Document:

artl_ex1020.htm

EXHIBIT 10.20

 

 

 

Exclusive License Agreement

between

The Research Foundation For The State University of New York

and

Artelo Biosciences, Inc.

 

	
1.
	
DEFINITIONS
	
 
	
 
	
2
	
 

	
2.
	
GRANT OF RIGHTS AND RETAINED RIGHTS
	
 
	
 
	
8
	
 

	
3.
	
CONSIDERATION AND PAYMENT TERMS
	
 
	
 
	
10
	
 

	
4.
	
DUE DILIGENCE AND COMMERCIALIZATION ACTIVITIES
	
 
	
 
	
15
	
 

	
5.
	
SUBLICENSING
	
 
	
 
	
16
	
 

	
6.
	
PATENT PROSECUTION AND PATENT COSTS
	
 
	
 
	
17
	
 

	
7.
	
BOOKS, RECORDS, AND REPORTS
	
 
	
 
	
18
	
 

	
8.
	
ENFORCEMENT OF PATENT RIGHTS
	
 
	
 
	
20
	
 

	
9.
	
INDEMNIFICATION AND INSURANCE
	
 
	
 
	
22
	
 

	
10.
	
TERMINATION
	
 
	
 
	
24
	
 

	
11.
	
WARRANTY AND LIABILITY
	
 
	
 
	
26
	
 

	
12.
	
ASSIGNMENT
	
 
	
 
	
27
	
 

	
13.
	
OBLIGATIONS TO FEDERAL GOVERNMENT AND OTHER SPONSORS
	
 
	
 
	
27
	
 

	
14.
	
NON-USE OF NAMES
	
 
	
 
	
27
	
 

	
15.
	
FOREIGN LAWS
	
 
	
 
	
28
	
 

	
16.
	
COMPLIANCE WITH LAWS
	
 
	
 
	
28
	
 

	
17.
	
CONFIDENTIALITY
	
 
	
 
	
29
	
 

	
18.
	
MISCELLANEOUS
	
 
	
 
	
31
	
 

	
EXHIBIT A: Licensed Patents
	
 
	
 
	
34
	
 

	
EXHIBIT B: Material
	
 
	
 
	
35
	
 

	
EXHIBIT C: Know-How
	
 
	
 
	
36
	
 

	
EXHIBIT D: Commercialization Plan
	
 
	
 
	
37
	
 

	
Exhibit E: Description of Affiliates
	
 
	
 
	
38
	
 

 

	 
	 
	

 
	 

 

This agreement (hereinafter, “Agreement”) is made and is effective as of the date last signed (hereinafter, “Effective Date”) by and between The Research Foundation for The State University of New York, a nonprofit, educational corporation existing under the laws of the State of New York with an office located at the Office of Technology Licensing & Industry Relations, N5002 Frank Melville Jr. Memorial Library, Stony Brook, New York 11794-3369, for and on behalf of the State University of New York at Stony Brook, (hereinafter, “Foundation”), and Artelo Biosciences, Inc., a Nevada corporation, having a primary address at 888 Prospect Street, Suite 210, La Jolla, California 92037 (hereinafter, “Licensee”).

 

RECITALS

 

WHEREAS, Foundation owns certain intellectual property rights in and to the Licensed Subject Matter, as defined in this Agreement; and

 

WHEREAS, Foundation desires to have the Licensed Subject Matter developed and used to the fullest extent for the benefit of the public; and

 

WHEREAS, Licensee desires to obtain rights to certain Licensed Subject Matter, as provided herein, for development and commercialization purposes.

 

NOW, THEREFORE, subject to the term and conditions contained herein, and in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

	1.	DEFINITIONS
	
 
	
 

		All capitalized terms used in this Agreement will have the meanings stated below or defined elsewhere in the Agreement.

 

	
 
	1.1.	“Affiliate” means, with respect to Licensee, any other person or entity, listed in Exhibit E (as may be updated from time to time upon written notice to Foundation by Licensee at such time as any person or entity not already listed in Exhibit E meets this definition of “Affiliate”), which directly or indirectly controls, is controlled by, or is under common control with Licensee. A person or entity shall be regarded as in control of another person or entity if it owns, or directly or indirectly controls, more than fifty percent (50%) of the voting stock or other ownership interest of the other person or entity, or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of the other person or entity by any means whatsoever.
	
 
	
 
	
 

	
 
	1.2.	“Annual Minimum Royalties” has the meaning assigned and ascribed in Section 3.5.
	
 
	
 
	
 

	
 
	1.3.	“Commercialization Plan” means the commercialization plan set forth in Exhibit D.

   

	 
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	1.4.	“Cover” or “Covered By” means (i) infringes a Valid Claim, or (ii) would infringe Valid Claim if it existed in an issued patent.
	
 
	
 
	
 

	
 
	1.5.	“First Commercial Sale” means the [***] First Commercial Sale shall not include [***].
	
 
	
 
	
 

	
 
	1.6.	“Field” subject to the provisions of Section 2.2 means all fields, including without limitation Human Therapeutics.
	
 
	
 
	
 

	
 
	1.7.	“IND” means an Investigational New Drug Application, as defined in 21 U.S.C. Section 301 et seq. of the U.S. Federal Food, Drug and Cosmetic act, as amended from time to time, or similar application or submission that is required to be filed with any Regulatory Agency in the Territory before beginning clinical testing of a Product in human subjects.
	
 
	
 
	
 

	
 
	1.8.	“Independent Auditor” means Third Party individuals and/or auditors, selected by the Foundation in its sole discretion, and reasonably acceptable to Licensee.
	
 
	
 
	
 

	
 
	1.9.	“Indemnified Parties” has the meaning assigned and ascribed in Section 9.1(a).
	
 
	
 
	
 

	
 
	1.10.	“Indication” means each [***] Notwithstanding the foregoing, [***]
	
 
	
 
	
 

	
 
	1.11.	“Initiation” means the first dosing of a patient by Licensee or Sublicensee in a Phase I Clinical Trial, Phase II Clinical Trial or a Phase III Clinical Trial.
	
 
	
 
	
 

	
 
	1.12.	“License Maintenance Fee(s)” has the meaning assigned and ascribed in Section 3.4.
	
 
	
 
	
 

	
 
	1.13.	“Licensed Patents” means the patents and patent applications listed in EXHIBIT A including (i) all divisionals, continuations, continuations in part (but only the claims that claim priority to the patent and patent applications listed in EXHIBIT A), (ii) any valid domestic and foreign patents which may issue from such patent applications and any reissues, renewals, substitutions, or extensions of or to any such patents or patent applications; and (iii) any corresponding foreign patents and foreign patent applications.
	
 
	
 
	
 

	
 
	1.14.	“Licensed Subject Matter” means the Patent Rights, Technical Information, and Material, if any within the Field.
	
 
	
 
	
 

	
 
	1.15.	“Material” means the tangible physical material, if any, delivered to Licensee hereunder, and any progeny or derivatives thereof developed by Licensee, Affiliates and/or Sublicensees. Any Materials delivered to Licensee hereunder shall be listed in Exhibit B attached hereto and amended as necessary.
	
 
	
 
	
 

	
 
	1.16.	“Material Obligations” has the meaning assigned and ascribed in Section 10.1(a).
	
 
	
 
	
 

	
 
	1.17.	“Milestone Payments” has the meaning assigned and ascribed in Section 3.7.

 

	 
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	1.18.	“NDA” means a new drug application submitted to the FDA prior to marketing a Product as required under the United States Federal Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or the substantive equivalent of such NDA as required by a Regulatory Agency prior to marketing and selling a Product in such Regulatory Agency’s country.
	
 
	
 
	
 

	
 
	1.19.	“Net Sales” means the gross revenues received by Licensee, Affiliates, and Sublicensees from the manufacture, use, sale, or other transfer of any Product including, without limitation, the provision of any Patent Service or Other Service, less sales and/or use taxes actually paid, import and/or export duties actually paid, outbound transportation paid, prepaid or allowed, and amounts allowed or credited, and actually refunded, due to returns (as reflected on the invoice, and not to exceed the original billing amount). In this context, gross revenues will also include the fair market value of any non-cash consideration received by Licensee, Affiliates, and Sublicensees for the manufacture, use, sale, or other transfer of Product and provision of any Patent Service or Other Service. In the case of transfers of Products between any of Licensee, Affiliates, and Sublicensees, of any of the foregoing such that the Products are not consumed or used, and not incorporated into a product or service subsequently sold to a Third Party customer, Net Sales shall be the greater of (i) the actual amount charged for the transfer of the Product between any of Licensee, Affiliates and Sublicensees, of any of the foregoing and (ii) the gross invoice or contract price charged to the Third Party customer for that Product in an arms-length transaction. If a Product is sold in a combination with other active components (“Combination Sale”), Net Sales on the Combination Sale shall be calculated by multiplying the Net Sales of that Combination Sale by the fraction A/(A+B), where A is the average sale price in the relevant country of the Product included in the Combination Sale when sold separately in finished form and B is the average sale price, in the same country of the other product(s) included in the Combination Sale when sold separately in finished form. If no such separate sales are made by Licensee, Affiliates or Sublicensees, Net Sales for royalty determination shall be calculated by multiplying Net Sales of the Combination Sale by the fraction C/(C+D), where C is the Cost of Goods attributable to the Product included in the Combination Sale and D is the Cost of Goods attributable to such other active components. As used in this section, the “Cost of Goods” means cost of materials used to make the Product or other active component(s) and the direct cost of labor to make the Product or other active components(s).
	
 
	
 
	
 

	
 
	1.20.	“Other Product” means all products that incorporate, use, were made or are made with the use of, or were discovered, developed, manufactured, sold, was sold, offered for sale, used, distributed, imported, or exported, with the use of the Material and/or Technical Information, in whole or in part. As used within this Agreement, the term “Other Product(s)” includes “Other Service(s)” as defined in Section 1.21.

    

	 
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	1.21.	“Other Service” means any method, process, procedure or service that incorporates or uses, Material and/or Technical Information, or any part thereof.
	
 
	
 
	
 

	
 
	1.22.	“Patent Costs” means all costs incident to preparing, filing, prosecuting, and maintaining the Patent Rights in the United States and elected foreign countries, and any and all costs incurred in filing continuations, divisional applications, or related applications thereon and any re-examinations, reissue, or similar post-grant proceedings thereof.
	
 
	
 
	
 

	
 
	1.23.	“Patent Product(s)” means all products that (i) if developed, made, manufactured, was made, used, offered for sale, sold, exported, imported, distributed or otherwise transferred within the Territory, but for the license granted herein, would infringe the Patent Rights, or (ii) are made by using a Patent Service as defined in Section 1.25, or (iv) when used, practice a Patent Service as defined in Section 1.25. As used within this Agreement, the term “Patent Product(s)” includes “Patent Service(s)” as defined in Section 1.25.
	
 
	
 
	
 

	
 
	1.24.	“Patent Rights” means Foundation’s patent rights to any subject matter that is claimed in, could be claimed in, or is otherwise Covered By: (i) one or more Valid Claims in any of the Licensed Patents, including any reissues, or reexaminations thereof; and (ii) any continuation or divisional applications of the Licensed Patents filed before the Effective Date or during the Term of this Agreement, and any patents issued thereon, including, without limitation, reissued and reexamined patents.
	
 
	
 
	
 

	
 
	1.25.	“Patent Service(s)” means (i) any method, process, procedure or service that, but for the license granted herein, would infringe the Patent Rights, or (ii) any method, process, procedure, or service that results in the manufacture of a Patent Product, as defined in Section 1.23.
	
 
	
 
	
 

	
 
	1.26.	“Payments Due” means, individually or collectively, any Royalties, License Maintenance Fees, Annual Minimum Royalties, Sublicensing Fees, Milestone Payments, late payment fees, Patent Costs, or other amounts due to Foundation under this Agreement.
	
 
	
 
	
 

	
 
	1.27.	“Phase I Clinical Trial” means a human clinical trial of a Product conducted in a manor generally consistent with US regulation 21 CFR § 312.21(a), as amended (or its successor regulation), or other comparable regulation imposed by a Regulatory Agency in any country of the Territory.

 

	 
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	1.28.	“Phase II Clinical Trial” means a human clinical trial of a Product conducted in a manor generally consistent with US regulation 21 CFR § 312.21(b), as amended (or its successor regulation), or other comparable regulation imposed by a Regulatory Agency in any country of the Territory.
	
 
	
 
	
 

	
 
	1.29.	“Phase III Clinical Trial” means a human clinical trial of a Product, conducted in a manor generally consistent with US regulation 21 CFR § 312.21(c), as amended (or its successor regulation), or other comparable regulation imposed by a Regulatory Agency in any country of the Territory.
	
 
	
 
	
 

	
 
	1.30.	“Product” or “Products” shall include Patent Products and Other Products.
	
 
	
 
	
 

	
 
	1.31.	“Regulatory Agency” means any applicable supranational, national, regional, state or local regulatory agency, department, bureau, commission, council or other government entity involved in granting of regulatory approval for a Product in a regulatory jurisdiction within the Territory, including, without limitation, the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA).
	
 
	
 
	
 

	
 
	1.32.	“Reporting Period” means every semi-annual period ending on the last day of the second and the fourth calendar quarter.
	
 
	
 
	
 

	
 
	1.33.	“Royalty” and “Royalties” has the meaning assigned and ascribed in Section 3.3.
	
 
	
 
	
 

	
 
	1.34.	“Royalty Term” “Royalty Term” means the period of time beginning on the Effective Date and ending on the later of: (i) the expiration date of the last to expire Patent Right; or (ii) ten (10) years from the date of the First Commercial Sale of a Product.
	
 
	
 
	
 

	
 
	1.35.	“Sublicense Agreement” (or “Sublicense”) means the agreement under which Licensee grants to an authorized Sublicensee any or all of the rights granted to Licensee under this Agreement or an option to any or all of the rights granted to Licensee under this Agreement.
	
 
	
 
	
 

	
 
	1.36.	“Sublicensee” means any non-Affiliate third party to whom Licensee grants a sublicense of any or all of the rights granted to Licensee under this Agreement.
	
 
	
 
	
 

	
 
	1.37.	“Sublicensing Fee(s)” has the meaning assigned and ascribed in Section 3.6.

 

	 
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	1.38.	“Sublicensing Revenue” means any payments that Licensee or an Affiliate receives from a Sublicensee in consideration of the rights under the Licensed Subject Matter granted in a Sublicense Agreement, including without limitation, license fees, milestone payments, license maintenance fees, service fees, and other payments of any kind including without limitation in-kind payments, equity amounts taken by Licensee in lieu of cash, or discounts below fair market value of an equity purchase by Licensee, but specifically excluding any royalties paid by Sublicensee to Licensee and (i) payment or reimbursement for direct research costs directly related to the research and development of Foundation’s Licensed Subject Matter and conducted by or for Licensee including costs of materials, equipment or clinical testing, provided: a) such payments or reimbursements are at fair market value for the research performed; b) the cost to be reimbursed or paid for, are incurred after the effective date of an agreement with a Sublicensee; c) Licensee is obligated to perform such research under the agreement with the Sublicensee; and d) such payments are characterized as reimbursement or payment, as the case may be, in all accounting practices performed by or on behalf of the Licensee and the Sublicensee, (ii) an equity investment in or debt financing of Licensee ; and (iii) as payment of or reimbursement for patent prosecution or maintenance expenses provided such payments are characterized as such payment in all accounting practices performed by or on behalf of the Licensee.
	
 
	
 
	
 

	
 
	1.39.	“Technical Information” shall mean (i) certain technical information, existing as of the Effective Date of the Agreement or arising within [***] from the Effective Date of the Agreement, including but not limited to [***]
	
 
	
 
	
 

	
 
	1.40.	“Term” refers to the term of this Agreement and, subject to Section 10, means the period of time set forth in the definition of Royalty Term.
	
 
	
 
	
 

	
 
	1.41.	“Territory” means worldwide.
	
 
	
 
	
 

	
 
	1.42.	“Third Party” means shall any entity or person other than the Foundation, Licensee, Affiliates or Sublicensees. .
	
 
	
 
	
 

	
 
	1.43.	“Valid Claim” means any unexpired claim in an issued unexpired patent, or any claim of a pending patent application or supplementary protection certificate within the Patent Rights that has not been pending for more than eight (8) years from the anniversary of the applicable patent application filing date and that has not been revoked, abandoned, disclaimed or withdrawn, or held unenforceable, unpatentable, or invalid by a court of competent jurisdiction in a final judgment that has not been appealed within the time allowed by law or from which there is no further appeal.

 
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	2.	GRANT OF RIGHTS AND RETAINED RIGHTS

 

	
 
	2.1.	Exclusive License. Subject to the terms of this Agreement, including without limitation Section 2.3 and Section 4.4, Foundation grants to Licensee and Affiliates a revocable (solely in accordance with the termination provisions set forth in this Agreement), exclusive license under the Patent Rights to develop, make, manufacture, have made, use, sell, have sold, import, export, distribute and offer for sale Patent Product(s) in the Territory and in the Field during the Term of this Agreement, including the right of Licensee to sublicense as set forth in Section 5. Foundation also grants Licensee a revocable (solely in accordance with the termination provisions set forth in this Agreement), exclusive license to use Technical Information, subject to the rights and limitations in this Agreement, to develop, manufacture, have made, use, sell, offer to sell, have sold, import, export, or distribute Products in the Field and throughout the Territory. Finally, subject to the terms of this Agreement, including without limitation Section 2.3, Foundation grants to Licensee a revocable (solely in accordance with the termination provisions set forth in this Agreement), exclusive right to use Material to develop, manufacture, have made, use, sell, offer to sell, have sold, import, export, distribute Products in the Field and throughout the Territory.
	
 
	
 
	
 

	
 
	2.2.	Future Field Exclusion(s). If, at any time, after the three (3) year anniversary of the Effective Date of the Agreement and during the remainder of the Term, Foundation receives bona fide offer from a Third Party to license Licensed Patents for any specific use outside of the Human Therapeutics field, Foundation shall give written notice of such offers to Licensee pursuant to Section 18.5. If within sixty (60) days of receipt of Foundation’s notice, Licensee fails to show that it has already initiated and it is maintaining an active development program for said specific use, Licensee shall, within six (6) months of receipt of Foundation’s notice, elect one of the following options: (a) grant a Sublicense to such referred Third Party for said specific use; (b) provide to Foundation a detailed, written plan for development and commercialization of Products for such specific use and begin actual implementation and maintenance of such plan immediately; or (c) notify Foundation in writing of its intent not to grant such Sublicense or develop and commercialize Products for such specific use. In the event Licensee elects option (c), said specific use would thereafter not be included within Field and Foundation would be free to directly license Patent Rights, Technical Information and Material to one or more Third Parties for use in the excluded licensed field. If Licensee elects option set forth in option (a), the Foundation shall be entitled to a share of Sublicensing Revenues from such Sublicense that is greater than [***]

    

	 
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	2.3.	Retained Rights. Foundation reserves all rights not specifically granted herein. Accordingly, except as expressly provided under this Section 2, no right or license is granted (expressly or by implication or estoppel) by Foundation to Licensee, its Affiliates or Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, trade secret, know-how technical information, data or other proprietary right. In addition, Foundation reserves the right for itself, Stony Brook University and its inventors and developers to:

 

	
 
	(a)	Use the Licensed Subject Matter for academic, educational, and non-commercial research purposes;
	
 
	
 
	
 

	
 
	(b)	Publish or otherwise disseminate any information about the Licensed Subject Matter, at any time; and
	
 
	
 
	
 

	
 
	(c)	Allow, at Foundation’s sole discretion, other educational and nonprofit institutions to use the Licensed Subject Matter for internal academic, educational, and non-commercial research purposes only.
	
 
	
 
	
 

	
 
	
Finally, the grant of rights in Section 2.1 is subject to the overriding obligations to the U.S. Government, if any, set forth in 35 U.S.C. §§200-212, and any future amendments thereto, and applicable governmental implementing regulations, including but not limited to those described in Section 13 herein. 

 

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	3.	CONSIDERATION AND PAYMENT TERMS
	
 
	
 

		The parties hereto understand that the fees and royalties payable by Licensee to Foundation under this Agreement are partial consideration for the license granted under this Agreement. Licensee will pay Foundation:

 

	
 
	3.1.	Upfront Fee. Within thirty (30) days of the Effective Date, Licensee will pay to Foundation an upfront, nonrefundable, non-creditable payment of [***]
	
 
	
 
	
 

	
 
	3.2.	Importance of Technical Information and Material. Licensee has requested, and Foundation has agreed, to grant certain rights to Technical Information and Materials. Licensee requires these rights in order to develop and commercialize the technology licensed hereunder. Because of the importance of Technical Information and Materials, Licensee has agreed to pay certain Royalties to Foundation on Other Products, as specified below, even if it is not Covered By Patent Rights, in order to obtain rights to Technical Information and Materials. Licensee has agreed to these payments because of the commercial value of Technical Information and Materials, separate and distinct from the commercial value of the Patents Rights. Licensee acknowledges that it would not have entered into this Agreement without receiving the rights to the Technical Information and Materials specified in Section 2. Licensee further acknowledges that licenses to Technical Information, Materials, and each patent and application within the definition of Patent Rights were separately available from a license to the Patent Rights, and that for convenience and because of the preference of Licensee, the parties executed this combined license to the Patent Rights, Technical Information, and Materials.
	
 
	
 
	
 

	
 
	3.3.	Royalties on Net Sales (“Royalties”).

     

	
 
	(a)	With respect to sales of Patent Products by Licensee, Affiliates, or Sublicensees, in the Territory, Licensee shall pay [***] of Net Sales generated from Patent Products.
	
 
	
 
	
 

	
 
	(b)	With respect to sales of Other Products by Licensee, Affiliates, or Sublicensees in the Territory, Licensee shall pay [***] of Net Sales generated from Other Products.

   

	 
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	(c)	If a Product is covered by both the definition of Patent Product and Other Product, Foundation shall be entitled to the Patent Product royalty rate on the Product. Foundation shall not be entitled to more than one royalty payment on the same Product sale under this section. To the extent a Product ceases being a Patent Product, but is still an Other Product, Foundation shall be entitled to the Other Product royalty rate on the Product, but only for such time as such Product is not Covered By Patent Rights. By way of example, but not by way of limitation, if the manufacture of a Product is Covered By the claim of a Patent, and the manufacture of that Product also incorporates Technical Information, Licensee must pay the royalty specified in Section 3.3 (a). If, after some period of time (for example, five years) of paying the royalties specified in Section 3.3(a) for the Net Sales of the Product, the Product ceases to be a Patent Product, Company must continue to pay royalties on the Product pursuant to Section 3.3(b). If at a later time, Product is again Covered By Patent Rights, the royalty specified in Section 3.3(a) shall again apply.
	
 
	
 
	
 

	
 
	(d)	On a country-by-country basis, in the event that one or more licenses from a Third Party(ies) are required to make, manufacture, use, sell, import or offer to sell a Product, the Royalties payable to Foundation, as set forth in this Section 3.3 as a result of Net Sales of such Product, may be reduced by [***] of the applicable Royalty due pursuant to Section 3.3.

 

	
 
	3.4.	License Maintenance Fee. Licensee will pay to Foundation a, nonrefundable, non-creditable fee (the “License Maintenance Fee”), per year, and payable on the first anniversary of the Effective Date and annually thereafter on each anniversary of the Effective Date according to the following schedule:
	
 
	
 
	
 

	
 
	
 
	
First anniversary: $5,000.00

Second anniversary: $10,000.00

Third anniversary: $15,000.00

Fourth anniversary and each subsequent anniversary: $25,000.00;

 

	
 
		Notwithstanding the foregoing, no annual license maintenance fee will be due for any year during which Licensee pays at least fifty thousand dollars ($50,000.00) to Foundation under one or more sponsored research agreement(s). Licensee’s obligation to pay the foregoing license maintenance fees will end on the first anniversary following the date of Licensee’s first commercial Royalty-generating sale of a Product.
	
 
	
 
	
 

	
 
	3.5.	5. Annual Minimum Royalties on Net Sales. Beginning in the calendar year of First Commercial Sales of the first Product by Licensee, Affiliates, or Sublicensee and due and payable each year on the anniversary of the Effective Date of the Agreement, during the Royalty Term, Licensee shall pay to the Foundation an annual minimum royalty fee of fifty thousand dollars ($50,000.00) (the “Annual Minimum Royalty”). The Annual Minimum Royalty will be credited against the total Royalties due and owed for the calendar year in which the Annual Minimum royalty was paid.

     

	 
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	3.6.	Sublicensing Fees. Licensee will pay Foundation a portion of the Sublicensing Revenues (“Sublicensing Fees”) in accordance with the following schedule:
	
 
	
 
	
 

	
 
	
 
	
Prior to [***]

[***] for the first Product             [***]

 

After the [***]

[***] for the first Product,

but prior to [***] [***]

 

After the [***]

[***]

[***]                            [***]

	
 
	
 
	
 

	
 
	
 
	
Payments shall be made to Foundation within thirty (30) days of receipt by Licensee.

 

	
 
	3.7.	Milestone Payments. Licensee will pay Foundation non-refundable and non-creditable milestone payments within thirty (30) days after the achievement of certain milestones of the Commercialization Plan according to the following schedule (“Milestone Payments”):

 

	
Milestone
	
 
	
Milestone Payment ($US)
	
 

	
Lead candidate selection (milestone one of the Commercialization business plan) or second anniversary of Effective Date of Agreement, whichever comes first
	
 
	$	25,000.00	
 

	
Initiation of a Phase II Clinical Trial for the first Indication of each active pharmaceutical ingredient that results from the grant of rights in Section 2 to Licensed Subject Matter
	
 
	$	150,000.00	
 

	
Initiation of a Phase III Clinical Trial for the first Indication of each active pharmaceutical ingredient that results from the grant of rights in Section 2 to Licensed Subject Matter
	
 
	$	250,000.00	
 

	
Upon First Commercial Sale based upon FDA or EMA regulatory approval for the first Indication of each active pharmaceutical ingredient that results from the grant of rights in Section 2 to Licensed Subject Matter
	
 
	$	1,500,000.00	
 

	
Receiving FDA or EMA approval for the second and each subsequent Indication of each active pharmaceutical ingredient that results from the grant of rights in Section 2 to Licensed Subject Matter
	
 
	$	1,000,000.00	
 

	
First time annual Net Sales greater than $100,000,000.00
	
 
	$	1,000,000.00	
 

	
First time annual Net Sales greater than $500,000,000.00
	
 
	$	5,000,000.00	
 

 
	 
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	3.8.	Payment Terms. All dollar amounts for Payments Due referenced herein will refer to U.S. Dollars. Payments with designated payment dates are due and payable on or before those dates. Royalties will be due and payable within seventy-five (75) days after the end of each Reporting Period for the Net Sales received during such Reporting Period. All invoiced amounts, including, but not limited to, the reimbursement of Patent Costs, will be due and payable within thirty (30) days of the respective invoice date. When Product(s) are sold for currencies other than U.S. Dollars, Royalties will first be determined in such foreign currency and then converted into equivalent U.S. Dollars per the exchange rate quoted in the Wall Street Journal on the last business day of the applicable Reporting Period as such foreign currency per U.S. Dollar. For the avoidance of doubt, Licensee is solely responsible for bank transfer charges, including but not limited to, wire transfer fees.
	
 
	
 
	
 

	
 
	3.9.	Payment Address. All payments for Payments Due will be made payable to “The Research Foundation for The State University of New York” and will be sent to the following address:
	
 
	
 
	
 

	
 
	
 
	
The Research Foundation for The State University of New York

Attention: Cash Management

P.O. Box 9

Albany, NY 12201-0009

United States

 

For Wire Transfers: 

Bank: Key Bank of New York

66 South Pearl Street

Albany, NY 12207

Account Number: 10970107

Routing Number: ABA 0213-00077

Swift Code: KEYBUS33

 

Please include the following notation on all payments: “Office of Technology Licensing at Stony Brook University”

 

	 
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	3.10.	Late Payment. In the event that any Payments Due are not timely received by Foundation when due, Licensee will pay to Foundation, in addition to such Payments Due, interest on such Payments Due computed using the lesser rate of: (i) twelve percent (12%) per annum; or (ii) the maximum rate allowable under the applicable law. Interest will be calculated from the date payment was due until actually received by Foundation, inclusive.
	
 
	
 
	
 

	
 
	3.11.	Foreign Charges. Royalties due for sales that occur in any country may not be reduced by any deduction of withholding, value-added taxes, fees, or other charges imposed by the government of such country, except as permitted in the definition of Net Sales.
	
 
	
 
	
 

	
 
	3.12.	Licensee Responsibility for Affiliates and Sublicensees. Licensee shall be responsible for obtaining the full compliance of Affiliate(s) and Sublicensee(s) with the terms and conditions of this Agreement and any Sublicense(s). For the purposes of payments, Licensee shall be fully and solely responsible for any Payments Due to Foundation on the account of any activities by Sublicensee(s) and/or Affiliates pursuant to the terms of this Agreement.

 

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	4.	DUE DILIGENCE AND COMMERCIALIZATION ACTIVITIES 

 

	
 
	4.1.	Licensee and Foundation have agreed on the initial Commercialization Plan for Licensee’s efforts to develop, market, and commercialize the Licensed Subject Matter and Product(s).
	
 
	
 
	
 

	
 
	4.2.	Upon execution of this Agreement, Licensee will, either directly or through authorized Affiliates and/or Sublicensees, diligently proceed with implementation of the Commercialization Plan.
	
 
	
 
	
 

	
 
	4.3.	Licensee will use diligent efforts to complete the milestones set forth in the Commercialization Plan by the dates specified therein. Notwithstanding the foregoing, the parties understand that the Commercialization Plan is a forecast subject to change due to unforeseen technical development challenges and the actions of government regulatory authorities such as the FDA and DEA. Accordingly, the parties shall negotiate, in good faith, an extension to the milestones in the Commercialization Plan, if Licensee is unable to compete a milestone set forth in Commercialization Plan for reasons that parties mutually and reasonably agree are beyond Licensee’s control.
	
 
	
 
	
 

	
 
	4.4.	Licensee acknowledges and agrees that a fundamental purpose of this Agreement is to achieve development and commercialization of the Licensed Subject Matter and Products, and the terms in this Section 4 constitute material terms of this Agreement. If Licensee fails to perform its obligations specified in this Section 4 by the due dates set forth in the Commercialization Plan (as may be extended pursuant to Section 4.3), then Foundation will have the unilateral right and option to: (i) terminate this Agreement; or (ii) modify the terms of the Agreement from an exclusive license to a non-exclusive license. This right to modify the terms, if exercised by Foundation, supersedes the rights granted in Section 2.1 of this Agreement.

 

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	5.	SUBLICENSING 

 

	
 
	5.1.	The license granted by this Agreement includes the right of Licensee and Affiliates to grant Sublicenses. With respect to Sublicenses granted pursuant to this Agreement, Licensee will:

 

	
 
	(a)	include all of the rights of, and obligations due to, Foundation under this Agreement on any Sublicense executed;
	
 
	
 
	
 

	
 
	(b)	promptly provide Foundation with a complete and unredacted copy of each executed Sublicense promptly after the execution thereof;
	
 
	
 
	
 

	
 
	(c)	not receive, or agree to receive, anything of value in lieu of cash as consideration from a third party under a Sublicense without the express written consent of Foundation;
	
 
	
 
	
 

	
 
	(d)	make all Payments Due and deliver all reports due to Foundation whether owed by Licensee, Affiliates or Sublicensees, and use commercially reasonable efforts to collect all payments due, directly or indirectly, to Foundation from Sublicensees.

 

	
 
	5.2.	Upon termination of this Agreement for any reason, all Sublicenses that are granted by Licensee pursuant to this Agreement where the Sublicensee is in full compliance with the obligations its Sublicense Agreement as of the date of such termination will remain in effect and will be assigned to Foundation, except that Foundation will not be bound to perform any duties or obligations set forth in any Sublicense Agreement that extend beyond the duties and obligations of Foundation set forth in this Agreement. Licensee will include a provision in each Sublicense which allows Foundation to assume the Sublicense if: (i) this Agreement is terminated; and (ii) the Sublicensee is in compliance with the foregoing requirements set forth in this Section 5.2.

 

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	6.	PATENT PROSECUTION AND PATENT COSTS

 

	
 
	6.1.	Patent Rights Management. Foundation will be solely responsible for the preparation, filing, prosecution, and maintenance of the Patent Rights. Licensee agrees to cooperate, and to cause its Affiliates and Sublicensees to cooperate, with Foundation in a timely manner in the preparation, filing, prosecution, and maintenance of Patent Rights by disclosing such information as may be requested from time to time by Foundation and by promptly executing such documents as Foundation may reasonably request in connection therewith. Licensee, Sublicensees and Affiliates will bear their own costs in connection with their cooperation with Foundation under this Section 6.1. Foundation will use reasonable effort to provide, or will have their legal counsel provide, to Licensee copies of documents received or prepared by Foundation in the prosecution and maintenance of the Patent Rights sufficiently in advance of submitting same to the patent office, so that Licensee may comment upon such documents. Foundation will use reasonable efforts or will have their legal counsel prepare or amend any patent application within Patent Rights to include claims reasonably requested by Licensee to protect the Products contemplated to be sold under this Agreement.
	
 
	
 
	
 

	
 
	6.2.	Reimbursement of Patent Costs. Licensee will reimburse Foundation for all Patent Costs incurred, pursuant to Section 6.1, prior to the Effective Date. As of the Effective Date of the Agreement, the accrued patent costs are approximately $170,109.93 which shall be paid to Foundation in three equal installments due on the six (6) month, twelve (12) month and eighteen (18) month anniversaries of the Effective Date of the Agreement.
	
 
	
 
	
 

	
 
		Licensee will pay all Patent Costs incurred after the Effective Date within thirty (30) days after its receipt of an invoice for such Patent Costs.
	
 
	
 
	
 

	
 
	6.3.	Invoicing. For all Patent Costs, Foundation may, at its option: (i) invoice Licensee directly; or (ii) have the law firm or other entity providing the patent-related services to send a copy of each Patent Cost invoice to Licensee for direct payment by Licensee of such Patent Cost expenses.
	
 
	
 
	
 

	
 
	6.4.	If Licensee decides to discontinue its support of Patent Costs for a specific Licensed Patent(s) or for a particular issued patent or pending patent application claiming priority to a Licensed Patent (“Discontinued Patent Rights”), Licensee will notify Foundation in writing sixty (60) days prior to any such discontinuation. Licensee will be responsible for reimbursing Foundation for any Patent Costs associated with such Discontinued Patent Rights that Licensee incurred up to sixty (60) days after the date of the receipt of such notice, whether or not such costs were invoiced to and/or paid by Licensee. Upon such discontinuation, Foundation, at its sole discretion, will have the rights to: (i) abandon the Discontinued Patent Rights and any related applications; (ii) exclude the Discontinued Patent Rights, and any related applications (including any application that claims priority to the patent application within the Discontinued Patent Rights or any patent application from which the patent application within the Discontinued Patent Rights may claim priority), from any license granted under this Agreement; (iii) grant only a non-exclusive license to the Discontinued Patent Rights, and any related applications (iv) convert any exclusive license granted under this Agreement to the patent application within the Discontinued Patent Rights, and any related applications, to a non-exclusive license. Foundation and Licensee agree to amend EXHIBIT A in a timely manner after notification of discontinuation of support under this Section 6.4.

 

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	7.	BOOKS, RECORDS, AND REPORTS

 

	
 
	7.1.	Full and Accurate Records. Licensee will keep, and will cause its Sublicensees and Affiliates to keep, full and accurate books and records in sufficient detail so that Licensee’s compliance with its obligations under this Agreement can be properly determined without undue delay or difficulty. Such books and records will be maintained for at least two (2) years after the Reporting Period(s) to which they relate. Books and records will include but not be limited to: accounting general ledgers; invoice/sales registers; original invoice and shipping documents; federal and state business tax returns; company financial statements; sales analysis reports; inventory and manufacturing records; sublicense and distributor agreements; price lists, product catalogs, and other marketing materials; and laboratory notebooks.
	
 
	
 
	
 

	
 
	7.2.	Inspection of Records. Foundation may, from time to time and at any reasonable time upon reasonable advance notice and during Licensee’s normal business hours, not exceeding once every twelve (12) months, through an Independent Auditor as Foundation may designate, inspect the complete and unredacted books and records of Licensee, Affiliates, and Sublicensees, in order to verify the accuracy of any reported statement by Licensee of Payments Due or amounts paid, or to determine compliance with any other obligation(s) of Licensee under this Agreement. Licensee agrees to cooperate fully with the Independent Auditor in connection with such review.
	
 
	
 
	
 

	
 
		After completion of any such inspection, Foundation will notify Licensee in writing of any discrepancies in Payments Due or amounts paid to Foundation. Such inspection will be made at the expense of Foundation, unless such inspection discloses an underpayment discrepancy of five percent (5%) or more in any calendar quarter. In such case, Licensee will be responsible for reimbursing Foundation for the inspection fee and expenses associated with such inspection within thirty (30) days after a written demand by Foundation. Licensee agrees to pay past due amounts for any deficiency error in Payments Due as determined by the Independent Auditor, including without limitation any payment deficiency since the Effective Date of the Agreement. Any underpayment as determined by the Independent Auditor will bear interest at one percent (1%) per month from the date the original payment was due. Foundation and the Independent Auditor will maintain in confidence such inspection and the resulting report. The Independent Auditor may from time to time consult the Foundation and any of its employees or third party counsel on questions as they relate to this Agreement. The Independent Auditor may not disclose financial or proprietary information except as required to conduct the audit, to report the results of the audit, or as otherwise permitted by this Agreement or if the information already exists in the public domain. No other confidentiality agreement will be required to conduct the audit of the Licensee’s books and records.

    

	 
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	7.3.	Reporting Period Reports. Within seventy-five (75) days after the end of each Reporting Period during the Royalty Term, Licensee will provide reports containing the following information for the applicable Reporting Period: (i) the number and type of Products made by or for Licensee, Affiliates and Sublicensee(s); (ii) the number and type of Products sold by Licensee, Affiliates, and Sublicensee(s); (iii) the Net Sales (and the calculation of Net Sales); (iv) the Royalties due under Section 3.3; (v) the Sublicensing Revenue (and the calculation of Sublicensing Revenue); (vi) the Sublicensing Fees due under Section 3.6; (vii) the total amount (Royalties and Sublicensing Fees) due to Foundation; (viii) identification of all Patent Rights claims that any Patent Product is Covered By; (ix) identification of Materials and Technical Information used or incorporated in the discovery, development, manufacture, use, sale, offering for sale, importation, exportation, distribution of any Other Product; (x) any License Maintenance Fees under Section 3.4; (xi) the Annual Minimum Royalties under 3.5; (xii) the milestones completed and the Milestone Payments under 3.7; and (xiii) the total amount paid or payable for any Payments Due . Licensee will submit these reports to Foundation even if there are no Payments Due for a particular Reporting Period. The foregoing will be provided on a country-by-country basis. Licensee will include with such reports copies of all reports Licensee receives from Sublicensees and Affiliates for the Reporting Period.
	
 
	
 
	
 

	
 
	7.4.	Semi-Annual Due Diligence Reports. Within sixty (60) days after the end of each second and fourth calendar quarter, Licensee will provide reports containing the following information relating to the two previous calendar quarters: progress on the commercialization and development of the Licensed Subject Matter and Products (i.e., new product development, product evaluation and testing, marketing plans, sales forecasts, significant commercialization events, scientific and commercialization hurdles faced, and progress on the milestones set forth in the Commercialization Plan). The foregoing will be provided on a country-by-country basis. 
	
 
	
 
	
 

	
 
	7.5.	Report Certification. An officer of Licensee will sign and certify each report required under this Section 7, and all reports will be prepared in accordance with Generally Accepted Accounting Principles.

 

	 
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	8.	ENFORCEMENT OF PATENT RIGHTS
	
 
	
 

	
 
	8.1.	Foundation and Licensee will promptly inform the other in writing of any actual, alleged, or suspected infringement or violation of any Patent Right by a third party, of which it is aware, and provide available evidence of infringement (“Infringement Notice”). During the period of sixty (60) days following the date of Infringement Notice, neither Foundation nor Licensee will notify a third party (including the infringer) of infringement or put such third party on notice of the existence of any Patent Rights without first obtaining consent of the other.
	
 
	
  
	
 

	
 
	8.2.	With respect to any Patent Rights licensed exclusively by Foundation to Licensee under this Agreement, Licensee shall have, for an initial period of one hundred twenty (120) days following Infringement Notice under the provisions of Section 8.1, and only with Foundation’s prior, written authorization, the first right, but not the obligation, to institute and control the prosecution of a suit or to take any other action to abate infringement of the Patent Rights. Licensee will inform Foundation of its intent to institute such action, in writing, and Foundation will have fifteen (15) days to authorize such action by Licensee, in writing. Such authority to institute action shall not be unreasonably withheld. For clarity, if Foundation does not provide a written authorization within the fifteen (15) day period, Licensee will not be authorized to institute such action. In the event, [***] During the fifteen day period, Foundation may also notify Licensee that Foundation will join Licensee, at its own expense, in such action under the provisions of Section 8.4 but may not thereafter commence suit against the infringer for the acts of infringement that are the subject of Licensee’s suit or any judgment rendered in that suit. In the event that Licensee requests, in writing, that Foundation joins a suit to enforce the Licensed Patents, Foundation shall promptly join such suit, at Licensee’s expense.
	
 
	
  
	
 

	
 
	8.3.	Subsequent to Licensee’s initial one hundred and twenty (120) day period, solely if Foundation provided a written authorization for Licensee to institute an infringement action and Licensee did not institute such infringement action or has not otherwise abated the subject third party infringement, Foundation shall have the right, but not the obligation, to institute and control the prosecution of a suit or to take any other action for infringement of any of the Patent Rights. If Foundation decides to initiate a lawsuit to enforce Patent Rights pursuant to this Section 8.3, Foundation will notify Licensee in writing. Licensee will have fifteen (15) days from receipt of such notice to notify Foundation that Licensee will join Foundation in such lawsuit under the provisions of Section 8.4. If Licensee does not timely notify Foundation that it will be joining in such lawsuit, then it will be deemed that Licensee has assigned to Foundation all rights, causes of action, and damages resulting from any alleged infringement.

 

	 
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		8.4. 	Foundation and Licensee may agree to enforce patent rights jointly, including by filing a lawsuit jointly. If a lawsuit is brought jointly in the names of both parties, then the out-of-pocket costs shall be borne equally, and any recovery or settlement shall be shared equally. Foundation and Licensee shall agree to the manner in which they shall exercise control over such lawsuit. Each party may, at its own option and expense, be represented by separate counsel of its own selection.
		  	
		8.5. 	If any suit is brought involving the enforcement or defense of the Patent Rights, the other party hereto agrees, at the request and expense of the party initiating such suit, to reasonably cooperate and to make available relevant records, papers, information, samples, specimens and the like.
		  	
		8.6. 	No settlement or consent judgment or other voluntary final disposition of an enforcement or defense suit initiated by either party to this Agreement may be entered into without the consent of Foundation, which consent will not be unreasonably withheld.
		  	
		8.7. 	In the event that an action alleging invalidity or noninfringement of the Patent Rights is brought against Licensee, Foundation reserves the right, within thirty (30) days after commencement of such action, to intervene and take over the sole defense of the action at its own expense.
		  	
		8.8. 	The total cost of any action commenced or defended solely by Foundation will be borne by Foundation and Foundation will keep any recovery or damages derived therefrom.
		  	
		8.9. 	The cost of any infringement action commenced or defended by Licensee will be borne by Licensee. Any recovery or damages resulting from such an action will first be applied to Licensee’s out-of-pocket expenses and legal fees, and second will be applied to Foundation’s out-of-pocket expenses, including legal fees. Any excess recovery or damages (a) to the extent such excess recovery or damages represent a direct damages awards for actual lost sales of Products in a jurisdiction where Licensee, its Affiliate or Sublicensee is actually selling Products during the period of infringement subject of such infringement action, will be considered Net Sales, subject to payment of Royalties in the amount of [***] of such amount under the Section 3.3(a), and (b) otherwise will be considered [***] to Foundation as Sublicensing Fees as set forth in Section 3.6.

    

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	9.	INDEMNIFICATION AND INSURANCE
	
 
	
 

	
 
	9.1.	Indemnification.
	
 
	
 
	
 

	
 
	(a)	Licensee shall indemnify, defend, and hold harmless Foundation, and its trustees, officers, staff, employees, students, and agents and their respective successors, heirs, and assigns, and Stony Brook University, and its trustees, officers, staff, employees, students, and agents and their respective successors, heirs, and assigns, (the “Indemnified Parties”), against any liability, damage, loss, or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon the Indemnified Parties or any one of them in connection with any claims, suits, actions, demands, or judgments of third parties, Affiliates, and Sublicensees: (i) arising out of the design, production, manufacture, sale, use in commerce or in human clinical trials, or promotion by Licensee, an Affiliate or by an agent of Licensee or Affiliate or Sublicensee of Licensee of any Product, process or service relating to, or developed pursuant to, this Agreement; or (ii) arising out of any other activities to be carried out by or on behalf of Licensee pursuant to this Agreement provided that the liability, damage or loss is not attributable to the negligent activities of such Indemnified Party.
	
 
	
 
	
 

	
 
	(b)	Licensee agrees, at its own expense, to provide attorneys reasonably acceptable to Foundation to defend against any actions brought or filed against any Indemnified Parties with respect to the subject of indemnity to which such Indemnified Parties are entitled hereunder, whether or not such actions are rightfully brought. Foundation will cooperate in the defense thereof, provided, however, that Foundation will have the right, but not the obligation, to control the defense, at its expense, of any such actions. Foundation and the Indemnified Parties may, at their option and expense, have their own counsel participate in any proceeding which is under direction of Licensee and will cooperate with Licensee and its insurer in the disposition of any such matter; provided, however, that if Licensee shall not defend such actions, Foundation and the Indemnified Parties shall have the right to defend such actions themselves and recover from Licensee all reasonable attorneys’ fees and expenses incurred by it during the course of such defense.
	
 
	
 
	
 

	
 
	(c)	Neither Foundation, the Indemnified Parties, nor Licensee shall enter into, or permit, any settlement of any such actions without the express written consent of the other parties, which shall not unreasonably be withheld.

 

	 
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	9.2.	Security for Indemnification.
	
 
	
 
	
 

	
 
	(a)	At such time as any Product, process, or service relating to, or developed pursuant to, this Agreement, is commercially distributed or sold, or tested in clinical trials by or on behalf of Licensee, including by its Affiliates or Sublicensees, Licensee shall at its sole cost and expense, procure and maintain policies of comprehensive general liability insurance in amounts not less than (i) $5,000,000 per incident and $5,000,000 annual aggregate during the period that such Product, process, or service is being tested in clinical trials prior to commercial sale, and (ii) $5,000,000 per incident and $5,000,000 annual aggregate during the period that such Product, process, or service is being commercially distributed or sold, and in each case naming the Indemnified Parties as additional insured. Such comprehensive general liability insurance shall provide: (i) product liability coverage; and (ii) broad form contractual liability coverage for Licensee’s indemnification obligations under Section 9.1 of this Agreement. If Licensee elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $250,000 annual aggregate) such self-insurance program shall include assets or reserves which have been actuarially determined for the liabilities associated with this Agreement and must be acceptable to Foundation.
	
 
	
 
	
 

	
 
	(b)	The minimum amounts of insurance coverage required under this Section 9.2 shall not be construed to create a limit of Licensee’s liability with respect to its indemnification obligations under Section 9.1 of this Agreement.
	
 
	
 
	
 

	
 
	(c)	Licensee shall provide Foundation with written evidence of such insurance upon request of Foundation. Licensee shall provide Foundation with written notice at least sixty (60) days prior to the cancellation, non-renewal, or material change in such insurance; if Licensee does not obtain replacement insurance providing comparable coverage by the end of such sixty (60) day period, Foundation shall have the right to immediately terminate this Agreement period without notice or any additional waiting periods.
	
 
	
 
	
 

	
 
	(d)	Licensee shall maintain such comprehensive general liability insurance beyond the expiration or termination of this Agreement during: (i) the period that any Product(s), process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold or tested in clinical trials by or for Licensee, Affiliates or Sublicensee(s) or used by an end-user or consumer of Product; and (ii) a reasonable period after the period referred to in (i) above which in no event shall be less than fifteen (15) years.

 

	 
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	10.	TERMINATION
	
 
	
 

	
 
	10.1.	Termination for Licensee Breach. 
	
 
	
 
	
 

	
 
	(a)	Licensee acknowledges and agrees that Licensee’s obligations under the following provisions are material terms of this Agreement, and Licensee’s failure to meet its obligations under these provisions will be treated as a material breach of this Agreement (“Material Obligations”): (i) obligations under Section 3 to make Payments Due to Foundation on the schedule set forth therein; (ii) obligations under Section 4 to diligently pursue and achieve commercialization activities; (iii) obligations under Section 6 related to patent prosecution and payment of patent costs; and (iv) obligations under Section 9 related to indemnification and insurance.
	
 
	
 
	
 

	
 
	(b)	If Licensee should: (i) fail to perform any covenant, condition, or undertaking of the Material Obligations of this Agreement; or (ii) materially breach any other provision of this Agreement; then Foundation may give written notice of such default to Licensee. If Licensee should fail to cure such default within ninety (90) days of notice of such default and provide adequate assurance of future performance, then this Agreement may, at Foundation’s option, be immediately terminated upon receipt of written notice by Licensee. Notwithstanding the foregoing, the cure period for any payment default shall not exceed thirty (30) days and shall not be subject to the preceding sentence. The date of receipt of any notice under this Section shall be governed by Section 18.5.
	
 
	
 
	
 

	
 
	10.2.	Automatic Termination. This Agreement shall immediately terminate without any further action by the Foundation if Licensee: (i) ceases to attempt to carry on its business with respect to the rights granted in the Agreement; (ii) becomes insolvent; or (iii) makes an assignment for the benefit of creditors or (iii) challenges, whether as a claim, cross-claim, counterclaim or defense, the validity or enforceability of any of the Patent Rights before any court, arbitrator, or other tribunal or administrative agency in any jurisdiction; then this Agreement will immediately terminate without any further action by Foundation.
	
 
	
 
	
 

	
 
	10.3.	Licensee’s Right To Terminate. Licensee may notify Foundation of their desire to terminate this Agreement at any time by giving Foundation sixty (60) days prior written notice. The termination will take effect the day after the sixtieth (60th) day has elapsed.

 

	 
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	10.4.	Accrued Obligations. Termination of this Agreement will not relieve Licensee, Affiliates, Sublicensees, and Foundation of any obligation or liability accrued hereunder prior to such termination, or rescind or give rise to any right to rescind any payments made or other consideration given to Foundation hereunder prior to the time such termination becomes effective. Licensee will pay all reasonable attorneys’ fees and costs incurred by Foundation in enforcing any obligation of Licensee or accrued right of Foundation.
	
 
	
 
	
 

	
 
	10.5.	Disposition of Products. Upon termination of this Agreement by Licensee or Foundation, pursuant to Section 10.1, 10.2, or 10.3, Licensee will provide Foundation with a written inventory of all Products in process of manufacture, in use, or in stock. Licensee may dispose of any such Products within the ninety (90) day period following such termination, provided, however, that Licensee will pay Royalties and render reports to Foundation thereon in the manner specified herein. Upon the natural expiration of this Agreement, Licensee will provide Foundation with a written inventory of all Products in process of manufacture, in use, or in stock (“Stock Products”). Licensee may [***]
	
 
	
 
	
 

	
 
	10.6.	Effects of Termination. Upon termination of this Agreement for any reason and except as provided in Sections 10.5 and 10.7, Licensee shall cease all use of Licensed Subject Matter, and delete, destroy, or return all copies of the Licensed Subject Matter and documentation in its possession or control. If Licensee chooses to delete and destroy Licensed Subject Matter, it shall provide written certification of the same.
	
 
	
 
	
 

	
 
	10.7.	Survival. The provisions Section 1 (Definitions), Section 7 (Books, Records and Reports), Section 9 (Indemnification and Insurance), Section 10.4 (Accrued Obligations), Section 10.5 (Disposition of Products), Section 10.6 (Effects of Termination), Section 10.7 (Survival), Section 10.7 (Warranty and Liability), Section 14 (Non-Use of Names), Section 17 (Confidentiality), Section 18 (Miscellaneous) and any other provisions which by their nature are inherently intended to survive will survive expiration or termination of this Agreement. In addition, upon the natural expiration of the Term and upon the expiration of the Royalty Term, on a country-by-country basis, Licensee will have the non-exclusive right to use Material and Technical Information to develop, manufacture, have made, use, sell, offer to sell, have sold, import, export, distribute Products in the Field and throughout the Territory.

 

	 
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	11.	WARRANTY AND LIABILITY
	
 
	
  

	
 
	11.1.	FOUNDATION WARRANTS TO LICENSEE THAT IT HAS THE LAWFUL RIGHT TO GRANT TO LICENSEE THE LICENSES UNDER THE LICENSED SUBJECT MATTER AS SET FORTH HEREIN. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, FOUNDATION MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS AND/OR TECHNICAL INFORMATION; AND ALL RIGHTS TO PATENT RIGHTS, TECHNICAL INFORMATION AND ANY MATERIALS PROVIDED BY FOUNDATION UNDER THIS AGREEMENT ARE PROVIDED “AS-IS”. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF LICENSED SUBJECT MATTER IS WITH THE LICENSEE.
	
 
	
 
	
 

	
 
	11.2.	NO WARRANTY OR REPRESENTATION IS MADE THAT ANYTHING MADE, USED, SOLD, OR COMMERCIALLY TRANSFERRED, UNDER THE TERMS OF THIS LICENSE, WILL BE FREE FROM INFRINGEMENT OF ANY THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.
	
 
	
 
	
 

	
 
	11.3.	 NOTHING IN THIS AGREEMENT, EITHER EXPRESS OR IMPLIED, OBLIGATES FOUNDATION EITHER TO BRING OR TO PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR PATENT INFRINGEMENT OR ENFORCEMENT OR TO FURNISH ANY INTELLECTUAL PROPERTY, INFORMATION OR MATERIALS NOT PROVIDED IN THE LICENSED SUBJECT MATTER.
	
 
	
 
	
 

	
 
	11.4. 	IN NO EVENT WILL FOUNDATION BE LIABLE FOR ANY INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES RESULTING FROM THE EXERCISE OF THIS LICENSE OR THE USE OF THE LICENSED SUBJECT MATTER, OR PRODUCTS, INCLUDING, WITHOUT LIMITATION, FOR LOST PROFITS, LOST BUSINESS OPPORTUNITY, INVENTORY LOSS, WORK STOPPAGE, LOST DATA, OR DOWNTIME, WHETHER OR NOT FOUNDATION HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
	
 
	
 
	
 

	
 
	11.5. 	IN NO EVENT WILL FOUNDATION’S AGGREGATE LIABILITY TO LICENSEE OR ANY THIRD PARTY FOR ANY CLAIMS, LOSSES, INJURIES, SUITS, DEMANDS, JUDGMENTS, LIABILITIES, COSTS, EXPENSES, OR DAMAGES, FOR ANY CAUSE WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, THOSE ARISING OUT OF OR RELATED TO THIS AGREEMENT), AND REGARDLESS OF THE FORM OF ACTION OR LEGAL THEORY, EXCEED THE FEES RECEIVED BY FOUNDATION FROM LICENSEE PURSUANT TO THIS AGREEMENT. LIMITATIONS OF LIABILITY REFLECT THE ALLOCATION OF RISK BETWEEN THE PARTIES. THE LIMITATIONS SPECIFIED IN THIS SECTION 10.7 WILL SURVIVE AND APPLY EVEN IF ANY LIMITED REMEDY SPECIFIED IN THIS AGREEMENT IS FOUND TO HAVE FAILED OF ITS ESSENTIAL PURPOSE.
	
 
	
 
	
 

	
 
	11.6. 	THIS AGREEMENT DOES NOT CONFER BY IMPLICATION, ESTOPPEL, OR OTHERWISE ANY LICENSE OR RIGHTS TO ANY OTHER FOUNDATION PROPERTY OTHER THAN THOSE RIGHTS EXPRESSLY STATED HEREIN.

  
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	12.	ASSIGNMENT
	
 
	
 

	
 
	12.1.	No part of this Agreement and the license granted hereunder may be assigned or transferred by Licensee without Foundation’s written consent. Notwithstanding the foregoing, Licensee may, without such consent, assign this Agreement and its rights and obligations hereunder to a successor in interest pursuant to a transfer or sale of all or substantially all of its business relating to this Agreement, or in the event of its merger, consolidation, change in control or similar transaction. In no event shall any assignment or transfer relieve Licensee of its primary responsibility for obligations in this Agreement until assignee or transferee and delivers a fully executed written agreement assuming and undertaking all of the duties and obligations of the Licensee under this Agreement. Any assignment made in violation of this Section will be void.
	
 
	
 
	
 

	13.	OBLIGATIONS TO FEDERAL GOVERNMENT AND OTHER SPONSORS
	
 
	
 

	
 
	13.1.	The Agreement will be subject to the rights of the United States Government, if any, resulting from any funding of the Licensed Subject Matter by the United States Government. This Agreement will also be subject to the rights of any other entities that may have contributed funding to development of the Licensed Subject Matter, if any. Licensee acknowledges that such rights, if applicable to Licensed Subject Matter, may reserve to the United States Government, a royalty-free, non-exclusive, non-transferable license to practice or have practiced on its behalf any government-funded invention claimed within any associated patents or patent applications as well as other rights.
	
 
	
 
	
 

	
 
	13.2.	Licensee agrees that to the extent required under 35 U.S.C. Section 204, any Product used, sold, or distributed by Licensee, Affiliates and Sublicensees, and in the United States will be manufactured substantially in the United States unless a waiver under 35 U.S.C. Section 204 is granted by the appropriate United States government agency.
	
 
	
 
	
 

	14.	NON-USE OF NAMES
	
 
	
 

	
 
	14.1.	Licensee agrees that it will not use Foundation’s name or State University of New York, or Stony Brook University, or any adaptation thereof (including trademarks, logos, and symbols associated with Foundation, “State University of New York”, and “Stony Brook University”) (collectively “SUNY”), or the names of the scientists, researchers, or others employed at or with SUNY in any advertising, promotional, or sales literature without first obtaining Foundation’s prior written consent, or in the case of the names of such researchers, scientists, or employees, the prior written consent of the individuals, except that Licensee may state that it is a licensee of the Foundation.

  
	 
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	15.	FOREIGN LAWS 
	
 
	
 

	
 
	15.1.	When required by local or national law, Licensee will register this Agreement, pay all costs and legal fees connected therewith, and otherwise insure that the local and national laws affecting this Agreement are fully satisfied.
	
 
	
 
	
 

	16.	COMPLIANCE WITH LAWS
	
 
	
 

	
 
	16.1.	General Compliance. Licensee will ensure compliance with all applicable county, state, federal or foreign laws, rules, and regulations governing the production, use, marketing, sale, and distribution of Products.
	
 
	
 
	
 

	
 
	16.2.	Compliance with Export Control Laws. Licensee, Affiliates and Sublicensee(s) will comply with all U.S. export control laws and regulations. Except as provided in 16.2 (a) Licensee, Affiliates and Sublicensee(s) acknowledge that they may not directly or indirectly export, re-export, distribute or transfer any commodities, technology and technical data prohibited or restricted by the Export Administration Regulations of the U.S. Department of Commerce, the International Traffic In Arms Regulations of the U.S. Department of State, the Office of Foreign Asset Controls of the U.S. Department of Treasury, the Assistance to Foreign Atomic Energy Activities of the U.S. Department of Energy.
	
 
	
 
	
 

	
 
	(a)	Licensee Export. Licensee, Affiliates and Sublicensee(s) will not export, directly or indirectly; (i) any technical data received from Foundation under this Agreement; and (ii) any Product or technical data without any applicable export license from the appropriate U.S. federal agency, subject to any exemptions or exclusions thereof. Licensee shall be solely responsible for obtaining all licenses, permits, or authorizations as required from time to time by the U.S. and any other government for any such export or re-export. Foundation makes no representation that an export license is or is not required, nor does Foundation make a representation that, if required, a license will be issued by the U.S. Department of Commerce, U.S. Department of State, U.S. Department of Energy, U.S. Department of Treasury or other appropriate governmental entity.

  
	 
	28
	

 
	 

  

	
 
	(b)	Licensee Disclosure to Foundation. Licensee will not disclose or transfer any export controlled technology or technical data identified on any US export control list, including, but not limited to, the Commerce Control List (CCL) at 15 C.F.R. § 774 and the U.S. Munitions List (USML) at 22 C.F.R. § 121. In the event Licensee intends to provide Foundation with export controlled information, Licensee will inform Foundation, in writing, thirty (30) days prior to the release of export controlled technology or technical data. Licensee agrees not to provide any export controlled information to Foundation without the written authorization of Foundation.
	
 
	
 
	
 

	17.	CONFIDENTIALITY
	
 
	
 

	
 
	17.1.	Confidential Information. As used in this Agreement, “Confidential Information” will mean confidential or proprietary information exchanged between the parties and/or Affiliates and Sublicensees hereunder and relating to the Patent Rights, Materials and Technical Information, or the performance of the obligations set forth herein, including without limitation: (i) written or other tangible information marked as confidential or proprietary; (ii) orally disclosed information that is identified as confidential and summarized in a notice delivered within thirty (30) days of the disclosure; (iii) the details of this Agreement; and (iv) information that should reasonably be considered confidential under the context in which the disclosure is made (i.e., nonpublic patenting information and nonpublic infringement information).
	
 
	
 
	
 

	
 
	17.2.	Confidentiality Obligations. Foundation and Licensee agrees to: (i) maintain the other party’s Confidential Information with the same level of care as it does its own valuable and sensitive information of a similar nature and, in any event, with not less than a reasonable degree of care; and (ii) not disclose the other party’s Confidential Information to any other party, without the prior written consent of the disclosing party. Each party agrees to limit its use of the other party’s Confidential Information to the purposes permitted by this Agreement. Notwithstanding the foregoing, the receiving party may disclose Confidential Information of the disclosing party to the extent such disclosure is reasonably necessary in the following instances: (a) in order for it to reasonably fulfill its obligations herein and to conduct its ordinary course of business, to its subcontractors, vendors, outside legal counsel, accountants and auditors under written obligations of confidentiality and non-use no less protective of the of the Confidential Information than the terms and conditions of this Section 17; (b) in connection with prosecuting and enforcing intellectual property rights in connection with the receiving party’s rights and obligations pursuant to this Agreement; and (c) in connection with exercising its rights hereunder, to actual and potential bona fide collaborators (including Sublicensees), acquirers, assignees, investment bankers, investors and lenders under written obligations of confidentiality and non-use no less protective of the Confidential Information than the terms and conditions of this Section 17. The obligation of confidentiality under this Section 17.2 shall continue for five (5) years from the expiration or termination of this Agreement.

 

	 
	29
	

 
	 

  

	
 
	17.3.	Exceptions. The obligations of either party under Section 17.2 will not apply to information that the receiving party can demonstrate: (i) was in its possession at the time of disclosure and without restriction as to confidentiality; (ii) at the time of disclosure is generally available to the public or after disclosure becomes generally available to the public through no breach of agreement or other wrongful act by the receiving party; (iii) has been received from a third party without restriction on disclosure and without breach of agreement or other wrongful act by the receiving party unless the receiving party should reasonably conclude that the information is Confidential Information; (iv) is independently developed by the receiving party without regard to the Confidential Information of the other party; or (v) is required to be disclosed by law or order of a court of competent jurisdiction or regulatory authority; provided, however, the receiving party shall: (a) give disclosing party, to the extent possible, advance notice prior to disclosure so the disclosing party may contest the disclosure or seek a protective order; and (b) limit the disclosure to the minimum Confidential Information that is legally required to be disclosed.
	
 
	
 
	
 

	
 
	17.4.	Injunctive Relief. The parties agree that the breach, or threatened breach, of any of the confidentiality provisions of this Section 17 may cause irreparable harm without adequate remedy at law. Upon any such breach or threatened breach, Licensee or Foundation will be entitled to injunctive relief to prevent the other party from commencing or continuing any action constituting such breach, without having to post a bond or other security and without having to prove the inadequacy of other available remedies. Nothing in this Section will limit any other remedy available to either party.

 

[Remainder of page intentionally left blank]

 
	 
	30
	

 
	 

  

	18.	MISCELLANEOUS 

 

		18.1. 	Governing Law. This Agreement will be construed, governed, interpreted and applied in accordance with the laws of the State of New York, except that questions affecting the construction and effect of any patent will be determined by the law of the country in which the patent was granted. The parties consent to the exclusive personal jurisdiction of the state and federal courts of the State of New York.
		
 
	
		18.2. 	Entire Agreement. This Agreement, including any Exhibits or attachments hereto, embodies the entire agreement and understanding among the parties to this Agreement and supersedes all prior agreements and understandings relating to the subject matter of this Agreement. None of the terms or provisions of this Agreement may be altered, modified, or amended except by the execution of a written instrument signed by the parties hereto.
		
 
	
		18.3. 	Severability. The provisions of this Agreement are severable, and in the event that any provisions of this Agreement are determined to be invalid or unenforceable under any controlling body of law, such invalidity or unenforceability will not in any way affect the validity or unenforceability of the remaining provisions hereof.
		
 
	
		18.4. 	Construction. Both parties contributed equally to the drafting of all parts of this Agreement and agree to all of the terms herein. Both parties reviewed this Agreement thoroughly prior to execution.
		
 
	
		18.5. 	Notices. All notices, requests, consents, and other communications to be provided under this Agreement must be in writing and will be delivered in person or sent overnight delivery by a nationally recognized courier or by certified or registered mail, electronic mail if return receipt requested, to the addresses provided below, and will be deemed to have been given when hand delivered, one (1) day after mailing when mailed by overnight courier, five (5) days after mailing by registered or certified mail, or on the date reflected in an electronic mail return receipt if sent by electronic mail:
	
 
	
 
	
 

	
 
	
 
	
If to Licensee, to:

  

Artelo Biosciences, Inc.

888 Prospect Street, Suite 210

La Jolla, CA 92037 USA

Attention: Gregory D. Gorgas, President & CEO

gorgas@artelobio.com

 

	 
	31
	

 
	 

 

	
 
	
 
	
If to Foundation, to:

  

Stony Brook University

Office of Technology Licensing and Industry Relations

N5002 Frank Melville Jr. Memorial Library

Stony Brook, New York 11794-3369

Attn: Director

sbu_docketing@stonybrook.edu

	
 
	
 
	
 

		18.6. 	No Waiver. Neither Party shall be deemed to have waived the exercise of any right that it holds under this Agreement unless such waiver is made in writing and signed by duly authorized representatives of the Parties.
			
		18.7. 	Patent Marking. To the extent required by law, Licensee will mark, and will cause its Sublicensees to mark, all Products that are manufactured or sold under this Agreement with: (i) the number of each issued patent under the Patent Rights that applies to such Product, if any; or (ii) the word ‘patent’ or the abbreviation ‘pat.’ together with an address of a posting on the Internet, accessible to the public without charge for accessing such address, that associates such Product with the number of the issued patent under the Patent Rights, if any.
		
 
	
		18.8.	Independent Parties. This Agreement will not be construed as creating a relationship of employment, agency, partnership, joint venture, or any other form of legal association between Licensee and Foundation. The relationship between the parties shall never be construed to be that of employer-employee. Neither party has any power to bind the other party or to assume or to create any obligation or responsibility on behalf of the other party or in the other party’s name.
		
 
	
		18.9.	Force Majeure. Neither party will be liable for failure or delay of fulfillment of all or part of this Agreement, directly or indirectly owing to acts of nature, governmental orders or restriction, war, warlike conditions, revolution, riot, looting, strike, lockout, fire, flood, or any other cause or circumstances beyond the parties’ control.
		
 
	
		18.10. 	Headings. The headings of the articles and sections are inserted for convenience of reference only, and are not intended to influence the interpretation of this Agreement.
		
 
	
		18.11. 	Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Further, either party’s signature to a copy of this Agreement will be deemed a signature to, and may be attached to, any other identical copy of the Agreement. Facsimile or electronic signatures will be as binding and effective as original signatures.
		
 
	
		18.12. 	Cumulative Rights. Any specific right or remedy provided in this Agreement will not be exclusive but will be cumulative of all other rights and remedies.

 

[Signature page to follow] 

  

	
	32
	

	

 

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

 

	LICENSEE	 	
THE RESEARCH FOUNDATION FOR

THE STATE UNIVERSITY OF NEW YORK
	 
	
  
	
 
	
 
	
  
	
 
	
 

	By:	
/s/ Gregory D. Gorgas 
	 	By:	/s/ Sean Boykevisch	 
		
Gregory D. Gorgas,
	 	Name:	Sean Boykevisch	 
		
President & CEO
	 	Title:	
Assistant Director, Office of Technology Licensing and Industry Relations, The State University of New York at Stony Brook 
	 
	
    
	
 
	
 
	
   
	
 
	
 

	
Date: January 17, 2018
	
 
	
Date: January 18, 2018
	
 

 
 

	 
	33
	

 
	 

 

EXHIBIT A:

Licensed Patents

 

	
Patent or

Application Number
	
Location/Type of Patent or Patent Application
	
Title (RF Docket

Number)
	
Filed
	
Issued
	
Assignee

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
 
	
[***]

 
	 
	34
	

 
	 

 

EXHIBIT B:

Material

 

 

 

 

 

 

 

 

 

 

 

 

 
	 
	35
	

 
	 

 

EXHIBIT C:

Know-How

  

[***]

 

	
[***]
	
[***]

	
[***]
	
[***]

	
[***]
	
[***]

	
[***]
	
[***]

	
[***]
	
[***]

	
[***]
	
[***]

	
[***]
	
[***]

 

B. Any data, technical information, designs, drawings, procedures, and methods related to Licensed Subject Matter that are provided to Licensee anytime [***] of the Agreement, and any data, technical information, designs, drawings, procedures, and methods related to Licensed Subject Matter arising from a sponsored research agreement, collaboration agreement or similar agreement, if any, between Foundation and Licensee. 

	 
	36
	

 
	 

 

EXHIBIT D:

Commercialization Plan

 

	
 
	
MILESTONE 
	
COMPLETION DATE

	
1
	
Licensee shall (a) [***] (b) develop a pharmaceutically acceptable formulation and, (c) demonstrate efficacy in animal models in selected Indications
	
first anniversary of the Effective Date of the Agreement

	
2
	
Licensee shall (a) complete safety pharmacology, (b) complete scale-up process of lead compound and (c) conduct FDA pre-IND meeting
	
six (6) months after completion of Milestone 1

	
3
	
Licensee shall complete (a) IND-enabling ADME studies, (b) IND-enabling toxicological studies, and (c) submit IND filing
	
twelve (12) months after completion of Milestone 2: 

	
4
	
Licensee shall complete (a) Phase I Clinical Trial single ascending dose in man and (b) Phase I Clinical multiple ascending dose study in man
	
twenty four (24) months after completion of Milestone 3

	
5
	
Licensee shall (a) initiate Phase II Clinical Trial efficacy studies in man, (b) demonstrate clinical benefit in Phase II in desired clinical Indication 
	
twenty four (24) months after completion of Milestone 4

	
6
	
Licensee shall (a) initiate Phase III Clinical Trial studies and (b) demonstrate statistical significance in primary end point in Phase III Clinical Trial
	
twenty four (24) months after completion of Milestone 5

	
7
	
Licensee shall receive NDA with FDA or foreign equivalent
	
six (6) months after completion of Milestone 6

 
	 
	37
	

 
	 

 

Exhibit E

 

Description of Affiliates

 

 

 

 

 

 

 

	
38Exhibit 10.1

 

股份购买协议

Share Purchase Agreement

 

本协议由以下各方于2018年4月11日在武汉市签订:

This Agreement is executed in Wuhan, China
on this day of April 11, 2018 by and among:

 

甲方 Party A:

甲方一:声荣环保科技技术(武汉)有限公司

Party A(I):Shengrong Environmental
Protection Technology (Wuhan) Co., Ltd.

授权代表:
李家珍

Authorized representative:Jiazheng
Li

甲方二:湖北声荣环保节能科技有限公司

Party A (II): Hubei Shengrong Environmental
Protection Energy-Saving Science and Technology Co. Ltd.

授权代表:李家珍

Authorized representative:Jiazheng
Li

 

乙方Party B:

乙方一: 廖龙

Party B (I):Long Liao

身份证号:330326196602095515

ID No.: 330326196602095515

乙方二:
郑春永

Party B (II):Chunyong Zheng

身份证号: 330326197103315426

ID No.: 330326197103315426

乙方三:武汉现代工业技术研究院

Party B (III): Wuhan Modern Industrial
Technology Research Institute

授权代表:廖龙

Authorized representative:Long
Liao

乙方四:湖北中工材料集团有限公司

Party B (IV): Hubei Zhonggong Materials
Group Co., Ltd.

授权代表:廖龙

Authorized representative:Long
Liao

 

丙方: 武汉赫斯特涂层材料股份有限公司

Party C: Wuhan HOST Coating
Materials Co., Ltd.

授权代表: 廖龙

Authorized representative:Long
Liao

 

丁方:TMSR Holding
Company Limited

Party D: TMSR Holding Company Limited.

授权代表:李家珍

Authorized representative:Jiazheng
Li

 

     

     

    

 

鉴于:

Whereas:

 

	1.	丙方是一家依照中华人民共和国法律法规于2010年10月27日成立并合法存续的股份有限公司,注册地在中华人民共和国湖北省葛店开发区葛店镇,现登记注册资本为人民币3000万元;

Party C is
a limited liability company incorporated and currently in good standing under the laws and regulations of the People’s
Republic of China (PRC) with the registered address in Gedian Town, Gedian Development Zone, Hubei Province, PRC and a current
registered capital of RMB 30 million;

 

	2.	乙方为丙方的现有登记股东,合计持有丙方100%的股权。

Party B represents
the currently registered shareholders of Party C, holding collectively 100% of Party C’s outstanding capital stock.

 

		3.	Party D owns 100% equity interest of Party A (I), a wholly foreign owned enterprise incorporated
under the laws of the PRC which owns 100% equity interest of Party A (II), a limited liability company incorporated under the law
of the PRC.

丙方持有依中国法律设立的外商独资企业,甲方一之100%股权,甲方一持有依中国法律设立的有限责任公司,甲方二之100%股权。

 

上述合同各方根据中华人民共和国有关法律法规的规定,本着平等自愿的原则,经过友好协商,达成一致,特订立如下合同条款,供各方共同遵守。

According
to the laws and regulations of the PRC and based on the principals of equality and voluntariness, after friendly negotiation, all
Parties agree to the terms set forth below. 

 

	 	第一条   释义	 

Article 1 Definitions

 

	1.1	除非本协议文意另有所指,下列词语具有以下含义:

Unless otherwise indicated in
this agreement, the terms below have the definitions as follows:

 

	
        过渡期

        Transition Period
	
        指

         
	
        本协议签署之日至就本协议项下对价支付完成的时间段。

        The period between the execution
date of this agreement and the completion of the payment of consideration.

	 	 	 
	
        送达

        Delivery
	指	
        本协议任一方按照本协议约定的任一种送达方式将书面文件发出的行为。

        Delivery of documents by any Party
pursuant to the delivery method set forth in this agreement.

	 	 	 
	
        本协议

        This Agreement
	指	
        本《股份购买协议》及附件。

        The Share Purchase Agreement and Attachments.

	 	 	 
	
        工作日

        Working Days
	指	
        中华人民共和国国务院规定的法定节假日以外的工作时间。

        Days other than legal holidays
set forth in the regulations promulgated by the PRC State Council

	 	 	 
	
        “/”

        “/”
	指	
        “和/或”

        And/or

	 	 	 
	
        “超过”或“小于”

        “more” or “less”
	指	
        均不含本数

        Does not include the number itself

  

    	 	1	 

     

    

 

	1.2	本协议的条款标题仅为了方便阅读,不应影响对本协议条款的理解。

The title of the provisions of
this agreement are for reference only and shall not affect the meaning of the provisions herein.

 

	第二条	股份发行前提

Article 2 Prerequisites of the
Payment of Total Consideration

 

	2.1	各方确认,甲方和丙方在本协议项下的支付总对价(定义见3.1条)的义务以下列条件为前提,乙方及丙方有义务提供相关证据证明下列条件以得到全部满足:

All Parties shall confirm that
the obligations of Party A and Party D to deliver the Total Consideration (as defined in Section 3.1) under this Agreement shall
be under the following conditions, and Party B and Party C have the obligation to provide related evidence that all of the following
conditions have been met:

 

	3.1.1	乙方及丙方已经以书面形式向甲方充分、完整披露了丙方的资产、负债、权益、对外担保以及与本协议有关的信息等;乙方及丙方承诺向甲方提供的丙方财务会计报表真实地完整地反映了丙方在该期间的资产、负债和盈利状况,不存在任何虚假。

Party B and Party C have made
to Party A a full and complete disclosure of Party C’s assets, liabilities, equities, guarantees to other parties and information related
to this Agreement; Party B and Party C, jointly and severally, shall provide Party A with Party C’s financial and accounting
statements that accurately and completely reflect the Party C’s assets, liabilities and profitability and/or losses without
any false statement.

 

	2.1.2	过渡期内,丙方的经营或财务状况没有发生重大的不利变化;未经甲方同意,丙方不得进行现金及资产的处置以及利润分配。

        During
        the Transition Period, there is no material adverse change to the business or financial condition of Party C; Party C
        shall not distribute any assets, cash or profits without the permission of Party A.

 

	2.1.3	过渡期内,未经甲方同意,乙方不得向丙方乙方以外的第三方转让其所持有的部分或全部丙方股权。

During the Transition Period, without Party A’s consent, Party B shall not transfer all or any of Party C’s shares held by Party B to any third party.

 

	2.1.4	过渡期内,乙方及丙方应在所有重大方面,保持丙方的组织架构好,丙方管理层、员工及顾问持续提供服务,维持好与主要客户的业务关系,并维持、控制和保全丙方的资产与过去经营状况一致。

During the Transition Period, Party B and Party C shall preserve intact, in all material respects, Party C’s business organizations, to keep available the services of Party C’s managers, directors, officers, employees and consultants, to maintain, in all material respects, their existing relationships with all customers with whom Party C does significant business, and preserve the possession, control and condition of Party C’s assets, all as consistent with past practice.

 

    	 	2	 

     

    

 

	2.1.5	过渡期内,丙方作为连续经营的实体,不存在亦不得有任何违法、违规的行为,丙方不得处置其主要资产或在其上设置担保,也不得发生或承担任何重大债务,通常业务经营中的处置或负债除外,且单独或累计金额不得超过五万美元。

During the Transition Period, as a continuous operating entity, Party C shall maintain its existence in good standing and it shall not conduct its business nor act in a manner that would be in violation of law, Party C shall not dispose of its main assets nor place any guarantees on them. Party C shall not take on any major debt, except where such debt or liability is in the regular course of Party C’s business operations and does not exceed $50,000 either individually or in the aggregate.

 

	2.1.6	过渡期内,无甲方书面同意(此类书面文件不得无故被扣压、设限或拖延),乙方和丙方不得:

Without limiting the generality of the foregoing sections, and except as contemplated by the terms of this Agreement, during the Transition Period, without the prior written consent of Party A (such consent not to be unreasonably withheld, conditioned or delayed), Party B and Party C shall not:

 

	 	2.1.6.1	修改、取消或变更公司注册文件、章程以及其他类似文件;

amend, waive or otherwise change, in any respect, its certificate of incorporation, bylaws or other similar organizational documents;

 

	 	2.1.6.2	授权发行、发售、授予、出售、担保,处置或提议发行、发售、担保或处置任何公司权益类证券或期权、承诺、认购或任何类型的购买或出售其权益类证券的权利,或其他证券权益,包括证券转换或交换为任何登记的股份或任何其他基于证券的承诺,或与第三方就该类证券或证券权利进行任何对冲交易;

authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities interests, including any securities convertible into or exchangeable for any of its equity securities or securities interests of any class and any other equity-based awards, or engage in any hedging transaction with a third party with respect to such equity securities or other securities interests;

 

	 	2.1.6.3	拆分,合并,重新资本化或重分类任何其权益类证券或发行其他类型证券,或就相关证券作出任何支付留置或发放股份股利,或直接或间接赎回或购买或承诺购买任何证券或证券权利;

split, combine, recapitalize or reclassify any of its equity interests or issue any other securities in respect thereof or pay or set aside any distribution or other dividend (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its equity securities or securities interests;

 

    	 	3	 

     

    

  

	 	2.1.6.4	引致,创造,承担,支付或其他任何可以导致公司承担超过5万美元(单独或累计)负债的行为,对第三方贷款、预支或投资,或担保或为任何第三方背书,承担债务或承诺;

incur, create, assume, prepay or otherwise become liable for any indebtedness (directly, contingently or otherwise) in excess of $50,000 (individually or in the aggregate), make a loan or advance to or investment in any third party, or guarantee or endorse any indebtedness, liability or obligation of any third party;

  

	 	2.1.6.5	
        在法律要求范围或现有任何已建立的福利支出计划或依据过去行为可知的任何正常商业行动范围以外的增加薪酬,工资或任何员工的补偿超过现金额的5%,或增加上述人员的奖金超过现金额的5%,或就2017财年和2018财年的奖金作出承诺,或者显著增加上述人员的福利待遇,与丙方任何现有顾问、管理层、董事或员工签订、建立或显著更改现有福利计划;

        increase the wages, salaries
or compensation of any of its employees by more than five percent (5%), or increase bonuses for the foregoing individuals in excess
of five percent (5%), or make commitments to advance with respect to bonuses for fiscal year 2016 or 2017, or materially increase
other benefits of any of the foregoing individuals, or enter into, establish, materially amend or terminate any benefit plan with,
for or in respect of any current consultant, officer, manager director or employee of Party C, in each case other than as required
by applicable law, pursuant to the terms of any already established benefit plan or in the ordinary course of business consistent
with past practice;

         

	 	2.1.6.6	作出或撤销任何关于税务的重要选择,就税务问题作出的任何和解、起诉、诉讼、处置、仲裁、调查审计或争议,修正纳税申报表、退税申请,或就任何税务政策或程序进行重大变更;

make or rescind any material election relating to taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable law;

 

	 	2.1.6.7	转移或授予任何第三方,或扩展,作出重大修订,允许失效或无法保留丙方目前已注册的无形资产,知识产权,已注册知识产权或其他丙方持有的无形资产,或乙方授权丙方使用的无形资产,或向任何未签订保密协议的第三方公布任何甲方或丙方的商业秘密;

transfer or license to any third party or otherwise extend, materially amend or modify, permit to lapse or fail to preserve any of Party C’s registered intellectual property, licensed intellectual property or other intellectual property held by Party C or by Party B for the benefit of Party C, or disclose any of Party A or C ’s trade secrets to any third party who has not entered into a confidentiality agreement;

 

    	 	4	 

     

    

 

	 	2.1.6.8	取消或放弃或转让任何丙方合同中的重大权利,或出租或签订任何(A)每年支出可能会超过5万美元的合同;或(B)签订超过一年的不支付重大罚款无法取消的或需多至提前60天通知方可取消的合同;

terminate or waive or assign any material right under any of Party C’s material contracts or any lease or enter into any contract (A) involving amounts potentially exceeding $50,000 per year or (B) with a term longer than one year that cannot be terminated without payment of a material penalty and upon notice of sixty (60) days or less;

  

	 	2.1.6.9	未合理维护与过去交易相关的重要会计账簿,会计记录以及会计凭证;

fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;

 

	 	2.1.6.10	设立任何子公司或者设置新的业务线;

establish any Subsidiary or enter into any new line of business;

 

	 	2.1.6.11	未能通过商业上合理的努力以保证保险条款的有效或取代或修订与资产、运营和公司活动相关的现行有效的保险政策或文件;

fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in an amount and scope of coverage as are currently in effect;

 

	 	2.1.6.12	对现有重大资产进行重新估值或对会计政策,准则或实践作出重大变更,美国通用会计准则和公司审计允许的部分除外;
 revalue any of its material assets or make any change in accounting methods, principles or practices, except in compliance with GAAP and approved by the Company’s outside auditors;

                                                                                 

	 	2.1.6.13	除只作出金钱赔偿外的,金额不超过5万美元的,或公司财务记录中已存在的就任何索赔、诉讼或纠纷的放弃,取消,分配,解决或和解;

waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $50,000, or otherwise pay, discharge or satisfy any Actions, Liabilities or obligations, unless such amount has been reserved in the Company Financials;

 

    	 	5	 

     

    

  

	 	2.1.6.14	结束或显著减少公司行为或努力,或解雇和减少公司员工;

close or materially reduce its activities, or effect any layoff or other personnel reduction or change, at any of its facilities;

 

	 	2.1.6.15	并购,包括任何兼并,吸收合并或购买任何股权或资产,或其他形式的业务整合,公司合并,设立合伙,有限公司或其他形式的业务组织或分布,或购买其他任何重大金额的正常业务需求以外的资产;

acquire, including by merger, consolidation, acquisition of stock or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business;

 

	 	2.1.6.16	作出超过5万美元的资本化支出;

make capital expenditures in excess of $50,000;

  

	 	2.1.6.17	采取全面或部分清算、解散、兼并、吸收合并、重组、重新资本化或其他重组行为的计划;

adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

	 	2.1.6.18	自愿承担重大合同中条款所涉及的或员工福利计划以外的任何金额超过5万美元的负债或义务;

voluntarily incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $50,000 (individually or in the aggregate) other than pursuant to the terms of a material contract or employee benefit plan;

 

	 	2.1.6.19	出售,出租,许可,交货或掉期,抵押或担保或承担债务(包括证券化),或其他任何处置重大比例的不动产,固定资产或权利的行为;

sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights;

 

	 	2.1.6.20	就丙方的投票权作出任何协议,理解或安排;

enter into any agreement, understanding or arrangement with respect to the voting of Party C’s securities;

 

    	 	6	 

     

    

 

	 	2.1.6.21	从事任何可能被合理认为将导致延迟或损害丙方取得任何与本协议相关的政府部门同意或批准的行为;

take any action that would reasonably be expected to delay or impair the obtaining of any consents or approvals of any governmental authority to be obtained in connection with this agreement;

 

	 	2.1.6.22	达成,修改,放弃或取消(根据条款需要取消的事项除外)与任何关联方的任何交易;

enter into, amend, waive or terminate (other than terminations in accordance with their terms) any transaction with any related parties; or

 

	 	2.1.6.23	授权或同意从事任何上述相关事项。

authorize or agree to do any of the foregoing actions.

 

	2.2	若乙方或丙方存在任何违反本协议第2.1条约定的情况,则甲方有权单方解除本协议,并要求乙方承担相应赔偿责任。

If Party B or Party C conducts any violation of the agreed conditions under Section 2.1, Party A shall have the right to unilaterally terminate this agreement, and require Party B to assume the corresponding liability.

  

	 	第三条	对价

Article 3 Consideration

 

	3.1	各方同意,为确保甲方从乙方处取得丙方100%股权,丙方同意向乙方支付1120万美元对价(“总对价”),其中520万美元以美元或等额人民币的现金(“现金对价”)支付,600万美元以每股票面金额为0.0001美元的丁方普通股(“普通股”)股份(“对价股份”)支付。双方一致同意依2018年3月27日收盘价每股9.28美元计,股份对价合计为646,552股丁方普通股,乙方一、乙方二、乙方三和乙方四或者其指定方分别获发的股份数量和现金按照其各自在丙方的持股比例计算:

In exchange for the transfer
of 100% equity interest of Party C from Part B to Party A, Party A and Party D shall deliver total consideration of US$ 11.2 million
(“Total Consideration”), of which US$ 5.2 million or RMB equivalent shall be paid in cash (“Cash Consideration”)
and US$ 6 million shall be paid in such number shares of common stock (“Common Stock”), par value $0.0001, of Party
D (“Share Consideration”). The Parties agree the Share Consideration shall be an aggregate of 646,552 shares of commons
stocks of Party D which is based on the closing price of US$9.28 on March 27, 2018. Party B(I), Party B(II), Party B(III) and Party
B(IV) or their respective designees, shall receive the Cash Consideration and Share Consideration pro rata in accordance with each
party’s respective percentage of ownership interest in Party C.

 

    	 	7	 

     

    

 

	3.2	所有根据本协议发行的股份均为受限于下列限制,第一个三分之一的股票为自发行之日起12个月的锁定期期限, 第二个三分之一股票为自发行之日起24个月的锁定期期限, 第三个三分之一的股票为自发行之日起36个月的锁定期期限(“锁定期”),该期间内乙方将不得转让、担保或处置该部分股份。此外,锁定期内,乙方(或其指定方)不得,(i)发售、质押、出售、合同出售任何对价股份的期权、认股权证、或签署购买对价股份的协议,或者以其他方式直接或间接转让或处分该对价股份,或者公开发售、出售、质押或处分对价股份的意图;(ii)签署换股或其他整体或部分转让对价股份经济权益的协议;或者(iii)要求对对价股份进行注册或类似注册的权利。乙方认可丙方会通知股份登记机构限制该部分股份的转让并设置相应标注。

The Share Consideration shall be subject to following lock-up whereby the first 1/3 of the Share Consideration shall be subject to a twelve (12) month lock-up from the date of issuance, the second 1/3 of the Share Consideration a twenty-four (24) month from the date of issuance and the last 1/3 of the Share Consideration a thirty-six (36) month lock-up from the date of issuance (the “Lock-Up Periods”).  During the respective Lock-Up Periods, Party B (or its designee) shall not, (i) offer, pledge, sell, contract to sell, sell any option, warrant or contract to purchase, or otherwise transfer or dispose of, directly or indirectly, any Share Consideration, or publicly disclose the intention to make any offer, sale, pledge or disposition, (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Share Consideration, or (iii) make any demand for or exercise any similar right with respect to the registration of any Share Consideration. Party B acknowledge that the Party D shall cause the transfer agent to fix appropriate lock-up legend on the Share Consideration.

 

	3.3	各方同意,对价股份将依下列规定分期发行给乙方或其指定方:

All Parties agree that Share Consideration shall be issued to Party B as followings:

 

	 	(a)	三分之一的对价股份,即215,517 股普通股于2018年12月31日当天或之前向发行给乙方或其指定方;

One-third of Share Consideration, i.e. 215,517 shares of Common Stock shall be issued to Party B or its designees on or before December 31, 2018;

 

	 	(b)	三分之一的对价股份,即215,517 股普通股于2019年12月31日当天或之前向发行给乙方或其指定方;

One-third of Share Consideration, i.e. 215,517 shares of Common Stocks shall be issued to Party B or its designees on or before December 31, 2019;
	 	(c)	剩余三分之一的对价股份,即215,518 股普通股于2020年12月31日当天或之前向发行给乙方或其指定方。

One-third of Share Consideration, i.e. 215,518 shares of Common Stocks shall be issued to Party B or its designees on or before December 31, 2020.

  

    	 	8	 

     

    

 

	 	第四条	丙方股权和相关手续的办理

Article 4 Ownership of Party C and Completion
of Recording Procedures

 

	4.1	
        各方同意,自甲方和/或丁方支付现金对价之日起,甲方一和甲方二将取得丙方100%股权,

        其中,甲方一和甲方二将分别持有约16.7%和83.3%丙方股权。丙方将尽其努力完成股权

        转让登记手续。

The Parties agree upon payment
of the Cash Consideration by Party A and/or Party D, Party A(I) and Party A (II) shall receive 100% equity interest of Party C
where Party A(I) and Party A (II) shall own 16.7% and 83.3% of equity interest of Party C, respectively. Party C shall use its
best effort to complete the required share transfer registration procedure.

  

	 	第五条	丙方管理

Article 5 Management of Party C

 

	5.1	甲方和丁方同意丙方法定代表人和董事长仍由廖龙先生担任,丙方董事或其他高管由乙方一提名,甲方依法定程序任免。

Party A and Party D agree that
Mr. Long Liao shall serve as the legal representative and Chairman of Party C. All the directors and officers of Party C will be
nominated by Party B (I) and appointed by Party A according to legal proceedings.

 

	 	第六条	竞业限制

Article 6 Non-Competition

 

	6.1	乙方承诺丙方是乙方经营相关业务的唯一实体,即乙方在三年内不得另设或参股与丙方主营业务相同的公司。

Party B represents and warrants that
within 3 years Party C is the only operating entity it has established in this line of business and that Party B will not in any
way compete with Party C’s business, whether that be by establishing or investing in any entity with the same primary business
as Party C.

 

	 	6.2	乙方/丙方同意采取有效措施确保丙方的高级管理人员不得设立或以任何形式(包括但不限于以股东、合伙人、董事、监事、经理、职员、代理人、顾问等等身份)参与与丙方业务相竞争/相关联的其他经营实体。

Party B and Party C agree to take
effective measures to ensure that senior executives of Party C do not set up or participate in any other operating entities or
affiliated entities with operations that compete with Party C.

 

    	 	9	 

     

    

 

	 	第七条	知识产权的占有与使用

Article 7 Possession and use of
intellectual property 

 

	7.1	
        乙方/丙方单独并共同声明、承诺并保证,本协议签订之时及本协议签订之后,丙方是丙方企业名称、商标和专利、商品名称及品牌、网站名称、域名、专有技术、各种经营许可证等相关知识产权、许可权的唯一的、合法的所有权人;上述知识产权均经过必要的相关政府部门批准或备案,且所有为保护该等知识产权而采取的合法措施均经过政府部门批准或备案,并保证按时缴纳相关费用,保证其权利的持续有效性。

        Party B and Party C, individually
and jointly and severally, represent, warrant and guarantee that, at and after the execution of this Agreement, Party C is the
sole legal owner of its intellectual property rights and permits, including the business name, trademarks, patents, product names
and brands, web names, domain names, proprietary technologies and various licenses and permits. Party B and Party C, individually
and jointly and severally, represent, warrant and guarantee that all legal measures taken to protect the foregoing intellectual
property have been approved by or recorded with related government agencies, all related expenses will be paid on time, and the
foregoing rights will be continuously valid.

 

	7.2	若与丙方生产经营相关的知识产权未在丙方名下,乙方/丙方应确保相关权利人按照合理的方式在本协议签署后将相关知识产权无偿或以法律法规允许的最低价格转移至丙方名下。If intellectual property rights related to Party C’s products and operations are not under its name, Party B and Party C shall ensure that, in a reasonable manner and in accordance with relevant intellectual property rights laws and regulations, all related rights and ownership interests in the intellectual property will be transferred to Party C free or at the lowest price permitted by law after the execution of this Agreement.

 

	 	第八条	债权和债务

Article 8 Debts and Liabilities

 

	8.1	乙方/丙方,分别和共同确认并承诺,在签订本协议之前不存在任何未披露的已发生或潜在的债务和责任(包括但不限于合同债务、侵权之债以及相关部门给予的各种行政罚款),且在过渡期内没有甲方同意,将不会产生相关负债或责任。

Party B and Party C, individually
and jointly and severally, represent and warrant that there are no undisclosed existing or potential debts and liabilities prior
to the execution of this Agreement (including but not limited to contractual liability, tort liability, and fines by various government
agencies) and there will be no debts or liabilities will be entered into during the transition period without the consent of Party
A.

 

	8.2	乙方同意,对未以书面形式向甲方披露的丙方的债务和责任,由乙方承担。乙方应当在实际发生赔付后5个工作日内全额向丙方进行补偿。

Party B agrees to be liable
for any debts and liabilities that have not been disclosed to Party A in writing. If Party C incurs any debts and liabilities,
Party B shall compensate Party C in the full amount within five working days after the payment has been made by Party C.

 

	 	第九条	保证和承诺

Article 9 Representations and Warranties 

 

	9.1	甲方向乙方和丙方保证和承诺如下:

Party A and Party D make the following representations and warranties to Party B and Party C:

 

	 	(1)	
        甲方是依法注册成立并且合法存续的企业法人,具有签署本协议的权利能力和行为能力,并有足够的能力全面履行本协议规定的义务。

        Party A and Party D are enterprises legally
        registered and currently in good standing with the ability to sign this Agreement and fully perform obligations under this Agreement.

 

    	 	10	 

     

    

 

	9.2	乙方及丙方,分别和共同向甲方保证和承诺如下:

Party B and Party C, individually
and jointly and severally, represent and warrant to Party A as follows:

 

	 	(1)	丙方是一家依照中华人民共和国法律法规于成立并合法存续的有限责任公司。

Party C is a limited liability
company duly formed, validly existing and in good standing under the laws of the PRC.

 

	 	(2)	拥有签订并履行本协议义务的全部权利与授权,并依据中国法律具有签订本协议所有的资格条件和/或行为能力。本协议的签署和履行不会与丙方公司章程或有关法律、法规、条例等有约束力的规范性文件或丙方签订的协议等所承担的义务相冲突。

Party B and Party C each have
the right and authority to sign this agreement, and to exercise rights and perform obligations hereunder. They have the
qualifications and ability required to sign this agreement under PRC laws. The execution and performance of this agreement
will not conflict with Party C’s bylaws, binding documents, including any governing laws, regulations and rules, or any
agreement signed by Party C.

 

	 	(3)	本协议的签订或履行不违反以其为一方的任何重大合同或协议。

The execution or performance
of this agreement will not violate any material agreement signed by any Party.

 

	 	(4)	已就与本次交易有关的所有信息和资料,向甲方进行且将在过渡期内仍将进行充分、详尽、及时的披露,没有重大遗漏、误导和虚构。保证自本协议签订至整个过渡期内其向甲方提供的一切文件资料均是真实、有效完整的。

Party B and Party C have made
a full, detailed, complete and timely disclosure of all information and materials related to this transaction, and will continue
to do so through the Transition Period, without any material omission, misleading or false information. Party B and Party C also
represent and warrant that all documents provided to Party A are true, valid and complete as of the date of this Agreement and
will remain so through the Transition Period.

 

	 	(5)	保证丙方全面履行本协议约定的义务,乙方的保证方式为连带责任保证。

Party B and Party C will fully
perform their obligations under this agreement and Party B bears joint and several liabilities for Party C’s actions.

 

	 	(6)	已向且在过渡期内持续向甲方披露所涉及或可能涉及的仲裁、诉讼、司法执行等法律纠纷或行政处罚、政府调查等事项,并就此等事项可能给丙方或本协议的履行造成的影响已向甲方作了充分的陈述和说明。

Party B and Party C have already
disclosed to Party A, and will continue to disclose through the Transition Period, all legal enforcement and government investigation
related matters such as arbitration, litigation, and judicial enforcement and have made, and will continue to make, full disclosure
with regard to the potential impact of such matters on Party C or its performance of this agreement.

 

    	 	11	 

     

    

 

	 	(7)	
        丙方目前及未来的财务会计报表公正真实地反映了丙方的经营业绩及资产负债状况,不

        包含任何虚假成分,没有为误导甲方而故意省略部分关键事实。

The financial statements of
Party C, now and in the future, fairly and accurately reflect the operating results, assets and liabilities of Party C without
any false element or intentional and partial omission of key facts to mislead Party A.

 

	 	(8)	保证丙方的关键管理人员和技术骨干在本协议签署后与丙方签订不低于五年的劳动合同及相关保密、不竞争协议(如甲方要求)。该类协议正本或副本将被提供给甲方。

Key personnel and technical
staff of Party C have signed employment agreements and related non-disclosure and non-compete agreements (per Party A’s request)
for a period of not less than five years from the execution of this agreement. Originals or copies of all such confidentiality
agreements have been, or will be during the Transition Period, delivered to Party A.

 

	 	(9)	乙方和丙方保证本协议签署后60日内办理完成股权变更登记手续。

Party B and C will cooperate in completing the share transfer registration within 60 days from signing this agreement.

 

	 	第十条	通知及送达

Article 10 Notices and Deliveries

 

	10.1	在本协议有效期内,因法律、法规、政策的变化,或任一方丧失履行本协议的资格和/或能力,导致影响本协议的履行,该方应承担相应的在合理时间内通知的义务。

Within the term of this agreement,
if any changes in laws, regulations, and policies cause any loss of the ability or qualification of any Party to perform its obligations
under this agreement which affects the performance of this agreement, such Party shall have the obligation to notify the other
Parties within a reasonable time period.

 

	10.2	各方同意,与本协议有关的任何通知,以书面送达方式方为有效。

All Parties agree that any
notice related to this agreement shall be given in writing.

 

	10.3	通知送达下列地点或各方的实际经营地或住所地:

Notice should be delivered to the following locations or the actual business location or domicile of all Parties:

 

甲方一地址:中华人民共和国武汉市硚口区丰茂路1号;

Address of Party A(I): No.
1 Fengmao Road, Qiaokou District, Wuhan City, PRC;

甲方二地址:中华人民共和国武汉市硚口区古田五路17号1-4特1号;

Address of Party A(II): Te
No.1, 1-4, No. 17, Gutian Wu Road, Qiaokou District, Wuhan City, PRC;

 

    	 	12	 

     

    

 

乙方一地址:
中华人民共和国湖北省葛店开发区葛店镇;

Address of Party B(I): Gedian
Town, Gedian Development Zone, Hubei Province, PRC;

乙方二地址:
中华人民共和国湖北省葛店开发区葛店镇;

Address of Part B(III): Gedian
Town, Gedian Development Zone, Hubei Province, PRC;

乙方三地址:
中华人民共和国湖北省葛店开发区葛店镇;

Address of Party B(III): Gedian
Town, Gedian Development Zone, Hubei Province, PRC;

 乙方四地址:
中华人民共和国湖北省葛店开发区葛店镇;

Address of Party B(IV): Gedian
Town, Gedian Development Zone, Hubei Province, PRC;

 

丙方地址:中华人民共和国湖北省葛店开发区葛店镇;

Address of Party C: Gedian Town,
Gedian Development Zone, Hubei Province, PRC;

 

丁方地址:中国湖北省武汉市硚口区南泥湾大道硚口经济开发区A101幢。

Address of Party D: A101 Qiaokou
Industry Park, Nanniwan Avenue, Qiaokou District,Wuhan, Hubei, China.

 

	 	第十一条	违约及其责任

Article 11 Breach of Contract

 

	11.1	本协议生效后,各方应按照本协议的规定全面、适当、及时地履行其义务、承诺及其他相关约定,除不可抗力因素外若本协议的任何一方违反本协议的义务、承诺及其他相关约定,则构成违约。

After this agreement becomes
effective, any breach of any obligations, warranties or any other provisions under this agreement by any party due to reasons other
than force majeure constitute a breach.

 

	11.2	一旦发生违约行为(包括违反保证和承诺),违约方应当向守约方支付违约金,并赔偿因其违约而给守约方造成的损失。支付违约金并不影响守约方要求违约方继续履行合同。

Once a breach occurs (including
a breach of representations and warranties), the breaching Party shall pay damages to the other non-breaching Parties. Paying damages
shall not affect the non-breaching Parties’ request that the breaching Party to continue to perform under this agreement.

 

	 	第十二条	合同的变更、解除

Article 12 Amendment and Termination

 

	12.1	本协议的任何修改、变更应经合同各方另行协商,并就修改、变更事项签署书面合同后方可生效。

Any amendment and change to
this agreement shall be based on negations of all Parties and shall become effective only after all Parties have signed the agreements
on such amendment or change.

 

	12.2	本协议在下列情况下解除:经协议各方当事人协商一致解除;或者,任一方发生违约行为并在30天内不予更正的,或发生累计两次或以上违约行为,守约方有权单方解除;或者,本协议因不可抗力,造成本协议无法履行。

This agreement can be terminated
under the following conditions: (1) all Parties consent to the termination of this agreement after negotiation; (2) if any Party
fails to cure its breach within 30 days or if any Party has breached the agreement two or more times, regardless of whether or
not it has cured such breach, then the non-breaching Parties can unilaterally terminate the agreement; or (3) this agreement cannot
be performed due to force majeure.

 

    	 	13	 

     

    

 

	12.3	有权提出解除合同的一方应当以书面形式通知,通知在到达其他各方时生效。

The Party with the right to
terminate shall notify the other Parties in writing and such notice shall become effective when it is delivered to other Parties.

 

	12.4	本协议被解除后,不影响一方当事人要求支付违约金和赔偿损失的权利。

After this Agreement is terminated,
the rights of any Parties to obtain liquidated damages and compensation for loss of rights under this agreement shall not be affected.

 

	 	第十三条	争议解决

Article 13 Settlement of Disputes

 

	13.1	本协议的效力、解释及履行均适用中华人民共和国法律。

The validity, interpretation,
and performance of this agreement shall be governed by and construed in accordance with the laws of the PRC.

 

	13.2	合同各方当事人因本协议发生的任何争议,均应首先通过友好协商解决,协商不成,各方均有权选择向上海国际经济贸易仲裁委员会提起仲裁,依据该会届时有效的仲裁规则进行仲裁,仲裁裁决是终局的,对各方均具有法律执行力。

All Parties of this Agreement
shall resolve any dispute arising from this agreement through friendly negotiation. If negotiation fails, all Parties have the
right to choose arbitration before the Shanghai International Economic and Trade Arbitration Commission. Final arbitration awards
according to arbitration rules of such commission shall be binding on all Parties.

 

	 	第十四条	附则

Article 14 Miscellaneous

 

	14.1	本协议自各方签字、盖章后成立并生效。

This agreement shall become
effective after all Parties sign or place their stamps on the agreement.

 

	14.2	本协议未尽事宜,各方可另行签署补充协议,该补充协议与本协议是一个不可分割的整体,并与本协议具有同等法律效力。本协议附件是本协议的组成部分,与本协议具有同等的法律效力。

All Parties can sign supplemental
agreements with regard to any matters unaddressed in this agreement. Such supplemental agreements will be considered part of this
agreement and have the same validity as this agreement.

 

	14.3	本协议用中文书写,一式8份,各方各持一份,具有同等法律效力。

This agreement is in Chinese
with eight originals, one for each Party and with the same validity.

 

 

(以下无正文,为本协议签署页)

(Intentionally Left Blank and Signature
Page follows)

 

    	 	14	 

     

    

 

 

本页为《股份购买协议》签字页

This page is the signature page of the Share
Purchase Agreement

 

甲方 Party A(I):

 

声荣环保科技技术(武汉)有限公司

Shengrong Environmental Protection Technology
(Wuhan) Co., Ltd.

 

	/s/ Jiazhen Li	 

姓名/Name:李家珍
Jiazhen Li

职务/Title : 执行董事

 

甲方 Party A(II):

 

湖北声荣环保节能科技有限公司

Hubei Shengrong Environmental Protection
Energy-Saving Science and Technology Co. Ltd.

 

	/s/ Jiazhen Li	 

姓名/Name:李家珍
Jiazhen LI

职务/Title :董事长

 

乙方一Party
B(I):

 

廖龙
Long Liao

 

	/s/ Long Liao	 

 

乙方二Party
B(II):

 

郑春永 Chunyong Zheng

 

	/s/ Chunyong Zheng	 

 

乙方三Party
B(III):

 

武汉现代工业技术研究院

Wuhan
Modern Industrial Technology Research Institute

 

	/s/ Long Liao	 

姓名/Name:廖龙
Long Liao

职务/Title:法人代表/授权签字人Legal/
Authorized Representative

 

乙方四Party
B(IV):

 

湖北中工材料集团有限公司

Hubei
Zhonggong Materials Group Co., Ltd.

 

	/s/ Long Liao	 

姓名/Name:廖龙
Long Liao

职务/Title:法人代表/授权签字人Legal/
Authorized Representative

 

    	 	15	 

     

    

 

丙方/Party C:

 

武汉赫斯特涂层材料股份有限公司

Wuhan HOST Coating Materials Co., Ltd.

 

	/s/ Long Liao	 

姓名/Name:廖龙
Long Liao

职务/Title:法人代表/授权签字人Legal/
Authorized Representative

 

丁方/Party D

TMSR Holding Company Limited

 

	/s/ Jiazhen Li	 

姓名/Name:李家珍
Jiazhen LI

职务/Title 联席董事长
Co-Chairman

 

 

 

16

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