Document:

Exhibit 10.8

 

MOTIF BIO PLC.

SHARE OPTION PLAN

 

1.                                      Establishment, Purpose and Term of Plan.

 

1.1.                           Establishment.  The Motif Bio plc Share Option Plan is hereby established effective as of 1 April 2015.

 

1.2.                           Purpose.  The purpose of the Plan is to advance the interests of the Company and its shareholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company.  The Company intends that Options granted pursuant to the Plan be exempt from or comply with Section 409A of the Code (including any amendments or replacements of such section), and the Plan shall be so construed.

 

1.3.                           Term of Plan.  The Plan shall continue in effect until its termination by the Board; provided, however, that all Options shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board.

 

2.              Definitions and Construction.

 

2.1.                           Definitions.  Whenever used herein, the following terms shall have their respective meanings set forth below:

 

a.                                     “Accountants” means independent public accountants selected by the Company,

 

b.                                     “AIM” means the Alternative Investment Market.

 

c.                                      “AIM Rules” means the rules of AIM from time to time.

 

d.                                     “Allocated” means in the case of any share option plan, the placing of unissued shares under option and in relation to any other types of employees’ share scheme, means the issue and allotment of shares,

 

e.                                      “Board” means the Board of Directors of the Company.  If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s).

 

f.                                       “Cause” means, unless such term or an equivalent term is otherwise defined with respect to an Option by the Participant’s Option Agreement or written contract of employment or service, any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records; (ii) the Participant’s material failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or

 

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intangible asset or corporate opportunity of a Participating Company (including, without limitation, the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a Participating Company’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment or service agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with a Participating Company.

 

g.                                      “Change in Control” means a change in ownership or control of the Company effected through any of the following transactions:

 

(i)                                    a merger, consolidation or other reorganization, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor company are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction, or

 

(ii)                                 a sale, transfer or other disposition of all or substantially all of the Company’s assets in liquidation or dissolution of the Company, or

 

(iii)                              the acquisition, directly or indirectly by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities pursuant to a transfer of the then issued and outstanding voting securities of the Company by one or more of the Company’s shareholders, or

 

(iv)                             the Court sanctioning a compromise or arrangement by the Company in connection with the acquisition of Shares in accordance with Section 899 of the Companies Act 2006, or

 

(v)                                a person becoming bound or entitled to acquire Shares under Sections 979 to 982 of the Companies Act 2006..

 

Anything in the foregoing to the contrary notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the legal jurisdiction of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the

 

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Company’s securities immediately before such transaction.  In addition, a sale by the Company of its securities in a transaction, the primary purpose of which is to raise capital for the Company’s operations and business activities including, without limitation, an initial public offering of the Shares on a public exchange, shall not constitute a Change in Control.

 

h.                                     “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations and administrative guidelines promulgated thereunder.

 

i.                                         “Committee” means the compensation committee or other committee or subcommittee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board.  Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.

 

j.                                        “Company” means Motif Bio Limited, a company registered under number 09320890 in England and Wales, or any successor company thereto.

 

k.                                     “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on either the exemption from registration provided by Rule 701 under the Securities Act or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act.

 

l.                                         “Dealing Day” means any day the London Stock Exchange is open for the transaction of business,

 

m.                                 “Director” means a member of the Board.

 

n.                                     “Disability” means the inability of the Participant, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Participant’s position with the Participating Company Group because of the sickness or injury of the Participant.

 

o.                                     “Employee” means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of a Participating Company; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.  The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be.  For purposes of an individual’s rights, if any, under the terms

 

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of the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.

 

p.                                     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

q.                                     “Fair Market Value” means, as of any date, the value of a Share or other property as determined by the Board, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:

 

(i)                                    If, on such date, the Shares are listed on a national or regional securities exchange or market system including AIM, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock as quoted on the national or regional securities exchange or market system constituting the primary market for the Stock, as reported in the Wall Street Journal, the Financial Times or such other source as the Company deems reliable.  If the relevant date does not fall on a day on which the Shares have traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Shares were so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion.

 

(ii)                                 If, on such date, the Shares are not listed on a national or regional securities exchange or market system, the Fair Market Value of Shares shall be as determined by the Board in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse, and in a manner consistent with the requirements of Section 409A of the Code.

 

r.                                        “Incentive Stock Option” means an Option which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.

 

s.                                       “Insider” means an Officer, a Director or other person whose transactions in Stock are subject to Section 16 of the Exchange Act.

 

t.                                        “Insider Trading Policy” means the written policy of the Company pertaining to the purchase, sale, transfer or other disposition of the Company’s equity securities by Directors, Officers, Employees or other service providers who may possess material, nonpublic information regarding the Company or its securities.

 

u.                                     “London Stock Exchange” means the London Stock Exchange plc.

 

v.                                     “Officer” means any person designated by the Board as an officer of the Company.

 

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w.                                   “Option” means a nonstatutory stock option (i.e., a stock option that does not qualify as an Incentive Stock Option) granted pursuant to the Plan

 

x.                                     “Option Agreement” means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Option granted to the Participant.

 

y.                                     “Parent Company” means a Holding Company as defined in Section 1159 of the Companies Act 2006.

 

z.                                      “Participant” means any eligible person who has been granted one or more Options.

 

aa.                              “Participating Company” means the Company or any Parent Company or Subsidiary Company.

 

bb.                              “Participating Company Group” means, at any point in time, all entities collectively which are then Participating Companies.

 

cc.                                “Plan” means this Motif BioSciences, Inc. Stock Option Plan.

 

dd.                              “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.

 

ee.                                “Securities Act” means the Securities Act of 1933, as amended.

 

ff.                                  “Service” means a Participant’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant.  Unless otherwise provided by the Board, a Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders such Service or a change in the Participating Company for which the Participant renders such Service, provided that there is no interruption or termination of the Participant’s Service.  Furthermore, a Participant’s Service shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company.  However, unless otherwise provided by the Board, if any such leave taken by a Participant exceeds ninety (90) days, then on the ninety-first (91st) day following the commencement of such leave the Participant’s Service shall be deemed to have terminated, unless the Participant’s right to return to Service is guaranteed by statute or contract.  Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, an unpaid leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Option Agreement.  Except as otherwise provided by the Board, in its discretion, the Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the business entity for which the Participant performs Service ceasing to be a Participating Company.  Subject to the foregoing, the Company, in its discretion, shall determine whether

 

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the Participant’s Service has terminated and the effective date of and reason for such termination.

 

gg.                                “Share” means an ordinary share of £0.01 in the issued share capital of the Company, as adjusted from time to time in accordance with Section 4.3.

 

hh.                              “Subsidiary Company” means any present or future “subsidiary company” of the Company, as defined in Section 1159 of the Companies Act 2006.

 

ii.                                      “Tax Liability” means any amount of tax (including federal, state and local taxes) or social security contributions for which a Participant would be liable (including any employer social security contributions that the employer has decided to transfer to the employee and to which the employee is deemed by accepting the Option to have agreed) and for which any Participating Company would be obliged to (or would suffer a disadvantage if it were not to) account to a relevant authority.

 

jj.                                    “Vesting Conditions” mean those conditions established in accordance with the Plan prior to the satisfaction of which shares subject to an Option remain subject to forfeiture upon the Participant’s termination of Service.

 

2.2.                           Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

3.              Administration.

 

3.1.                           Administration by the Board.  The Plan shall be administered by the Board.  All questions of interpretation of the Plan, of any Option Agreement or of any other form of agreement or other document employed by the Company in the administration of the Plan or of any Option shall be determined by the Board, and such determinations shall be final, binding and conclusive upon all persons having an interest in the Plan or such Option, unless fraudulent or made in bad faith.  Any and all actions, decisions and determinations taken or made by the Board in the exercise of its discretion pursuant to the Plan or Option Agreement or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest therein.

 

3.2.                           Separate Employees’ Share Scheme.  The main Plan shall be operated solely as an “employees’ share scheme” as defined in Section 1166 of the Companies Act 2006 and therefore participation under the Plan shall be limited to those persons within that definition.  Participation by persons other than Employees shall be by way of the Appendix to this Plan which shall constitute a sub-plan for this purpose and the provisions of the Plan shall apply mutatis mutandis save where the context otherwise provides or requires.

 

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3.3.                           Authority of Officers.  Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, determination or election.

 

3.4.                           Powers of the Board.  In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its discretion:

 

a.                                     to determine the persons to whom, and the time or times at which, Options shall be granted and the number of Shares to be subject to each Option;

 

b.                                     to determine the Fair Market Value of Shares or other property;

 

c.                                      to determine the terms, conditions and restrictions applicable to each Option (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the exercise or purchase price of shares pursuant to any Option, (ii) the method of payment for shares purchased pursuant to any Option, (iii) the method for satisfaction of any tax withholding obligation arising in connection with any Option or shares acquired pursuant thereto, including by the withholding or delivery of Shares, (iv) the timing, terms and conditions of the exercisability or vesting of any Option or shares acquired pursuant thereto, (v) the time of expiration of any Option, (vi) the effect of any Participant’s termination of Service on any of the foregoing, (vii) the performance criteria, if any, and level of achievement versus the performance criteria that shall determine the number of Securities granted, issued, retainable and/or vested, and (vii) all other terms, conditions and restrictions applicable to any Option or shares acquired pursuant thereto not inconsistent with the terms of the Plan;

 

d.                                     to approve one or more forms of Option Agreement;

 

e.                                      to amend, modify, extend, cancel or renew any Option or to waive any restrictions or conditions applicable to any Option or any shares acquired pursuant thereto;

 

f.                                       to accelerate, continue, extend or defer the exercisability of any Option or any Shares acquired pursuant thereto, including with respect to the period following a Participant’s termination of Service;

 

g.                                      to implement a program where (A) outstanding Options are surrendered or cancelled in exchange for Options of the same type (which may have lower exercise prices and different terms), Options of a different type, or cash, or (B) the exercise price of an outstanding Option is reduced, based in each case on terms and conditions determined by the Administrator in its sole discretion;

 

h.                                     to allow Participants to satisfy withholding tax obligations or costs attendant to exercising an Option by electing to have the Company withhold from the Shares or cash to be delivered upon exercise or vesting of an Option that number of

 

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shares of Stock represented by the Shares or cash having a Fair Market Value equal to the minimum amount required to be withheld and/or the attendant costs.  The Fair Market Value of any Shares to be withheld will be determined on the date that the amount of tax to be withheld and/or costs imposed is to be determined.  All elections by a Participant to have Shares or cash withheld for these purposes will be made in such form and under such conditions as the Board may deem necessary or advisable;

 

i.                                         to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose citizens may be granted Options;

 

j.                                        to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law; and

 

k.                                     to make all other determinations deemed necessary or advisable for administering the Plan.

 

3.5.                           Administration with Respect to Insiders.  With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.

 

3.6.                           Grant of Awards.  The Board may only grant an Option within the period of 42 days beginning with the Dealing Day after the date on which the Shares are first admitted to AIM, or the Dealing Day after the date on which the Company announces its annual or half yearly results for any period or at any time when the Board considers that circumstances are sufficiently exceptional to justify the grant and where the Company is restricted by statute, order or regulation from granting an Option in accordance with this Section 3.6, an Option may be granted at any time during the period of 42 days after the removal of such restriction.  The grant of any Option shall be subject to obtaining any approval or consent required under the AIM Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers and any other UK or overseas regulation or enactment..

 

3.7.                           Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board or as officers or employees of the Participating Company Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may

 

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be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

 

4.                  Shares Subject to Plan.

 

4.1.                           Subject to Section 4.2, the number of Shares which may be Allocated under the Plan on any day shall not, when added to the aggregate of the number of Shares which have been Allocated in the previous 10 years under the Plan and any other employees’ share scheme adopted by the Company, exceed that number of Shares that represents 10% of the ordinary share capital of the Company in issue immediately prior to that day.  Treasury shares (if relevant) shall cease to count as for the purposes of the above limit if institutional investor guidelines cease to require such Shares to be so counted.  In calculating the limit in this Section 4.1, any Shares where the right to acquire them was released or lapsed without being exercised will be disregarded.  Any Award shall be limited and take effect so that the limits in this Section 4.1 are complied with.

 

4.2.                           Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.33, the maximum aggregate number of Shares that may be issued under the Plan shall be Eighteen Million (18,000,000) and shall consist of authorized but unissued or reacquired Shares or any combination thereof.  If an outstanding Option for any reason expires or is terminated or canceled or if Shares are acquired pursuant to an Option subject to forfeiture or repurchase and are forfeited or repurchased by the Company for an amount not greater than the Participant’s exercise or purchase price, the Shares allocable to the terminated portion of such Option or such forfeited or repurchased Shares shall again be available for issuance under the Plan.

 

4.3.                           Adjustments for Changes in Capital Structure.  Subject to any required action by the shareholders of the Company and the requirements of Sections 409A and 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the shareholders of the Company in a form other than Shares (excepting normal cash dividends) that has a material effect on the Fair Market Value of Shares, appropriate and proportionate adjustments (as confirmed by the Accountants to be fair and reasonable) shall be made in the number and kind of shares subject to the Plan and to any outstanding Options, and in the exercise or purchase price per share of any outstanding Options in order to prevent dilution or enlargement of Participants’ rights under the Plan.  For purposes of the foregoing, conversion of any convertible securities of

 

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the Company shall not be treated as “effected without receipt of consideration by the Company.”  If a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Board may unilaterally amend the outstanding Options to provide that such Options are for New Shares.  In the event of any such amendment, the number of shares subject to, and the exercise or purchase price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its discretion.  Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number, and the exercise price per share shall be rounded up to the nearest whole cent.  In no event may the exercise or purchase price, if any, under any Option be decreased to an amount less than the par value, if any, of the stock subject to the Option.  Such adjustments shall be determined by the Board, and its determination shall be final, binding and conclusive.

 

5.                  Options.

 

Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish.  Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

5.1.                           Persons Eligible for Options. Options may be granted to Employees under the Plan and to Consultants and Directors under the Appendix to this Plan.

 

5.2.                           Participation in the Plan.  Options are granted solely at the discretion of the Board.  Eligible persons may be granted more than one Option.  However, eligibility in accordance with this Section shall not entitle any person to be granted an Option, or, having been granted an Option, to be granted an additional Option.

 

5.3.                           Exercise Price.  The exercise price for each Option shall be established in the discretion of the Board provided, however, that the exercise price for each Option shall not be less than the nominal value of the relevant Shares if the Options are to be satisfied by a new issue of Shares by the Company and provided, however, further that the exercise price per share for an Option shall be not less than the Fair Market Value of a Share on the effective date of grant of the Option.  Notwithstanding the foregoing, an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code.

 

5.4.                           Exercisability and Term of Options.  Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option.  Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions.

 

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5.5.                           Exercise Requirements.  The exercise of an Option and the issue or transfer of Shares after such exercise must be lawful in the relevant jurisdictions and in compliance with the AIM Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers and any other relevant UK or overseas regulation of enactment.  If, on exercise of an Option, a Tax Liability would arise by virtue of such exercise then the exercise shall not be effective unless and until the Participant has duly entered into arrangements acceptable to the Board that the relevant company will receive the amount of such Tax Liability.

 

5.6.                           Payment of Exercise Price.

 

a.                                     Forms of Consideration Authorized.  Except as otherwise provided below, payment of the exercise price for the number of Shares being purchased pursuant to any Option shall be made (i) in cash, by check or in cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of Shares owned by the Participant having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice of exercise together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (v) by any combination thereof.  The Board may at any time or from time to time grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

 

b.                                     Limitations on Forms of Consideration.

 

i                         Tender of Shares.  Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, or attestation to the ownership, of Shares to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s Shares.  Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company, or attestation to the ownership, of Shares unless such shares either have been owned by the Participant for more than six (6) months or such other period, if any, required by the Company (and were not used for another Option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

 

ii                       Cashless Exercise.  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise, including with respect to one or more Participants

 

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specified by the Company notwithstanding that such program or procedures may be available to other Participants.

 

5.7.                                 Effect of Termination of Service.

 

a.                            Option Exercisability.  Subject to earlier termination of the Option as otherwise provided by this Plan and unless a longer exercise period is provided by the Board, an Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period determined in accordance with this Section and thereafter shall terminate:

 

i                         Disability.  If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the Option Agreement evidencing such Option (the “Option Expiration Date”).

 

ii                      Death.  If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.  The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months after the Participant’s termination of Service.

 

iii                   Termination for Cause.  Notwithstanding any other provision of the Plan to the contrary, if the Participant’s Service is terminated for Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service.

 

iv                  Other Termination of Service.  If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

 

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b.                            Extension if Exercise Prevented by Law.  Notwithstanding the foregoing other than termination of Service for Cause, if the exercise of an Option within the applicable time periods set forth in Section 5.7.a is prevented by the provisions of Section 8 below, the Option shall remain exercisable until the later of (i) thirty (30) days after the date such exercise first would no longer be prevented by such provisions or (ii) the end of the applicable time period under Section 5.7.a, but in any event no later than the Option Expiration Date.

 

5.8.                           Transferability of Options.  During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative.  An Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.  Notwithstanding the foregoing, to the extent permitted by the Board, in its discretion, and set forth in the Option Agreement, such Option shall be assignable or transferable subject to the applicable limitations, if any, described in Rule 701 under the Securities Act, and the General Instructions to Form S-8 Registration Statement under the Securities Act.

 

6.              Change in Control.

 

6.1.                           Effect of Change in Control on Options.  Subject to the requirements and limitations of Section 409A of the Code, if applicable, the Board may provide for any one or more of the following:

 

a.                                     Accelerated Vesting.  The Board may, in its discretion, provide in any Option Agreement or, in the event of a Change in Control, may take such actions as it deems appropriate to provide for the acceleration of the exercisability and/or vesting in connection with such Change in Control of each or any outstanding Option or portion thereof and shares acquired pursuant thereto upon such conditions, including termination of the Participant’s Service prior to, upon, or following such Change in Control, to such extent as the Board shall determine.

 

b.                                     Assumption, Continuation or Substitution of Options.  In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, assume or continue the Company’s rights and obligations under each or any Option or portion thereof outstanding immediately prior to the Change in Control or substitute for each or any such outstanding Option or portion thereof a substantially equivalent award with respect to the Acquiror’s shares.  For purposes of this Section, if so determined by the Board, in its discretion, an Option or any portion thereof shall be deemed assumed if, following the Change in Control, the Option confers the right to receive, subject to the terms and conditions of the Plan and the applicable Option Agreement, for each Share subject to such portion of the Option immediately prior to the Change in Control, the consideration (whether shares, cash, other securities or property or a combination thereof) to which a holder of a Share on the effective

 

13

 

date of the Change in Control was entitled; provided, however, that if such consideration is not solely ordinary shares of the Acquiror, the Board may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise of the Option for each Share to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Shares pursuant to the Change in Control.  If any portion of such consideration may be received by holders of Shares pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration.  Any Option or portion thereof which is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control.  Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement.

 

c.                                      Cash-Out of Outstanding Options.  The Board may, in its discretion and without the consent of any Participant, determine that, upon the occurrence of a Change in Control, each or any Option or portion thereof outstanding immediately prior to the Change in Control shall be canceled in exchange for a payment with respect to each vested and each unvested share, if so determined by the Board) Shares subject to such canceled Option in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per Share in the Change in Control, reduced by the exercise or purchase price per share, if any, under such Option.  If any portion of such consideration may be received by holders of Shares pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its sole discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration.  In the event such determination is made by the Board, the amount of such payment (reduced by applicable withholding taxes, if any) shall be paid to Participants in respect of the vested portions of their canceled Options as soon as practicable following the date of the Change in Control and in respect of the unvested portions of their canceled Options in accordance with the vesting schedules applicable to such Options.

 

7.              Tax Withholding.

 

7.1.                                     Tax Withholding in General.  The Company shall have the right to deduct from any and all payments made under the Plan, or to require the Participant, through payroll

 

14

 

withholding, cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for, any Tax Liability required by law to be withheld by the Participating Company Group with respect to an Option or the shares acquired pursuant thereto.  The Company shall have no obligation to deliver Shares or to release Shares from an escrow established pursuant to an Option Agreement until the Participating Company Group’s tax withholding obligations have been satisfied by the Participant.

 

7.2.                                     Withholding in Shares.  The Company shall have the right, but not the obligation, to deduct from the Shares issuable to a Participant upon the exercise of an Option, or to accept from the Participant the tender of, a number of whole Shares having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of the Participating Company Group.

 

8.              Compliance with Securities Law.

 

The grant of Options and the issuance of Shares pursuant to any Option shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Shares may then be listed.  In addition, no Option may be exercised or shares issued pursuant to an Option unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Option or (b) the shares issuable pursuant to the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to issuance of any Shares, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

9.              Amendment or Termination of Plan.

 

The Board may amend, suspend or terminate the Plan at any time.  No amendment, suspension or termination of the Plan shall affect any then outstanding Option unless expressly provided by the Board.  Except as provided by the next sentence, no amendment, suspension or termination of the Plan may adversely affect any then outstanding Option without the consent of the Participant.  Notwithstanding any other provision of the Plan or any Option Agreement to the contrary, the Board may, in its sole and absolute discretion and without the consent of any Participant, amend the Plan or any Option Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Option Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A of the Code.

 

15

 

10.       Miscellaneous Provisions.

 

10.1.                    Rights as Employee, Consultant or Director.  No person shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant.  Nothing in the Plan or any Option granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director or interfere with or limit in any way any right of a Participating Company to terminate the Participant’s Service at any time.  In particular, a Participant waives any and all rights to compensation or damages in consequence of the termination of the Participant’s Service for any reason whatsoever insofar as those rights arise from him ceasing to have rights under an Option as a result of such termination.  To the extent that an Employee of a Participating Company other than the Company receives an Option under the Plan, that Option shall in no event be understood or interpreted to mean that the Company is the Employee’s employer or that the Employee has an employment relationship with the Company.

 

10.2.                    Rights as a Shareholder.  A Participant shall have no rights as a shareholder with respect to any shares covered by an Option until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.3 or another provision of the Plan.  In addition, any rights that a Participant has with respect to any stock issued under any Option shall be subject to the terms and conditions of the company stockholder agreement (as the same may be amended from time to time, the “Shareholders Agreement”).  No Shares shall be issued pursuant to an Option unless the recipient of such Shares has executed a deed of adherence to the Shareholders Agreement.  Notwithstanding the foregoing, to the extent that any provision in the Shareholders Agreement would result in the imposition of tax under Section 409A of the Code, such provision shall not apply to Shares received pursuant to any Option.

 

10.3.                    Delivery of Title to Shares.  Subject to any governing rules or regulations, the Company shall issue or cause to be issued the Shares acquired pursuant to an Option and shall deliver such shares to or for the benefit of the Participant by means of one or more of the following: (a) by delivering to the Participant evidence of book entry Shares credited to the account of the Participant, (b) by depositing such Shares for the benefit of the Participant with any broker with which the Participant has an account relationship, or (c) by delivering such Shares to the Participant in certificate form.

 

10.4.                    Fractional Shares.  The Company shall not be required to issue fractional shares upon the exercise or settlement of any Option.

 

10.5.                    Retirement and Welfare Plans.  Neither Options made under this Plan nor Shares or cash paid pursuant to such Options shall be included as “compensation” for purposes of computing the benefits payable to any Participant under any Participating Company’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing such benefits.

 

16

 

10.6.                    Section 409A of the Code.  Notwithstanding other provisions of the Plan or any Option Agreements hereunder, no Option shall be granted, deferred, accelerated, extended, paid out or modified under this Plan in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon a Participant.  In the event that it is reasonably determined by the Board or, if delegated by the Board to the Committee, by the Committee that, as a result of Section 409A of the Code, payments in respect of any Option under the Plan may not be made at the time contemplated by the terms of the Plan or the relevant Option Agreement, as the case may be, without causing the Participant holding such Option to be subject to taxation under Section 409A of the Code, including as a result of the fact that the Participant is a “specified employee” under Section 409A of the Code, the Company will make such payment on the first day that would not result in the Participant incurring any tax liability under Section 409A of the Code.  The Company shall use commercially reasonable efforts to implement the provisions of this Section 10.6 in good faith; provided that neither the Company, the Board nor any of the Company’s employees, directors or representatives shall have any liability to Participants with respect to this Section 10.6.

 

10.7.                    Severability.  If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.

 

10.8.                    Choice of Law.  Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Option Agreement shall be governed by the laws of the England and Wales, without regard to its conflict of law rules.

 

17

 

APPENDIX

 

Options may be granted under this Appendix as a subplan to non-Employees.  The rules of the Plan shall apply mutatis mutandis to Options granted under this Appendix save where the context otherwise requires.

 

18Exhibit 10.9

 

SALE AND PURCHASE AGREEMENT

 

SALE AND PURCHASE AGREEMENT (“Agreement”), made and entered into as of June 1st, 2001

 

by and between

 

F. Hoffmann-La Roche Ltd, Grenzacherstrasse 124, CH-4070 Basel (hereinafter referred to as “ROCHE BASEL”)

 

and

 

Hoffmann-La Roche Inc., 340 Kingsland Street, Nutley, New Jersey 07110, USA “ROCHE NUTLEY”, both, ROCHE BASEL and ROCHE NUTLEY jointly called SELLER”)

 

on the one hand

 

and

 

Arpida Ltd, Dammstrasse 36, CH-4142 Münchenstein, Switzerland (“PURCHASER”)

 

on the other hand

 

 

Whereas, on May 27, 1997, Dr. Ivan Kompis and ROCHE BASEL entered into an agreement on Ro 48-2622 giving Dr. Kompis the right to perform certain development activities with ROCHE BASEL retaining an option right to further development and commercialization of a resulting drug (,,Option Agreement”);

 

Whereas, under the Option Agreement ROCHE BASEL had the right to either take over development and commercialization of Ro 48-2622 or assign and transfer and cause its Affiliates to assign and transfer to PURCHASER certain know-how and patents to Ro 48-2622 owned by ROCHE BASEL and ROCHE NUTLEY;

 

Whereas, ROCHE BASEL and ROCHE NUTLEY have decided to assign and transfer to PURCHASER such patent rights and know-how essentially on terms and conditions defined in the Option Agreement;

 

Whereas, PURCHASER is interested in the transfer and assignment of all such know-how and patent rights;

 

Now, therefore SELLER and PURCHASER hereby agree as follows:

 

1.                                      Definitions

 

1.1                               “Active Principle” means all substances covered by the Patents.

 

1.2                               “Affiliate” of a party means any corporation or other business entity controlled by, controlling or under common control with, such party.  For this purpose “control” shall mean direct or indirect beneficial ownership of fifty percent (50%) or more of the voting shares in such corporation or other business entity provided, however, Genentech, Inc., with offices located at 460 Point San Bruno Boulevard, South San Francisco, California, 94080, shall not be considered an Affiliate of SELLER.

 

1.3                               “Assets” means the Know-How and the Patents.

 

1.4                               “Drug” means any pharmaceutical product with at least one Active Principle.

 

1.5                               “Effective Date” means June 1st, 2001.

 

2

 

1.6                               “Know-How” means such know how listed in Appendix A to this Agreement.

 

1.7                               “Net Sales” means the gross sales of the PRODUCT by PURCHASER, its Affiliates or licensees to third parties less deductions of returns (including withdrawals and recalls), customary rebates (price reductions, including Medicaid and similar types of rebates e.g. chargebacks), volume (quantity) discounts granted at the time of invoicing, sales taxes and other taxes directly linked and included in the gross sales amount (“Adjusted Gross Sales”).

 

In addition, for all other expenses which are not accounted for on a Product by Product basis like sales deductions (outward freights, transportation insurance, packing materials for dispatch of goods, custom duties), sales expenses (discounts granted later than at the time of invoicing) and cash discounts and other direct expenses, there shall be a lump sum deduction of six percent (6%) from the above Adjusted Gross Sales.

 

1.8                               “Patents” means the patents and the patent applications listed in Appendix B to this Agreement.

 

1.9                               “Reasonable Efforts” means the efforts which the PURCHASER hereto would use in the development, registration and commercialization of a product stemming from its own research with sufficient commercial potential to deserve development and marketing.

 

1.10                        “Valid Claim” means a claim of any filed or issued and unexpired Patent which has not been disclaimed, revoked or held unpatentable, invalid or unenforceable by final decision of a court or other governmental agency of competent jurisdiction.

 

2.                                      Sale and Purchase

 

2.1                               Sale and Purchase of Assets

 

Subject to the terms and conditions of this Agreement, SELLER shall sell, assign and transfer to PURCHASER and PURCHASER shall purchase from SELLER the Assets.

 

3

 

2.2                               Price and Payment

 

In consideration for the transfer of the Assets under this Agreement, PURCHASER shall pay SELLER the purchase price consisting of

 

a)             a non-refundable payment of CHF 75’000 (Swiss Francs seventy-five thousand) payable within thirty days after the effective date Agreement;

 

b)             a royalty on Net Sales of

 

aa) 5% (five percent) of a Drug with Ro 48-2622 (the racemate form);

 

bb) 4% (four percent) of a Drug which includes:

 

·                                          Ro 46-9514 (RS)-4-[5-(2, 4-Diamino-pyrimidin-5-ylmethyl)-7, 8-dimethoxy-2H-1-benzpyran-2-yl]-butyric acid,

 

·                                          Ro 46-9518 (RS)-5-(7, 8-Dimethoxy-2-pentyi-2H-1-benzpyran-5-ylmethyl)-pyrimidin-2, 4-diamine,

 

·                                          Ro 47-5677(RS)-5-(2-Isopropyl-7, 8-dimethoxy-2H-1-benzopyran-5-ylmethyl)-pyrimidin-2, 4-diamine,

 

·                                          Ro 46-8717 4-[5-(2, 4-Diamino-pyrimidin-5-ylmethyl)-8-methoxy-2H-1-benzopyran-7-yloxy]-butyric acid,

 

·                                          Ro 47-7572 (RS)-5-(2-Isobutyl-7, 8-dimethoxy-2H-1-benzopyran-5-yl-methyl)pyrimidin-2,4-diamine, or

 

·                                          only one of the enantiomers of Ro 48-2622;

 

or

 

cc) 1% (one percent) of a Drug which includes any of the other substances covered by the Patents.

 

Royalties shall be paid on a country by country basis

 

dd) until the last date on which the making, having made, using, selling, offering for sale or importing of Drug in the given country would, but for this Agreement, infringe a Valid Claim of a Patent, or

 

ee) 10 (ten) years after the first commercial sale of the Drug in the given country, whichever is longer.

 

4

 

3.                                      Representations and Warranties

 

3.1                               SELLER warrants that SELLER or its Affiliates own all rights and title in and to the Assets and SELLER has the right to transfer such Assets to PURCHASER.  Besides, SELLER warrants and represents that Appendix B is in all respects complete with respect to the subject matter of this Agreement.

 

3.2                               Except for the warranties under Art. 3.1, SELLER makes no warranty or representation whatsoever, whether express or implied, in respect of the Assets transferred to PURCHASER hereunder.  In particular, SELLER makes no warranty of fitness for a particular purpose or merchantability.  SELLER’s sole liability shall be limited to the warranties and representations set forth in Section 3.1.

 

3.3                               PURCHASER represents that PURCHASER has conducted a due and diligent investigation into the Assets.

 

3.4                               PURCHASER represents that PURCHASER will have funds sufficient to pay the non-refundable payment of CHF 75’000.

 

3.5                               PURCHASER warrants and represents that to the extent PURCHASER or its Affiliates are entitled to recapture value added tax which may be imposed on SELLER by tax authorities in various countries pursuant to PURCHASER’s acquisition of Assets under this Agreement, PURCHASER shall or shall cause its Affiliates to take such reasonable actions as may be necessary for such recapture and to remit to SELLER or its designated Affiliate the amount thereof, less any levy, fee .or other charge which may be imposed upon PURCHASER or its Affiliates with respect to such payment, within thirty days after the respective amount has been repaid to the PURCHASER by the tax authorities.

 

3.6                               SELLER shall use all reasonable diligence to keep confidential all Know-How related to Ro 48-2622, its enantiomers, Ro 46-9514, Ro 46-9518, Ro 47- Ro 46-8717 and Ro 47-7572.

 

5

 

4.                                      Diligence

 

PURCHASER shall use reasonable diligence to develop, register and, as long as PURCHASER is obliged to pay royalties, commercialize the Drug.

 

5.                                      Patents

 

In case PURCHASER intends to abandon any of the Patents, PURCHASER shall duly notify SELLER.  Within 60 (sixty) days after the receipt of such notification, SELLER shall notify PURCHASER whether SELLER wishes PURCHASER to transfer and assign such Patent free of charge to SELL any of its Affiliates designated by SELLER in its notification.  If SELLER interested in such transfer and assignment, PURCHASER has the right to dispose of such Patent at its own discretion.

 

6.                                      Royalty payments

 

6.1                               Payments arising from sales of Drug due hereunder shall be calculated semi-annually on a calendar basis and shall be payable within sixty (60) days of the end of the relevant half year.  Each remittance shall be accompanied by:

 

a)                                     a true accounting of all gross sales, Net Sales and any other relevant information needed in order to determine the amount of royalty due under this Agreement;

 

b)                                     a detailed list of any taxes, levies or other duties paid or required to be withheld by PURCHASER on account of any payments due to the SELLER under this Agreement.  Such taxes, levies or other duties paid or required to be withheld shall be deducted from respective payment hereunder.  At the request of the SELLER the PURCHASER shall secure and send to the SELLER the best available evidence of any such taxes levies or other duties withheld and paid by the PURCHASER or its Affiliates, co-promoters, co-marketeers, distributors or sub-licensees.

 

6.2                               The SELLER shall have the right at its own expense (save as provided below) to have all records (including those held by licensees and co-marketeers) relating to Net Sales and

 

6

 

sales by licensees and co-marketeers and any other relevant information examined by an independent certified public accountant or similar expert during regular business hours, provided however that such examination shall not take place more than once a year and shall not cover such records for more than the preceding two (2) years.  The independent certified public accountant or similar expert shall mutually be appointed by the parties.  Should the parties not agree on the appointment of such an accountant or similar expert within 20 (twenty) days after the SELLER has notified the PURCHASER that it wishes to have the records examined, then the accountant or similar expert shall be appointed by the chairman of the Basel Chamber of Commerce.  The results of the inspection by the independent certified public accountant or similar expert shall be final and binding for the parties.  In the even that such inspection reveals a discrepancy in payments made in excess of five percent (5%), then the PURCHASER shall pay the accountant’s reasonable fees and expenses incurred in connection with the inspection.  Any sums which are owed to either party as a result of the inspection shall be paid promptly to the other party.

 

6.3                               All payments due under this Art. 6 (i) in the USA shall be payable to ROCHE NUTLEY in USD and (ii) in all other countries shall be payable to ROCHE BASEL in CHF.

 

6.4                               Whenever for the purpose of calculating royalties conversion from any foreign currency shall be required, to calculate Adjusted Gross Sales, then the amount of such monthly sales in foreign currencies shall be converted into Swiss Francs using the average monthly rate of exchange at the time for such currencies for each respective month of the applicable accounting period as retrieved from the UBS, Basel, Switzerland, or some other sour upon in writing by the parties for any particular country.

 

6.5                               Any payments due pursuant to the terms of the Agreement that are not paid on or before the date such payments are due shall bear inter average of one month London Interbank Offered Rates (LIBOR), as reported by Datastream from time to time (or any other source agreed upon in writing between the parties), plus one hundred (100) basis points, calculated on the number of days in each month that such payment is delinquent.

 

7

 

7.                                      General Provisions

 

7.1                               Costs and Expenses

 

All costs and expenses incurred in connection herewith and the transactions contemplated hereby shall be paid by the party incurring such expenses.  Any value added, excise or transfer taxes or government authorities’ fees (e.g. fees for the assignment of Patents) in connection with the present Agreement shall -  subject to Art. 3.5 above - be paid and born solely by PURCHASER and are included in the purchase price according to Art. 2 above.

 

7.2                               Notices

 

All notices and other communications required or permitted hereunder shall in writing and shall be effective upon actual delivery:

 

	
To   SELLER:
    	
F.   Hoffmann-La Roche Ltd
    
	
 
    	
Attn.   Corporate Law
    
	
 
    	
Grenzacherstrasse   124
    
	
 
    	
CH-4070   Basel
    
	
 
    	
and
    
	
 
    	
Hoffmann-La   Roche Inc.
    
	
 
    	
Attn.   Corporate Secretary
    
	
 
    	
340,   Kingsland Street
    
	
 
    	
Nutley,   NJ 07110
    
	
 
    	
USA
    
	
 
    	
 
    
	
To   PURCHASER:
    	
Arpida   Ltd
    
	
 
    	
Attn.   COO
    
	
 
    	
Dammstrasse   36
    
	
 
    	
CH-4142   Münchenstein
    
	
 
    	
Switzerland
    
			

 

or to such other address as a party hereto indicates by written notice to the other party in accordance with this section.

 

7.3                               Amendment

 

No waiver or modification of this Agreement shall be effective unless made in writing and signed by the parties hereto.

 

8

 

7.4                               Waiver

 

A failure of any party to enforce at any time the provisions of this Agreement shall in no way constitute a present or future waiver of such provision, nor shall such failure in any way effect the right of either party to enforce any provision thereafter.

 

7.5                               Counterparts

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

7.6                               Severability

 

Any term or provision of this Agreement which is invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, provided that the remaining terms and provisions can be construed to be within the parties’ understanding of this Agreement.

 

7.7                               Indemnification

 

7.7.1                     Remedy for Breach.  The sole and exclusive remedy of PURCHASE and SELLER for any breach or inaccuracy of any representation or warranty under this Agreement by the other party hereto shall be the indemnities contained in this Article 7.7.  Any claims that a party may have arising out of the other party’s breach of its representations and warranties hereunder shall be notified to the other party no later than one year following the Effective Date.  SELLER and PURCHASER agree to use all reasonable efforts to mitigate any loss or damage for which they may seek indemnification under this Article 7.7.

 

7.7.2                     Subject to the limitations set forth in Article 7.7.3 to the fullest extent permitted under applicable law, SELLER shall indemnify PURCHASER against and agrees to hold PURCHASER harmless from any and all damage, loss, liability, third party claims, and expenses (collectively, “Damages”) (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses in connection with any action, suit or

 

9

 

proceeding brought against PURCHASER) incurred or suffered by PURCHASER arising out of any misrepresentation or breach of a representation or covenant made by SELLER (hereinafter “Indemnifiable Claims”).

 

7.7.3                     Notwithstanding anything to the contrary set forth elsewhere herein, PURCHASER shall not be entitled to indemnification hereunder with respect to any Indemnifiable Claim hereunder unless the amount of Damages with respect to such Claim exceeds CHF 50’000 (fifty thousand Swiss Francs).  However, SELLER shall not be required to pay PURCHASER more than one third of the part of the purchase price paid by PURCHASER up to the date of the final resolution of any Indemnifiable Claim provided, however, that the amount to be paid by SELLER to PURCHASER under this Art. 7.7.3 shall in no case be higher than CHF 100’000 (one hundred thousand Swiss Francs) in respect of the aggregate Damages asserted pursuant to Art. 7.7.2 above.

 

7.7.4                     PURCHASER shall indemnify SELLER and its Affiliates against and agrees to hold SELLER and its Affiliates harmless from any and all Damages (including without limitation, reasonable expenses of investigation and attorneys’ fee and expenses in connection with any action, suit or proceeding brought against SELLER or its Affiliates) incurred or suffered by SELLER or its Affiliates arising out of (a) any misrepresentation or breach of warranty or covenant made by PURCHASER herein; or (b) the conduct of the business by PURCHASER and its Affiliates, designees, sublicensees and agents with respect to the Active Principle and the Drug or (c) any claim relating to the use (e.g. sale) of the by PURCHASER, its designees, sublicensees and agents.

 

7.7.5                     Each party shall immediately notify the other party {hereinafter “Indemnifying Party”), in case of any action, suit or proceeding (hereinafter “Claim”) brought against the party in connection with the subject matter of this Agreement which may cause the Indemnifying Party to indemnify such party in accordance with Art. 7.7 of this Agreement.  The parties shall mutually agree on the further proceedings against such claim.  Should the parties not agree on the proceeding, then the party against which the claim was brought, shall act in accordance with the reasonable instructions given by the Idemnifying Party, otherwise the Indemnifying Party’s obligation to indemnify and hold

 

10

 

harmless pursuant to this Art. 7.7 shall not cover Damages which incurred or were suffered by the other party due to the fact that this party has not acted in accordance with the reasonable instructions given by the Indemnifying Party.

 

7.8                               Governing Law

 

This Agreement shall be governed by and interpreted in accordance with the laws of Switzerland.

 

7.9                               Arbitration

 

All disputes arising from or in connection with the present Agreement shall be finally settled by arbitration to be held in Basel, Switzerland, under the Arbitration Rules of the Basel Chamber of Commerce by one or more arbitrator appointed in accordance with the said Rules.

 

7.10                        Assignment

 

This Agreement may not be assigned by either party without the written consent of the other party; provided however that either party may assign the Agreement to an Affiliate without the written consent of the other party.  In such a case the assigning party shall notify the other party about such assignment in due course.

 

11

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.

 

	
Basel,   28.5.01
    	
F.   Hoffmann-La Roche Ltd
    
	
 
    	
 
    
	
 
    	
/s/   W. Henrich
    
	
 
    	
 
    
	
Nutley,
    	
Hoffman-La   Roche, Inc.
    
	
 
    	
 
    
	
 
    	
/s/   [Illegible]
    
	
 
    	
Vice   President
    
	
 
    	
 
    
	
Müchenstein,   11.6.01
    	
Arpida   Ltd
    
	
 
    	
 
    
	
 
    	
/s/   [Illegible]
    

 

 

Appendix A

 

Know How:

 

List of Documents and Test Descriptions for Ro 48-2622

 

1.                                      Then, R. L., Hartman, P, Locher, H., Schlunegger, H: In vitro activity of several new dihydrofolate reductase inhibitors against pneumococci. R & D Memo B-168’692 (2.2.1998)

 

2.                                      Nielsen, J. and R. Blum: The effect of the DHFR inhibitors Ro 48-3707 and Ro 48-3713 on the electrochemical proton gradient across the bacterial cytoplasmic membrane. R & D Memo B-163’872 (15.10.1994)

 

3.                                      Extract of methods and results from BC 162’712 (4.2.1994)

 

4.                                      Extract of methods and results from BC 165’332 (20.3.1995)

 

5.                                      DHFR assay Method

 

6.                                      Description of methods for experimental septicemia in mice and experimental subcutaneous abscess in mice

 

7.                                      Table: Inhibition of several purified dihydrofolate reductases by Ro 48-2622 and reference compounds.

 

8.                                      Table: Mouse pneumonia model with S. pneumoniae 4241

 

9.                                      List strains used in the animal infection models.

 

10.                               Outprint DHFR data base: Ro 48-2622

 

11.                               Copy: Locher, H. H., Schlunegger, H, Hartman, P.G., Angehrn, P, Then, R. L.: Antibacterial activities of epiroprim, a new dihydrofolate reductase inhibitor, alone and in combination with dapsone. Antimicrob. Agents and Chemother.  40: 1376-1381, 1996 (contains method mouse septicemia)

 

Purchaser has already received from Seller all documents listed above.

 

 

Appendix B

 

Patent rights

 

Roche Patent Family 14460 (ex 4440/175)

 

Priority: CH 04.12.1995

 

	
Country
    	
 
    	
Code
    	
 
    	
Application Date
    	
 
    	
Application No.
    	
 
    	
Grant Date
    	
 
    	
Patent No.
    	
 
    	
Expiry
    	
 
    	
Status
    
	
Australia
    	
 
    	
AU
    	
 
    	
 
    	
 
    	
76963/96
    	
 
    	
18.11.1999
    	
 
    	
708578
    	
 
    	
22.11.2016
    	
 
    	
P
    
	
Brazil
    	
 
    	
BR
    	
 
    	
 
    	
 
    	
PI9611871
    	
 
    	
 
    	
 
    	
 
    	
 
    	
22.11.2011
    	
 
    	
A
    
	
Canada
    	
 
    	
CA
    	
 
    	
 
    	
 
    	
2238521
    	
 
    	
 
    	
 
    	
 
    	
 
    	
22.11.2016
    	
 
    	
A
    
	
China
    	
 
    	
CN
    	
 
    	
 
    	
 
    	
96198783.9
    	
 
    	
 
    	
 
    	
 
    	
 
    	
22.11.2016
    	
 
    	
A
    
	
Europe *)
    	
 
    	
EP
    	
 
    	
 
    	
 
    	
96939890.8
    	
 
    	
 
    	
 
    	
 
    	
 
    	
22.11.2016
    	
 
    	
A
    
	
Japan
    	
 
    	
JP
    	
 
    	
 
    	
 
    	
09-520925
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
A
    
	
Mexico
    	
 
    	
MX
    	
 
    	
 
    	
 
    	
984416
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
A
    
	
South Korea
    	
 
    	
KR
    	
 
    	
 
    	
 
    	
98-704199
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
A
    
	
Turkey
    	
 
    	
TR
    	
 
    	
 
    	
 
    	
1014/6
    	
 
    	
 
    	
 
    	
 
    	
 
    	
22.112016
    	
 
    	
A
    
	
USA
    	
 
    	
US
    	
 
    	
 
    	
 
    	
08/758993
    	
 
    	
30.06.1998
    	
 
    	
5773446
    	
 
    	
02.12.20136
    	
 
    	
P
    

 

P = patent granted application pending

 

A = application pending

 

*) Europe encompasses the following designated states:

 

AT, BE, CH, DE, OK, ES, Fl. FR. GB, GR, IE, IT, LU, NL, PT, SE, TR

 

 

Entity Detail

 

Entity Name: LIFE SCIENCES MANAGEMENT GROUP, INC.

Dept ID #: Dl 0363430

 

General Information                                Amendments Personal Property Certificate of Status

 

	
Principal Office (Current):
    	
 
    	
SUITE 350
    1901 RESEARCH BOULEVARD
 ROCKVILLE, MD 20850
    
	
 
    	
 
    	
 
    
	
Resident Agent (Current):
    	
 
    	
CSC-LAWYERS INCORPORATING SERVICE COMPA
    7 ST. PAUL STREET, SUITE 1660
 BALTIMORE, MD 21202
    
	
 
    	
 
    	
 
    
	
Status:

 

Good Standing:
    	
 
    	
FORFEITED

 

No What does it mean when a business is not in good standing   or forfeited?
    
	
 
    	
 
    	
 
    
	
Business Code:
    	
 
    	
Ordinary Business - Stock
    
	
 
    	
 
    	
 
    
	
Date of Formation or Registration:
    	
 
    	
12/20/2004
    
	
 
    	
 
    	
 
    
	
State of Formation:
    	
 
    	
MD
    
	
 
    	
 
    	
 
    
	
Stock/Non stock:
    	
 
    	
Stock
    
	
 
    	
 
    	
 
    
	
Close/Not Close:
    	
 
    	
Not Close
    

 

Link Definition

 

	
General Information
    	
 
    	
General information about this entity
    
	
Amendments
    	
 
    	
Original and subsequent documents filed
    
	
Personal Property
    	
 
    	
Personal Property Return Filing Information and Property   Assessments
    
	
Certificate of Status
    	
 
    	
Get a Certificate of Good Standing for this entity
    

 

 

Annex A

 

Dr. Ivan Kompis

Goldentalweg 16

 

4104 Oberwil

 

Basel, May 27, 1997

Subject:

 

Your Reference:  Ro 48- 2622

Our Reference:  Schaf/shd

 

Dear Dr. Kompis,

 

Reference is made to various meetings between you (“Dr. Kompis”) and F. Hoffmann- L Roche Ltd (“Roche”) with respect to a cooperation on Ro 48-2622 or its active enantiomer For good orders’ sake we would like to confirm the understanding reached by both parties.

 

1.                                      Dr. Kompis has received under a Secrecy Agreement, signed by both parties on February 19, 1996, certain information on and a sample of Ro 48-2622 for further evaluation.

 

2.                                      Dr. Kompis has discovered one enantiomer of Ro 48-2622 which is more active than the racemate Ro 48-2622 and herewith assigns his rights to the enantiomer to Roche free of charge.  Roche shall have the right to file any resulting patent application in its own name and Dr. Kompis agrees to render Roche all requested assistance including the execution of the signatures, papers and documents necessary for obtaining patents.  Roche agrees to reimburse Dr. Kompis in effectuating such assistance upon the submission of itemized statements by Dr. Kompis

 

3.                                      Dr. Kompis is prepared at its own risk to evaluate further the potential of Ro 48-2622 and/or its enantiomer (both jointly the “Substance”).

 

4.                                      Dr. Kompis has the right to perform phase 0 studies and clinical studies which includes Phase I clinical studies and one pilot efficacy study in patients (jointly “Studies”) with the Substance.  Subject to the approval of Roche, Dr. Kompis has the right to have performed the studies in part or in total by third parties provided that such third parties are bound to the same confidentiality obligations as Dr. Kompis hereunder.  Roche shall not unreasonably withheld its approval.

 

 

Roche has provided Dr. Kompis with all information available at Roche with respect to Ro 48-2622 and its manufacture and certain amounts of Ro 48-2622 and key inter-mediates thereof.

 

5.                                      Twenty four (24) months after the date of this letter of agreement or at completion of the Studies, whichever is earlier, Dr. Kompis will provide Roche with a written report of the work performed (“Work”) and all data and results arising from the Work (“Report”).

 

6.                                      Within three (3) months after receipt by Roche of the Report, Roche shall notify D Kompis and, according to Roche’s sole decision, either

 

6.1                               if the substance is Ro 48-2622, compensate Dr. Kompis for the Work and the value added to the Substance by

 

6.1.1                     reimbursing Dr. Kompis’ costs incurred for the Work (“Costs”) and a mark-up of 50 (fifty) percent of Costs; and

 

6.1.2                     paying a royalty of 1 (one) percent of Roche’s and its affiliated companies’ net sales of a drug containing as active principle Ro 48-2622 or an analogue covered by a claim of the Swiss patent application (No 3425/95) filed by Roche and any resulting patent (including the patents set forth in section above) thereof (jointly “Patents”) (“Drug”)

 

and in which case Dr. Kompis shall transfer and assign ownership of any and all data and results of the Work to Roche.  Such ownership of Roche shall be sole, exclusive and unrestricted;

 

or

 

6.2                               assign and transfer and cause its affiliated companies to assign and transfer to Dr. Kompis all respective rights to Ro 48-2622 and the Patents.  In consideration of such assignment and transfer, Dr. Kompis shall compensate Roche by

 

6.2.1                     reimbursing Roche’s costs incurred for the filing and prosecution of the Patents and

 

6.2.2                     paying a royalty of 5 (five) percent of Dr. Kompis’ or his licensee’s net sales of a Drug.

 

7.                                      If the Substance is the enantiomer of Ro 18-2622 invented by Dr. Kompis, the conditions of 6, above shall apply with the following modifications:

 

7.1                               The mark-up set forth in 6.1.1 above s hall be 75 (seventy five) percent instead of 50 (fifty) percent;

 

7.2                               The royalty rate set forth in 6.1.2 above shall be 3 (three) percent instead of 1 (one) percent;

 

17

 

7.3                               6.1 shall be amended and include an obligation of Roche to pay the following milestone payments:

 

7.3.1                     upon initiation of phase III clinical trials with a Drug CHF 2 (two) mio;

 

7.3.2                     upon approval of a Drug in a major country CHF 4 (four) mio;

 

7.4                               The royalty rate set forth in 6.2.2 shall be 4 (four) percent instead of 5 (five) percent.

 

8.                                      Dr. Kompis agrees to keep the information received from Roche hereunder and any data and results elaborated hereunder in strict confidence and not to make any use thereof other than provided under this letter of agreement

 

9.                                      The assignment or transfer of any rights by Dr. Kompis to a third party needs the prior written consent from Roche which consent shall not unreasonably be withheld.

 

10.                               The parties agree to further discuss in good faith and agree on such additional terms and conditions usual for these kind of arrangements in this field as they deem necessary during the progress of their co-operation.

 

Should you agree with the content of this letter of agreement, please indicate your agreement by countersigning the enclosed original and send it back to us.

 

Yours sincerely,

 

F. Hoffmann-La Roche Ltd

 

	
/s/   W. Henrich
    	
 
    	
/s/   S. Arnold
    
	
W.   Henrich
    	
 
    	
Mr. S.   Arnold
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Agreed   to
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Dr. I. Kompis
    	
 
    	
Date:
    	
July   11,1997
    
	
Dr. I.   Kompis
    	
 
    	
 
    

 

18

 

Dr. Ivan Kompis

Goldenthalweg 16

4104 Oberwil

 

F. Hoffmann-La Roche Lid.

c/o Mr. Werner Henrich

Head of Corporate Licensing

 

4070 Basel

 

Oberwil, March 18, 1999

 

Subject:  Ro 48-2622/Your letter of May 27,1997

 

Dear Mr. Henrich,

 

Referring to the above mentioned letter of agreement and our recent discussion s I would like to ask you kindly to accept the change of the paragraph 5 of the document mentioned (in italics) as follows

 

5. Thirty six months (36) after the date of this letter of agreement or at completion of the Studies, whichever is earlier, Dr. Kompis will provide Roche with a written report of the work performed (“Work”) and all data and results arising from the Work (“Report”).

 

Thank you in advance for your understanding and confirmation of your agreement by countersigning of this letter.

 

Sincerely yours

 

	
/s/   I. Kompis
    	
 
    
	
I.   Kompis
    	
 
    

 

 

Agreed to:

 

	
F.   Hoffmann-La Roche Ltd.
    	
 
    	
Date:
    
	
 
    	
 
    	
 
    
	
/s/   W. Henrich
    	
 
    	
March   19, 1999

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