Aventis shall need Zealand’s prior written approval which shall not unreasonably be withheld or delayed.

 

ARTICLE IV — BACK-UP COMPOUND OPTION

 

4.1                               Zealand hereby grants to Aventis an exclusive option [***] to acquire an exclusive worldwide license (i) to make or have made Back-up Compound and (ii) to develop, register, make or have made, market, sell and/or distribute pharmaceutical products containing Back-up Compound [***].

 

4.2                               Upon Aventis’ request at any time during the term of this Agreement, Zealand shall notify Aventis in writing of any potential Back-up Compound known to Zealand. Upon each such notice, Zealand shall provide Aventis in writing with scientific information relating to each such Back-up Compound. Aventis shall review the scientific information and determine as to each such Back-up Compound whether Aventis will exercise the option or not. Aventis shall inform Zealand in writing of its decision whether to exercise or not the option as to each such Back-up Compound within one hundred eighty (180) days.

 

4.3                               In the event that Aventis has exercised the option during such one hundred eighty (180) days as to each such Back-up Compound, then Aventis shall be deemed to have acquired the exclusive worldwide license (i) to make or have made Back-up Compound and (ii) to develop, register, make or have made, market, sell and/or distribute pharmaceutical products containing Back-up Compound [***].

 

ARTICLE V — MILESTONE PAYMENTS

 

5.1                               Aventis shall pay to Zealand as partial consideration for the grant of the license in accordance with Article 3 hereof and the grant of the option in accordance with Article 4 hereof milestone payments as specified herein. Subject to Article 20.1 hereof, the milestone payments shall be made in US-Dollar plus Value Added Tax, if applicable, and shall be due and payable within thirty (30) days after Aventis has received an invoice from Zealand indicating that the respective event has occurred, such invoice not to be sent before the occurrence of the event provided, however, the milestone payment related

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

7

 

to the Effective Date shall be made no later than July 4, 2003. Within five (5) working days following the occurrence of any of the events set forth herebelow, Aventis shall inform Zealand in writing thereof.

 

	
 
    	
 
    	
All amounts in Million US-Dollar
    
	
 
    	
 
    	
 
    
	
Effective Date of the Agreement
    	
 
    	
10
    
	
 
    	
 
    	
 
    
	
Short acting formulation (SA): Successful Completion   of phase II study 2001 (one month), as specified in Annex   04 hereof;
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
Short acting formulation (SA): Successful Completion   of phase II study 2002 (three months), as specified in Annex   04 hereof;
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
Depot formulation: [***], as specified in Annex 04 hereof [***];
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Short acting formulation (SA): Successful Completion   of 24-months stability study for final formulation, as specified in Article 04 hereof;
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
Short acting formulation (SA): Successful Completion   of phase III studies, 3002 — 3006, as specified in Annex   04 hereof;
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Depot formulation: [***], as specified in Annex 04 hereof;
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Short acting formulation (SA): NDA-Approval in the USA
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
Depot formulation: [***]
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Co-existence in the USA of NDA-Approvals for the   short acting formulation and the depot formulation
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Deport formulation: [***]
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Depot formulation: [***]
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Maximum of all milestone payments:
    	
 
    	
110
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

8

 

5.2                               All milestone payments shall be non-refundable and payable only once, whether for Compound or Back-up Compound, for type 2 diabetes. In the event that Aventis wants to develop Compound, or if applicable Back-up Compound, for any indication other than type 2 diabetes, then Aventis and Zealand shall negotiate in good faith separate milestone payments which shall reflect for such other indication all development costs projected for such other indication by Aventis, the commercial potential of the Compound, or if applicable Back-up Compound, in such other indication, and the amount of milestone payments for the Compound, or if applicable Back-up Compound, actually paid for the type 2 diabetes indication. However, Aventis shall under no circumstances pay more than a grand total of one hundred ten (110) Million US-Dollar in total milestone payments for any and all indications whether for Compound or Back-up Compound under this Agreement.

 

5.3                               In the event that Aventis would not file in the United States of America for the NDA-Approval of the short acting formulation, although filing would have been possible with prospects to succeed, then the milestone payment regarding the coexistence of the two NDA-Approvals ([***] US-Dollar) shall be due and payable together with the milestone payment regarding the NDA-approval of the depot formulation.

 

5.4                               To the extent that the payments would require Aventis to withhold taxes, Article XX hereof shall apply.

 

ARTICLE VI — ROYALTY PAYMENTS

 

6.1                               In addition to the payment obligations specified in Article 5 hereof, Aventis shall pay to Zealand as partial consideration for the license granted in accordance with Article 3 hereof and the option granted in accordance with Article 4 hereof royalties on Net Sales equal to the applicable percentage rate plus Value Added Tax, if applicable, on a country-by-country basis in accordance with and subject to this Article 6 (“Royalty Payments”).

 

The Royalty Payments shall be made in Euro and they shall be due and payable semi-annually within sixty (60) days after each Calendar Semester plus Value Added Tax, if applicable:

 

(i)                                     On annual Net Sales less than or equal to [***];

 

(ii)                                  On annual Net Sales greater than [***] but less than or equal to [***];

 

(iii)                               On annual Net Sales greater than [***], but less than or equal to [***]

 

(iv)                              On annual Net Sales greater than [***]

 

6.2                               The Royalty Payments pursuant to Article 6.1 hereof shall be payable on a country-by-country basis at the applicable percentage rate as long as the manufacture, marketing, sale and/or distribution of the Product, in the absence of this Agreement, would infringe a

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

9

 

Valid Claim. For the avoidance of doubt, Aventis shall only be required to make one single consolidated payment per Calendar Semester year to Zealand.

 

6.3                               In the event that on a country-by-country basis there is no Valid Claim of a patent from among the Patents which covers the manufacture, the marketing, the sale and/or distribution of the Product, then no Royalty Payments pursuant to Article 6.1 hereof shall be payable in such country. In the event that on a country-by-country basis there is a Valid Claim which covers the manufacture, the marketing, the sale and/or distribution of the Product and a compulsory license is granted to a third party, then the applicable royalty rate for such country shall be reduced by [***] percent.

 

6.4                               In case of Article 6.3, first sentence, hereof, the Net Sales achieved in such country shall not be included in the sales band calculation of the Net Sales set forth in Article 6.1 hereof, and in case of Article 6.3, second sentence, hereof, the Net Sales achieved in such country shall be included in the sales band calculation as shown in Annex 02 hereof.

 

6.5                               Notwithstanding anything to the contrary contained in this Agreement, after the expiration of the last to expire patent from among the Patents, Aventis shall not be required on a country-by-country basis to make any Royalty Payments as a result of Aventis’ ongoing use of the Know-how.

 

6.6                               In case of sales invoiced in a currency other than US-Dollar, the rate to be used in computing Net Sales shall be calculated using the arithmetic average of the spot rates on the last business day of each month of the calendar quarter in which the Net Sales were made. The “Closing mid-point rate” found in the “Dollar spot forward against the Dollar” table as published by the Financial Times (European Edition) or any other publication as agreed to by the Parties shall be used as a source of spot rates to calculate the average as defined in the preceding sentence.

 

6.7                               An example of the calculation of royalties payable in accordance with this is set forth in Annex 02 hereto.

 

6.8                               Aventis shall pay the Royalty Payments no later than sixty (60) days after any Calendar Semester with respect to the Net Sales achieved during such Calendar Semester.

 

6.9                               In the event that Aventis has exercised the option provided for in Article 4 hereof and commercializes a Product containing a Back-up Compound, then this Article 6 shall apply to any Product containing Back-up Compound and for the purpose of calculating Royalty Payments with respect to the Back-up Compound, the Net Sales from sales of the Product containing a Back-up Compound shall be deemed to be Net Sales from sales of the Product containing the Compound, and only one consolidated calculation of Net Sales and Royalty Payments shall be made.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

10

 

ARTICLE VII — KNOW-HOW DISCLOSURE

 

7.1                               Zealand shall promptly and in no case later than thirty (30) days after the Effective Date disclose and transfer to Aventis or its designated Affiliates at no cost all the Know-how, and the ownership in any and all Investigational New Drug Applications (“IND”) or equivalent applications, filings, submissions or approval relating to the Compound and/or the Product. Each of Aventis and Zealand shall appoint a window person of sufficient seniority and experience to work together to facilitate a swift and smooth disclosure of the Know-how from Zealand and its contractors to Aventis. The disclosure and transfer shall include, without limitation, the items as specified in Annex 03 hereof.

 

7.2                               With regard to any Improvements made by Zealand, Zealand shall on an ongoing basis disclose such Improvements to Aventis in writing without undue delay after such Improvements were made.

 

7.3                               Following the Effective Date, Zealand shall provide from time to time reasonable assistance and support to Aventis upon Aventis’ reasonable request with the goal to ensure that the Know-how is successfully implemented. To this end, Zealand shall collaborate with Aventis and assist Aventis in any way in order to allow Aventis to set-up the manufacture of the Compound and a suitable formulation as quickly as possible.

 

ARTICLE VIII — SUPPLY OF INVENTORY OF COMPOUND AND / OR PRODUCT TO AVENTIS

 

Within thirty (30) days after the Effective Date, Zealand undertakes to supply Aventis [***] with the inventory of the Compound and/or the Product, available within Zealand or at one or more of its contractors, suitably packaged for shipment to protect against damages and deterioration, together with the appropriate documentation and certificates of analysis and shelf life quotation. Aventis acknowledges that Zealand will supply such quantities of Compound and/or Product on an “as is” basis without representation and warranties. Zealand undertakes to direct its contractor which manufactured batch [***] of the Compound to transfer the raw data relating to the manufacture and quality testing of such batch to Zealand as soon as requested by Aventis after [***], or earlier if so agreed between Aventis and Zealand in writing, and Zealand shall then transfer those raw data to Aventis without undue delay.

 

ARTICLE IX — DEVELOPMENT OF THE COMPOUND AND THE PRODUCT

 

9.1                               As of the Effective Date, Aventis shall be solely responsible to develop the Compound, and if applicable Back-up Compound, and the Product including, without limitation, to develop any formulation which would include the Compound, and if applicable any Back-up Compound, to develop any manufacturing process to manufacture the Compound, and if applicable Back-up Compound, and the Product, to conduct pre-commercialization activities and to obtain NDA-Approvals and other marketing authorizations in any country of the Territory. All regulatory filings and NDA-Approvals and other marketing authorizations shall be filed in the name of and owned by Aventis, its Affiliates or any permitted sub-licensees. Zealand shall complete any ongoing

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

11

 

formulation activity by June 15, 2003 and shall provide Aventis with final reports thereon in writing until June 30, 2003. Aventis shall be solely responsible and pay for any and all costs and out-of-pocket expenses relating to its development of the Compound, and if applicable Back-up Compound, and/or Product as of the Effective Date.

 

9.2                               During the term of this Agreement, Aventis shall use [***] efforts to develop the Compound, and if applicable Back-up Compound, and/or the Product. Further, Aventis shall develop the Compound and/or the Product in accordance with the overall development outline as specified in Annex 04 hereof and in accordance with a still to be determined development plan. Without limiting the generality of the foregoing, Aventis shall provide Zealand with key results of each clinical study no later than forty-five (45) days after lock of the data base. Aventis reserves the right during the term of this Agreement to modify the overall development plan upon its reasonable discretion and notify Zealand of such modification. In such event, the Parties shall discuss in good faith whether, and if so how, the development milestone events set out in Article 5.1 hereof shall be redefined. However, any modification of the development outline shall under no circumstances result in a reduction of the maximum milestone payments payable pursuant to Article 5.1 hereof.

 

9.3                               The Parties shall establish a Review Committee consisting of two (2) members from each Party. The Review Committee shall meet in person, per video conference or per telephone conference semi-annually to review the project report prepared by Aventis which report shall outline the progress of the development and the key results achieved. In particular, the report shall comment on the progress of the overall development outline and the still to be determined development plan. The Review Committee shall not have the authority to make decisions concerning the development and the exclusive decision making authority shall be and remain with Aventis. Each Party shall bear its own costs and out-of-pocket expenses related to such meetings.

 

ARTICLE X — MARKETING, SALES AND DISTRIBUTION

 

Aventis shall market, sell and/or distribute the Product to Customers in accordance with the following:

 

10.1                        Aventis, at its sole expense, shall use [***] efforts to obtain and maintain all necessary NDA-Approvals for the Product, registrations, approvals, licenses, permits and consents required in each country of the Territory to market, sell and/or distribute the Product.

 

10.2                        Aventis, at its sole expense, shall use [***] efforts to market, sell and distribute the Product.

 

10.3                        Aventis shall be entitled to use a trademark or trademarks owned by Aventis or its Affiliates for the marketing, sale and/distribution of the Product.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

12

 

10.4                        Aventis shall market, sell and distribute the Product in accordance with the approved label of the NDA-Approvals and in accordance with all applicable law and regulations.

 

10.5                        Aventis shall at all times maintain adequate working capital and facilities to market, sell and/or distribute the Product.

 

10.6                        Aventis shall retain an adequate number of sales representatives dedicating their professional efforts to promoting the sale of the Product.

 

ARTICLE XI — IMPROVEMENTS

 

11.1                        Any and all Improvements made or acquired by Aventis or its Affiliates during the term of this Agreement and any intellectual property rights based thereon, including Patents Emerging, shall be owned by Aventis. Aventis shall promptly notify Zealand of any such Improvements. The filing of any Patents Emerging based on such Improvements, the prosecution and the maintenance thereof shall be made by Aventis at its sole name and cost.

 

11.2                        Any and all Improvements made or acquired by Zealand or its Affiliates during the term of this Agreement and any intellectual property rights based thereon, including Patents Emerging, shall be owned by Zealand. Zealand shall promptly notify Aventis of any such Improvements. The filing of any such Patents Emerging based on such Improvements, the prosecution and the maintenance thereof shall be made by Zealand at its sole name and cost provided, however, the bearing of out-of-pocket expenses for filing and prosecution of any Patents Emerging shall be as set forth in the last sentence of Article 13.1 hereof. During the term of this Agreement on a country-by-country basis, Zealand’s ownership interest in such Improvements and related intellectual property rights, including Patents Emerging, shall become part of the license punted by Zealand to Aventis and its Affiliates under Article 3 hereof without any further charge than provided in this Agreement.

 

11.3                        Any and all Improvements made or acquired jointly by Zealand (including its Affiliates) and Aventis (including its Affiliates) during the term of this Agreement and any intellectual property rights based thereon, including Patents Emerging, shall be jointly owned by Zealand and Aventis. Each Party shall promptly notify the other Party in relation to the jointly made Improvements. The filing of any Patents Emerging based on such Improvements, the prosecution and the maintenance thereof shall be made by Aventis at its sole name and costs. Zealand’s joint ownership interest in such Improvements and related intellectual property rights, including Patents Emerging, shall become part of the license granted by Zealand to Aventis and its Affiliates under Article 3 hereof without any further charge than provided in this Agreement.

 

ARTICLE XII — INTELLECTUAL PROPERTY RIGHTS

 

Zealand represents and warrants to Aventis on the Effective Date that

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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12.1                        Zealand is the duly authorized owner of patents from the list of Patents as specified in Annex 01 hereto;

 

12.2                        Zealand, during the term of this Agreement, will maintain, and remain the sole registered owner of, the patents from the list of Patents as specified in Annex 01 hereto;

 

12.3                        Zealand has no knowledge from which it can be inferred that any right or option right exist for the benefit of any state, university, company, entity or any other organization to obtain license rights under the Patents;

 

12.4                        Zealand has no knowledge from which it can be inferred that any of the Patents are invalid or unenforceable;

 

12.5                        Zealand has no knowledge from which it can be inferred that the practice of the license granted to Aventis pursuant to Article 3 hereof would infringe the patent rights of any third party;

 

12.6                        Zealand has no knowledge that the conception, development and reduction to practice of the Patents and the Know-how have constituted or involved the misappropriation of trade secrets or other rights of any third party;

 

12.7                        Zealand has not obtained knowledge from which it can be inferred that during the prosecution of the Patents Zealand had not disclosed to the United States Patent Office all relevant, non-cumulative references of which Zealand had actual knowledge, and further, Zealand had no actual knowledge, without independent investigation, of any publication or demonstrated fact that would render any of the Patents invalid or unenforceable.

 

ARTICLE XIII — PATENT PROSECUTION AND ENFORCEMENT

 

13.1                        Zealand shall diligently prosecute the Patents at Zealand’s expense subject to this Article 13.1. Zealand shall consult with Aventis in all important matters arising in the course of the prosecution of the Patents, and Zealand shall use reasonable efforts to implement all reasonable requests made by Aventis related to such prosecution of the Patents. All out-of-pocket expenses incurred by Zealand in the prosecution of patent family [***] (as specified in Annex 01 hereof) [***] shall be reimbursed by Aventis to Zealand at [***]. If Aventis requests Zealand to file and prosecute any of said patent series from among the Patents in any other country, then Aventis shall reimburse to Zealand [***] relating to such prosecution.

 

13.2                        Zealand shall diligently maintain all issued patents from among the Patents at Zealand’s sole expense, irrespective of whether the patents issue in the countries specified in Article 13.1 hereof or in other countries.

 

13.3                        In the event Aventis contributed to new patents solely, Aventis shall solely own the Patents Emerging and shall diligently prosecute and maintain the Patents Emerging at its

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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expense. Aventis shall use reasonable efforts to implement all reasonable requests made by Zealand related to the prosecution of the Patents Emerging. In the event Zealand contributed to the new patents solely, Zealand shall solely own the Patents Emerging and shall diligently prosecute and maintain the Patents Emerging at its expense. Zealand shall use reasonable efforts to implement all reasonable requests made by Aventis related to the prosecution of the Patents Emerging. In the event Aventis and Zealand contributed to the Patents Emerging, Aventis and Zealand shall jointly own the Patents Emerging in accordance with the ratio of contribution to the invention. Aventis shall diligently prosecute and maintain the Patents Emerging at its expense. Aventis shall use reasonable efforts to implement all reasonable requests made by Zealand related to the prosecution of the Patents Emerging.

 

13.4                        If Zealand decides to withdraw any Patents Emerging solely owned by Zealand, Zealand shall offer those Patents Emerging to Aventis for further prosecution and maintenance at Aventis’ expense. In this case Aventis shall own those Patents Emerging.

 

13.5                        Aventis shall supply Zealand with any information in its possession or control pertaining to, or desirable for, the extension of the Patents or Patents Emerging. Aventis shall supply Zealand in a timely manner with any supporting affidavits or documents required in connection with the extension of the Patents or the Patents Emerging. None of Aventis or its Affiliates shall take any action the consequence of which is to preclude Zealand from obtaining any extension of the term of the Patents or the Patents Emerging.

 

13.6                        In the event either of the Parties hereto receives knowledge of any infringement or threatened infringement of any patent from the Patents or any patents from the Patents Emerging by a third party, such Party shall give prompt notice in writing to the other Party. With regard to the Patents or Patents Emerging, Aventis shall have the first right and the obligation to initiate any action against the third party within sixty (60) days. The cost of such action shall be borne by Aventis and any monies awarded shall belong to Aventis. Zealand, however, shall receive from Aventis [***]. In the event that Aventis does not initiate an action during the sixty (60) days, then Zealand shall have the right to initiate any action against such third party due to the infringement of the Patents or the Patents Emerging. The cost of such action shall be borne by Zealand and any monies awarded shall belong to Zealand.

 

13.7                        In the event that either of the Parties receives knowledge of any claim or action by a third party that the practice by Aventis of the license under this Agreement infringes the patents of such third party, then Aventis shall have the first right to defend against such claim or action. Zealand shall have access to the correspondence, shall have access to hearings and shall have the right to make reasonable comments which Aventis shall take into consideration to the extent this is reasonably possible. Aventis shall be entitled to set off from the next due Royalty Payment or Royalty Payments pursuant Article 6 hereof:

 

13.7.1              [***]

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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13.7.2              [***]

 

always PROVIDED, however, with respect to Article 13.7.1 and/or Article 13.7.2, that the payment by Aventis of Royalty Payments to Zealand in accordance with Article 6 hereof shall not be reduced to below [***] of Net Sales, and any amount not yet set off shall be carried forward and counted towards the following Royalty Payment; AND always PROVIDED, however, that in case of a settlement agreement or license agreement the negotiation between Aventis and the third party was conducted in good faith.

 

13.8                        Indemnification by Zealand

 

13.8.1              Zealand shall, at its sole cost and expense, indemnify, defend, and hold harmless Aventis, its Affiliates, their officers, directors, agents and employees (each individually an “Aventis Indemnified Party”, and collectively the “Aventis Indemnified Parties”), from and against any and all claims, demands, lawsuits, actions, causes of action, damages, judgments, liabilities, losses, costs, expenses imposed against, suffered or incurred by the Aventis Indemnified Parties (including reasonable attorneys’ fees and legal costs) which (i) [***] and (ii) [***].

 

13.8.2              Aventis shall be required to give prompt and timely written notice of such claims to Zealand, in any event no later than thirty (30) days after receiving knowledge thereof, and failure to do so shall terminate Zealand’s obligations under this Article 13.8. Aventis and the other Aventis Indemnified Parties shall provide any reasonably necessary information, cooperation and support to Zealand’s defense or settlement of the claim. Zealand shall obtain Aventis’ approval before entering into any compromise, settlement or stipulation, such approval not to be unreasonably withheld, delayed or conditioned.

 

13.9                        Indemnification by Aventis

 

13.9.1              Aventis shall, at its sole cost and expense, indemnify, defend, and hold harmless Zealand, its Affiliates, their officers, directors, agents and employees (each individually a “Zealand Indemnified Party”, and collectively the “Zealand Indemnified Parties”), from and against any and all claims, demands, lawsuits, actions, causes of action, damages, judgments, liabilities, losses, costs, expenses imposed against, suffered or incurred by the Zealand Indemnified Parties (including reasonable attorneys’ fees and legal costs) which (i) [***] and (ii) [***] except [***].

 

13.9.2              Zealand shall be required to give prompt and timely written notice of such claims to Aventis, in any event no later than thirty (30) days after receiving knowledge thereof, and failure to do so shall terminate Aventis’ obligations under this Article 13.9. Zealand and the other Zealand Indemnified Parties shall provide any

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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reasonably necessary information, cooperation and support necessary to Aventis’ defense or settlement of the claim. Aventis shall obtain Aventis’ approval before entering into any compromise, settlement or stipulation, such approval not to be unreasonably withheld, delayed or conditioned.

 

ARTICLE XIV — OTHER PRODUCT

 

14.1                        In the event that during the term of this Agreement (i) Aventis (or one of its Affiliates) signs a definitive agreement with a third party by which Aventis (or one of its Affiliates) would acquire, directly or indirectly, Control (as such term is defined below) of such third party, or by which a third party would acquire, directly or indirectly, Control of Aventis (or one of its Affiliates), and (ii) the third party (or one of its Affiliates) is the owner of or is holding license rights to patents relating to another GLP-1 receptor agonist (for the purpose of this Article 14 referred to as “Other Product”), and (iii) such Other Product, at the moment of acquiring Control, is in clinical development, is approved or is commercialized in either [***], then Aventis shall notify Zealand thereof in writing within one hundred and twenty (120) days (the “Aventis Notice”). This period, however, is reduced to sixty (60) days in the event that the Other Product is one of the primary assets of such third party. In the Aventis Notice Aventis shall confirm that it intends to divest or cease the development or the commercialization of the Other Product. If Aventis does not so notify Zealand in writing within such one hundred and twenty (120) days, or if applicable sixty (60) days, then Aventis shall be deemed to be in material breach of this Agreement. However, if Aventis has notified Zealand in writing within such one hundred and twenty (120) days, or if applicable sixty (60) days, and as long as Aventis is dedicating [***] efforts to develop and commercialize the Compound or Product and is working as expeditiously as reasonably possible towards divesting (including licensing-out) the Other Product or towards ceasing the development or the commercialization thereof, Aventis shall not be deemed to be in material breach of this Agreement. Without limiting the generality of the foregoing, Aventis shall in any event complete the divesting or cease the development or the commercialization of the Other Product, as the case may be, within twelve (12) months from Zealand’s receipt of the Aventis Notice. For the purpose of this Article 14, the term “Control” shall mean the ownership of fifty (50) percent or more of the voting stock or similar interest.

 

14.2                        The above Article 14.1 shall not apply and Aventis shall not be deemed to be in material breach of this Agreement, if, at the moment of acquiring Control, (i) the Other Product is in clinical development or earlier development stage; and (ii) the Product containing the Compound has been commercialized at least during [***] in either [***].

 

14.3                        The above Article 14.1 shall not apply and Aventis shall not be deemed to be in material breach of this Agreement, if, at the moment of acquiring Control, (i) the Other Product is commercialized in pharmaceutical markets; and (ii) the Product containing the Compound has been commercialized at least during [***] in either [***].

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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ARTICLE XV — REPORTING

 

15.1                        Aventis shall, and shall cause its Affiliates and sub-licensees to, prepare and keep comprehensive, accurate and complete documentation and records in English relating to the aggregate amounts invoiced, the aggregate deductions permitted under this Agreement and the Net Sales. Such documentation shall be prepared and kept in accordance with United States generally accepted accounting principles (“US-GAAP”). Such documentation and records shall be kept in accordance with the legal requirements in each of the countries of the Territory.

 

15.2                        Within forty-five (45) days of the end of each Calendar Semester, Aventis shall provide Zealand with a written report in English, which shall include the following data and information regarding such period (the “Semi-annual Reports”):

 

15.2.1              Detailed information regarding the sales of the Product undertaken by each of Aventis, its Affiliates and/or its sub-licensees, including:

 

15.2.1.1                                                    the Net Sales during such period and the computation of Royalty Payments on such Net Sales;

 

15.2.1.2                                                    the aggregate amounts invoiced from the sale of the Product per country and the aggregate deductions permitted under this Agreement per country;

 

15.2.1.3                                                    the quantities of Product sold during the period in each country of the Territory.

 

15.2.2              Any other information reasonably requested by Zealand.

 

15.3                        Aventis shall provide Zealand with copies of all the reports it receives from its sub-licensees.

 

15.4                        Within sixty (60) days of the end of each Calendar Semester, Aventis shall provide Zealand with an annual report in English encompassing the reporting requirements specified in this Article 15.

 

ARTICLE XVI — FINANCIAL AUDIT

 

16.1                        During the term of this Agreement and for a period of two (2) years following its expiration or termination, upon the request of Zealand (but not more frequently than once in each calendar year), an independent public accountant selected by Zealand and reasonably acceptable to Aventis shall be allowed access, during ordinary business hours, to the records, documents, bookkeeping systems, financial statements, records and any other resources, materials and data of Aventis, its Affiliates and sub-licensees relevant to verify the accuracy of the payments made or payable by Aventis hereunder during any of the three (3) calendar years before the audit. The cost of such audit shall be paid by Zealand unless the audit reveals an under-reporting of payments in excess of [***] of the

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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amount due for any one-year period, in which case the cost of the audit shall be paid by Aventis. If an audit discloses any underpayment by Aventis, Aventis shall promptly make payment to Zealand of such underpayment plus accrued interest at the rate of [***] plus [***] from the date such underpayment occurred until the date it is paid. If the audit discloses any overpayment by Aventis, Zealand shall promptly repay such overpayment to Aventis.

 

16.2                        The above Article 16.1 shall apply, mutatis mutandis, to the calculation of out-of-pocket expenses incurred by Zealand for the prosecution of patents pursuant to Article 13.1 hereof.

 

ARTICLE XVII — GENERAL REPRESENTATIONS AND WARRANTIES

 

Each Party hereto hereby represents, warrants and declares to the other Party as follows:

 

17.1                        Such Party is a corporation duly organized, validly existing and in good standing under the laws of the country of its incorporation.

 

17.2                        Such Party has full corporate authority to operate its business as conducted and has full authority to execute and perform this Agreement. This Agreement and all transactions contemplated hereby have been duly authorized by such Party.

 

17.3                        Such Party - together with its Affiliates - has the necessary know-how, skills, expertise, experience, technology, adequate financial resources, necessary professional skills, personnel and technical resources to perform its obligations and undertakings under this Agreement.

 

17.4                        Such Party shall, in performing its obligations under this Agreement, comply with all applicable laws and regulations.

 

ARTICLE XVIII — CONFIDENTIALITY, PUBLIC DISCLOSURES

 

18.1                        The Receiving Party (i) shall not disclose Confidential Information to any third party; (ii) shall restrict dissemination of Confidential Information to only its employees, Affiliates, licensor, sub-licensees or sub-contractors on a need to know basis, provided that such person or entity is bound by a like obligation of confidentiality, and (iii) shall use the same degree of care as for its own information of like importance, but at least use reasonable care, in safeguarding against disclosure of Confidential Information of the Disclosing Party.

 

18.2                        Each Party agrees to treat all the Confidential Information disclosed to it as strictly confidential and not to disclose or exploit or make use, directly or indirectly, of such Confidential Information without the express written consent of the Disclosing Party, except for purposes set forth in this Agreement.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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18.3                        It is neither Party’s intent to use the specific information disclosed to it by the other Party under this Agreement in its own product development, except as expressly authorized or licensed by this Agreement.

 

18.4                        The Receiving Party may disclose Confidential Information to the extent such disclosure is required by law or by court order provided, however, in the event that the Receiving Party is required to disclose the Confidential Information, the Receiving Party shall provide prompt written notice to the Disclosing Party of such requirement so that the Disclosing Party may seek a protective order or other appropriate remedy. In the event that no such protective order or other remedy is obtained, the Receiving Party shall disclose only that portion of the Confidential Information it is legally required to disclose and shall exercise all reasonable efforts to obtain confidential treatment for such Confidential Information.

 

18.5                        Except as required by applicable law or regulations any public statement or press release concerning Confidential Information, this Agreement and/or the transactions contemplated hereunder shall be agreed upon in advance by the Parties hereto and, upon request, by a Party hereto the other Party shall have a right to review the draft public statement or press release. Without limiting the generality of the foregoing, Zealand and Aventis acknowledge that it may be necessary to make public statements or press releases to disseminate the results of the development of the Compound.

 

For any public statement or press release at the initiative of Aventis or Zealand (the “Publishing Party”) early notification shall be given in writing to the communication department of the other Party (the “Reviewing Party”) at least eight (8) working days before the envisaged disclosure date. A draft of such public statement or press release shall be sent to the Reviewing Party at least four (4) working days before the envisaged disclosure date. The Reviewing Party shall have the opportunity to review the draft and to give reasonable comments which the Publishing Party shall reasonably take into consideration.

 

It shall be understood that the commercial terms contained in this Agreement (e.g. the single amount of milestone payments and the royalty rate) shall not be disclosed by either Party unless agreed upon in writing by the other Party.

 

In the event of a public statement or press release at the initiative of Zealand, the sole decision to make a joint public statement or press release shall be with Aventis.

 

Should Aventis issue a public statement or press release, then Aventis shall whenever possible specify that the Compound, and if applicable Back-up Compound, has been licensed from Zealand. This obligation will cease as soon as the Product is commercialized.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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Without limiting the generality of the foregoing, the Reviewing Party may request a delay of the public statement or press release by forty-five (45) days in order to secure that the Reviewing Party can make necessary patent applications.

 

If the Reviewing Party requests such delay, then the Publishing Party shall delay the public statement or press release for such period of forty-five (45) days.

 

ARTICLE XIX — DISCLAIMER OF CONSEQUENTIAL AND OTHER DAMAGES

 

IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OTHER PERSON FOR ANY PUNITIVE OR CONSEQUENTIAL DAMAGE INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR DAMAGES TO THE OTHER PARTY’S BUSINESS REPUTATION EXCEPT IN CASE OF INTENTIONAL, WILLFUL OR GROSSLY NEGLIGENT MISCONDUCT UNDER THIS AGREEMENT. THIS ARTICLE SHALL NOT APPLY TO AVENT1S’ OBLIGATIONS PURSUANT TO ARTICLE 9.2, 10.1 AND 10.2 HEREOF, NOR TO ZEALAND’S OBLIGATIONS PURSUANT TO ARTICLE 12.2 HEREOF.

 

ARTICLE XX — PAYMENTS AND TAXES

 

20.1                        All milestone payments due to Zealand hereunder shall be made in US-Dollar provided, however, that the first milestone payment of ten (10) million US-Dollar which is linked to the Effective Date shall be made no later than July 4, 2003 in the Euro currency, the payment amount shall be nine million two hundred and fifty six thousand six hundred eighty eight (9,256,688) Euro and payment of this Euro amount shall be considered fulfilment of the obligation to pay such first milestone payment of ten (10) million US-Dollar. All Royalty Payments shall be made in Euro. Zealand’s bank account shall be at [***] or such other account designated by Zealand. All costs and expenses related to such bank transfers shall be borne solely by Aventis.

 

20.2                        All payments referred to herein shall be exclusive of Value Added Tax. If and when required under applicable law, Aventis shall add Value Added Tax to the relevant payment.

 

20.3                        All payments referred to herein shall be reduced by the amount required to be paid or withheld pursuant to applicable tax laws. Any such amounts required to be paid or withheld pursuant to applicable tax laws shall be an expense of, and borne solely by, Zealand. Aventis, as applicable, shall submit to Zealand reasonable proof and documentation of payment of such amounts paid or withheld pursuant to applicable tax laws.

 

20.4                        Zealand shall issue to Aventis an invoice for each milestone payment to be made by Aventis hereunder.

 

20.5                        Without derogating from the rights of Zealand under this Agreement or under any law to other or additional remedies or relieves, it is hereby agreed that any amount due to

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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Zealand by Aventis under this Agreement or arising therefrom not paid in full on its due date shall bear interest from its prescribed due date and until its actual payment at an annual rate of [***] plus [***].

 

ARTICLE XXI — INSURANCE

 

Each Party hereto shall at all times during the term of this Agreement and for ten (10) years thereafter maintain in full force and effect customary general liability and product liability insurance in appropriate amounts. In addition thereto, Aventis shall maintain in full force and effect clinical studies insurance in sufficient amounts. Upon request, each Party will provide the other Party with a certificate of insurance evidencing that it has such insurance coverage in force.

 

ARTICLE XXII — TERM AND TERMINATION

 

22.1                        Unless terminated earlier pursuant to Article 22 hereof, the term of this Agreement shall commence on the Effective Date and shall remain in full force and effect on a country-by-country basis until the later of (i) the expiration of the last to expire patents from the Patents specified in Annex 01 hereto or (ii) until ten (10) years after the launch of the Product in the respective country, and only with respect to the European Union, until ten (10) years after the launch of the Product in the first of the EU-Member States.

 

22.2                        Notwithstanding anything to the contrary contained in this Agreement, either Party shall have the right to terminate this Agreement in its entirety by giving written notice to the other Party having immediate effect in the event that:

 

22.2.1              the other Party is in material breach of this Agreement and fails to cure such breach within ninety (90) days after receiving notice of that breach; for the purpose of this sub-section, on the side of Aventis, it shall be assumed (without limitation) that Aventis is in material breach of this Agreement if Aventis does not use [***] efforts to develop the Compound, and if applicable Back-up Compound, or to market, sell and/or distribute the Product; or

 

22.2.2              If Aventis (or any of its Affiliates) through in-licensing, acquisition of intellectual property rights or any other intellectual property related agreement acquires rights to an Other Product (as defined in Article 14) outside of the situation described in Article 14 provided, however, it shall not be assumed that Aventis is in material breach if such acquisition of rights occurs:

 

(A)                               at a moment in time when (i) the Other Product is in clinical development or earlier development stage; and (ii) the Product containing the Compound has been commercialized at least [***]; or

 

(B)                               at a moment in time when (1) the Other Product has obtained NDA-Approval and/or equivalent marketing authorizations; and (ii) the Product containing the Compound has been commercialized at least [***]

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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22.2.3              the other Party (i) becomes insolvent; (ii) enters into liquidation, dissolution, receivership or the general assignment for the benefit of creditors; provided that if such condition is assumed involuntarily it has not been dismissed within ninety (90) days after it begins; or (iii) ceases its business operations.

 

22.3                        Notwithstanding anything to the contrary contained in this Agreement, Aventis shall have the right to terminate this Agreement in its entirety at any time at its discretion giving to Zealand a ninety (90) days prior written notice.

 

22.4                        Upon expiration or termination of this Agreement, the following shall apply:

 

22.4.1              Neither Party shall be relieved from its duty to discharge in full all obligations accrued or due prior to the date of expiration or termination of this Agreement including, without limitation, to adhere to continue to provide indemnification in accordance with Article 13.8 or Article 13.9 hereof and to adhere to the obligation to maintain confidentiality in accordance with Article 18 hereof to the same extent as if this Agreement had not expired or had not been terminated;

 

22.4.2              Upon expiration of this Agreement in accordance with Article 22.1 hereof on a country-by-country basis, Aventis shall have a fully paid-up non-exclusive license, with the right to sub-license, under the Patents, the Know-how and Improvements made by Zealand to make or have made, develop, register, market, sell and/or distribute the Compound, the Back-up Compound, and/or the Product. Upon request by Aventis, the Parties shall agree in good faith on the terms and conditions of an exclusive license by Zealand to Aventis under Patents Emerging owned or co-owned by Zealand or its Affiliates.

 

22.4.3              Upon termination of this Agreement by Aventis in accordance with Article 22.3 hereof, Aventis (i) shall be entitled to stop the pre-clinical and/or the clinical development of the Compound; (ii) shall arrange that ongoing development activities are taken to a conclusive end which seems reasonable and which must not necessarily be the final conclusion of the respective development activity; (iii) shall be obligated to offer for sale to Zealand available inventory of Compound, or if applicable Back-up Compound, to Zealand at cost; (iv) Aventis shall return to Zealand within ninety (90) days after the effective date of the termination all Know-how received from Zealand; (v) Aventis shall grant to Zealand a license against consideration to be negotiated in good faith to use any Improvement made by Aventis for the manufacture, marketing, sale and/or distribution of Products containing the Compound; and (vi) shall not be obligated to manufacture the Compound, or if applicable Back-up Compound, or the Product.

 

22.4.4              Upon termination of this Agreement by Zealand in accordance with Article 22.2.1 or Article 22.2.2 hereof, then Article 22.4.3 shall apply provided, however, that the license to be granted by Aventis to Zealand in accordance with Article 22.4.3

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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(v) shall be free of charge and shall include, without limitation, any pre-clinical and/or clinical data generated by Aventis and/or its Affiliates.

 

22.5                        The rights available to either Party in accordance with this Article 22.2 through Article 22.4 shall not derogate from any rights and/or remedies which may be available to either Party under applicable law (Article 23.9 hereof).

 

ARTICLE XXIII — GENERAL PROVISIONS

 

23.1                        Force Majeure

 

Neither Party shall be deemed in default of this Agreement to the extent that performance of its obligations or attempts to cure any breach are delayed or prevented by reason of any act of God, fire, war, civil unrest, natural disaster, accident, act of government, shortages of materials or supplies or any other cause beyond the reasonable control of such Party (“Force Majeure”), provided that such Party gives the other Party written notice thereof within fifteen (15) days of discovery thereof and uses good faith efforts to so perform or cure. In the event of such a Force Majeure, the time for performance or cure shall be extended for a period equal to the duration of the Force Majeure.

 

23.2                        Relationship of the Parties

 

23.2.1              The relationship established by this Agreement is that of independent contractors and nothing herein will be construed as allowing either Party to create or assume any obligation on behalf of the other Party for any purpose whatsoever except as specifically provided for herein.

 

23.2.2              Neither Party, their Affiliates, sub-licensees, employees, consultants, contractors or agents are agents, employees, partners or joint ventures of the other Party.

 

23.3                        Solicitation of Employees

 

To the extent permitted by law, during the term of this Agreement and for a period of [***] thereafter each Party agrees neither to solicit directly for employment purposes the employees of the other Party.

 

23.4                        Assignment

 

23.4.1              The rights and liabilities of the Parties under this Agreement shall bind and inure to the benefit of the Parties’ respective successors and any party which acquires all or substantially all of its assets relating to the subject matter of this Agreement.

 

23.4.2              Neither Party shall be entitled to assign or transfer any rights or any obligations or this whole Agreement to any of its Affiliates, except that Aventis may assign the rights and obligations under this Agreement or this whole Agreement to any of its Affiliates without Zealand’s consent.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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23.5                        Notices

 

The addresses of the Parties for purposes of this Agreement and for the delivery of any notices required or otherwise dispatched hereunder shall be as stated in the preamble to this Agreement. Such addresses may be amended upon the provision of notice to the other Party. All notices shall be in writing and shall be sent by either of the Parties to the other Party by registered mail, facsimile or personal delivery to the addresses set forth in the preamble, and shall be deemed to have been delivered to the addressee, if by registered mail, seven (7) calendar days after the date on which the notice was posted, if by facsimile, twenty four (24) hours after dispatch by fax; and in the case of personal delivery, at the time of delivery.

 

23.6                        Disputes

 

(a)                                 Any dispute, controversy or claim arising out of or relating to this Agreement, or arising out of the breach, a termination or the invalidity of this Agreement or a termination notice given under this Agreement or the rights of any Party for indemnification hereunder (each, a “Claim”), shall be submitted in the first instance to the Executive Vice President of Aventis in charge of Research and Development (“Drug Innovation and Approval”) for Aventis, and the Chief Executive Officer of Zealand for Zealand.

 

(b)                                 If any Claim cannot be resolved by the individuals designated in Article 23.6 (a) within thirty (30) days after being submitted to them, and except for the right of any Party to apply to a court of competent jurisdiction for a temporary restraining order to preserve the status quo or to prevent irreparable harm pending the selection and confirmation of a panel of arbitrators in accordance herewith, such Claim shall be settled by arbitration in accordance with the Arbitration Rules (the “Rules”) of the International Chamber of Commerce in effect on the day the arbitration is commenced in accordance with this Agreement, except as modified by this Article 23.6. After expiration of the thirty (30) day period, any Party may commence arbitration by serving upon the other Party a written demand for arbitration sent by a courier service of internationally recognized reputation in accordance with this Agreement. The number of arbitrators shall be three, one of whom is selected by Zealand, one of whom is selected by Aventis and one of whom is selected by Aventis and Zealand (or by the other two arbitrators if the Parties cannot, within thirty (30) days after the commencement of the arbitration proceeding, agree on the third arbitrator). In the event that any Party shall fail to appoint an arbitrator within thirty (30) days after the commencement of the arbitration proceeding, such arbitrator and the third arbitrator shall be appointed by the ICC in accordance with the Rules. The arbitration award shall be rendered by a majority of the members of the board of arbitration. The panel shall not be entitled to modify this Agreement or the transactions contemplated herein. The arbitration proceeding shall be conducted in the English language and shall be brought in London, England, unless the Parties agree in writing to conduct the

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

25

 

arbitration in another location. The ICC shall have jurisdiction over all Parties to this Agreement for purposes of the arbitration.

 

(c)                                  The arbitration decision shall be final and binding and shall not be subject to appeal to any court in any jurisdiction, except as provided by applicable law. The prevailing Party may enter such decision in any court having competent jurisdiction.

 

Any statute of limitations or other equitable or legal doctrine which would otherwise be applicable to any action brought by either of the Parties shall be applicable in the arbitration.

 

(d)                                 The arbitrators shall be entitled to receive reasonable compensation at an hourly rate to be established between the arbitrators and the ICC. If required by the arbitrators, Zealand on the one hand, and Aventis on the other, will deposit with the ICC an equal share of the total anticipated fee of the arbitrators in an amount to be estimated by the ICC. The non-prevailing Party in the proceedings shall be ordered to pay, and shall have the ultimate responsibility for, all arbitrators’ fees and the fees of the ICC and such fees shall be included in the judgment to be entered against the non-prevailing Party.

 

(e)                                  Notwithstanding any other provision of this Agreement, any Party may apply to a court of competent jurisdiction within the United States of America, for an order in true nature of a temporary restraining order or preliminary injunction for purposes of maintaining the status quo pending the final resolution of any dispute pursuant to the arbitration provisions hereof.

 

(f)                                   Each Party consents to the jurisdiction and administration of the ICC for purposes of the arbitration proceedings contemplated.

 

23.7                        Expenses

 

Unless provided for otherwise herein, each Party hereto shall bear all its general costs and expenses related to the performance of its obligations under this Agreement and its preparation.

 

23.8                        Severability

 

If any provision of this Agreement, or the application thereof, shall for any reason and to any extent be determined to be invalid or enforceable under applicable law, then such invalidity or unenforceability shall not affect the remainder of this Agreement, unless the invalid or unenforceable provision is of such importance that it can be reasonably assumed that the Parties would not have entered into this Agreement without the invalid or unenforceable provision. The Parties agree to replace any such invalid or unenforceable provision with a valid and enforceable provision designed to achieve, to

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

26

 

the extent possible, the business purposes and intent of such invalid and unenforceable provisions.

 

23.9                        Applicable law

 

This Agreement and any disputes concerning its validity, construction, enforceability or performance shall be governed by the laws of Germany without reference to conflict of law principles.

 

23.10                 Entire Agreement

 

This Agreement, together with all its Annexes hereto, constitutes the entire understanding and agreement of the Parties with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous understandings and agreements, whether written or oral, with respect to such subject matter, including the Term Sheet dated April 23, 2003.

 

23.11                 Language

 

All correspondence, documentation, reports, drawings, specifications or instructions related to this Agreement shall be in the English language.

 

23.12                 Waivers

 

No delay or failure by either Party to exercise or enforce at any time any right or provision of this Agreement shall be considered a waiver thereof or of such Party’s right thereafter to exercise or enforce each and every right and provision of this Agreement. No single waiver shall constitute a continuing or subsequent waiver.

 

23.13                 Amendments and Modifications

 

This Agreement may not be modified or amended, in whole or in part, except in a written instrument signed by both Parties.

 

23.14                 Construction

 

This Agreement has been negotiated by the Parties and their respective counsel. This Agreement shall be fairly interpreted in accordance with its terms and without any strict construction in favor of or against either Party. Both Parties hereto shall be considered the drafting.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

27

 

	
Zealand Pharma A/S
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ E. Steiness 
    	
/s/ J. Hansen
    	
 
    	
 
    
	
Name:
    	
E. Steiness 
    	
J. Hansen
    	
 
    	
 
    
	
Title:
    	
CEO
    	
CFO
    	
 
    	
 
    
	
 
    	
 
    
	
Aventis Pharma Deutschland GmbH
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ F. Douglas
    	
 
    	
 
    
	
Name:
    	
F. Douglas
    	
 
    	
 
    
	
Title:
    	
Executive Vice   President
    	
 
    	
 
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

28

 

Annex 01

 

Patents

 

	
Zealand
   REF. NO.
    	
 
    	
E&A
   REF.
   NO.
    	
 
    	
COUNTRY
    	
 
    	
TITLE
    	
 
    	
INVENTOR
    	
 
    	
APPLN. NO.
   FILING DATE
    	
 
    	
PARENT NOS.,
   FILING DATE
    	
 
    	
PATENT NO.
   & DATE
    	
 
    	
PUBLIC.
   NO. &
   DATE
    	
 
    	
OTHER
   INFORMATION
    
	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

29

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

30

 

Annex 02

 

Example for calculating Royalty Payments

 

For illustrative purposes, assume sales for a Calendar Semester are booked in three different currencies: 800 Million USD, 800 Million Euro and 80,000 Million Yen

 

Step 1: Convert all non-USD sales booked for the Calendar Semester to USD using exchange rates as described in Article 6.6

 

Example

 

Assume the arithmetic average of the spot rates on the last business day of each month of the calendar quarter in which the Net Sales were made, as defined in Article 6.6, are USD = .95 Euro and USD — 125 Yen

 

Therefore, sales are converted as follows:

 

	
800 Million USD =
    	
 
    	
800 Million USD
    
	
 
    	
 
    	
 
    
	
800 Million Euro =
    	
 
    	
842 Million USD
    
	
80,000 Million Yen =
    	
 
    	
640 Million USD
    
	
 
    	
 
    	
 
    
	
Total Net Sales in USD =
    	
 
    	
2,282 Million USD
    

 

Step 2: Based on Net Sales calculated in USD and on the arithmetic average of the spot rates in Step 1 above, calculate Royalty Payment in Euro using the royalty percentages as defined in Article 6.1

 

For the Example, Royalty Payment is calculated as follows:

 

	
[***]x [***]USD x .95   Euro/USD
    	
 
    	
=
    	
 
    	
[***] Euro
    
	
[***]x [***]USD x .95 Euro/USD
    	
 
    	
=
    	
 
    	
[***] Euro
    
	
[***]x [***]USD x .95 Euro/USD
    	
 
    	
=
    	
 
    	
[***] Euro
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

31

 

	
[***]x [***]USD x .95 Euro/USD
    	
 
    	
=
    	
 
    	
[***] Euro
    
	
Total
    	
 
    	
=
    	
 
    	
[***] Euro
    

 

Therefore, Total Royalty Payment in Euro = [***], payable as defined in Article 6.1

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

32

 

Annex 03

 

Know-how disclosure and transfer

 

	
[Area
    	
 
    	
Number
    	
 
    	
Author
    	
 
    	
Title
    
	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

33

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

34

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

35

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

36

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

37

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

38

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

39

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

40

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

41

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

42

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

43

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

44

 

	
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[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

45

 

Annex 04

 

Development Outline

 

[***][***]

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

46

 

FIRST AMENDMENT TO LICENSE AGREEMENT

 

THIS FIRST AMENDMENT TO LICENSE AGREEMENT (the “First Amendment”), dated as of March 16, 2010, is entered into by and between Zealand Pharma A/S, a company organized under the laws of Denmark with its principal place of business at Smedeland 26B, 2600 Glostrup, Denmark (“Zealand”), and Sanofi-Aventis Deutschland GmbH (f.k.a. Aventis Deutschland GmbH), a company organized under the laws of Germany with its principal place of business at 65926 Frankfurt am Main, Germany (“SADG”).  Each of Zealand and SADG is referred to as a “Party” and both collectively as “Parties.”

 

RECITALS

 

WHEREAS, Zealand and SADG are parties to a certain License Agreement dated June 24, 2003 (the “License Agreement”); and

 

WHEREAS, the Parties wish to amend the License Agreement, on the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing premises and the rights and obligations set forth in this First Amendment, the Parties agree as follows:

 

ARTICLE I. AMENDMENTS

 

1.1.         The License Agreement hereby is amended as follows:

 

(a)           Article 2 of the License Agreement is amended to add or modify, as the case may be, the following definitions:

 

“Group 1 Product” means any Product other than a Group 2 Product.

 

“Group 2 Product” means any Product that contains the Compound combined with one or more other active pharmaceutical ingredients (APIs) other than the Compound.

 

“Product” means (1) any pharmaceutical preparation in final dosage form containing the Compound including, without limitation, any strengths, forms, formulations (whether short acting and depot formulations), combinations or administration routes, and (2) a cell therapy product or other product containing genetically modified cells or microorganism which, when administered, causes the Compound to be released in the human body.  For the avoidance of doubt, the term “pharmaceutical preparation,” as used in this paragraph and throughout the Agreement, shall not include a cell therapy product or other product containing genetically modified cells or microorganism which, when administered, causes a GLP-1 receptor agonist to be released in the human body.

 

“Restricted Product” means an injectable pharmaceutical preparation in final dosage form that includes a GLP-1 receptor agonist other than the Compound (whether a peptide or a non-peptide) formulated for administration as a short

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

 

acting product [***].Restricted Product does not include a cell therapy product or other product containing genetically modified cells or microorganism which, when administered, causes a GLP-1 receptor agonist other than the Compound to be released in the human body and, therefore, notwithstanding anything set forth herein to the contrary, none of the provisions set forth in Article XIV or Section 22.2.2 shall be applicable to such cell therapy product or other product containing genetically modified cells or microorganism.

 

“Alternative Route GLP-1” means a [***] that includes a GLP-1 receptor agonist other than the Compound [***]. Alternative Route GLP-1 shall include, without limitation [***].

 

“Other Depot GLP-1” means an [***] that includes a GLP-1 receptor agonist other than the Compound [***].

 

“Phase I” means, with respect to a Product, a clinical study that provides for the first introduction into humans of a Product, with a primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of such Product, and consistent with 21 CFR § 312.21(a), and/or, as applicable, comparable legal requirements of other jurisdictions.

 

“Phase II” means, with respect to a Product, a clinical study conducted in human patients designed to evaluate clinical efficacy and safety of such Product for one or more indications and/or to obtain an understanding of the dosage regimen prior to a Phase III Study, or that is otherwise conducted in accordance with 21 C.F.R. § 312.21(b) and/or, as applicable, comparable legal requirements of other jurisdictions.

 

“Phase III” means, with respect to a Product, a clinical study conducted in human patients as a pivotal trial for purposes of filing a NDA or Marketing Authorization application for such Product, or that provides for the clinical study of such Product on sufficient numbers of patients to confirm with statistical significance the efficacy, and confirm the safety of such Product or that is otherwise conducted in accordance with 21 C.F.R. § 312.21(c) and/or, as applicable, comparable legal requirements of other jurisdictions.

 

(b)           Article 5 is deleted in its entirety and replaced with the following:

 

“ARTICLE V — MILESTONES PAYMENTS

 

5.1                               SADG shall pay to Zealand as partial consideration for the grant of the license in accordance with Article 3 hereof and the grant of the option in accordance with Article 4 hereof milestone payments as specified herein.  Subject to Article 20.1 hereof, the milestone payments shall be made in US-Dollars plus Value Added Tax, if applicable, and shall (except as indicated) be due and payable within thirty (30) days after SADG has

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

2

 

received an invoice from Zealand indicating that the respective event has occurred, such invoice not to be sent before the occurrence of the event provided.  Within five (5) working days following the occurrence of any of the events set forth herebelow, SADG shall inform Zealand in writing thereof; SADG shall further provide Zealand with any information Zealand may reasonably request concerning the status of any Alternative Route GLP-1 or Other Depot GLP-1.  All amounts below are in Million US-Dollars:

 

	
(i)            Initial   Milestone Payment
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(1)           Effective   Date of Agreement;
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
                                                (It   is acknowledged and agreed that the above-referenced initial payment was paid   in full prior to the execution of this First Amendment)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(ii)           Milestones   for Group 1 Products, Short Acting Formulation
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(1)                                 Successful   Completion of Phase II study 2001 (one month), as specified in Annex 04   hereof
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(2)                                 Successful   Completion of Phase II study 2002 (three months), as specified in Annex 04   hereof
    	
 
    	
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(3)                                 Successful   Completion of 24-months stability study for final formulation, as specified   in Article 04 hereof
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
                                                (It   is acknowledged and agreed that the payments required under Sections 5.1   (ii)(1), (2) and (3) above were paid in full prior to the execution   of this First Amendment)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(4)                                 Successful   Completion of Phase III studies (GetGoal Program)
    	
 
    	
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(5)           NDA   Approval of the first indication in the U.S.A.
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
(iii)          Milestones   for Group 1 Products, Depot Formulation
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(1)           [***]
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(2)           [***]
    	
 
    	
15
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

3

 

	
(iv)          Milestones for Group 2 Products
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(1)                                 Upfront   payment, immediately payable on execution of this First Amendment, on the   basis of an invoice previously provided
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(2)           Completion   of first Phase I clinical trial
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(3)                                 Commencement   of first Phase II clinical trial (if any)(not payable if following milestone   is 30, as indicated below)
    	
 
    	
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(4)                                 Commencement   of first Phase III clinical trial (milestone payment will be 15 if payment   (3) has previously been made and otherwise will be 30)
    	
 
    	
15/30
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
                                                (For   the avoidance of doubt, total payments for (3) and (4) shall be 30)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(5)                                 Submission   of an NDA for any indication to the FDA or (if earlier) submission of an   application for a Marketing Authorization for any indication to the EMEA, or   any Member State of the EU
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(6)           NDA   Approval of the first indication in the U.S.A.
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(7)                                 First   grant of a Marketing Authorization for the first indication in the EU, or any   Member State thereof
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
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                                                For   these purposes, a clinical trial shall be considered to have “commenced” upon   the first approval by a regulatory authority of the protocol for the clinical   trial.
    	
 
    	
 
    

 

5.2                               The above defined milestones shall be nonrefundable and payable only once whether for Compound or Back-up Compound.

 

5.3                               To the extent that the payments would require SADG to withhold taxes, Section 20.3 hereof shall apply.  SADG shall take all action that Zealand may reasonably request to minimize such withholding taxes.”

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

4

 

(c)           Section 6.1 is deleted in its entirety and replaced with the following:

 

“6.1                         In addition to the payment obligations specified in Article 5 hereof, SADG shall pay to Zealand as partial consideration for the license granted in accordance with Article 3 hereof and the option granted in accordance with Article 4 hereof royalties on Net Sales equal to the applicable percentage rate plus Value Added Tax, if applicable, on a country-by-country basis in accordance with and subject to this Article 6 (“Royalty Payments”).  The Royalty Payments shall be made in Euro and they shall be due and payable semi-annually within sixty (60) days after each Calendar Semester plus Value Added Tax, if applicable:

 

(i)                                     Royalty Payments for Group 1 Products:

 

(1)           On annual Net Sales less than or equal to US-Dollars [***] within such range;

 

(2)           On annual Net Sales greater than US-Dollars [***], but less than or equal to US-Dollars [***];

 

(3)           On annual Net Sales greater than US-Dollars [***], but less than or equal to US-Dollars [***] and

 

(4)           On annual Net Sales greater than US-Dollars [***].

 

(ii)                                  Royalty Payments for Group 2 Products:

 

(1)           With respect to a Group 2 Product that combines the Compound and SADG compound insulin glargine: Ten percent (10%) of annual Net Sales, irrespective of the level of Net Sales of such Group 2 Product; and

 

(2)           With respect to any other Group 2 Product which may be developed by SADG during the term of the Agreement, the royalty rate payable to Zealand shall be determined within three (3) months following SADG’s notification of such development to Zealand by mutual agreement reached in good faith by the Parties.  In the event the parties cannot reach an agreement within the prescribed period of time, SADG’s royalty payments to Zealand shall be [***] of Net Sales which, for the purpose of determining royalty payments owed to Zealand with respect to such Group 2 Product, shall be calculated by [***].  In the event that, in any country or countries, no separate sale of either a Group 1 Product or such above designated other pharmaceutical product(s) are made during the accounting period in which the sale of the Group 2 Product was made or if the gross retail selling price thereof cannot be determined for an accounting period, Net Sales shall be determined by mutual agreement

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

5

 

reached in good faith by the Parties prior to the end of the accounting period in question based on an equitable method of determining same.

 

(d)           Section 9.2 is deleted in its entirety and replaced with the following:

 

“During the term of this Agreement, SADG shall use [***] efforts to develop the Compound, and if applicable Back-up Compound and or the Product in accordance with the development plan set forth in Annex 04 (the “Development Plan”), and shall provide Zealand with the key results of each clinical study no later than four (4) months after the lock of the study database.  SADG reserves the right during the term of this Agreement to modify the Development Plan in its reasonable discretion and shall notify Zealand of any such modification.  In such event, the Parties shall discuss in good faith whether, and if so, how, the development milestones events shall be redefined.”

 

(e)           The term “Other Product” in the title of Article 14 and in Section 22.2.2 is replaced by “Restricted Product”.

 

(f)            Section 14.1(ii) is modified to read as follows:

 

“...and, (ii) the third party (or one of its Affiliates) is the owner of or is holding license rights to patents relating to a Restricted Product, and (iii) [remainder of paragraph unchanged]”.

 

(g)           In consideration for the amendment made to Article 14 and Section 22.2.2 of the of the License Agreement as set forth in the paragraphs (e) and (f) above, Zealand shall be entitled to receive from SADG the following payments, in the event that SADG, or one its Affiliates, or a third-party acting directly or indirectly under a license granted by SADG or one of its Affiliates commercializes an Alternative Route GLP-1 or Other Depot GLP-1:

 

(1)           SADG shall pay Zealand [***] of the net sales of each such Alternative Route GLP-1 or Other Depot GLP-1 product, commencing upon the first sale of any such product, on a country-by-country basis in the Territory, in any country where, and as long as, SADG would have royalty payment obligations under Sections 6.1(i) or 6.1(ii) of the Agreement (as amended by this First Amendment) with respect to a Product launched in such country.  For the purpose of this paragraph, the net sales of an Alternative Route GLP-1 or Other Depot GLP-1 product shall be computed in the same manner as the Net Sales of a Product, but based on the sales of such Alternative Route GLP-1 or Other Depot GLP-1 product.

 

(2)           In addition, SADG shall pay Zealand (i) [***] US-Dollars upon the first NDA approval obtained in the U.S.A. by SADG or any of its Affiliates or direct or indirect licensees of the first indication for an Other Depot GLP-1, and (ii) [***] US-Dollars upon the first grant to SADG or any of its Affiliates or direct or indirect licensees of a marketing authorization in the EU, any Member State

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

6

 

thereof for the first indication of an Other Depot GLP-1, each such amount being payable only once.

 

(3)           For the avoidance of doubt, paragraph (1) and (2) shall not apply to a cell therapy product or other product containing genetically modified cells or microorganism which, when administered, causes a GLP-1 receptor agonist to be released in the human body.

 

(h)           Section 20.3 is amended by adding the following sentence to the end:

 

“The Parties shall cooperate and take all reasonable actions to minimize such withholding taxes.”

 

(i)            Annex 04 is deleted in its entirety and replaced with Amended Annex 04 annexed hereto.  All references in the License Agreement to “Annex 04” are read to refer to Annex 04 as amended herewith.

 

ARTICLE II. MISCELLANEOUS

 

2.1.         All references in the License Agreement to the “Agreement” are read to refer to the License Agreement as amended herewith.

 

2.2.         Any capitalized term used herein which is not defined in Article I hereof shall have the meaning set forth for such capitalized term in Article II of the License Agreement.

 

2.3.         This First Amendment is subject to, and made part of, the License Agreement, including without limitation Article XXIII (GENERAL PROVISIONS).

 

2.4.         This First Amendment may be executed in counterparts.

 

[Remainder of page intentionally left blank]

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

7

 

IN WITNESS WHEREOF, each Party hereto has caused this First Amendment to the License Agreement to be duly executed as of the date first above written.

 

	
 
    	
ZEALAND PHARMA A/S
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ David H. Solomon
    
	
 
    	
 
    	
Name: David H. Solomon
    
	
 
    	
 
    	
Title: President & Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
SANOFI-AVENTIS   DEUTSCHLAND GMBH
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dr. Klaus Menken
    
	
 
    	
 
    	
Name: Dr. Klaus Menken
    
	
 
    	
 
    	
Title: CFO Germany
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

8

 

FIRST AMENDMENT TO LICENSE AGREEMENT

 

AMENDED ANNEX 04

 

Development Plan

 

[***]

 

[***]

 

[***]

 

[***]

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

9

 

Zealand Pharma A/S
 Attn.: David H. Solomon
 Chief Executive Officer
 Smedeland 36
 DK-2600 Glostrup
 Denmark
 CONFIDENTIAL

 

7 February 2012

 

Re:          Lixisenatide ([***]) milestone payments

 

Dear Sirs:

 

Reference is made to the license agreement entered into on 23 June 2003 between Sanofi-Aventis Deutschland GmbH (formerly Aventis Pharma Deutschland GmbH) and Zealand Pharma A/S, with respect to lixisenatide, as amended on 16 March 2010 (as amended, the “License Agreement”).

 

Capitalized terms used but not defined herein shall have the meanings set forth in the License Agreement.

 

This letter confirms the Parties’ agreement to replace the milestone payment table included in Article 5.1 of the License Agreement with the revised milestone payment table attached hereto.

 

For the avoidance of doubt, and without amending the License Agreement, the Parties also acknowledge and agree that payment of the USD 15 Million milestone for commencement of a Phase III clinical trial for a Group 2 Product will be triggered, as to the lixisenatide/LANTUS® combination product (“LixiLan”), by the commencement of a pivotal Phase III Clinical Trial of the [***] formulation of LixiLan, or alternatively, by the commencement of a pivotal Phase III clinical trial of the [***] formulation of LixiLan.  Of course, the milestone (which is payable only once) may be due upon [***] on a Group 2 Product other than LixiLan, or a pivotal Phase III clinical trial of another formulation of LixiLan (if and when developed), if it occurs earlier.  For clarity, a “pivotal” Phase III study is one intended to provide a sufficient basis for submission of an application for an NDA (or any non-US equivalent) and the Parties agree that, with respect to the [***] formulation of LixiLan, a “pivotal” Phase III study shall specifically refer to a Phase III study with [***].

 

The existence and contents of this Letter Agreement and its schedule shall be subject to the provisions of Article XVIII (Confidentiality, Public Disclosures) of the License Agreement.  This Letter Agreement shall constitute an amendment of Article 5.1 of the License Agreement, adopted pursuant to Article 23.13 thereof, and may be referred to as the “Second Amendment” to the License Agreement.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

 

Please provide us with a signed copy of this Letter Agreement to acknowledge receipt and confirm your agreement with its terms.

 

	
Sincerely yours,
    	
 
    
	
 
    	
 
    
	
Sanofi-Aventis   Deutschland GmbH
    	
 
    
	
 
    	
 
    
	
/s/ Dr. Klaus Menken
    	
 
    
	
 
    	
 
    
	
Dr. Klaus Menken
    	
 
    
	
 
    	
 
    
	
/s/ Dr. Karsten Vogel
    	
 
    
	
 
    	
 
    
	
ppa. Dr. Carsten Vogel
    	
 
    

 

*              *              *

 

The undersigned authorized signatory of Zealand Pharma A/S confirms receipt and agreement with the terms of the above.

 

	
Dated:
    	
 
    
	
 
    	
 
    
	
Zaland Pharma A/S
    	
 
    
	
 
    	
 
    
	
/s/ David Horn Solomon
    	
 
    
	
 
    	
 
    
	
By: David Horn Solomon,   CEO
    	
 
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

2

 

Attachment

 

MILESTONE PAYMENT TABLE

 

(Amended 7 February 2012)

 

The table of milestone payments in Article 5.1 is amended to read as follows

 

	
(i)
    	
Initial   Milestone Payment
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(1)
    	
 
    	
Effective Date of Agreement;
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(It is acknowledged and agreed that the   above-referenced initial payment has been paid in full)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(ii)
    	
Milestones for   Group 1 Products, Short Acting Formulation
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(1)
    	
 
    	
Successful Completion of Phase II study 2001 (one month),   as specified in Annex 04 hereof
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(2)
    	
 
    	
Successful Completion of Phase II study 2002 (three   months), as specified in Annex 04 hereof
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(3)
    	
 
    	
Successful Completion of 24-months stability study   for final formulation, as specified in Article 04 hereof
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(It is acknowledged and agreed that the payments   required under Sections 5.1 (ii)(1), (2) and (3) above have been   paid in full)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(4)
    	
 
    	
The earlier of (x) Successful Completion of   Phase III studies (GetGoal Program), or (y) 31 March 2012
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(5)
    	
 
    	
NDA Approval of the first indication in the U.S.A.
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(iii)
    	
Milestones for   Group 1 Products, Depot Formulation
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(1)
    	
 
    	
[***]
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(2)
    	
 
    	
[***]
    	
 
    	
15
    
								

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

3

 

	
(iv)
    	
Milestones for   Group 2 Products
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(1)
    	
 
    	
Upfront payment, payable on execution of the First   Amendment to the License Agreement
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(It is acknowledged and agreed that the   above-referenced payment on execution has been paid in full)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(2)
    	
 
    	
Completion of first Phase I clinical trial
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(It is acknowledged and agreed that the   above-referenced Phase I clinical trial payment has been paid in full)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(3)
    	
 
    	
Commencement of first Phase III clinical trial
    	
 
    	
15
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(4)
    	
 
    	
Submission of an NDA for any indication to the FDA   or (if earlier) submission of an application for a Marketing Authorization   for any indication to the EMEA, or any Member State of the EU
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(5)
    	
 
    	
NDA Approval of the first indication in the U.S.A.
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(6)
    	
 
    	
First grant of a Marketing Authorization for the   first indication in the EU, or any Member State thereof
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(7)
    	
 
    	
[***]
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(8)
    	
 
    	
[***]
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
For these purposes, a clinical trial shall be   considered to have “commenced” upon the first approval by a regulatory   authority of the protocol for the clinical trial.
    	
 
    	
 
    
								

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

4

 

 

Zealand Pharma A/S
 Attn.: David H. Solomon
 Chief Executive Officer
 Smedeland 36
 DK-2600 Glostrup
 Denmark
 CONFIDENTIAL

 

July 31, 2013

 

Re:          Lixisenatide Sales Reporting and Calculation

 

Dear Sirs:

 

Reference is made to the license agreement entered into on 23 June 2003 between Sanofi-Aventis Deutschland GmbH (formerly Aventis Pharma Deutschland GmbH) and Zealand Pharma A/S, with respect to lixisenatide, as amended on 16 March 2010 and on February 7, 2012 (the “License Agreement”).

 

Capitalized terms used but not defined herein shall have the meanings set forth in the License Agreement.

 

This letter confirms the Parties’ agreement to amend the License Agreement as follows:

 

1.                                      Section 6.6 shall be deleted in its entirety and replaced by the following Section 6.6:

 

“6.6                         Where sales are made by Aventis or its Affiliates in a currency other than Euro then the amount of Net Sales recorded during a Calendar Semester in local currencies shall be converted to Euro using Aventis’ or its Affiliates’ normal practices for preparation of its or their audited financial statements for external reporting purposes using the following methodology:

 

The arithmetic average of all Euro/Foreign Currency daily exchange rates published by the European Central Bank during each calendar month shall be used to calculate the Euro equivalent of the amount of Net Sales made during that calendar month. The total Net Sales amount for a particular reporting period shall be determined by adding the monthly Net Sales amounts in Euro for such reporting period. For any currency where daily exchange rates are not published by the European Central Bank, the daily exchange rate used by Aventis or its Affiliates shall be that of a widely accepted source of published exchange rates.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

 

For the purpose of determining the applicable percentage rate for royalties owed for Group 1 Products, pursuant to Section 6.1 above, the monthly Net Sales amounts in Euro shall be converted into monthly Net Sales in US Dollars using the arithmetic average of the daily Euro to US Dollar exchange rates of the calendar month in which such Net Sales were made. The annual US Dollar Net Sales shall be determined by adding the monthly US Dollar Net Sales amounts for Group 1 Products and used for the determination of the appropriate Royalty Payment percentage rate.”

 

2.                                      Article 15 shall be deleted in its entirety and replaced by the following Article 15:

 

“ARTICLE XV — REPORTING

 

15.1                        Aventis shall, and shall cause its Affiliates and sub-licensees to prepare and keep comprehensive, accurate and complete documentation and records in English relating to the amount of Net Sales. Such documentation shall be prepared and kept in accordance with the International Financial Reporting Standards (IFRS).

 

15.2                        Within forty five (45) days of the end of each Calendar Quarter Aventis shall provide Zealand reports of the quantities of Product sold, Net Sales achieved and corresponding amount of royalties owed to Zealand, during such Calendar Quarter and, twice a year, during the elapsed Calendar Semester in each country of the Territory and for each Product presentation. Such reports shall be in the form of Annex 05 hereto.”

 

3.                                      A new version of Annex 02 and a new Annex 05, as attached hereto, is appended to the License Agreement.

 

The existence and contents of this Letter Agreement and its schedule shall be subject to the provisions of Article XVIII (Confidentiality, Public Disclosures) of the License Agreement. This Letter Agreement shall constitute an amendment of Section 6.6, Article 15 and Annex 02 of the License Agreement, adopted pursuant to Article 23.13 thereof, and may be referred to as the “Third Amendment” to the License Agreement.

 

Please provide us with a signed copy of this Letter Agreement to acknowledge receipt and confirm your agreement with its terms.

 

Sanofi-Aventis Deutschland GmbH • Industriepark Hochst • D-65926 Frankfurt am Main www.sanofi-aventis.de

 

Chairman of the Supervisory Board: Hanspeter Spek
 Managing Directors: Dr. Martin Siewert (Vorsitzender), Dr. Matthias Braun,
 Prof. Dr. Jochen Maas, Dr. Klaus Menken, Stefan Oelrich, Dr. Heinz Riederer, Dr. Emmanuel Siregar
 Place of Business • Commercial Register: Frankfurt am Main, Abt. B Nr. 40661

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

2

 

	
Sincerely yours,
    	
 
    
	
 
    	
 
    
	
Sanofi-Aventis   Deutschland GmbH
    	
 
    
	
 
    	
 
    
	
/s/ Dr. Martin   Siewert
    	
 
    
	
 
    	
 
    
	
By: Dr. Martin   Siewert
    	
 
    
	
 
    	
 
    
	
/s/ Dr. Klaus   Menken
    	
 
    
	
 
    	
 
    
	
By: Dr. Klaus   Menken
    	
 
    

 

*              *              *

 

The undersigned authorized signatory of Zealand Pharma A/S confirms receipt and agreement with the terms of the above.

 

	
Dated:
    	
 
    
	
 
    	
 
    
	
Zealand Pharma A/S
    	
 
    
	
 
    	
 
    
	
/s/ David Horn Solomon
    	
 
    
	
 
    	
 
    
	
By: David Horn Solomon,   CEO
    	
 
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

3

 

Annex 02

 

Example for calculating Royalty Payments

 

For illustrative purposes, assume sales for a Calendar Semester are booked in three different currencies: 800 Million USD, 800 Million Euro and 80,000 Million Yen, with the monthly sales and exchange rates as set out in Table 1 below

 

Step 1: Convert all non-Euro sales booked for each month to Euro using exchange rates as described in Article 6.6 to generate Total Sales in Euro and convert Total Sales in Euro into USD using the exchange rates described in Article 6.6 to generate Total Sales in USD. Then add together the sum of the monthly sales to obtain the total sales for the Calendar Semester in both Euro and USD.

 

Example: Table 1

 

	
Month
    	
 
    	
USD
   Rate
    	
 
    	
Yen/USD
   Rate
    	
 
    	
Yen/Euro
   Rate
    	
 
    	
Sales
   booked
   in
   Euro
   Million
    	
 
    	
Sales
   booked
   in USD
   Million
    	
 
    	
Sales
   booked
   Yen
   Million
    	
 
    	
Total
   Sales in
   Euro
   Million
    	
 
    	
Total
   sales in
   USD
   Million
    
	
Month 1
    	
 
    	
0.94
    	
 
    	
120
    	
 
    	
127.66
    	
 
    	
100
    	
 
    	
100
    	
 
    	
10,000
    	
 
    	
272
    	
 
    	
290
    
	
Month 2
    	
 
    	
0.95
    	
 
    	
125
    	
 
    	
131.58
    	
 
    	
133
    	
 
    	
133
    	
 
    	
13,333
    	
 
    	
361
    	
 
    	
380
    
	
Month 3
    	
 
    	
0.96
    	
 
    	
130
    	
 
    	
135.42
    	
 
    	
167
    	
 
    	
167
    	
 
    	
16,667
    	
 
    	
450
    	
 
    	
468
    
	
Month 4
    	
 
    	
0.96
    	
 
    	
130
    	
 
    	
135.42
    	
 
    	
100
    	
 
    	
100
    	
 
    	
10,000
    	
 
    	
270
    	
 
    	
281
    
	
Month 5
    	
 
    	
0.95
    	
 
    	
125
    	
 
    	
131.58
    	
 
    	
133
    	
 
    	
133
    	
 
    	
13,333
    	
 
    	
361
    	
 
    	
380
    
	
Month 6
    	
 
    	
0.94
    	
 
    	
120
    	
 
    	
127.66
    	
 
    	
167
    	
 
    	
167
    	
 
    	
16,667
    	
 
    	
454
    	
 
    	
483
    
	
Calendar Semester Sales
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
800
    	
 
    	
800
    	
 
    	
80,000
    	
 
    	
€2 168
    	
 
    	
$2 283
    

 

Step 2: Calculate the Royalty Rate for the Month based on Cumulative Sales in USD and the Monthly Exchange Rate as calculated in accordance with Article 6.6 as shown in Table 2

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

4

 

Example: Table 2

 

	
Month
    	
 
    	
Total Sales
   in Euro
   Millions
    	
 
    	
Total Sales
   USD
   Millions
    	
 
    	
Cumulative
   Sales USD
   Millions
    	
 
    	
Royalty Rate
   for the
   Month
    	
 
    	
Royalty
   value for the
   month in
   Euro Million
    
	
Month 1
    	
 
    	
272
    	
 
    	
290
    	
 
    	
290
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Month 2
    	
 
    	
361
    	
 
    	
380
    	
 
    	
670
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Month 3
    	
 
    	
450
    	
 
    	
468
    	
 
    	
1139
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Month 4
    	
 
    	
270
    	
 
    	
281
    	
 
    	
1420
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Month 5
    	
 
    	
361
    	
 
    	
380
    	
 
    	
1800
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Month 6
    	
 
    	
454
    	
 
    	
483
    	
 
    	
2283
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Totals
    	
 
    	
2168
    	
 
    	
2283
    	
 
    	
 
    	
 
    	
[***]
    	
 
    	
[***]
    

 

The Monthly Royalty Rate is calculated by multiplying the appropriate Royalty Rate for the cumulative turnover by the proportion of the monthly sales made at that royalty rate.

 

For example in Month 2 in Table 2 above: Monthly Sales in USD were 380 Million and Cumulative Sales were 670 Million. Thus cumulative sales in USD had exceeded [***] with the portion below [***] at a Royalty Rate of [***]% and the portion above [***] with a Royalty Rate of [***]%.

 

Royalty Rate [***].

 

The Royalty Value for the Month is calculated by multiplying the Royalty Rate for the Month by the Total Sales in Euro Millions for the Month.

 

Thus for Month 2 Royalty Value for the Month in Euro Millions = [***] million.

 

Step 3: Calculate the Total Royalty Rate for the Calendar Semester by summing the Royalty Value for the Month in Euro. So for this example the Total Royalty Payment in Euro = [***] Million Euro, payable as defined in Article 6.1

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

5

 

Annex 05

 

Template for [***] Report

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

6

 

[***]

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

7

 

	

    	
 

 

 

Execution Copy
    

 

CONFIDENTIAL
 Zealand Pharma A/S
 Attn.: David H. Solomon
 Chief Executive Officer
 Smedeland 36
 DK-2600 Glostrup
 Denmark

 

September 2, 2014

 

Re:          Amendment of Certain Confidentiality Provisions of License Agreement

 

Dear Sirs:

 

Reference is made to the license agreement entered into on 24 June 2003 between Sanofi-Aventis Deutschland GmbH (formerly Aventis Pharma Deutschland GmbH) and Zealand Pharma A/S, with respect to lixisenatide, as amended on 16 March 2010, February 7, 2012 and July 31, 2013 (the “License Agreement”).

 

Capitalized terms used but not defined herein shall have the meanings set forth in the License Agreement.

 

This letter confirms Aventis and Zealand’s mutual agreement to amend the license Agreement by including a new Article 23.15, as follows:

 

“23.15    Transactions with Financial Partners

 

Aventis and Zealand acknowledge that either of them may wish to enter into agreements with a third party or third parties (such third parties are referred to as “Financial Partners”) under which the participating Party may seek to (a) have all or some of its activities contemplated hereunder funded, and/or (b) monetize, from time to time, all or a portion of the participating Party’s rights to payments under this Agreement (each such agreement a “Financial Partner Transaction”). In this connection, notwithstanding anything to the contrary in this Agreement, the Parties have agreed that Each Party shall be entitled to disclose Confidential

 

Sanofi-Aventis Deutschland GmbH • Industriepark Hochst • D-65926 Frankfurt am Main • Phone +49 (0)68 305-60710 • Fax +49 (0) 69 30546863 • www.sanofl.de

 

Chairman of the Supervisory Board: Peter Guenter
 Managing Directors: Dr. Martin Siewert (Chairman), Dr. Matthias Braun,
 Prof. Dr. Jochen Maas, Dr. Klaus Menken, Stefan Oerlich, Dr. Emmanuel Siregar
 Place of business: Frankfurt am Main • Commercial Register: Frankfurt am Main Abt B Nr. 40661

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

 

Information to candidate Financial Partners (and officers, directors, employees, agents, rating agencies, insurers, representatives (including, without limitation,

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

 

financial advisors, attorneys, accountants, consultants and scientists) and advisors (“Representatives”) of the Parties and such Financial Partners), in connection with the negotiation or evaluation of a Financial Partner Transaction, provided that (1) no Confidential Information may be disclosed to any Financial Partner that directly or through an Affiliate is the non-contingent owner or licensee of patents claiming any other GLP-1 receptor agonist, (ii) only such Confidential Information as is necessary for the negotiation or evaluation of the Financial Partner Transaction may be disclosed, (iii) without the prior written consent of Aventis, Zealand shall not disclose confidential development reports concerning Products, (iv) such Confidential Information shall be disclosed on a “need to know” basis, and (v) each recipient of such Confidential Information enters into, prior to disclosure, a confidentiality undertaking substantially in the form attached on Annex 6 hereto.

 

The existence and contents of this Letter Agreement shall be subject to the provisions of Article XVIII (Confidentiality, Public Disclosures) of the License Agreement, as amended hereby. This Letter Agreement shall constitute an amendment of Article XVIII and Article 23.4 of the License Agreement, adopted pursuant to Article 23.13 thereof, and may be referred to as the “Fourth Amendment” to the License Agreement. All references in the License Agreement to the “Agreement” shall be read to refer to the License Agreement as amended hereby,

 

Please provide us with a signed copy of this Letter Agreement to acknowledge receipt and confirm your agreement with its terms.

 

Enc:        Annex 6 (Confidentiality Undertaking)

 

Sincerely yours,

 

Sanofi-Aventis Deutschland GmbH

 

	
/s/  Dr. Klaus Menken
    	
 
    
	
 
    	
 
    
	
By: Dr. Klaus Menken
    	
 
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

3

 

By; Dr. Emmanuel Siregar

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

4

 

The undersigned authorized signatory of Zealand Pharma A/S confirms receipt and agreement with the terms of the above.

 

Dated:

 

Zealand Pharma A/S

 

	
/s/ David Horn Solomon
    	
 
    
	
By: David Horn Solomon,   CEO
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

5

 

CONFIDENTIALITY AGREEMENT

 

This Confidentiality Agreement (the “Agreement”) is made on this          (the “Effective Date”) by and between:

 

[SANOFI, a French corporation, with a principal office at 54, rue La Boetie, 75008 Paris, France, acting on its behalf and on the behalf of its Affiliates, (collectively, “Sanofi” or the “Disclosing Party”),

 

OR

 

[ZEALAND PHARMA A/S, a Danish corporation, with a principal office at Smedeland 36, DK-2600 Glostrup (hereafter, “Zealand” or the “Disclosing Party”)],

 

and,

 

[FINANCIAL PARTNER NAME], a       , with a principal office at                , (the “Receiving Party”).

 

WHEREAS [Sanofi/Zealand] and Receiving Party have entered into discussions regarding a potential business collaboration with respect to the Subject Matter, as defined below;

 

WHEREAS, in the course of such discussions, [Sanofi/Zealand] wishes to disclose to Receiving Party confidential and proprietary information, provided such information is protected as set out in this Agreement and is used by Receiving Party only for the Purpose, as defined below;

 

NOW THEREFORE, the parties agree as follows:

 

1.                                      Definitions

 

For the purposes of this Agreement:

 

(a)           “Confidential Information” means any non-public information or data relating to the Subject Matter, or to [Sanofi/Zealand]’ s business or affairs, which is owned or controlled by [Sanofi/Zealand] and provided to the Receiving Party, whether on electronic or hard copy media or orally, including any and all analyses, compilations, studies, reports or other documents prepared by [Sanofi/Zealand], or by its directors, officers, employees, advisers, Affiliates, agents or representatives, and provided to the Receiving Party. Confidential Information will also include the fact that discussions are taking place between the parties concerning the Subject Matter, and the content of any such discussions. However, any information will not be considered as Confidential Information if such information:

 

(i)            is or was known by the Receiving Party, at the time of receipt from [Sanofi/Zealand], and the Receiving Party has evidence to demonstrate such prior knowledge (unless such information was disclosed to the Receiving Party under a confidentiality agreement with [Sanofi/Zealand] or any Affiliate thereof); or

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

6

 

(ii)           is or becomes publicly known without breach of this Agreement by the Receiving Party; or

 

(iii)          is or becomes available to the Receiving Party from an independent third source not bound by an obligation of secrecy to [Sanofi/Zealand] with respect to the Confidential Information.

 

(b)           “Affiliate” means a company which is, directly or indirectly, under the Control of either party to this Agreement.

 

(c)           “Control” means the ownership of fifty percent (50%) or more of the capital stocks or the voting rights of a company.

 

(d)           “Purpose” means any discussions, evaluations, and negotiations in connection with evaluating and/or establishing a potential business relationship between the parties pertaining to the Subject Matter.

 

(e)           “Representatives” means, with respect to the Receiving Party, its directors, officers, employees, rating agencies, insurers, advisors, representatives (including, without limitation, financial advisors, attorneys, accountants, consultants and scientists) and agents.

 

(f)            “Subject Matter” means [***].

 

2.                                      Handling of Confidential Information

 

(a)           All Confidential Information must be maintained in strict confidence by the Receiving Party and by its Representatives, and must not be disclosed to any third party and must be protected with the same degree of care the Receiving Party normally uses in the protection of its own confidential and proprietary information, but in no case with any less degree than reasonable care.

 

(b)           The Confidential Information may be disclosed by the Receiving Party only to those Representatives of the Receiving Party having the need to receive such Confidential Information to further the Purpose of this Agreement, provided the Representatives receiving of such Confidential Information are required to be bound by confidentiality and non-use obligations similar to those undertaken by the Receiving Party under this Agreement. The Receiving Party shall be wholly responsible for the full compliance with such confidentiality and non-use obligations by such Representatives.

 

(c)           The Receiving Party must not, and must cause its Representatives not to, use any Confidential Information for the benefit of the Receiving Party or any such Representative, for the benefit of any third party, or for any purpose other than the Purpose, and must not use any Confidential Information for obtaining any intellectual property rights for the Receiving Party or such Representative,

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

7

 

(d)           The Receiving Party must not, and must cause its Representatives not to, copy, reproduce, or reduce to writing any part of the Confidential Information, except as is necessary for the Purpose.

 

3.                                      Restrictions

 

The obligations stated in this Agreement will not apply with respect to information which the Receiving Party is required to disclose by law, rule, regulation or court order, or pursuant to requests of governmental authorities or regulatory agencies having oversight over the Receiving Party, provided, in any such case, that the Receiving Party immediately notifies (or, if the nature of such requirement precludes immediate notification, notifies as soon as possible under the circumstances) [Sanofi/Zealand] in writing of such requirement, court order or regulatory request and fully cooperates with [Sanofi/Zealand] in the event [Sanofi/Zealand] elects to legally contest such disclosure or limit the effect thereof. In the event that [Sanofi/Zealand] is not successful in contesting such disclosure and does not waive compliance with the terms of this Agreement, the Receiving Party will furnish only that portion of the Confidential Information that it is advised by counsel (which may be the Receiving Party’s internal counsel) is legally required and will exercise all commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Confidential Information.

 

4.                                      Other Matters

 

(a)           Nothing in this Agreement will oblige [Sanofi/Zealand] to disclose any particular Confidential Information to the Receiving Party,

 

(b)           Neither this Agreement, nor either party’s performance under this Agreement, will transfer to the Receiving Party, or give the Receiving Party, any proprietary right, title, interest or claim in or to any of the Confidential Information.

 

(c)           Each party represents and warrants to the other party that it has the legal power and authority to enter into and perform under this Agreement.

 

(d)           The Receiving Party represents and warrants to the other party that it, directly or through an affiliate, is not the non-contingent owner or licensee of patents claiming any other GLP-1 receptor agonist. The Receiving Party hereby agrees, and agrees to cause its Representatives, not to disclose Information to any Representative that, either directly or through an affiliate, is a non-contingent owner or licensee of patents claiming any other GLP-1 receptor agonist.

 

(e)           Neither party is obliged to discuss or negotiate, or enter into, any other agreement as a result of the parties’ execution of this Agreement and, until such time as a definitive agreement may be entered into between the parties with respect to the Purpose of this Agreement, any such discussion or negotiation may be terminated at any time at the sole and absolute discretion of either one of the parties.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

8

 

(f)            The Receiving Party agrees and acknowledges that any disclosure of Confidential Information under this Agreement is made on an “as is” basis; [Sanofi/Zealand] makes no representation or warranty whatsoever with regard to the accuracy, completeness, freedom to operate or fitness for any purpose of the Confidential Information.

 

(g)           The Receiving Party acknowledges that the Confidential Information may constitute “privileged information” under applicable laws and/or stock exchange rules and commits to strictly comply with the provisions of all such laws and rules that prohibit insider dealing and similar infractions.

 

(h)           The Receiving Party agrees, and will cause its Affiliates and its and its Affiliates’ Representatives to agree (i) that any breach of any of the restrictions set forth in this Agreement by the Receiving Party or such Affiliates or Representatives may cause substantial and irreparable injury to [Sanofi/Zealand] and that money damages may not be a sufficient remedy for an actual or threatened breach of this Agreement because of the difficulty of ascertaining the amount of damage that would be suffered by [Sanofi/Zealand] in the event that this Agreement were breached, and (ii) that, in addition to all other remedies available at law or equity, [Sanofi/Zealand] will be entitled to seek equitable relief, including injunction and specific performance, as a remedy for any such breach or threatened breach. The Receiving Party further agrees to indemnify [Sanofi/Zealand] against any and all losses, damages, claims or expenses incurred or suffered by [Sanofi/Zealand] as a result of any breach of the provisions of this Agreement by the Receiving Party, its Affiliates or its or its Affiliates’ Representatives.

 

5.                                      Termination

 

(a)           This Agreement will commence upon the Effective Date and continue for a period of one (1) year unless earlier terminated by either party upon thirty (30) days’ written notice to the other party.

 

(b)           Upon termination or expiry of this Agreement, the Receiving Party (i) must cease to use the Confidential Information, and (ii) within sixty (60) days after the date of a written notice by [Sanofi/Zealand], must destroy all copies thereof then in its possession or control, and (iii) upon the written request [Sanofi/Zealand], will furnish [Sanofi/Zealand] with written certification of such destruction. Notwithstanding the foregoing, the Receiving Party (i) may retain one copy of the Confidential Information for the purpose of certifying the scope and nature of the documents received under this Agreement and (2) shall not be required to delete or modify electronic back-ups made in the ordinary course of business.

 

(c)           The obligations of confidentiality and restricted use contained herein will survive for a period of [***] after the Effective Date.

 

6.                                      General

 

This Agreement will be legally binding upon the undersigned, their successors and assigns. Neither party can assign or amend any part of this Agreement except by a written

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

9

 

document executed by both parties. In the event any provision of this Agreement is invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions will not in any way be affected or impaired.

 

7.                                      Governing Law; Submission to Jurisdiction

 

This Agreement will be governed by, and construed and enforced in accordance with the laws of the State of New York, excluding its conflict of law rules. Each party hereto agrees that it shall bring any litigation with respect to any claim arising out of or related to this Agreement exclusively in the courts of proper jurisdiction in and for New York County, New York and solely in connection with claims arising under this Agreement (i) irrevocably submits to the exclusive jurisdiction of such courts, (ii) waives any objection to laying venue in any such action or proceeding in such courts, (iii) waives any objection that such courts are an inconvenient forum or do not have jurisdiction over either party hereto, and (iv) agrees not to seek a transfer of venue on the basis that another forum is more convenient. Notwithstanding anything herein to the contrary, nothing in this shall prohibit any party from seeking or obtaining orders for conservatory or interim relief from any court of competent jurisdiction. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorised representatives.

 

	
FINANCIAL PARTNER NAME
    	
[SANOFI / ZEALAND]
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
Name:
    	
 
    
	
Title:
    	
Title:
    
					

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

10

 

 

CONFIDENTIAL
 Zealand Pharma A/S
 Attn.: David H. Solomon
 Chief Executive Officer
 Smedeland 36
 DK-2600 Glostrup
 Denmark

 

October 6, 2014

 

Re:          Amendment to License Agreement

 

Dear Sirs:

 

Reference is made to the license agreement entered into on 24 June 2003 between Sanofi-Aventis Deutschland GmbH (formerly Aventis Pharma Deutschland GmbH) and Zealand Pharma A/S, with respect to lixisenatide, as amended on 16 March 2010, February 7, 2012, July 31, 2013 and September 2, 2014 (the “License Agreement”).

 

Capitalized terms used but not defined herein shall have the meanings set forth in the License Agreement.

 

This letter agreement confirms the Parties’ agreement to amend the License Agreement by modifying Article 22.4 and Article 23.15 thereof and to amend Paragraph 1.1(g) of the First Amendment to the License Agreement, in each case as provided herein.

 

1.                                      Amendment of Article XIX

 

The last sentence of Article XIX of the License Agreement is hereby deleted and replaced by the following sentence:

 

“THIS ARTICLE SHALL NOT APPLY TO AVENTIS’ OBLIGATIONS PURSUANT TO ARTICLE 9.2, 10.1 AND 10.2 HEREOF, NOR TO ZEALAND’S OBLIGATIONS PURSUANT TO ARTICLE 12.2 HEREOF OR A BREACH BY ZEALAND OF ITS

 

Sanofi-Aventis Deutschland GmbH • Industriepark Hochst • D-65926 Frankfurt am Main • Telephone +49 (0) 69 305-80710  Fax +49 (0) 69 305-16883 • www.sanofi.de

 

Vorsitzender des Aufsichisrates: Peter Guenter
 Geschaftsfuhrer.Dr. Martin Siewert (Vorsitzender), Dr. Matthias Braun,
 Prof. Dr. Jochen Maas, Dr. Klaus Mackin, Stefan Oelrich, Dr. Emmanuel Siregar
 Sitz der Gesellschaft: Frankfurt am Main • Handeisregister: Frankfurt am Main Abt B Nr. 40661

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

 

OBLIGATIONS OF EXCLUSIVITY AS TO LICENSES AND OPTIONS GRANTED PURSUANT TO ARTICLE 3.1, 4.1 AND 4.3 HEREOF.”

 

2.                                      Amendment to Article 22.4

 

Article 22.4 of the License Agreement is hereby amended by adding thereto the following Article 22.4.5:

 

“22.4.5                                                        Upon Aventis’ becoming entitled to terminate this Agreement in accordance with Article 22.2.1 hereof by reason of a material breach by Zealand, Aventis may make a one-time election, in lieu of termination (and as its sole non-monetary remedy for such breach), to enforce any or all of the following remedies:

 

(i)                                     Any Aventis Confidential Information transferred by Aventis to Zealand pursuant to this Agreement that is then held by Zealand shall be promptly returned by Zealand to Aventis or destroyed by Zealand (as Aventis may elect and, if destruction is requested, Aventis shall be promptly provided with a written certificate signed by an officer of Zealand confirming that such destruction has been completed), except that Zealand may retain, as Confidential Information, one (1) copy for legal record keeping requirements and for purposes of exercising any of its rights under this Agreement;

 

(ii)                                  Zealand’s right to receive the results of clinical studies under Article 9.2 hereof shall immediately terminate;

 

(iii)                               Zealand’s right to negotiate a modification of milestone payments under Article 9.2 hereof shall immediately terminate;

 

(iv)                              The Review Committee provided for under Article 9.3 hereof shall be disbanded and not reconstituted;

 

(v)                                 Zealand’s right to be notified of any Improvements made by Aventis under Article 11.1 hereof shall immediately terminate;

 

(vi)                              The duration of the licenses and other rights of Aventis hereunder, including but not limited to the exclusive license granted under Article III and the option relating to Back-Up Compounds granted under Article IV hereof, shall become perpetual, subject to termination by Zealand only as provided in Article 22.2 hereof (but without limiting Zealand’s remedies other than termination under applicable law), without modification of the milestone and royalty payment obligations of Aventis under this Agreement; and

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

2

 

(vii)                           Solely if the breach is of the undertaking that the license granted under Article 3.1 and/or Article IV hereof will be granted by Zealand to Aventis on an exclusive basis, elect to terminate Zealand’s right under Article 14.1 hereof to terminate this Agreement by reason of a change in Control involving a Restricted Product, as well as Zealand’s right under Article 22.2.2 hereof to terminate this agreement by reason of Aventis’ acquisition of rights to a Restricted Product, in each case only as concerns the countries in which a product is marketed, as a result of Zealand’s breach, that competes (in light of its indications and the patient populations to which it may be prescribed) with a Product marketed in such countries;

 

provided, however, that Aventis shall only be entitled to exercise any or all of the alternative remedies described in this Article 22.4.5 if and when Aventis obtains a partial or final arbitral award under the procedures set forth in Article 23.6 hereof confirming that Aventis has a proper basis for exercising its rights under this Article 22.4.5. For the avoidance of doubt, the election of Aventis of such remedies in lieu of termination shall not constitute a waiver of any claim for monetary damages that Aventis may have, at law, by contract or otherwise.”

 

3.                                      Amendment of Article 23.15

 

Article 23.15 of the License Agreement is hereby amended to henceforth read in its entirety as follows:

 

“23.15           Transactions with Financial Partners

 

Aventis and Zealand acknowledge that each of them may wish to enter into agreements with a third party or third parties for the purpose, for Aventis, of funding activities contemplated hereunder or, for Zealand, of monetizing rights to payments hereunder (such third parties are referred to as “Financial Partners” and each such agreement is referred to as a “Financial Partner Transaction”; for purposes of this Article 23.15, the Party participating in such Financial Partner Transaction is referred to as the “FPT Initiator” and the other Party is referred to as the “FPT Acceptor”). In this connection, notwithstanding anything to the contrary in this Agreement, the Parties have agreed as follows:

 

23.15.1.                                                    Disclosure of Confidential Information. Each Party shall be entitled to disclose Confidential Information to candidate and actual Financial Partners (and officers, directors, employees, agents, advisors, representatives, rating agencies and insurers (“Representatives”) of the Parties and such Financial Partners), in connection with the negotiation, evaluation or implementation of a Financial Partner Transaction, provided that (i) no Confidential Information may be disclosed to any Financial Partner that directly or through one or more Affiliates is the non-contingent owner or licensee of patents claiming any other GLP-1 receptor

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

3

 

agonist, (ii) only such Confidential Information as is necessary for the negotiation, evaluation or implementation of the Financial Partner Transaction may be disclosed, (iii) such Confidential Information shall be disclosed on a “need to know” basis, (iv) each recipient of such Confidential Information shall, prior to disclosure, enter into a confidentiality undertaking substantially in the form attached as Annex 06 hereto, and (v) without the prior written consent of Aventis, Zealand shall not disclose all or any part of reports prepared by Aventis or at its request concerning development and commercialization strategy or activities that constitute Confidential Information. Subject to the terms of this Article 23.15.1, Aventis shall be entitled to disclose to its Financial Partners all or any part of reports concerning development and commercialization strategies or activities, including where such reports constitute Confidential Information. A Financial Partner may further disclose Confidential Information to third parties (including candidate and actual investors or other funding sources) and their respective Representatives, subject to the conditions set forth in this Article 23.15.1, in connection with (x) the implementation of a Financial Partner Transaction, (y) an assignment, sale, syndication, transfer or pledge of the Financial Partner’s rights and/or obligations under agreements entered into in connection with a Financial Partner Transaction, or (z) subsequent sales of securities issued in connection with a Financial Partner Transaction. If Confidential Information provided by a Aventis to Zealand is disclosed by Zealand to its Financial Partners or their Representatives, and subsequently is disclosed to a third-party to whom or in a manner that is not permitted under a confidentiality undertaking authorized hereunder, and to which disclosure Aventis has not otherwise given its consent, Aventis may by notice require Zealand to provide a copy or, subject to such reasonable provisions for its safeguard and return as Zealand may request, an original of any confidentiality undertakings that Zealand has entered into with a person or entity identified by Aventis as a source of such unauthorized disclosure, and Zealand shall provide all further cooperation that Aventis may reasonably request in connection with the enforcement of Zealand’s and Aventis’ rights under such confidentiality undertakings. If Confidential Information provided by Zealand to Aventis is disclosed by Aventis to its Financial Partners (including sublicensees treated as Financial Partners hereunder) or their Representatives, and subsequently is disclosed to a third-party to whom or in a manner that is not permitted under a confidentiality undertaking authorized hereunder, and to which disclosure Zealand has not otherwise given its consent, Zealand may by notice require Aventis to provide a copy or, subject to such reasonable provisions for its safeguard and return as Aventis may request, an original of any confidentiality undertakings that Aventis has entered into with a person or entity identified by Zealand as a source of such unauthorized

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

4

 

disclosure, and Aventis shall provide all further cooperation that Zealand may reasonably request in connection with the enforcement of Zealand’s and Aventis’ rights under such confidentiality undertakings.

 

23.15.2.                                                    Sublicense of Development and Commercialization Rights by Aventis. In connection with a Financial Partner Transaction for which Aventis is the FPT Initiator, notwithstanding the provisions of Section 3.2, Aventis may, on not less than thirty (30) days’ prior written notice to Zealand, sublicense to a Financial Partner of Aventis or an entity designated by a Financial Partner the rights granted to Aventis under this Agreement with respect to a Product or Products, for any portion of the Territory in which Aventis has decided to cease the development or the marketing, sale and distribution to Customers of such Product or Products, provided, however, that (i) Aventis is not, at that time, in material breach of its obligations hereunder, (ii) in Aventis’ reasonable opinion, as of the effective date of such sublicense, the sublicensee has managerial and other personnel and technical and financial resources reasonably sufficient to ensure the proper performance by such sublicensee of Aventis’ obligations hereunder, and (iii) the sublicense will not result in a material increase in the obligations of Zealand and/or its permitted assignees hereunder. Notwithstanding such sublicense, Aventis shall remain jointly and severally liable with the sublicensee for the timely and complete performance of all of Aventis’ obligations hereunder, including in particular its obligations under Articles V, VI, IX and’X hereof. Any objection by Zealand with respect to such sublicense shall be deemed waived if not notified to Aventis no later than the later to occur of (A) two (2) weeks following receipt by Zealand of the notice referred to above, and (B) two (2) weeks following receipt by Zealand of the additional pre-implementation information requested from Aventis as provided under Article 23.15.4(B) hereof. Aventis shall be authorized to provide to each permitted sublicensee Zealand Confidential Information and any notices received or given by Aventis hereunder, on the terms and conditions set forth in Article 23.15.1, as if such permitted sublicensee were an Aventis Financial Partner. Such reports and notices shall be Confidential Information for purposes of this Agreement.

 

23.15.3.                                                    Assignment of Intellectual Property, Contract Rights and Payments by Zealand. Zealand may assign, contribute, sell or otherwise transfer to one (1) special purpose vehicle formed for purposes of a Financial Partner Transaction (“Master SPV”), all of the Patents, Patents Emerging, Know-How or Improvements that it has licensed or has committed to license to Aventis hereunder (such Patents, Patents Emerging, Know-How and Improvements hereinafter referred to as the “FPT IP”), on the following terms:

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

5

 

(A)                               Master SPV shall be, for so long as this Agreement remains in effect, a wholly-owned direct or indirect subsidiary of Zealand, except as may be required under laws governing insolvency and the rights of creditors; for the avoidance of doubt, Master SPV shall not be considered to be a “Financial Partner” but shall be a party to and through which disclosure of Confidential Information is authorized under Article 23.15.1 as though a Financial Partner without regard to its own Affiliates’ interests in GLP-1 receptor agonists;

 

(B)                               Management of Master SPV shall, subject to applicable law and to contractual limitations that do not modify the rights or obligations of Aventis hereunder, be exercised exclusively by its sole general partner, which shall be a wholly-owned subsidiary of Zealand of which Zealand as the sole shareholder (except as may be required under laws governing insolvency and the rights of creditors) has the exclusive right to designate the management;

 

(C)                               Simultaneously with any assignment, contribution, sale or other transfer of FPT IP from Zealand to Master SPV, Zealand will transfer to Master SPV, in the same manner, all of Zealand’s rights and obligations under this Agreement (including the right to receive and give any notices to be received by or given to Zealand hereunder);

 

(D)                               Simultaneously with the assignment, contribution, sale or other transfer of FPT IP and this Agreement to Master SPV under Article 23.15.3(C), Zealand, Aventis and Master SPV shall enter into an agreement pursuant to which (a) Zealand shall, subject to applicable law and to contractual limitations that do not modify the rights or obligations of Aventis hereunder, agree to use its powers as the sole shareholder (except as may be required under laws governing insolvency and the rights of creditors) of the general partner of Master SPV, its powers as the sole limited partner of Master SPV, and any rights it may have under and in accordance with the terms of servicing agreements, to cause Master SPV to satisfy, perform and comply with all of Master SPV’s obligations hereunder, and (b) Master SPV shall assume and perform, or confirm its obligation to perform, all of Zealand’s representations, warranties and covenants hereunder that relate to the period of time after the effective date of such agreement;

 

(E)                                Master SPV may further assign, contribute, sell or otherwise transfer to one (1) or more (but not more than three (3)) special purpose vehicles each formed for purposes of a Financial Partner Transaction (each, an “Issuer SPV;” for the avoidance of doubt, no Issuer SPV shall be considered a “Financial Partner” but shall be a party to and through which disclosure of Confidential Information is authorized under Article 23.15.1 as though a

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

6

 

Financial Partner without regard to its own Affiliates’ interest in GLP-1 receptor agonists) the right to receive all or part of the payments owed by Aventis to Master SPV in respect of the FPT IP (but excluding for clarity any FPT IP), along with the rights to enforce such payment right and to make claims for indemnification (to the extent a claim for indemnification would have been available to Zealand or a Zealand Indemnified Party), provided that (i) each Issuer SPV shall be a subsidiary wholly-owned, directly or indirectly, by Master SPV (prior to realization under any pledge of Master SPV’s direct or indirect interest therein granted in connection with the Financial Partner Transaction), and (ii) management of each Issuer SPV shall, subject to applicable law and to contractual limitations that do not modify the rights or obligations of Aventis hereunder, be exercised exclusively by its sole general partner, which shall be a wholly-owned subsidiary of Master SPV of which Master SPV as the sole shareholder has the exclusive right to designate the management; and after such assignment is notified in writing to Aventis in accordance with Article 23.5 hereof, Aventis shall make payment of the amounts so assigned only to such account as may be designated for this purpose by each Issuer SPV in writing and, in this connection, the Issuer SPVs shall use reasonable efforts to designate a single payment agent holding a single account to receive such payments, unless the designation of a payment agent or a single account will have an adverse tax impact on the Issuer SPVs, such as an increase in withholding taxes; if a single payment agent is so designated, the payment agent shall distribute to each Issuer SPV the amount payable to it by virtue of the respective Issuer Purchase Agreement, provided that if insufficient funds have been received from Aventis to make each such payment, each such payment shall be reduced in proportion to the shortfall in the total amount of such payment received (without limiting any rights against Aventis for the full amount of such payments); except as expressly provided herein, Master SPV shall not, without Aventis’ prior written consent, assign, contribute sell or otherwise transfer any FPT IP or any of Master SPV’s rights or obligations under this Agreement.

 

(F)                                 Each Issuer SPV may issue to Financial Partners one or more series of notes secured by the rights to payment assigned to such Issuer SPV and other collateral (other than the FPT IP); without limiting the confidentiality obligations of such Financial Partner noteholders as described in Article 23.15.1, such Financial Partner noteholders shall represent and warrant on the date they acquire their notes that they are not (directly or through one or more Affiliates) the non-contingent owner or licensee of patents claiming any other GLP-1 receptor agonist, and shall require any assignee or transferee of their interest as a noteholder to

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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represent and warrant on the same terms and to enter into similar confidentiality undertakings;

 

(G)                               In connection with a transfer by Zealand to Master SPV of the FPT IP and of this Agreement in compliance with this Article 23.15.3, Zealand irrevocably and unconditionally agrees to further transfer to Master SPV, and to cause Master SPV to include in the rights granted to Aventis hereunder upon such transfer to Master SPV, additional license rights to present or future Patents, Patents Emerging, Know-How or Improvements as may be required to allow Master SPV to fully perform the obligations undertaken to Aventis hereunder; alternatively, should the transfers and license grants described in the preceding sentence be impossible for any reason, Zealand irrevocably and unconditionally agrees to directly grant Aventis the required additional rights to such to present or future Patents, Patents Emerging, Know-How or Improvements, on the terms and conditions provided for herein but with no obligation to make payments other than those provided for herein;

 

(H)                              If the Master SPV defaults on a Curable Obligation (as defined below) to Aventis, and an Issuer SPV or an authorized representative of the Financial Partners holding notes issued by an Issuer SPV promptly offers to cure such default, then Aventis shall accept such cure and such cure shall discharge Master SPV’s obligation to the extent thereof, provided, however, that the party making such cure shall not acquire any right against Aventis by reason of such cure. For this purpose ‘Curable Obligation’ shall mean any obligation to make a payment to a Party hereunder and the other obligations described on Annex 07 hereto; and

 

(I)                                   Zealand shall be entitled to receive from Master SPV and each Issuer SPV any Confidential Information of Aventis and, notwithstanding the assignment to or assumption of rights and obligations under this Agreement to Master SPV and Issuer SPV, shall continue to be bound by its obligations with respect to Aventis Confidential Information as provided in Article XVIII hereof, and shall continue to be entitled to make public disclosures as provided in Article XVIII. Master SPV (as the assignee of Zealand’s rights under this Agreement) shall be authorized to provide to Zealand and to each Issuer SPV copies of (i) copies of reports required under Article 15.2 of this Agreement; and (ii) any notices of default or termination under the Agreement. Such reports and notices shall be Confidential Information for purposes of this Agreement. Each Issuer SPV shall be further entitled to provide copies of such notices and reports to each Financial Partner holding notes issued by such Issuer SPV, directly or through an authorized representative of such noteholders, provided,

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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however that the recipient enters into, prior to disclosure, a confidentiality undertaking in substantially the same form as Annex 06 hereto.

 

23.15.4. General Provisions.

 

(A)                               The FPT Initiator shall give the FPT Acceptor not less than thirty (30) days’ prior written notice of any Financial Partner Transaction (the “FPT Notice”). The FPT Notice shall describe, in reasonable detail, the proposed Financial Partner Transaction and Financial Partners or, if the Financial Partners have not been identified, a description of the types of individuals or entities who will be invited to become Financial Partners.

 

(B)                               The FPT Initiator shall provide any additional information that the FPT Acceptor may reasonably request concerning the proposed Financial Partner Transaction prior to the implementation of a Financial Partner Transaction, including descriptions of proposed transaction documents or (in the discretion of the FPT Initiator, and if available) copies of the final drafts thereof, such request to be made no later than one (1) week following its receipt of the FPT Notice. After the implementation of a Financial Partner Transaction, the FPT Initiator shall provide the FPT Acceptor with any additional information that the FPT Acceptor may reasonably request concerning such Financial Partner Transaction, including copies of the final versions of any material agreements or instruments that are entered into in connection with such Financial Partner Transaction (other than undertakings regarding confidentiality, which shall be provided only as set forth in Article 23.15.1). Any information provided concerning a Financial Partner Transaction, whether in the FPT Notice or further to a subsequent request, shall be treated as Confidential Information for purposes of this Agreement.

 

(C)                               The Parties shall cooperate and take all action as may be reasonably requested by the FPT Initiator, in order to implement the proposed Financial Partner Transaction, including the signature and performance of any required agreements or instruments.

 

(D)                               Unless otherwise required by applicable law and judicial practice or otherwise agreed in writing, no Financial Partner shall be a party to any litigation, arbitration or settlement relating to any dispute under the License Agreement and the sole parties to any such dispute shall be the Parties, the Master SPV and the respective Issuer SPV, as the case may be, and no Financial Partner shall have rights or obligations under this Agreement, except as expressly provided in this Article 23.15.

 

(E)                                The FPT Initiator shall be authorized to provide to the Financial Partner (or, if there is more than one Financial Partner, to a single representative

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

9

 

designated for this purpose who may distribute such information to Financial Partners) copies of any notices of default or termination under the Agreement, provided, however that the recipient enters into, prior to disclosure, a confidentiality undertaking in substantially the same form as Annex 06 hereto.”

 

4.                                      Amendment of Paragraph 1.1(g) of the First Amendment to the License Agreement

 

Reference is made to Paragraph 1.1(g) of the First Amendment to the License Agreement. In consideration of Aventis’ agreement as provided herein with respect to a Financial Partner Transaction with Zealand as the FPT Initiator, Zealand hereby irrevocably waives its right to receive the [***] royalty to which it is entitled on [***] products. Such waiver shall be effective with respect to royalties based on net sales of such products during the period from and after [***].

 

*    *    *

The existence and contents of this Letter Agreement shall be subject to the provisions of Article XVIII (Confidentiality, Public Disclosures) of the License Agreement, as amended hereby. This Letter Agreement shall constitute an amendment of Article XVIII, Article XIX, Article 22.4 and Article 23.4 of the License Agreement and a partial waiver of Paragraph 1.1(g) of the First Amendment to the License Agreement, adopted pursuant to Article 23.13 thereof, and may be referred to as the “Fifth Amendment” to the License Agreement. All references in the License Agreement to the “Agreement” shall be read to refer to the License Agreement as amended hereby.

 

[SIGNATURE PAGE FOLLOWS]

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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Please provide us with a signed copy of this Letter Agreement to acknowledge receipt and confirm your agreement with its terms.

 

Enc:                       Annex 06 (Confidentiality Undertaking)
 Annex 07 (Curable Obligations)

 

Sincerely yours,

 

Sanofi-Aventis Deutschland GmbH

 

	
/s/ Prof.   Dr. Jochen Maas
    	
 
    
	
 
    
	
By:
    	
 Prof. Dr. J. Maas
    	
 
    
	
 
    	
10/08/2014
    	
 
    
	
 
    
	
/s/ Dr. Klaus Menken
    	
 
    
	
 
    
	
By:
    	
Dr. Klaus Menken
    	
 
    
	
 
    	
10/08/2014
    	
 
    

 

*    *    *

 

The undersigned authorized signatory of Zealand Pharma A/S confirms receipt and agreement with the terms of the above.

 

Dated:

 

Zealand Pharma A/S

 

	
/s/ David Horn Solomon
    	
 
    
	
 
    
	
By: David Horn Solomon,   CEO
    

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

11

 

FIFTH AMENDMENT TO 24 JUNE 2003 LIXISENATIDE LICENSE AGREEMENT

 

Annex 06 — Confidentiality Undertaking

 

12

 

FIFTH AMENDMENT TO 24 JUNE 2003 LIXISENATIDE LICENSE AGREEMENT

 

Annex 07 — Curable Obligations

 

Article XIII (Patent-Related Provisions):

 

Pay any costs or expenses (without derogation of Aventis’ obligation to reimburse certain amounts) relating to the maintenance or prosecution of Zealand patents issued from among the Patents provided under the License Agreement as well as any patents from the Patents Emerging, and effect administrative filings in connection with such payments.

 

Give notice of any infringement or threatened infringement by a third party of any patent from the Patents granted under the License Agreement or any patents from the Patents Emerging that is controlled by Zealand and related to any Product.

 

Give notice of any claim or action by a third party that either Zealand or licensee is infringing such third party’s patents.

 

[***] Certain information in this document has been omitted and submitted separately to the Securities and Exchange Commission.  Confidential treatment has been requested separately with respect to the omitted portions.

 

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