Document:

Exhibit 10.11

 

CONSULTING AGREEMENT

 

This Consulting Agreement (this “Agreement”)
dated as of January 5, 2009 (the “Effective Date”),
is made by and between Power Medical Interventions, Inc., a Delaware
corporation (the “Company”), and John P.
Gandolfo (the “Consultant”).

 

WHEREAS, the Company desires to engage the
Consultant to perform consulting services on behalf of the Company and the
Consultant desires to perform such services on the terms and conditions
hereinafter set forth.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants set forth
herein the parties hereby agree as follows:

 

1.                                      Consulting
Services.

 

(a)                                 The
Company hereby retains the Consultant and the Consultant hereby agrees to
perform such consulting and advisory services as the Company may request on a
non-exclusive basis, including those set forth in Schedule A and such
other services as may be mutually agreed upon by Consultant and the Company
from time to time (the “Consulting Services”).  .

 

(b)                                 The
Consultant agrees to make himself available to render the Consulting Services,
at such times and locations as may be mutually agreed, from time to time as
requested by the Company.  The Consultant
may deliver the Consulting Services over the telephone, in person or by written
correspondence.  Notwithstanding the foregoing, the Consultant shall not be required to
devote more than an average of forty hours per quarter to the performance of
the Consulting Services.

 

(c)                                  The
Consultant agrees to devote his best efforts to performing the Consulting
Services. The Consultant shall comply with all rules, procedures and standards promulgated
by the Company with regard to the Consultant’s access to and use of the Company’s
property, information, equipment and facilities.

 

2.                                      Compensation.  In consideration of Consulting Services
performed, the Company shall pay the Consultant $2,000 per month.  The Consultant agrees to invoice the Company
monthly for all amounts due pursuant to this Section 2, and the Company
shall pay all amounts due within thirty (30) days of the date of the invoice.

 

3.                                      Expenses.  The Company will reimburse the Consultant for
such reasonable business expenses as are incurred by the Consultant in the
performance of Consulting Services for the Company.

 

4.                                      Independent
Contractor.  In furnishing the
Consulting Services, the Consultant understands that he will at all times be
acting as an independent contractor of the Company and, as such, will not be an
employee of the Company.  Nothing in this
Agreement shall be construed to create any duty to, standard of care with
reference to, any liability to, or any right of suit or action in, any person
not a party to this Agreement.  Without
limiting the generality of the

 

 

foregoing, this Agreement is not intended to
confer a benefit on any third party and no third party may rely upon this
Agreement.

 

5.                                      Term.  The
term of this Agreement will begin on the Effective Date and will end four
months after the Effective Date or upon earlier termination as provided below
(the “Term”); provided,
that the Term may be extended by mutual agreement of the Company and the
Consultant prior to the expiration or termination of this Agreement.  This Agreement may be terminated by either
party at any time by written notice to the other party.

 

6.                                      Confidential
Information.

 

While
providing the Consulting Services to the Company and thereafter, the Consultant
shall not, directly or indirectly, use any Confidential Information (as defined
below) other than pursuant to his provision of the Consulting Services by and
for the benefit of the Company, or disclose to anyone outside of the Company
any such Confidential Information.  The
term “Confidential Information” as
used throughout this Agreement shall mean all trade secrets, proprietary
information and other data or information (and any tangible evidence, record or
representation thereof), written or oral, whether prepared, conceived or
developed by a consultant or employee of the Company (including the Consultant)
or received by the Company from an outside source, which is in the possession
of the Company (whether or not the property of the Company) and which is
maintained in secrecy or confidence by the Company.

 

In addition to
the foregoing, the Consultant acknowledges that Section 5 (Restrictive
Covenants) and Section 6 (Assignment of Inventions) of the Employment
Agreement, between the Consultant and the Company, dated as of January 5,
2007, as amended, are still in full force and effect and apply to performance
of the Consulting Services by Consultant under this Agreement.

 

7.                                      Miscellaneous.

 

(a)                                 Entire
agreement.  This Agreement and the
documents referred to herein constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, between the parties with
respect to such subject matter.

 

(b)                                 Assignment.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.  This Agreement is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder, except as otherwise expressly provided herein and shall not
be assignable by operation of law or otherwise.

 

(c)                                  Amendments
and supplements.  This Agreement may
not be altered, changed or amended, except by an instrument in writing signed
by the parties hereto.

 

(d)                                 No
waiver.  The terms and conditions of
this Agreement may be waived only by a written instrument signed by the party
waiving compliance.  The failure of any
party hereto to enforce at any time any of the provisions of this Agreement
shall in no way be construed to be a waiver of any such provision, nor in any
way to affect the validity of this

 

2

 

Agreement or any part hereof or the right of
such party thereafter to enforce each and every such provision.  No waiver of any breach of or non-compliance
with this Agreement shall be held to be a waiver of any other or subsequent
breach or non-compliance.

 

(e)                                  Governing
law.  This Agreement shall be
governed by, and construed and enforced in accordance with, the substantive
laws of the Commonwealth of Pennsylvania, without regard to its principles of
conflicts of laws.

 

(f)                                   Notice.  All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered by hand,
sent by facsimile transmission with confirmation of receipt, sent via a
reputable overnight courier service with confirmation of receipt requested, or
mailed by registered or certified mail (postage prepaid and return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice), and shall be deemed given on
the date on which delivered by hand or otherwise on the date of receipt as
confirmed:

 

To the
Consultant:

 

John P.
Gandolfo

62 Terrace
Road

Wayne, New
Jersey 07470

 

To the
Company:

 

Power Medical Interventions, Inc.

2021 Cabot Boulevard

Langhorne, Pennsylvania 19047

Facsimile: 267.775.8122

 

(g)                                  Survival;
Validity.  Notwithstanding the
termination of the Consultant’s relationship with the Company (whether pursuant
to Section 5 or otherwise), the Consultant’s covenants and
obligations set forth in Section 6 and the Company’s obligations in
Sections 2 and 3, shall remain in effect and be fully enforceable in
accordance with the provisions thereof. 
In the event that any provision of this Agreement shall be determined to
be unenforceable by reason of its extension for too great a period of time or
over too large a geographic area or over too great a range of activities, it
shall be interpreted to extend only over the maximum period of time, geographic
area or range of activities as to which it may be enforceable.  If, after application of the preceding
sentence, any provision of this Agreement shall be determined to be invalid,
illegal or otherwise unenforceable by a court of competent jurisdiction, the
validity, legality and enforceability of the other provisions of this Agreement
shall not be affected thereby.

 

(h)                                 Counterparts.  This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same
Agreement.

 

3

 

IN WITNESS
WHEREOF, the parties have caused this Consulting Agreement to be executed as an
agreement under seal as of the date first written above.

 

	
   

  	
  CONSULTANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ JOHN P.
  GANDOLFO

  
	
   

  	
  JOHN P.
  GANDOLFO

  	
  (signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  POWER
  MEDICAL INTERVENTIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  MICHAEL P. WHITMAN

  
	
   

  	
  (signature)

  
	
   

  	
   

  
	
   

  	
  Michael P. Whitman

  
	
   

  	
  President and Chief Executive Officer

  
				

 

Signature Page to Consulting AgreementExhibit 10.15

 

 

DEVELOPMENT, PRODUCT SUPPLY AND
COMMERCIALIZATION AGREEMENT

 

FOR THERMODOX®

 

by and between

 

CELSION CORPORATION

 

and

 

YAKULT HONSHA CO., LTD.

 

 

Dated:  December 1, 2008

 

Material in this
Agreement has been omitted and filed separately with the Commission.

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  DEVELOPMENT OF
  PRODUCTS; JOINT STEERING COMMITTEE

  	
  15

  
	
  2.1

  	
  Development

  	
  15

  
	
  2.2

  	
  Development and
  Discontinuation of Development

  	
  15

  
	
  2.2.1

  	
  Development of ThermoDox Products

  	
  15

  
	
  2.2.2

  	
  Discontinuation of Development

  	
  16

  
	
  2.3

  	
  Development
  Plans

  	
  16

  
	
  2.3.1

  	
  Development Plan for Initial ThermoDox Products

  	
  16

  
	
  2.3.2

  	
  Development Plans for Additional Indications

  	
  17

  
	
  2.3.3

  	
  Scope of Development Plan

  	
  17

  
	
  2.3.4

  	
  Updates to the Development Plan

  	
  17

  
	
  2.4

  	
  Implementation
  of Development Plan

  	
  17

  
	
  2.5

  	
  Development
  Costs and Funding

  	
  17

  
	
  2.5.1

  	
  Development Costs

  	
  17

  
	
  2.6

  	
  Access to
  Records and Facilities

  	
  17

  
	
  2.7

  	
  Commercialization

  	
  18

  
	
  2.8

  	
  Commercialization
  Plan

  	
  18

  
	
  2.8.1

  	
  Preparation and Updating of Commercialization Plans

  	
  18

  
	
  2.8.2

  	
  Contents of Commercialization Plan

  	
  18

  
	
  2.8.3

  	
  Estimate of Commercialization Costs

  	
  19

  
	
  2.9

  	
  Trademarks

  	
  19

  
	
  2.10

  	
  Use of
  Promotional Materials

  	
  19

  
	
  2.11

  	
  Contract Sales
  Forces

  	
  19

  
	
  2.12

  	
  Conduct of
  Commercialization Activities

  	
  19

  
	
  2.12.1

  	
  Statements About the ThermoDox Products

  	
  20

  
	
  2.12.2

  	
  Maintenance of Records

  	
  20

  
	
  2.12.3

  	
  Medical and Scientific Affairs

  	
  20

  
	
  2.13

  	
  Discontinuation
  of Commercialization

  	
  20

  
	
  2.14

  	
  Joint Steering
  Committee

  	
  20

  
	
  2.14.1

  	
  Members; Officers

  	
  20

  
	
  2.14.2

  	
  Responsibilities

  	
  21

  
	
  2.14.3

  	
  Meetings

  	
  22

  
	
  2.14.4

  	
  Decision-Making

  	
  22

  
	
  2.15

  	
  Minutes of
  Committee Meetings

  	
  22

  
	
  2.15.1

  	
  Distribution of Minutes

  	
  22

  
	
  2.15.2

  	
  Review of Minutes

  	
  22

  
	
  2.15.3

  	
  Discussion of Comments

  	
  22

  
	
  2.16

  	
  Expenses

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  LICENSE GRANTS

  	
  23

  
	
  3.1

  	
  License Grant to
  Yakult

  	
  23

  
	
  3.2

  	
  License Grants
  to Celsion

  	
  23

  
	
  3.3

  	
  (Intentionally
  Deleted)

  	
  24

  
	
  3.4

  	
  Sublicensing and
  Subcontracting

  	
  24

  
	
  3.4.1

  	
  Right to Sublicense or Subcontract

  	
  24

  
	
  3.4.2

  	
  Liability for Affiliates, Sublicensees and
  Subcontractors

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  NON-COMPETE AND
  ADDITIONAL INDICATIONS

  	
  24

  
	
  4.1

  	
  Non-Compete

  	
  24

  

 

i

 

	
  4.2

  	
  Additional
  Indications

  	
  24

  
	
  4.2.1

  	
  Additional Proposal

  	
  24

  
	
  4.2.2

  	
  Acceptance of Proposed Indication

  	
  25

  
	
  4.2.3

  	
  Rejection of Proposed Indication

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  FINANCIAL
  PROVISIONS

  	
  25

  
	
  5.1

  	
  Upfront Payment

  	
  25

  
	
  5.2

  	
  Payment of
  Development Costs

  	
  25

  
	
  5.3

  	
  Milestone
  Payments

  	
  25

  
	
  5.4

  	
  Sale of
  ThermoDox Products in the Territory

  	
  26

  
	
  5.4.1

  	
  Royalty

  	
  26

  
	
  5.5

  	
  Royalty Term

  	
  26

  
	
  5.6

  	
  Notices of
  Termination

  	
  27

  
	
  5.7

  	
  Reports and
  Payments

  	
  27

  
	
  5.7.1

  	
  Intercompany Sales

  	
  27

  
	
  5.7.2

  	
  Yakult Report

  	
  27

  
	
  5.8

  	
  GAAP

  	
  27

  
	
  5.9

  	
  (Intentionally
  Deleted)

  	
  27

  
	
  5.10

  	
  Manner of
  Payments

  	
  27

  
	
  5.11

  	
  Interest on Late
  Payments

  	
  28

  
	
  5.12

  	
  Default in
  Payments

  	
  28

  
	
  5.13

  	
  Tax Withholding;
  Value Added Tax

  	
  28

  
	
  5.13.1

  	
  Withholding

  	
  28

  
	
  5.13.2

  	
  Value-Added Tax

  	
  29

  
	
  5.14

  	
  Financial
  Records; Audits

  	
  29

  
	
  5.15

  	
  Right of Offset

  	
  30

  
	
  5.16

  	
  Generic Entry

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  PRODUCT SUPPLY
  AND DISTRIBUTION

  	
  30

  
	
  6.1

  	
  Exclusive Supply
  of ThermoDox Products by Celsion

  	
  30

  
	
  6.2

  	
  Pricing

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  INTELLECTUAL
  PROPERTY

  	
  31

  
	
  7.1

  	
  Intellectual
  Property

  	
  31

  
	
  7.1.1

  	
  Yakult Technology

  	
  31

  
	
  7.1.2

  	
  Celsion Technology

  	
  31

  
	
  7.1.3

  	
  Joint Improvements and Yakult Improvements

  	
  31

  
	
  7.1.4

  	
  Inventorship

  	
  31

  
	
  7.2

  	
  Prosecution and
  Maintenance of Patents

  	
  31

  
	
  7.2.1

  	
  Prosecution and Maintenance of Celsion Patent Rights

  	
  31

  
	
  7.2.2

  	
  Right to Comment

  	
  31

  
	
  7.2.3

  	
  Yakult Step-In Rights

  	
  32

  
	
  7.2.4

  	
  Execution of Documents by Agents

  	
  32

  
	
  7.3

  	
  Patent
  Infringement

  	
  32

  
	
  7.3.1

  	
  Third Party Patent Invalidity Claims

  	
  32

  
	
  7.3.2

  	
  Infringement of Celsion Patent Rights

  	
  32

  
	
  7.4

  	
  Notice of
  Generic Product Entry in the Territory

  	
  33

  
	
  7.5

  	
  Patent Term
  Extension

  	
  33

  
	
  7.6

  	
  Patent Challenge

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  REGULATORY
  MATTERS

  	
  34

  
	
  8.1

  	
  General

  	
  34

  
	
  8.2

  	
  Communications
  with Regulatory Authorities

  	
  34

  
	
  8.3

  	
  Drug Safety

  	
  35

  
	
  8.4

  	
  Regulatory
  Information

  	
  35

  
	
  8.5

  	
  Suspension of
  Clinical Development Activities

  	
  35

  
	
  8.6

  	
  Recalls or Other
  Corrective Action

  	
  35

  

 

ii

 

	
  ARTICLE 9

  	
  CONFIDENTIAL
  INFORMATION; PUBLICATIONS AND PUBLICITY

  	
  35

  
	
  9.1

  	
  Confidential
  Information

  	
  35

  
	
  9.2

  	
  Publications

  	
  37

  
	
  9.3

  	
  Registration and
  Filing of This Agreement

  	
  38

  
	
  9.4

  	
  Publicity

  	
  38

  
	
  9.5

  	
  Prohibition on
  Solicitation

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  REPRESENTATIONS
  AND WARRANTIES; COVENANTS

  	
  39

  
	
  10.1

  	
  Mutual
  Representations and Warranties

  	
  39

  
	
  10.2

  	
  Additional
  Yakult Representations and Warranties

  	
  40

  
	
  10.3

  	
  Additional
  Celsion Representations and Warranties

  	
  40

  
	
  10.4

  	
  Covenants

  	
  41

  
	
  10.5

  	
  Representations
  and Warranties of Celsion Concerning the Duke Agreement

  	
  42

  
	
  10.6

  	
  Celsion’s
  Obligations Concerning the Duke Agreement

  	
  42

  
	
  10.7

  	
  Additional
  Covenants of Celsion

  	
  43

  
	
  10.8

  	
  Disclaimer of
  Warranty

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  INDEMNIFICATION

  	
  43

  
	
  11.1

  	
  Indemnification
  by Yakult

  	
  43

  
	
  11.2

  	
  Indemnification
  by Celsion

  	
  43

  
	
  11.3

  	
  Procedure for
  Indemnification

  	
  44

  
	
  11.3.1

  	
  Notice

  	
  44

  
	
  11.3.2

  	
  Defense of Claim

  	
  44

  
	
  11.3.3

  	
  Settlement of Claim

  	
  45

  
	
  11.4

  	
  Insurance

  	
  45

  
	
  11.5

  	
  Limitation of
  Liability

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  TERM AND
  TERMINATION

  	
  45

  
	
  12.1

  	
  Term

  	
  45

  
	
  12.1.1

  	
  Expiration

  	
  45

  
	
  12.2

  	
  Termination for
  Cause

  	
  46

  
	
  12.2.1

  	
  Termination for Material Breach

  	
  46

  
	
  12.2.2

  	
  Termination as a Result of Insolvency

  	
  46

  
	
  12.2.3

  	
  Termination by Yakult

  	
  47

  
	
  12.2.4

  	
  Termination for Failure to Achieve Minimum Sales
  Targets

  	
  47

  
	
  12.3

  	
  Change of
  Control

  	
  47

  
	
  12.4

  	
  Termination of
  Duke Agreement

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  EFFECTS OF TERMINATION

  	
  47

  
	
  13.1

  	
  Effect of
  Termination by Celsion for Cause or by Yakult Voluntarily

  	
  47

  
	
  13.2

  	
  Effect of
  Termination by Yakult for Cause

  	
  48

  
	
  13.3

  	
  Effect of
  Termination for Insolvency

  	
  48

  
	
  13.4

  	
  Effect of
  Termination for Failure to Meet Minimum Sales Targets

  	
  48

  
	
  13.5

  	
  Termination
  Assistance and Technology Transfer

  	
  48

  
	
  13.5.1

  	
  Technology Transfer

  	
  49

  
	
  13.5.2

  	
  Delivery of Collateral Materials

  	
  50

  
	
  13.5.3

  	
  Assignment of Rights and Grant of Licenses

  	
  50

  
	
  13.5.4

  	
  Inventory

  	
  51

  
	
  13.6

  	
  Termination Due
  to Serious Safety Issue

  	
  51

  
	
  13.7

  	
  Survival

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
  MISCELLANEOUS

  	
  52

  
	
  14.1

  	
  Relationship of
  the Parties

  	
  52

  
	
  14.2

  	
  Further
  Assurances

  	
  52

  
	
  14.3

  	
  Force Majeure

  	
  52

  

 

iii

 

	
  14.4

  	
  Governing Law

  	
  53

  
	
  14.5

  	
  Arbitration

  	
  53

  
	
  14.6

  	
  (Intentionally
  Deleted)

  	
  54

  
	
  14.7

  	
  Assignment

  	
  55

  
	
  14.8

  	
  Notices

  	
  55

  
	
  14.9

  	
  Severability

  	
  56

  
	
  14.10

  	
  Headings

  	
  56

  
	
  14.11

  	
  Waiver

  	
  56

  
	
  14.12

  	
  Entire Agreement

  	
  56

  
	
  14.13

  	
  No License

  	
  56

  
	
  14.14

  	
  No Third Party
  Beneficiaries

  	
  56

  
	
  14.15

  	
  Counterparts

  	
  56

  

 

iv

 

DEVELOPMENT, PRODUCT SUPPLY AND COMMERCIALIZATION AGREEMENT

 

THIS DEVELOPMENT, PRODUCT SUPPLY AND COMMERCIALIZATION AGREEMENT (the “Agreement”), is executed and
effective on December 5, 2008 (the “Effective Date”), by and
between Celsion Corporation, a corporation organized and existing under the
laws of the State of Delaware and having its principal office at 10220 Old
Columbia Road, Suite L, Columbia, Maryland 21046 (“Celsion”), and
Yakult Honsha Co., Ltd., a corporation organized and existing under the laws of
Japan and having its principal office at 1-19 Higashi
Shinbashi 1-chome, Minato-ku, Tokyo, Japan (“Yakult”).  Celsion and
Yakult are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”

 

INTRODUCTION

 

WHEREAS, Duke University granted rights with respect
to ThermoDox Product to Celsion Corporation under the License Agreement dated
on November 10, 1999, as amended by Amendment to License Agreement on January 15,
2003, and Amendment 2 to License Agreement on June 20, 2007. (“Duke
Agreement”);

 

WHEREAS,
Yakult has extensive experience and expertise in the development and
commercialization of pharmaceutical products in Japan;

 

WHEREAS,
Celsion has an ongoing research and development program in the field of
ThermoDox Products and holds certain intellectual property in
this field; and

 

WHEREAS, Celsion and Yakult and its Affiliates desire to collaborate on the research, development and
commercialization of the ThermoDox Products in Japan upon the terms and conditions
set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, covenants and agreements contained herein, Celsion and
Yakult, intending to be legally bound, agree as follows:

 

ARTICLE 1 DEFINITIONS

 

For
purposes of this Agreement, the following initially capitalized terms, whether
used in the singular or plural, shall have the following meanings:

 

1.1                               “Adverse Event” means any unfavorable and unintended sign,
including an abnormal laboratory finding, symptom, or disease temporally
associated with the use of ThermoDox Products, whether or not related to
ThermoDox Products.

 

1.2                               “Affiliate” of a Party means any Person which directly or
indirectly controls, is controlled by, or is under common control with such
Party for so long as such control exists. 
For purposes of this definition, “control” of a Person means (including,
with correlative meanings, “controlled by,” “controlling” and “under common
control with”) the possession of

 

1

 

(a) the
power to direct or cause the direction of the management and policies of such
Person, or (b) ownership of at least fifty percent (50%) of the securities
or comparable equity interest (or such lesser percentage which is the maximum
allowed to be owned by a foreign corporation in a particular jurisdiction)
having the power to vote on or direct the affairs of the Person.

 

1.3                               “Bundled Product” means a product
containing a ThermoDox Product and other products sold by Yakult, when sold
together by Yakult have the intent of providing an aggregate price lower or
higher than the price of each product sold separately.

 

1.4                               “Business Day” means any day that is not a Saturday, a Sunday or a national holiday in Japan or an official holiday in the state of New York as identified
annually by the Parties.

 

1.5                               “Calendar Quarter” means for each Calendar Year, each of the
three (3) month periods ending March 31, June 30, September 30
and December 31; provided, however, that the first Calendar Quarter for
the first Calendar Year shall extend from the Effective Date to the end of the
first complete calendar quarter thereafter.

 

1.6                               “Calendar Year” means, for the first calendar year, the period
commencing on the Effective Date and ending on December 31 of the calendar
year during which the Effective Date occurs, and each successive period
beginning on January 1 and ending twelve (12) consecutive calendar months
later on December 31.

 

1.7                               “Celsion Confidential Information” means Confidential Information
for which Celsion is the Disclosing Party.

 

1.8                               “Celsion Improvements” means any Improvements that are
conceived, first made or invented during the Term solely by Celsion, or its
Affiliates, agents, or sublicensees or by Third Parties acting on its behalf.

 

1.9                               “Celsion IND” means [ 
*  ] for a use of ThermoDox Product as filed with the US Food and Drug Administration.

 

1.10                        “Celsion Know-How” means Know-How that is either Controlled by
Celsion on the Effective Date or comes within Celsion’s Control during the Term
(other than Yakult Know-How pursuant to the licenses granted hereunder) and is
necessary or useful for the Development, manufacture, use or Commercialization
of any ThermoDox Product, provided that Celsion Know-How shall not include Celsion
Improvements.

 

1.11                        “Celsion Patent Costs” means all
Patent Costs incurred in the preparing, filing, prosecuting and maintaining
Celsion Patent Rights.

 

1.12                        “Celsion Patent Rights” means any Patent Rights containing one
or more claims that cover (i) the composition of matter of a ThermoDox
Product or portion thereof, (ii) the manufacture or formulation
of the foregoing, (iii) use of a ThermoDox Product for a Named Indication,
or (iv) any Patent Rights otherwise necessary or useful for the
Development,

 

* Material has
been omitted and filed separately with the Commission.

 

2

 

manufacture,
use or Commercialization of any ThermoDox Product for a Named Indication, which
are Controlled by Celsion as of the Effective Date or come within Celsion’s
Control during the Term (other than (x) Yakult Patent Rights pursuant to
the licenses granted hereunder and (y) Celsion Improvements), including
any Patent Rights claiming Joint Improvements. 
As of the Effective Date, Celsion Patent Rights are [  *  ].

 

1.13                        “Celsion Technology” means Celsion
Patent Rights and Celsion Know-How.

 

1.14                        “Change of Control” means with respect
to a Party (1) the sale of all or substantially all of such Party’s assets
or business relating to this Agreement; (2) a merger, reorganization or
consolidation involving such Party in which the voting securities of such Party
outstanding immediately prior thereto cease to represent at least fifty percent
(50%) of the combined voting power of the surviving entity immediately after
such merger, reorganization or consolidation; or (3) a person or entity,
or group of persons or entities, acting in concert acquire more than fifty
percent (50%) of the voting equity securities or management control of such
Party.

 

1.15                        “Claims” means all charges,
complaints, actions, suits, proceedings, hearings, investigations, claims and
demands.

 

1.16                        “Clinical Study” is a scientific study
of how a treatment works in humans.  A Clinical Study is deemed to “commence” upon the first patient signing
an informed consent in such Clinical Study. 
A Clinical Study can be a Phase I, Phase II or Phase III study.  Clinical Studies shall have a corresponding
meaning.  A Phase IV study is not a
Clinical Study.

 

1.17                        “CMC” means “Chemistry Manufacturing and Controls” and refers to the
FDA and/or Japanese regulatory term used in drug manufacturing and development.

 

1.18                        “Collaboration” means the joint efforts of Celsion and Yakult to
Develop and Commercialize ThermoDox Product for Named Indications pursuant to
this Agreement.

 

1.19                        “Collateral Materials” means, with respect to a ThermoDox
Product, information, data, or images reduced to a tangible form (which, for
the avoidance of doubt, shall include electronic form) to the extent relating
exclusively to such ThermoDox Product. 
By way of example and not limitation, Development Plans, NDAs,
Regulatory Materials, Commercialization Plans, ThermoDox Product training program and
Promotional Materials are all considered “Collateral Materials.”

 

1.20                        “Commercialization” means any and all
activities directed to marketing, promoting, distributing, offering for sale
and selling a ThermoDox Product, importing a ThermoDox Product (to the extent
applicable) and conducting Phase IV Studies. 
When used as a verb, “Commercialize” means to engage in
Commercialization.

 

1.21                        “Commercialization Costs” of a
ThermoDox Product means all Out-of-Pocket Costs and Expenses, incurred by
Yakult or its Affiliates, to the extent provided for in an approved
Commercialization Plan or otherwise approved in advance by the Committee, and 

 

* Material has been
omitted and filed separately with the Commission.

 

3

 

solely
to the extent related to marketing and sale of such ThermoDox Product in the
Territory, consisting of:

 

1.21.1                          [  *  ];

 

1.21.2                          [  *  ];

 

1.21.3                          [  *  ];

 

1.21.4                          [  *  ];

 

1.21.5                          [  *  ];

 

1.21.6                          [  *  ];

 

1.21.7                          [  *  ].

 

1.21.8                          [  *  ];

 

1.21.9                          [  *  ];

 

1.21.10                   [  *  ]; and

 

1.21.11                   [  *  ].

 

1.22                        “Commercially Reasonable Efforts” means the efforts, activities
and resources, which a diligent Third Party company active in the same Field as
the respective Party would use (including, without limitation, the promptness
with which such efforts and resources would be applied) in Developing,
manufacturing, promoting
or Commercializing its own pharmaceutical products that are of comparable
market potential to the ThermoDox Product, taking into account all relevant
factors including product labeling or anticipated labeling, present and future
market potential, past performance of the ThermoDox Product and such Party’s
own pharmaceutical products that are of similar market potential, financial
return, medical and clinical considerations, present and future regulatory
environment and competitive market conditions, and the nature and extent of
market exclusivity (including patent coverage and regulatory exclusivity), all
as measured by the facts and circumstances at the time such efforts are
due.  Commercially Reasonable Efforts require
that a Party, at a minimum, assign responsibility for such obligations to
qualified employees, set annual goals and objectives for carrying out such
obligations, and allocate appropriate resources designed to meet such goals and
objectives.

 

1.23                        “Committee” means the joint steering
Committee.

 

1.24                        “Confidential Information” means all
secret, confidential or proprietary information or data, whether provided in
written, oral, graphic, video, electronic or other form, provided by one Party
(the “Disclosing Party”) to the other Party (the “Receiving Party”)
pursuant to the terms of binding agreement between Yakult and Celsion for Development and

 

* Material has
been omitted and filed separately with the Commission.

 

4

 

marketing of ThermoDox Product in Japan, dated August 13, 2008, this Agreement or generated pursuant to this Agreement,
including without limitation, non-public information relating to the Disclosing
Party’s existing or proposed research, development efforts, new inventions
(whether or not patentable), patent applications, Know-How, Improvements by
either or both Parties, sources of materials used, customers, financial
information, personnel, business, products, and the terms of this Agreement.  Notwithstanding the foregoing sentence,
Confidential Information shall not include any information or materials that:

 

1.24.1                          were already known by the Receiving Party or any of its Affiliates
(other than under an obligation of confidentiality to the Disclosing Party) at
the time of disclosure by the Disclosing Party, to the extent such
Receiving Party has documentary evidence of independent discovery or
development by or on behalf of the Receiving Party or any of its Affiliates,
without the use of the Confidential Information belonging to the Disclosing
Party;

 

1.24.2                          were generally available to the public at the
time of its disclosure to the Receiving Party;

 

1.24.3                          became generally available to the public after its disclosure or
development by either or both Parties, as the case may be, and other than
through any act or omission of the Receiving Party in breach of the Receiving
Party’s confidentiality obligations under this Agreement; or

 

1.24.4                          were disclosed to the Receiving Party or any of its Affiliates, other
than under an obligation of confidentiality, by a Third Party who had no
obligation to the Disclosing Party not to disclose such information to others;

 

1.25                        “Control” or “Controlled”
means, with respect to any:  (a) material,
item of information, method, data or other Know-How, or (b) intellectual
property right, the possession (whether by
ownership or license, other than a license pursuant to this Agreement) by a
Party or its Affiliates of the ability to grant to the other Party access
and/or a license as provided herein under such item or right without violating
the terms of any agreement or other arrangement with any Third Party existing
at the applicable time.

 

1.26                        “Country” means any generally
recognized sovereign entity.

 

1.27                        “Development” or “Develop” means preclinical and clinical
drug development activities, including, among other things, test method
development and stability testing, toxicology, formulation, process
development, manufacturing scale-up, manufacturing for Clinical Studies,
preclinical studies, Clinical Studies, regulatory filing submission and
approval, and regulatory affairs related to the foregoing.  When used as a verb, “Develop” means to
engage in Development.  For clarity,
Development does not include Phase IV Studies.

 

1.28                        “Development Costs” of a ThermoDox Product means all
Out-of-Pocket Costs and Expenses for work required for Development of such
ThermoDox Product (including preclinical and clinical activities and CMC studies, regulatory
activities and approvals, the recruiting and enrolling of patients in the
Clinical Studies), and the cost to purchase the

 

5

 

ThermoDox
Product, in each case only to the extent provided for in an approved
Development Plan or otherwise approved in writing and in advance by the
Committee.  Development Costs shall
consist of:

 

1.28.1         [  *  ];

 

1.28.2         [  *  ]; and

 

1.28.3         [  *  ].

 

1.29        “Development Plan” for a ThermoDox Product means the written
comprehensive plan for the Development of such ThermoDox Product through filing
for Marketing Authorization, including activities designed to generate the
preclinical, process development/manufacturing scale-up, clinical and
regulatory information required for filing Marketing Authorization Applications
and managing any contracted Third Party resources engaged to carry out any of
the foregoing activities.  The initial
Development Plans for ThermoDox Products in the Territory shall be developed by Yakult and approved by the Committee within
[  * 
] of the Effective Date, and may be amended and updated in accordance
with Section 2.3 of this Agreement.

 

1.30        (Intentionally Deleted)

 

1.31        (Intentionally Deleted)

 

1.32        “FDA” means
the U.S. Food and Drug Administration and any successor agency thereto.

 

1.33        “FD&C Act”
means the U.S. Federal Food, Drug, and Cosmetic Act, as amended from time to
time (21 U.S.C. §§ 301 et seq.), together with any rules and regulations
promulgated thereunder.

 

1.34        “Field” means all therapeutic, prognostic and diagnostic
applications for ThermoDox Product for human and non-human purposes for Named
Indications.

 

1.35        “First
Commercial Sale” of a ThermoDox Product means the first shipment of such ThermoDox Product in
quantities customarily required for a pharmaceutical product launch sold to a
Third Party by Yakult, Yakult’s Affiliates, or Yakult’s sublicensees in the
Territory after receipt of Marketing Authorization (and, where applicable,
Price Approval) for such ThermoDox Product in the Territory.

 

1.36        “Generic Product”
means, on a Country-by-Country basis and ThermoDox Product-by- ThermoDox Product basis, a
drug product independently developed by a Third Party that:  (a) contains the same active
pharmaceutical ingredient(s) as the ThermoDox Product, (b) can
reasonably be or is reasonably used for the same indication or indications for
which such ThermoDox Product is approved, (c) is approved for use and sale in the Territory in reliance on the prior
approval of a ThermoDox Product as determined by the applicable Regulatory 

 

* Material has been omitted and filed separately with the Commission.

 

6

 

Authority, and (d) whose
manufacture, importation, sale, offer for sale and/or use is not challenged
under any Laws by Celsion or a Celsion Affiliate.

 

1.37        “GCPs” means
the then-current standards, practices and procedures promulgated or endorsed by
the FDA for the design, conduct, performance, monitoring, auditing, recording,
analyses, and reporting of clinical trials as set forth in the guidelines
titled “Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,”
including related regulatory requirements imposed by the MHLW and comparable
regulatory standards, practices and procedures imposed by any Regulatory
Authority in the Territory, as well as guidelines promulgated by the ICH, as
the foregoing may be updated from time to time, that provide assurance that the
data and reported results are credible and accurate, and that the rights,
integrity, and confidentiality of trial subjects are protected.

 

1.38        “GLPs” means
the then-current good laboratory practice standards promulgated or endorsed by
the MHLW and comparable regulatory standards imposed by any Regulatory
Authority in the Territory, as well as guidelines promulgated by the ICH, as
the foregoing may be updated from time to time.

 

1.39        “GMPs” means the then-current good
manufacturing practices required by the MHLW for the manufacture and testing of pharmaceutical materials, and
comparable Laws or regulations applicable to the manufacture and testing of
pharmaceutical materials imposed by any Regulatory Authority in the
Territory, as well as guidelines promulgated by the ICH,
as the foregoing may be updated from time to time.

 

1.40        “Governmental
Authority” means any court, agency, department, authority or other
instrumentality of any national, state, county, city or other political
subdivision.

 

1.41        “ICH” means International Conference for Harmonization of
Technical Requirements for Registration for Pharmaceuticals for Human Use.

 

1.42        “Improvement”
means any invention, discovery, modification or improvement (whether patentable
or not) conceived, first made or invented by or on behalf of a Party during the
Term related to ThermoDox Product and / or any other of its underlying LTSL technology
which may be used in other Celsion products, including, without limitation, all
new or improved ingredients, compositions, methods of synthesis, use,
manufacture, preparation, presentation, means of delivery, dosage, formulation
or analysis.  For clarity, Improvement
includes all Joint Improvements.

 

1.43        “IND” means
an Investigational New Drug Application, as defined in the FD&C Act, that
is required to be filed with the FDA, or similar application or submission that
is required to be filed with any Regulatory Authority in the Territory, before
beginning clinical testing of a ThermoDox Product in human subjects.  IND means the Celsion IND or the Yakult IND
as the context requires.

 

1.44        “Joint Improvement” means an
Improvement that is conceived, first made or invented jointly by employees
and/or agents of both Celsion and Yakult or their Affiliates.

 

7

 

1.45        “Know-How”
means any technology, technical information, know-how and materials, including,
without limitation, all biological, chemical, pharmacological, toxicological,
clinical, assay and other information, data, discoveries, inventions,
improvements, processes, techniques, formulae and trade secrets, patentable or
otherwise.

 

1.46        “Laws” means laws, rules and
regulations (including any rules, regulations, guidelines or other requirements
of the Regulatory Authorities applicable to the Development, manufacturing,
storage, distribution and Commercialization of ThermoDox Products) that may be
in effect from time to time.

 

1.47        “Losses”
means any and all damages, awards, deficiencies, settlement amounts, defaults,
assessments, fines, dues, penalties, costs, fees, liabilities, obligations,
taxes, liens, losses, lost profits and expenses (including, without limitation,
court costs, interest and reasonable fees of attorneys, accountants and other
experts) incurred by or awarded to Third Parties and required to be paid to
Third Parties with respect to a Claim by reason of any judgment, order, decree,
stipulation or injunction, or any settlement entered into in accordance with
the provisions of this Agreement, together with all documented Out-of-Pocket
Costs and Expenses incurred in complying with any judgments, orders, decrees,
stipulations and injunctions that arise from or relate to a Claim of a Third
Party.

 

1.48        “LTSL” means any and all Lysolipid Thermally Sensitive Liposomes including,
without limitation, ThermoDox Products and other heat activated encapsulated
chemotherapeutic agents.

 

1.49        “Marketing
Authorization” means the approval by a Regulatory Authority for the sale of
a ThermoDox Product within the Territory for which the Regulatory Authority
has jurisdiction.

 

1.50        “Marketing Authorization Application”
or “MAA” means, with respect to a Country, the regulatory authorization
application required to market and sell a ThermoDox
Product in such Country as granted by the relevant Regulatory Authority,
including any NDA or any marketing authorization application filed with the
MHLW.

 

1.51        “Material Breach” means  any breach by any Party hereto of its representations, warranties, covenants,
agreements or other performance obligations under this Agreement (other than a
payment obligation) that (a) is material to this Agreement, taken as a
whole, and (b) shall have continued for [  *  ] after notice
thereof was provided to the alleged breaching Party by the non-breaching Party, with the exception of actions or omissions resulting from
mutual agreement in writing by the Parties or required for compliance with any
applicable Law.

 

1.52        “MHLW” means
Japan’s Ministry of Health, Labour and Welfare and any of its subsidiary agencies or local governments
responsible for pharmaceutical matters, or any successor agency having substantially the same function.

 

* Material has
been omitted and filed separately with the Commission.

 

8

 

1.53        “Named Indications”
means indications set forth on Schedule 1.53, as amended from time to
time pursuant to the terms of this Agreement, including without limitation, any
amendments necessary to include all indications involving the ThermoDox
Products for which either Celsion (outside of the Territory) or Yakult (within
the Territory) has received Marketing Authorization from the FDA or MHLW,
respectively, or any other
mutually agreed indication.  As of the Effective Date, the Named
Indication is Hepatocellular Carcinoma (“HCC”).  As set forth in Sections 2.1 and 4.2, this
Agreement requires Yakult to
study and submit for approval all indications that have been approved by the
FDA or other international Regulatory Authority (i.e. major market countries that
participate in ICH such as UK, France, Germany and Canada).

 

1.54        “NDA” means
a new drug application or supplemental new drug application or any amendments
thereto, submitted to the FDA in the United States, or the MHLW in the
Territory, as the case may be.

 

1.55        (Intentionally Deleted)

 

1.56        “Net Sales” of a ThermoDox Product means, as determined in accordance with
GAAP, the aggregate gross amount invoiced on account of sales of such ThermoDox Product by Yakult or any of its Affiliates or
their sublicensees to a Third Party, less the amount of the following
relating to such sale to the extent actually paid, granted or accrued:

 

1.56.1         [  *  ];

 

1.56.2         [  *  ];

 

1.56.3         [  *  ];

 

1.56.4         [  *  ]; and

 

1.56.5         [  *  ].

 

For clarity, any tax, tariff, customs duty,
excise or other duty or other governmental charge levied on the sale,
transportation or delivery of a ThermoDox
Product and borne by the seller thereof will not reduce Net Sales for Royalty Payments
calculation.  Net Sales shall be determined from books and records maintained by
Yakult in accordance with GAAP, as consistently applied with respect to sales
of all of its prescription pharmaceutical products.  For clarity, ThermoDox Product professional samples or similar use of products shall be considered
marketing expenses, and shall not be considered a discount or otherwise be used
to offset Net Sales.

 

In the case of any sale for value, such as barter or
counter-trade, of a ThermoDox Product, or part thereof, other than in an arm’s-length transaction
exclusively for cash, Net Sales shall be deemed to be the Net Sales at which
substantially similar quantities of such ThermoDox Product are sold
for cash in an arm’s-length transaction.

 

* Material has been omitted and filed separately with the Commission.

 

9

 

Notwithstanding the foregoing, Net Sales shall not
be reduced by customs or excise taxes, import duties, sales taxes and other
taxes or duties related to the active ingredient in a ThermoDox Product or sales
of a ThermoDox Product other than in finished form, all of which shall be deemed
expenses incurred in connection with the manufacture of a ThermoDox Product.

 

In the event a ThermoDox Product is sold as a
Bundled Product, Net Sales shall be calculated by multiplying the Net Sales of
the Bundled Product by the fraction A/(A+B), where A is the weighted (by sales
volume) average sale price in the Territory of the ThermoDox Product in such
Bundled Product when sold separately in finished form and B is the weighted (by
sales volume) average sale price in the Territory of the other product(s) sold
separately in finished form.  In the
event no such separate sales are made by Yakult or its Affiliates or
sublicensees, Net Sales of the Bundled Product shall be calculated in a manner
to be negotiated and agreed upon by the Parties, reasonably and in good faith,
prior to any sale of such Bundled Product, which shall be based upon the
relative value contributed to the Bundled Product of each of the active
components of such Bundled Product.

 

1.57        “Out-of-Pocket Costs and Expenses” means costs and expenses paid
to Third Parties (or payable to Third Parties and accrued in accordance with
GAAP), other than Affiliates or employees, by either Party.

 

1.58        “Patent Costs” means all Out-of-Pocket Costs and Expenses
incurred in preparation, filing, prosecuting and maintaining Patent Rights.

 

1.59        “Patent Rights”
means all patents and patent applications filed anywhere in the world including
any continuations, continuations-in-part, divisions, provisionals or any
substitute applications, any patent issued with respect to any such patent
applications, any reissue, reexamination, renewal or extension (including any
supplemental protection certificate) of any such patent, and any confirmation
patent, registration patent or patent of addition based on any such patent, and
all foreign counterparts of any of the foregoing, and all patents and patent
applications claiming priority to and from which others claim priority, or, as
applicable, portions thereof or individual claims therein.

 

1.60        “Patent Term Extension” means any term
extensions, supplementary protection certificates, and equivalents thereof,
offering patent protection beyond the initial term with respect to any issued
Patent Rights.

 

1.61        “Person” means any natural person,
corporation, general partnership, limited partnership, joint venture,
proprietorship or other business organization.

 

1.62        “Phase I Study”
means, with respect to a ThermoDox Product, a clinical study identified as a Phase I Study in the
Development Plan and conducted in humans on a pharmaceutical product with the
primary purpose of determining safety, metabolism and pharmacokinetic
properties, dosing and clinical pharmacology of such pharmaceutical product,
and that is consistent with 21 C.F.R. § 312.21(a).  Phase I Study also means the equivalent study
in Japan.

 

10

 

1.63        “Phase II Study”
means, with respect to a ThermoDox Product, a clinical study identified as a Phase II Study in the
Development Plan and conducted in human patients designed to evaluate initial
clinical efficacy and safety for such product for one or more indications, as
well as to obtain further understanding of the dosage regimen before embarking
on Phase III Studies, and that is consistent with 21 C.F.R. § 312.21(b).  Phase II Study also means the equivalent
study in Japan.

 

1.64        “Phase III Study”
means, with respect to a ThermoDox Product, a clinical study identified as a Phase III Study in the
Development Plan and conducted as a pivotal trial for purposes of filing a
Marketing Approval Application for a ThermoDox Product that provides for the clinical study of such ThermoDox Product on
sufficient numbers of patients to confirm with statistical significance the efficacy,
and confirm the safety of such ThermoDox Product sufficient to support such Marketing Approval Application for
such ThermoDox Product, and is consistent with 21 C.F.R. § 312.21(c).  Phase III Study also means the equivalent
study in Japan.

 

1.65        “Phase IV Study”
means a study required by a
Regulatory Authority that is a Phase IV
post-marketing and safety study, clinical experience study, and all other
similar types of studies or investigations for a ThermoDox Product that is
initiated in the Territory after receipt of a Marketing Authorization for such ThermoDox Product in the
Territory and is principally intended to support the marketing and
Commercialization of such ThermoDox Product, including, without limitation, clinical experience investigations and studies conducted to fulfill local commitments made as a
condition of any Marketing Authorization. 
For clarity, no Phase III Studies are included in this definition of
Phase IV Studies.  Phase IV Study also
means the equivalent study in Japan.

 

1.66        “Preclinical
Development Plan” means a Development Plan directly relating to a
Preclinical Study.

 

1.67        “Preclinical Study” means, with respect to a ThermoDox Product, the testing of experimental drugs and chemical compounds
in the laboratory (in vitro) or in
animals.  Preclinical Study shall not
include testing, experimentation of other use in human patients.

 

1.68        “Price Approval”
means, in the Territory where a Governmental Authority authorizes reimbursement for, or
approves or determines pricing for, pharmaceutical products, receipt (or, if
required to make such authorization, approval or determination effective,
publication) of such reimbursement authorization or pricing approval or
determination (as the case may be).

 

1.69        “Product Recall” means any recall or market withdrawal
of a ThermoDox Product from or in the Territory.

 

1.70        “Promotional
Materials” means all written, printed, video or graphic advertising,
promotional, educational and communication materials (other than the ThermoDox Product package
insert), including all written, graphic, electronic, audio and video pieces and
including

 

11

 

journal
advertisements, direct mail, direct-to-consumer advertising, internet postings,
broadcast advertisements and sales aids, relating to the ThermoDox Products in
the Territory.

 

1.71        “Quality Agreement”
means the agreement that will be executed between the Parties which will be an
essential set of quality related requirements and responsibilities affecting manufacturing
and testing of ThermoDox Product.

 

1.72        “Regulatory Approvals” means all
approvals (including, without limitation, INDs, Marketing Authorizations and
supplements and amendments thereto), licenses, registrations or authorizations
of any national, supra-national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental entity necessary
for the Development or Commercialization of the ThermoDox
Product, including clinical testing, importation, manufacture, distribution,
use or sale of the ThermoDox Product in a given regulatory jurisdiction.

 

1.73        “Regulatory
Authority” means any applicable Governmental Authority responsible for the
granting of Marketing Authorizations for a ThermoDox Product in a given
regulatory jurisdiction, including, without limitation, the FDA and the MHLW.

 

1.74        “Regulatory Materials”
means any regulatory submissions, notifications, registrations, approvals
and/or other filings and correspondence made to or with a Regulatory Authority,
and any other records required to be maintained for possible audit by a
Regulatory Authority, that are necessary or reasonably desirable to Develop,
manufacture, store, promote, market, sell, Commercialize or otherwise distribute ThermoDox Products in the Territory.

 

1.75        “Royalty Term”
means on a ThermoDox Product-by- ThermoDox Product basis, the period beginning on the date of the First Commercial
Sale of a ThermoDox Product in the Territory and ending on the last day on which Royalty Payments are payable
by Yakult to Celsion pursuant to Section 5.5.

 

1.76        “Samples of Product
Package” means product packages sample with no active ThermoDox Product, which
will be used as Promotional Materials and
distributed to members of the target audience of prescribers to market the
potential use with patients in the Territory, or other similar type of activity
and in accordance with all Laws.

 

1.77        “Territory” means
Japan.

 

1.78        “ThermoDox
Product” means any heat or radiation sensitive product containing a any molecule,
compound structure or formulation of doxorubicin encapsulated in heat or
radiation sensitive liposomes, as further described in [  *  ], and that may be covered by the Celsion Patent Rights. ThermoDox Product
shall also include the combination of the foregoing with (a) one or more
therapeutically active ingredients and/or (b) equipment for use with one
or more of the foregoing.  ThermoDox
Products has a corresponding meaning.

 

1.79        “Third Party” means
a Person who is not a Party or an Affiliate of a Party.

 

* Material has been omitted and filed separately with the Commission.

 

12

 

1.80        “United States” or “U.S.”
means the United States of America, and its territories and possessions.

 

1.81        “Valid Claim” means
any claim of (a) an issued and unexpired patent included in the Celsion Patent
Rights that has not been revoked or held unenforceable or invalid by a decision
of a court or other Governmental Authority of competent jurisdiction, and which
has not been disclaimed, denied or admitted by Celsion to be invalid or
unenforceable through reissue or disclaimer or otherwise, or (b) a pending
patent application within the Celsion Patent Rights that has not been
cancelled, withdrawn or abandoned; provided, however, when such patent issues
based on such patent application, any claim contained therein shall be deemed a
Valid Claim.  If, in the Territory, there should be two (2) or more such decisions conflicting with
respect to the validity of the same claim, the decision of the higher or
highest tribunal shall thereafter control; however, should the tribunals be of
equal rank, then the decision or decisions upholding the claim shall prevail
when the conflicting decisions are equal in number, and the majority of the
decisions shall prevail when the conflicting decisions are unequal in number.

 

1.82        “Yakult Confidential Information” means Confidential Information for which Yakult is the Disclosing Party.

 

1.83        “Yakult
Improvements” means any Improvements that are (i) conceived, first
made or invented during the Term solely by Yakult, or its Affiliates, agents,
or sublicensees or by Third Parties acting on its behalf and (ii) is
necessary or useful for the Development, manufacture, use or Commercialization
of any ThermoDox Product.

 

1.84        “Yakult IND” means
an IND that will be filed with Japan MHLW for Marketing Approval of a ThermoDox
Product.

 

1.85        “Yakult Know-How”
means Know-How that is either Controlled by Yakult on the Effective Date or
comes within Yakult’s Control during the Term (other than Celsion Know-How
pursuant to the licenses granted hereunder) and is necessary or useful for the
Development, manufacture, use or Commercialization of any ThermoDox Product,
provided that Yakult Know-How shall not include Yakult Improvements.

 

1.86        (Intentionally Deleted)

 

1.87        “Yakult Patent
Rights” means any Patent Rights containing one or more claims that cover (i) the
composition of matter of a ThermoDox Product or portion thereof, (ii) the
manufacture or formulation of the foregoing, (iii) use of a ThermoDox
Product for a Named Indication, or (iv) any Patent Rights otherwise
necessary or useful for the Development, manufacture, use or Commercialization
of any ThermoDox Product for a Named Indication, which are Controlled by Yakult
as of the Effective Date or come within Yakult’s Control during the Term [  *  ].

 

1.88        “Yakult Technology” means Yakult
Patent Rights and Yakult Know-How.

 

* Material has been omitted and filed separately with the Commission.

 

13

 

1.89        Construction. 
Except where expressly stated otherwise in this Agreement, the following
rules of interpretation apply to this Agreement:

 

(a)           “include,”
“includes” and “including” are not limiting and mean include, includes and
including, without limitation; (b) definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms; (c) references
to an agreement, statute, Law or instrument defined or referred to herein mean
such agreement, statute, Law or instrument as from time to time amended,
modified or supplemented, including (in the case of agreements and instruments)
by waiver or consent and (in the case of statutes and Laws) by succession of
comparable successor statutes or Laws and all attachments thereto and
instruments incorporated therein; (d) references to a person are also to
its successors and permitted assigns; (e) references to an “Article,” “Section,”
“Exhibit” or “Schedule” refer to an Article or Section of, or any Exhibit or
Schedule to, this Agreement unless otherwise indicated; (f) the word “will”
shall be construed to have the same meaning and effect as the word “shall”; and
(g) the word “any” shall mean “any and all” unless otherwise indicated by
context.

 

Other Defined Terms

 

	
  Abandoned
  Patent Portfolio Rights

  	
   

  	
  7.2.3

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Auditing
  Party

  	
   

  	
  5.13

  
	
  Celsion

  	
   

  	
  Preamble

  
	
  Celsion
  Indemnitees

  	
   

  	
  11.1

  
	
  Commercialization
  Plan

  	
   

  	
  2.8.1

  
	
  Competing
  Products

  	
   

  	
  4.1

  
	
  Cost
  of Goods

  	
   

  	
  6.2(a)

  
	
  Court

  	
   

  	
  14.6

  
	
  Development
  Milestone

  	
   

  	
  5.3.1

  
	
  Disclosing
  Party

  	
   

  	
  1.24

  
	
  Discontinuing
  Party

  	
   

  	
  13.5

  
	
  Due
  Date

  	
   

  	
  5.11

  
	
  Duke
  Agreement

  	
   

  	
  Introduction

  
	
  Effective
  Date

  	
   

  	
  Preamble

  
	
  Executives

  	
   

  	
  2.15.4(a)

  
	
  First
  Milestone Payment

  	
   

  	
  5.3.3

  
	
  Follow-Up HCC Study

  	
   

  	
  12.1.1

  
	
  Force
  Majeure Event

  	
   

  	
  14.3

  
	
  GAAP

  	
   

  	
  5.8

  
	
  HCC

  	
   

  	
  1.53

  
	
  Indemnified
  Party

  	
   

  	
  11.3.1

  
	
  Indemnifying
  Party

  	
   

  	
  11.3.1

  
	
  Initial
  Commercialization Plan

  	
   

  	
  2.8.1

  
	
  Non-Discontinuing
  Party

  	
   

  	
  13.5

  
	
  Parties

  	
   

  	
  Preamble

  
	
  Party

  	
   

  	
  Preambl

  

 

14

 

	
  Patent
  Challenge

  	
   

  	
  7.6

  
	
  Patent
  Portfolio Rights

  	
   

  	
  7.2.1

  
	
  Pharmacovigilance Agreement

  	
   

  	
  8.3

  
	
  Product
  Marks

  	
   

  	
  2.9

  
	
  Receiving
  Party

  	
   

  	
  1.24

  
	
  Recall Costs

  	
   

  	
  8.6

  
	
  Recording
  Party

  	
   

  	
  5.13

  
	
  Redacted
  Agreement

  	
   

  	
  9.3

  
	
  Responsible
  Party

  	
   

  	
  5.13.2

  
	
  Term

  	
   

  	
  12.1.1

  
	
  Third
  Party Claim

  	
   

  	
  11.3.1

  
	
  VAT

  	
   

  	
  5.13.2

  
	
  Withholding
  Party

  	
   

  	
  5.13.1

  
	
  Yakult

  	
   

  	
  Preamble

  
	
  Yakult
  Indemnitees

  	
   

  	
  11.2

  
	
  Yakult
  Report

  	
   

  	
  5.7.2

  

 

ARTICLE
2     DEVELOPMENT OF PRODUCTS; JOINT STEERING
COMMITTEE

 

[Yakult will provide (1) an English language
translation of the summary of each study report and (2) a full and
complete Japanese language version of each study report for Celsion regulatory
purposes]

 

2.1          Development.  Yakult shall, in accordance with the
Development Plan set forth on Schedule 2.3.1, including the timing
and costs set forth therein, and this Agreement, use Commercially Reasonable
Efforts to Develop ThermoDox Products for the Named Indications.  Yakult also shall use Commercially Reasonable
Efforts to file Marketing Authorization Applications for ThermoDox Products in
the Territory and to obtain Market Authorizations in the Territory.  For clarity, Yakult shall be obligated to use
Commercially Reasonable Efforts to obtain Marketing Authorization for all
indications for which a ThermoDox Product has been approved by any Regulatory
Authority outside of the Territory.

 

2.2          Development and Discontinuation of
Development.

 

2.2.1       Development of ThermoDox Products.

 

(a)                                  Yakult shall use Commercially Reasonable
Efforts to Develop each ThermoDox Product in accordance
with the applicable Development Plan.

 

(b)                                 Yakult shall be responsible for

 

15

 

(i) conducting and completing Preclinical Studies, Phase I, Phase
II and Phase III Studies, as required by MHLW, for each ThermoDox Product, [  *  ],
and

 

(ii) preparing and submitting all
Regulatory Materials to the appropriate Regulatory Authorities in the Territory
necessary or desirable in order to obtain all requisite Marketing
Authorizations for the ThermoDox Products in the
Territory.

 

(c)                                  Yakult may conduct Clinical Studies outside
of the Territory in order to meet the standards for Regulatory Approval of
ThermoDox Products in the Territory, provided that Yakult obtains preapproval
from the Committee of any and all such activities.

 

(d)                                 Within [  *  ] after
its completion of each Phase I, Phase II and Phase III Study for a ThermoDox Product (“completion” meaning a final study report has
been delivered to either Party), each Party shall submit to the Committee a report of
the results of such study, together with all supporting data.  Based on the results obtained from each such
Phase I, Phase II or Phase III Study, the Committee shall review and may amend
the Development Plan for the ThermoDox Product.  If the Committee determines that the results
of such studies warrant further Development of the applicable ThermoDox Product, the amended Development Plan shall set
forth the additional studies to be conducted for such ThermoDox Product and the timetable for initiating such
studies.  Yakult shall be responsible for
conducting all subsequent Development activities for each ThermoDox Product in accordance with the revised
Development Plan.

 

(e)                                  Upon request by either Party, the other Party shall
promptly, but in no event later than [  *  ] after
such request (provided that such information is reasonably and readily
available and has not already been provided) provide the Committee with

 

(i) a summary in reasonable detail of
all data generated or obtained from each discrete Development activity
performed by such Party under a Development Plan for ThermoDox
Products, such as any toxicology
study, pharmacokinetics study, stability study and other discrete Clinical
Study, and

(ii) a final report of the results of
each such Development activity, together with all material supporting data.

 

2.2.2                     Discontinuation of Development.  If the Committee decides to
discontinue Developing a ThermoDox Product, the Development Plan for such
ThermoDox Product shall immediately terminate upon such decision.  Upon such determination by the Committee, the
Committee shall remove such Named Indication(s) from Schedule 1.53 unless otherwise
agreed to by the Parties.

 

2.3                               Development Plans.

 

2.3.1                     Initial Development Plan for ThermoDox Products.  The initial Development Plan
for the ThermoDox Products in the Territory shall be completed
and submitted to the Committee for review and approval within [  *  ] of the Effective
Date.  The initial Development Plan, and
any proposed updates or amendments thereto proposed by Yakult pursuant to Section 2.3.4
hereof, shall be submitted to the Committee for review and approval, 

 

* Material has been omitted and filed separately with the Commission.

 

16

 

which
approval shall occur (a) no later than [  *  ] after submission
to the Committee for review and (b) not more than [  *  ] from the Effective
Date.  The approved Development Plan, as
amended from time to time, shall be attached hereto as Schedule 2.3.1.

 

2.3.2                     Development Plans for Additional Indications.  When an additional indication
is added to the Collaboration pursuant to Section 2.14.2, the applicable
proposed Development Plan shall be adopted as the initial
Development Plan for the Development of a ThermoDox Product for the additional
indication through filing of an NDA for such ThermoDox Product.

 

2.3.3                     Scope of Development Plan.  The Development Plan for each ThermoDox
Product shall specify the composition details of such ThermoDox Product and the
Named Indication of such ThermoDox Product and shall, at minimum, set forth the
specific Development activities for which Yakult will be responsible, relevant
timelines, and the estimated number of patients to be enrolled in each Clinical
Study and the estimated duration of each Clinical Study.  An English language summary of all preclinical and
clinical protocols must be submitted to the Committee for review and comment, with approval required
within [ 
*  ].

 

2.3.4                     Updates to the Development Plan.  Beginning with the first full
Calendar Year after the Effective Date, on an as-needed basis but not more frequently than once-per Calendar Year, Yakult shall prepare and
submit for review and approval by the Committee, proposed updates and
amendments to the then-existing Development Plan and prepare the Development
Plan for each ThermoDox Product for the immediately subsequent Calendar Year.

 

2.4                               Implementation of Development Plan.  In
implementing a Development Plan, Yakult shall make available such key personnel
as may be necessary or appropriate to liaise on a regular basis with the
Committee to resolve any questions regarding Yakult’s implementation of the
Development Plan and to communicate to the Committee timely suggestions for
improving the Development Plan.  In
connection with the preparation and implementation of the Development Plan,
Celsion and Yakult shall make available to each other any material data and
information then in their possession pertaining to ThermoDox Product useful for such Development activities, and
hereby grants to the other the right to use all such data and information for
purposes of performing its obligations hereunder.

 

2.5                               Development Costs and Funding.

 

2.5.1                     Development Costs.  [  *  ] is obligated to [  *  ] fund all Clinical Studies,
Preclinical Studies, all research and development costs (including Chemistry,
Manufacturing and Controls (“CMC”) studies) for MHLW approval of ThermoDox
Products, provided however, that if Celsion’s Phase III HCC Study does not lead
to FDA Regulatory Approval, the Parties will fund a Follow-Up Phase III Study
as set forth in Section 12.1.1.

 

2.6                               Access to Records and Facilities.  Each Party shall maintain
scientific records, in sufficient detail and good scientific manner appropriate
for obtaining Patent Rights and for regulatory purposes relating to the Development of ThermoDox
Products. The records shall 

 

* Material has been omitted and filed separately with the Commission.

 

17

 

reflect
all work done and results achieved in the performance of Development by such
Party. For the purpose of ensuring compliance with all applicable Laws and
other applicable regulatory requirements, a Party shall be
entitled to access the other
Party’s and its Affiliates’ records and facilities relating to the Development.
Access is limited to: no more than [  *  ] occasions in each Calendar Year; on each occasion to no more than [  *  ] consecutive
Business Days; during regular business hours; upon reasonable
advance notice, at the requesting Party’s own
expense; with minimal disruption to the other Party’s business.  In all Third Party agreements the Third Parties
shall be contractually
required to provide each Party with access. If a Party
requires additional access in order to comply with applicable regulatory
requirements and submissions, the other Party will grant access and be
flexible, as the situation will require, in accommodating the needs of the
first Party.

 

2.7                               Commercialization.  Yakult shall be solely responsible for all
Commercialization activities relating to the ThermoDox Products in the Territory, and for recommending pricing and other terms of sale for the
ThermoDox Product in the Territory to the Committee for review and comment.  Yakult shall use Commercially
Reasonable Efforts in accordance with the applicable Commercialization Plan,
including the timelines set forth therein, to (a) achieve First Commercial
Sale of a ThermoDox Product as soon as practicable following issuance of a
Marketing Authorization (and Price Approval where applicable) of such ThermoDox
Product in the Territory, and (b) Commercialize such ThermoDox Product in the
Territory once a Marketing Authorization (and Price Approval where applicable)
for such ThermoDox Product is obtained, with the objective of maximizing the
sales potential of the ThermoDox Products and promoting the therapeutic profile
and benefits of the ThermoDox Products in the most commercially beneficial
manner.

 

2.8                               Commercialization Plan.

 

2.8.1                     Preparation and Updating of Commercialization
Plans.  Commencing at least [  *  ] prior to the projected First
Commercial Sale of a ThermoDox Product in the
Territory, Yakult shall commence preparing an Initial
Commercialization plan for such ThermoDox
Product (the “Initial Commercialization Plan”).  Thereafter, Yakult shall update the
Commercialization plan for the Territory for such ThermoDox Product
(the “Commercialization Plan”) at least [  *  ].  The initial Commercialization Plans as so
updated from time to time, shall be attached hereto as Schedule 2.8.1.  Any subsequent Commercialization Plan, and
any proposed updates or amendments to either of the foregoing, shall be
submitted to the Committee for review and comment, which comment shall occur no later
than [  *  ] after submission to the
Committee for review.

 

2.8.2                     Contents of Commercialization Plan.  The
Parties shall agree to annual minimum sales based on an independent formal
market study.  This market study shall be
designed, managed and funded jointly by the Parties.  Sales targets will be adjusted for additional
approved indications beyond the Named Indications.  Yakult shall select an independent marketing
company that has previous experience with multinational pharmaceutical or
biotechnology companies regarding drug pricing and marketing for the
Territory.  The direction and reporting
responsibility will be the function of the Committee.  Each 

 

* Material has been omitted and filed separately with the Commission.

 

18

 

Commercialization Plan shall encompass at least [  *  ] and shall contain at a
minimum, in each case with respect to the Territory:

 

(a)                                  [  *  ];

 

(b)                                 [  *  ];

 

(c)                                  [  *  ];

 

(d)                                 [  *  ];

 

(e)                                  [  *  ];

 

(f)                                    [  *  ];

 

(g)                                 [  *  ]; and

 

(h)                                 [  *  ].

 

2.8.3                     Estimate of Commercialization Costs.  In
addition to the items enumerated in Section 2.8.2, each Commercialization
Plan shall set forth (a) the total budget on an annual basis for
Commercialization activities set forth in the Commercialization Plan; and (b) pricing
strategies specifically relating to the ThermoDox Product.

 

2.9                               Trademarks.  Yakult shall have the perpetual, exclusive for the Royalty Term and
non-exclusive thereafter, [  *  ] right in the Territory to brand the ThermoDox Product using Celsion’s
trademarks, trade names and any other trademarks and trade names the Parties
mutually agree are appropriate for the ThermoDox Product (“Product Marks”).  Celsion shall own all rights in the Product
Marks in the Territory and may register and maintain the Product Marks in the
Territory and regions it determines reasonably necessary.

 

2.10                        Use of Promotional Materials. The Yakult sales force will utilize only Promotional
Materials to conduct promotional activities for the ThermoDox Product. All
promotional activities and materials will be in accordance and compliance with
Japanese regulatory requirements, as well as Celsion global promotional strategies, however, Japanese regulatory requirements
prevails over any Celsion global promotional strategies. Celsion shall have rights to use all Promotional Materials.

 

2.11                        Contract Sales Forces.  Yakult may use any contract sales force to
market a ThermoDox Product in the Territory without the prior written consent of Celsion.

 

2.12                        Conduct of Commercialization Activities. 
Yakult shall use its Commercially Reasonable Efforts in Commercializing ThermoDox Products in the Territory, and shall conduct all Commercialization activities in the Territory in accordance with the applicable 

 

* Material has been omitted and filed separately with the Commission.

 

19

 

Commercialization Plan and this Agreement and in compliance with all
applicable Laws and industry codes and standards.  In addition, and without limiting the
foregoing, Yakult shall:

 

2.12.1              Statements About the ThermoDox Products.  Train and instruct its sales
representatives (a) to make only those statements and claims regarding the
ThermoDox Products, including as to efficacy and safety, that are consistent
with the ThermoDox Product labeling and accompanying inserts and the
Promotional Materials, and (b) not to make any untrue or misleading
statements or comments about the ThermoDox Products, competitors or other
products.

 

2.12.2              Maintenance of Records. 
Maintain records and otherwise establish procedures to ensure compliance
with all applicable Laws and professional requirements that apply to the promotion
and marketing of the ThermoDox Products.

 

2.12.3              Medical and Scientific Affairs.  Be solely responsible for the execution of
medical and scientific affairs and programs, including professional symposia
and other educational activities, and medical affairs studies.  Yakult shall have the right to respond to all
questions or requests for information about the ThermoDox Products made by any medical professionals or any other Person,
provided however, that this shall not be interpreted to limit Celsion’s right
to respond.

 

2.13                        Discontinuation of Commercialization.  If the Committee determines to
discontinue Commercializing a ThermoDox Product, the Development Plan and the
Commercialization Plan for such ThermoDox Product shall terminate immediately
upon such decision.  Upon such
determination by the Committee, the Committee shall remove the relevant Named
Indication(s) from Schedule 1.53, as applicable, unless
otherwise agreed to by the Parties.

 

2.14                        Joint Steering Committee.  The
Development and Commercialization of ThermoDox Products
under this Agreement shall be conducted under the direction of a joint steering
committee (the “Committee”) as follows:

 

2.14.1              Members; Officers. 
Within [  *  ] after the Effective Date, the
Parties shall establish the Committee, which shall consist of [  *  ], [  *  ]
of whom shall be designated by [  *  ], each with the
requisite experience and seniority to enable them to make decisions on behalf
of the Parties with respect to the issues falling within the jurisdiction of the
Committee. A Party may designate
a substitute to temporarily attend and perform the functions of such Party’s
designee at any meeting of the Committee. From time to time, each Party may
substitute one or more of its representatives of the Committee by providing written notice to the other
Party. Celsion and Yakult each may, on advance
notice to and the consent of the other Party, invite non-member employees of
such Party to attend meetings of the Committee. 
Yakult shall designate one of its representatives to serve as
chairperson of the Committee, which designation
Yakult may change from time to time by written notice to Celsion.  One
member of Celsion shall serve as
secretary of the Committee at each Committee meeting, and shall prepare minutes
for all meetings.

 

* Material has been omitted and filed separately with the Commission.

 

20

 

2.14.2              Responsibilities.  The
Committee shall perform the following functions:

 

(a)                                  Determine
the direction and objectives of the Collaboration;

 

(b)                                 Oversee all
aspects of Yakult’s development, implementation and management of the
day-to-day activities of the Collaboration pursuant to the terms of this
Agreement;

 

(c)                                  Review and
approve the Development Plans, and review and comment on Commercialization Plans for ThermoDox
Products and any material amendments thereto;

 

(d)                                 Review and approve the Development strategy,
regulatory strategy, formulation and manufacturing process development
strategy, and protocols and milestones for Clinical Studies (with such approval
occurring within [  *  ]), as such strategies and protocols are proposed to
the Committee by Yakult;

 

(e)                                  Review data and reports arising from and
generated in connection with the Development and Commercialization of the
ThermoDox Products;

 

(f)                                    Review and coordinate regulatory activities
to be undertaken by Yakult in accordance with ARTICLE 8;

 

(g)                                 Review and have final approval authority with
respect to “go/no-go” decisions for the Development of the ThermoDox Products
recommended by Yakult;

 

(h)                                 Review
activities conducted, if any, by a Party with respect to additional indications
for ThermoDox Product;

 

(i)                                     Oversee the integration of new indications to
be added to the Named Indications listed on Schedule 1.53;

 

(j)                                     Review and update Schedule 1.53;

 

(k)                                  Review and provide guidance for all pricing
decisions (for purposes of coordinating pricing strategies outside of the
Territory, only) and managed care contracting strategies to ensure consistency
with the Commercialization Plan;

 

(l)                                     Resolve disputes and other matters concerning
the Collaboration contemplated by this Agreement;

 

* Material has been
omitted and filed separately with the Commission.

 

21

 

(m)                               Estimate
sales amounts, [ 
*  ]; and

 

(n)                                 Have such
other responsibilities as may be assigned to the Committee pursuant to this
Agreement or as may be mutually agreed upon by the Parties from time to time.

 

2.14.3              Meetings.  The Committee shall meet in
person ([  *  ] of which may be by videoconference) at least once every [  *  ] during the first [  *  ] Calendar Years of the Term of
this Agreement and [ 
*  ] per Calendar
Year thereafter, or more or less frequently as Celsion and Yakult mutually
agree upon from time to time, or as reasonably requested by either such Party,
on such dates, and at such places and times as the Parties shall mutually
agree, provided that the Parties shall endeavor to have the first meeting of
the Committee within [ 
*  ] after the
Effective Date.  Meetings of the
Committee that are held in person shall alternate between offices of Yakult and
Celsion, or such other place as the Parties may mutually agree.  Each Party shall receive at least [  *  ] written notice of any
meeting.  The members of the Committee
also may convene or be polled or consulted from time to time by means of
telecommunications, video conferences, electronic mail or correspondence.

 

2.14.4              Decision-Making.  The
Committee may make decisions with respect to any subject matter that is subject
to the Committee’s decision-making authority and functions as set forth in Section 2.14.2.  All decisions of the Committee shall be made
by unanimous vote (by Persons present in Person or by telephone at any meeting)
or written consent, with Yakult and Celsion each having, collectively, among
its respective members, one (1) vote in all decisions.  The Committee shall use Commercially
Reasonable Efforts to resolve the matters within its roles and functions or
otherwise referred to it.  If the
Committee cannot reach consensus on a matter within [  *  ] after such matter has been
brought to the Committee’s attention, then such matter shall be handled in the
manner set forth below:

 

(a)                                  Dispute Resolution.  [  *  ]

 

2.15                        Minutes of Committee Meetings.  Definitive minutes of all
Committee meetings shall be finalized no later than [  *  ] after the meeting
to which the minutes pertain as follows:

 

2.15.1              Distribution of Minutes.  [  *  ] after a Committee meeting, the secretary of such Committee shall
prepare and distribute to all members of such committee draft minutes of the
meeting.  Such minutes shall provide a
list of any issues yet to be resolved, either within such Committee or through
the relevant resolution process.

 

2.15.2              Review of Minutes.  The members of each Committee shall then have
[  *  ] after receiving
such draft minutes to review the minutes and provide comments to the secretary
of such Committee.

 

2.15.3              Discussion of Comments.  Upon the expiration of such [  *  ] period, the Parties
shall have an additional [  *  ]
to discuss each other’s comments and finalize the
minutes.  The secretary and chairperson(s) of
such Committee shall each sign and date the final 

 

* Material has been omitted and filed separately with the Commission.

 

22

 

minutes.  The signature of such chairperson(s) and
secretary upon the final minutes shall indicate each Party’s assent to the
minutes.

 

2.16                        Expenses.  Each Party shall be responsible for all
travel and related costs and expenses, including all Out-of-Pocket Costs and
Expenses, for its members and other employee representatives to attend
Committee meetings, and otherwise participate on the Committee.

 

ARTICLE 3     LICENSE GRANTS

 

3.1                               License Grant to Yakult.

 

3.1.1                     Subject to the terms and conditions of this Agreement, Celsion hereby
grants to Yakult, during the Term of this Agreement, an exclusive license (even
as to Celsion) in only the Territory, under the Celsion Technology, Celsion Improvements, Joint Improvements and Yakult Improvements, with the right to
sublicense as provided in Section 3.4, to make, have made, sell, offer to
sell, import and use ThermoDox Products in the Field.

 

3.1.2                     Except for the rights granted to Yakult under Section 3.1.1 of this Agreement, all right, title and interest in and to the Celsion
Technology, Celsion Improvements, Joint Improvements and Yakult Improvements shall at all times remain
with and be vested in Celsion.  All
rights with respect to any Celsion Technology, Celsion Improvements, Joint Improvements or Yakult Improvements that are not granted under 3.1.1 of this Agreement shall remain with Celsion and subject to Section 4.2, Celsion
shall have the right to grant licenses to any Third Party under the Celsion
Technology, Celsion Improvements,
Joint Improvements and Yakult Improvements to
make, have made, sell, offer to sell, import and use the ThermoDox Products
outside the Territory.  For
clarity, the licenses and rights granted in Section 3.1.1 of this Agreement shall not be construed to convey any licenses or rights
under the Celsion Patent Rights with respect to any active pharmaceutical
ingredients other than doxorubicin.

 

3.2                               License Grants to Celsion. 
Subject to the terms and conditions of this Agreement, Yakult hereby
grants Celsion a perpetual, worldwide, non-exclusive royalty-free license, with
the right to sublicense as provided in Section 3.4, for the purposes of (i) under
Yakult’s Technology, solely to the extent necessary for Celsion to exercise its
rights and perform its obligations pursuant to this Agreement, (ii) utilizing
any preclinical or clinical data or information, and any INDs, and NDAs
developed in connection therewith, in connection with Yakult’s performance of
its obligations hereunder, for Celsion to make, have made, sell, offer to sell,
import and use, Develop or Commercialize the ThermoDox Products in any Country
outside the Territory.

 

23

 

3.3                               (Intentionally Deleted)

 

3.4                               Sublicensing and Subcontracting.

 

3.4.1                     Right to Sublicense or Subcontract.

 

(a)                                  Neither Party may sublicense any of the rights granted under this
Agreement, nor subcontract any of its obligations hereunder, without the prior
written consent of the other Party, such consent not to be unreasonably
delayed, withheld, refused or conditioned, except to its Affiliates, which
right shall automatically terminate if and when such Affiliate ceases to be an
Affiliate of such Party. Notwithstanding the foregoing, Yakult may subcontract its obligation for
the Development of the ThermoDox Products without the consent of Celsion.

 

(b)                                 Each sublicense or subcontract granted by a Party to a permitted
sublicensee or subcontractor pursuant to Section 3.4.1(a) shall be
subject and subordinate to the terms and conditions of this Agreement and shall
contain terms and conditions consistent with those in this Agreement and shall
not in any way diminish, reduce or eliminate a Party’s obligations under this
Agreement. Each Party shall provide the other Party with a copy of
each such sublicense or subcontractor agreement within [  *  ] after the execution
thereof.  As set forth in the terms of the binding agreement dated August 13, 2008, between Yakult and Celsion for development and marketing of ThermoDox Products
in Japan, Yakult does not have the right hereunder to
grant to any sublicensee a manufacturing license to manufacture any ThermoDox
Product.

 

3.4.2                     Liability for Affiliates, Sublicensees and
Subcontractors.  Each Party shall ensure that each of its
Affiliates and permitted sublicensees or subcontractors accepts and complies
with all of the applicable terms and conditions of this Agreement as if such
Affiliates or permitted sublicensees or subcontractors were a party to this
Agreement and each Party shall remain fully responsible for its Affiliates’ and
permitted sublicensees’ or subcontractors’ performance under this Agreement.

 

ARTICLE 4     NON-COMPETE AND  ADDITIONAL INDICATIONS

 

4.1                               Non-Compete. 
During the Term of this Agreement, neither Yakult nor any of its
Affiliates shall, directly or indirectly, by itself or through any Third Party,
Commercialize a competing heat activated liposomal drug other than ThermoDox Products (collectively, the “Competing Products”).

 

4.2                               Additional Indications.  Yakult is required to research and submit a Marketing Authorization Application for Marketing Authorization in the Territory for all indications for which a ThermoDox Product
has been approved by any Regulatory Authority outside of the Territory.

 

4.2.1                     Additional Proposal.  Each Party may propose to Develop jointly as
part of the Collaboration a ThermoDox Product for an indication other than a
Named Indication by submitting to the Committee at any time during the Term, a
written proposal describing the proposed indication, as applicable, which shall
include a proposed Development Plan for Developing a product containing such
ThermoDox Product for such proposed indication (an “Additional Proposal”).  The non-proposing Party on the Committee
shall have sole discretion as to whether to accept such proposed indication as
a Named Indication.

 

* Material has been omitted and filed separately with the Commission.

 

24

 

4.2.2                     Acceptance of Proposed Indication.  If the non-proposing Party
elects to accept the proposed indication as a Named Indication, it shall give
the proposing Party a notice of acceptance in writing within [  *  ] after the
Additional Proposal is submitted by the proposing Party, which acceptance shall
become effective upon receipt.  In and
after such acceptance, such proposed indication shall be deemed a Named
Indication and Schedule 1.53 shall be revised accordingly.  The proposed development plan shall be
adopted by the Parties as the initial Development Plan for developing a
ThermoDox Product for the proposed indication.

 

4.2.3                     Rejection of Proposed Indication.  If the non-proposing Party
fails to accept the proposed indication for a ThermoDox Product as a Named
Indication, within [  *  ] after the proposing Party’s submission of the Additional Proposal,
then the provisions of Section 4.1 shall apply and, neither Party may,
directly or indirectly, itself or through any Affiliate or Third Party, Develop
or Commercialize the foregoing in the Territory.

 

ARTICLE
5     FINANCIAL PROVISIONS

 

5.1                               Upfront Payment.  In
consideration of Celsion’s research and development costs incurred in the past
and the licenses granted by Celsion to Yakult under the Celsion Patent Rights
and the Celsion Know-How pursuant to this Agreement, simultaneously with the
execution of this Agreement, Yakult shall make a non-creditable, non-refundable
payment to Celsion in the amount of Two Million Five Hundred Thousand United
States Dollars ($2,500,000 (US)) by wire transfer within one (1) month of the Effective
Date.

 

5.2                               Payment of Development Costs.  [  *  ]

 

5.3                               Milestone Payments.

 

5.3.1                     In further consideration of the licenses
granted by Celsion to Yakult under the Celsion Patent Rights and the Celsion
Know-How pursuant to this Agreement, and in consideration of the ongoing
research and development activities to be undertaken by Celsion, Yakult also
shall pay to Celsion upon achievement of each such milestone, the amounts set
forth below in Section 5.3.2 (each, a “Development Milestone”);
provided that the payment for each Development Milestone (“Milestone Payment”) shall be made only once for each applicable ThermoDox Product to reach such Development Milestone,
and no payment shall be owed for a Development Milestone that is not reached.  As set forth in the table in Section 5.3.2,
a Development Milestone shall be deemed to have been achieved if a subsequent
Development Milestone has been achieved.

 

5.3.2                     Upon achievement of a Development Milestone,
Yakult shall promptly, but in no event more than [  *  ] after
the achievement of each such Development Milestone, notify Celsion in writing
of such achievement. For each Development Milestone achieved, Yakult shall
promptly, but in no event more than [  *  ] after
the achievement of such Development Milestone, remit payment to Celsion for
such Development Milestone.  For the
avoidance of doubt, each Milestone Payment described below shall be paid only
once during the Term, regardless of the number of ThermoDox Products that
achieve the corresponding Development Milestone.

 

* Material has been omitted and filed separately with the Commission.

 

25

 

	
   

  	
   

  	
  Milestone Payment

  
	
  Development Milestone

  	
   

  	
  Payment for ThermoDox Product

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  MHLW Marketing Authorization of a ThermoDox Product for HCC

  	
   

  	
  Eighteen Million United
  States Dollars

  ($18,000,000 (US)) [  *  ]

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  Annual Sales [  *  ]

  	
   

  	
  [  *  ]

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  Annual Sales [  *  ]

  	
   

  	
  [  *  ]

  
	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
  MHLW Approval of Any New Indications [  *  ].

  	
   

  	
  [  *  ]

  

 

Any dispute under this Section 5.3 that relates to whether a
milestone event has occurred shall first be referred to the Committee for
resolution, and if not successfully resolved as set forth in Section 2.14.4,
it shall be subject to arbitration under Section 14.5.

 

5.3.3                     First Milestone Payment.  Upon
MHLW Marketing Authorization of a ThermoDox Product for HCC in the Territory, Yakult shall pay Celsion
Eighteen Million United States Dollars ($18,000,000 (US); the “First
Milestone Payment”).  [  *  ].

 

5.4                               Sale of ThermoDox Products in the Territory.

 

5.4.1                     Royalty.  For each sale of a ThermoDox Product, Yakult
shall make the following
payments as royalties to Celsion (“Royalty Payments”):

 

	
  Net Sales of All Applicable ThermoDox Products in the Territory in a Calendar Year

  	
   

  	
  “Royalty Rate”

  
	
   

  	
   

  	
   

  
	
  [
   *  ]

  	
   

  	
  [  *  ]

  
	
  [
   *  ]

  	
   

  	
  [  *  ]

  
	
  [
   *  ]

  	
   

  	
  [  *  ]

  

 

Royalty Payments will be made to Celsion on a [  *  ] basis upon completion of reporting process set forth in Section 5.7.2.  When
calculating the Royalty Payment
for each [  *  ], Yakult shall (i) determine
the correct Royalty Rate for [  *  ]
and (ii) if necessary, increase or decrease the Royalty Payment for that [  *  ] to
ensure that the proper Royalty Rate
was paid for that [  *  ].  Any dispute under this Section 5.4 that
relates to whether a sales target has been achieved shall first be referred to
the Committee for resolution, and if not successfully resolved as set forth in Section 2.14.4,
it shall be subject to arbitration under Section 14.5.

 

5.5                               Royalty Term. 
Yakult’s obligation to pay royalties to Celsion on Net Sales of the
ThermoDox Products pursuant to Section 5.4.1 shall commence upon the First
Commercial Sale of such ThermoDox Product and shall
expire upon [  *  ].  For clarity, the Royalty Term may be extended
if there is [  *  ].  For avoidance of conflict of interest, Yakult
shall continue 

 

* Material has
been omitted and filed separately with the Commission.

 

26

 

to make all Milestone Payments and Royalty Payments for the full Royalty Term consistent
with this Article 5 unless (i) Duke
University
terminates the Duke Agreement
and (ii) [  *  ].

 

5.6                               Notices of Termination.  In
the event that a Party has given the other Party any notice of termination of
this Agreement under ARTICLE 12, no
payments under this Section 5.7 shall become due with respect to the time
period after the effective date of such termination, provided that any amounts
payable by Yakult that are accrued and are due and owing with respect to the
time period occurring prior to the effective date of termination shall remain
due and payable hereunder.

 

5.7                               Reports and Payments.  With
respect to a ThermoDox Product, the following
provisions shall apply:

 

5.7.1                     Intercompany Sales.  [  *  ]

 

5.7.2                     Yakult Report. 
Within [  *  ] after the end of [  *  ], Yakult shall submit to
Celsion a written report (the “Yakult Report”) setting forth in
reasonable detail the following revenue costs and expense information with
respect to [  *  ]:

 

(a)                                  Net Sales;

 

(b)                                 [  *  ]; and

 

(c)                                  [  *  ].

 

5.8                               GAAP.  All financial terms and
standards defined or used in this Agreement for sales or activities occurring
pursuant to the terms of this Agreement shall be governed by and determined in
accordance with Japanese generally accepted
accounting principles, consistently applied (“GAAP”).

 

5.9                               (Intentionally Deleted)

 

5.10                        Manner of Payments.  All sums due
to Celsion under this Agreement shall be payable in United States Dollars from
a banking institution in the United States or Japan by bank wire transfer in immediately available funds to such bank
account(s) that Celsion shall designate at least [  *  ] prior to such
transfer with all necessary
information for such transfer, including account number and swift code.  All sums due to Yakult under this Agreement shall be payable in United States Dollars to such bank account that Yakult may from time to time designate by notice to
Celsion at least [  *  ] prior to such transfer with all necessary information for such transfer,
including account number and swift code.  Any remittance transaction fees shall be borne by
the paying Party.  For any payments made in a Calendar Quarter,
the exchange rate shall equal the arithmetic average of the daily exchange
rates (obtained as described below) during such Calendar Quarter; each daily
exchange rate shall be obtained from www.oanda.com. For Royalty Payments, the exchange rate is a
daily average for the Calendar Quarter.

 

* Material has
been omitted and filed separately with the Commission.

 

27

 

5.11                        Interest on Late Payments.  If either Celsion or Yakult shall fail to
make a timely payment pursuant to this Agreement, any such payment that is not
paid on or before the date such payment is due under this Agreement (“Due
Date”) shall bear interest, at a rate of [  *  ] percent [  *  ] per annum from the Due Date until paid in
full, or if less, the maximum interest rate permitted by applicable Law.  Any subsequent payment made by the defaulting
party shall be credited first to all interest so accrued.  Such interest shall be computed on the basis of a year of three hundred
sixty (360) days for the actual number of days payment is delinquent.

 

5.12                        Default in Payments.  Any default by any Party hereto of its
payment obligations hereunder that shall have continued for [  *  ] after notice thereof was provided to the
alleged defaulting Party by the non-defaulting Party; provided that, in the
event of a good faith payment dispute, such [  *  ] cure period shall be
extended for an additional [  *  ] to resolve such
dispute if the alleged defaulting Party has paid all undisputed amounts when due
and provided the non-defaulting Party with a reasonably detailed written
explanation of the alleged defaulting Party’s basis for disputing the payment
obligation within the [  *  ] period following the
notice of the default by the non-defaulting Party.  The alleged defaulting Party shall pay
interest on the final adjudicated amount due pursuant to Section 5.11 from
the date that such payment was originally due.

 

5.13                        Tax Withholding; Value Added Tax.

 

5.13.1                          Withholding.  Except as specifically provided herein, in
the event such withholding is required under the appropriate local tax Laws by
one (1) of the Parties (the “Withholding Party”) on account of
monies payable to the other Party under this Agreement, such amounts shall be
deducted from the amount of monies otherwise payable to the other Party under
this Agreement, and any such withholding taxes required under applicable Law to
be paid or withheld shall be an expense of, and borne solely by, such other
Party.  The Withholding Party shall use
its best efforts to notify the other Party in advance of the withholding and
shall secure and send to the other Party within a reasonable period of time
proof of any such taxes paid or required to be withheld by the Withholding
Party for the benefit of the other Party. 
The Parties shall reasonably cooperate with each other to ensure that
any amounts required to be withheld by either Party are reduced in amount to
the fullest extent permitted by Law.  No
deduction shall be made, or a reduced amount shall be deducted, if the other
Party furnishes a document from the appropriate tax Regulatory Authorities to
the Withholding Party certifying that the payments are exempt from income taxes
or subject to reduced tax rates, according to the applicable convention for the
avoidance of double taxation.  Each Party
agrees to assist the other Party, as may reasonably be necessary, in claiming
exemption from such deductions or withholdings under double taxation or similar
agreement or treaty from time to time in force, and in minimizing the amount
required to be so withheld or deducted, and provided further, that the paying Party shall provide
such additional documentation from time to time as needed for the other party
to confirm the payment of tax.  In the
event that withholding is required on a payment to a Party or its Affiliate
under this Agreement that would not have been required but for an assignment or
sublicense by the other Party or such other Party’s Affiliate, such payment
will be grossed-up by the amount of the withholding if the
non-assigning/non-sublicensing Party can demonstrate that the withholding will
increase its overall current tax liability for the year at issue (after
considering the application of any available foreign tax credit).

 

* Material has
been omitted and filed separately with the Commission.

 

28

 

5.13.2                          Value-Added Tax.  The Parties do not anticipate that payments
under this Agreement will be subject to a value added tax or similar tax (“VAT”)
and the Parties agree to cooperate with one another and use best efforts to
ensure that the VAT does not represent an unnecessary cost in respect of
payments made under this Agreement. 
Except as specifically provided, it is understood and agreed between the
Parties that (a) all amounts payable under this Agreement are exclusive of
any VAT, which shall be added thereon as applicable and (b) where VAT is
properly added to a payment made under this Agreement, the Party making the
payment will pay the amount of VAT only on receipt of a valid tax invoice
issued in accordance with the Laws and regulations of the Country in which the
VAT is chargeable.  However, in the event
that an assignment or sublicense or the choice of jurisdiction for performing
any of its obligations hereunder by a Party (the “Responsible Party”)
causes a VAT that would not otherwise be applicable to apply to a payment under
this Agreement, then the Parties agree that the Responsible Party shall bear
the burden of the VAT.  In such event,
the payment with respect to which such VAT is owing shall be made in such a
manner as to ensure that the Party other than the Responsible Party receives
(or pays) a sum equal to the sum which it would have received (or paid) had
such VAT not been due.

 

5.14                        Financial Records; Audits.  Each Party shall keep, and shall cause its
Affiliates and sublicensees to keep, such accurate and complete records of Net
Sales and its Third Party royalty payments, Patent Costs, Development Costs and
Commercialization Costs as are necessary to determine the amounts due to Yakult
and Celsion under this Agreement.  Such
records shall be retained by each Party and all of its Affiliates and
sublicensees (in such capacity, the “Recording Party”) for a period of
no less than five (5) Calendar Years after the Calendar Year to which such
records relate.  During normal business
hours and with reasonable advance notice to the Recording Party, such records
shall be made available for inspection, review and audit, at the request and
expense of the other Party (the “Auditing Party”), by an independent
certified public accountant, or the local equivalent, appointed by such
Auditing Party and reasonably acceptable to the Recording Party for the sole
purpose of verifying the accuracy of the Recording Party’s accounting reports
and payments made or to be made pursuant to this Agreement; provided, however,
that such audits may not be performed more than [  *  ] after the payment
or report to be audited has been issued or more than [  *  ] per Calendar Year
and such Auditing Party shall not be permitted to audit the same period of time
more than once.  Such accountants shall
be instructed not to reveal to the Auditing Party the details of its review,
except for:  (a) such information as
is required to be disclosed under this Agreement, and (b) such information
presented in a summary fashion as is necessary to report the accountants’
conclusions to the Auditing Party, and all such information shall be deemed
Confidential Information of the Recording Party; provided, however, that in any
event such information may be presented to the Auditing Party in a summary
fashion as is necessary to report the accountants’ conclusions.  All costs and expenses incurred in connection
with performing any such audit shall be paid by the Auditing Party unless the
audit discloses at least a [  *  ] percent ([  *  ]) shortfall, in which case the Recording Party will bear the [  *  ] of the audit for
such Calendar Year. The Auditing Party will be entitled to recover any
shortfall in payments due to it as determined by such audit, plus interest
thereon calculated in accordance with Section 5.11, or alternatively shall
have the right to offset and deduct any such shortfall in payments due to it
against payments the Auditing Party is otherwise required to make to the Recording Party under 

 

* Material has
been omitted and filed separately with the Commission.

 

29

 

this
Agreement.  The Recording Party will be
entitled to receive any overpayment made by it as determined by such audit by
offsetting and deducting any such overpayment against payments the Recording
Party is otherwise required to make to the Auditing Party under this
Agreement.  The documents from which the
sums due under this ARTICLE 5 were calculated shall be retained by the
relevant Party.

 

5.15                        Right of Offset.  Each Party hereby acknowledges and agrees
that the other Party shall be entitled to offset, in part or in full, from time
to time, any and all amounts owed to such Party under this Agreement, against
any and all amounts due and unpaid by the other Party under this Agreement,
unless such amounts are subject to an unresolved good faith payment dispute.

 

5.16                        Generic Entry.  If any Generic
Product enters the market in the Territory or is expected to enter based on
credible information, the Parties shall meet to discuss the anticipated
decrease in annual sales of the corresponding ThermoDox Product in the
Territory and corresponding effect on Royalty Payments, and possible methods to
protect the market for the corresponding ThermoDox Product. However, if for any reason Marketing
Authorization of any Generic Product
introduction is withdrawn from the Territory, then the terms of this agreement shall apply, and if appropriate, Celsion and Yakult
will renegotiate the ThermoDox
royalty as affected by the Generic Product introduction and subsequent withdrawal with good faith efforts.

 

ARTICLE 6  PRODUCT SUPPLY
AND DISTRIBUTION

 

6.1                               Exclusive  Supply of ThermoDox Products by Celsion.  Celsion shall, or shall cause
its Third Party manufacturer to, manufacture and supply to Yakult, and Yakult
shall order exclusively from Celsion, all of its requirements for ThermoDox
Products for use in Clinical Studies to be performed in accordance with the
Development Plan, and for the commercial sale of ThermoDox Products upon
receipt of Marketing Authorization from MHLW. 
Notwithstanding this Article 6, the terms and conditions of the
ThermoDox Product supply agreement between the Parties shall be addressed more
specifically in a separate supply agreement to be negotiated and executed by
the Parties within [  *  ] of the Effective Date of this Agreement.

 

6.2                               Pricing.  Both Parties agree to work cooperatively and
in good faith to endeavor to achieve the lowest possible manufacturing cost per
vial.  The purchase price for all
ThermoDox Products supplied by Celsion to Yakult hereunder shall be as follows:

 

(a)  All ThermoDox Products supplied for use in
the Clinical Studies and otherwise in the Development of the ThermoDox Products
shall be sold by Celsion to Yakult at Celsion’s [  *  ] (“Cost of Goods”).

 

(b)  All ThermoDox Products supplied for sale
to end-users upon receipt of Marketing Authorization from MHLW shall be sold by
Celsion to Yakult at [  *  ].  The price per vial charged by
Celsion to Yakult shall not exceed [  *  ] United States Dollars ([  *  ] (US)) per vial during the [  *  ] of ThermoDox Product launch. 
Celsion shall use all Commercially Reasonable Efforts to reduce the cost
per vial during the Term of the Agreement, and Yakult may, at its 

 

* Material has
been omitted and filed separately with the Commission.

 

30

 

discretion, participate with Celsion in the
development of appropriate cost reduction strategies. The price then shall be reduced to $[  *  ] (estimate) in the [  *  ], $[  *  ] (estimate) in the [  *  ], $[ 
*  ] (estimate) in the [  *  ], and $[ 
*  ] (estimate) from [  *  ] onwards as a function of these efforts.

 

ARTICLE 7  INTELLECTUAL
PROPERTY

 

7.1                               Ownership of Intellectual Property.

 

7.1.1                                 Yakult Technology.  As
between the Parties, Yakult is and shall remain the sole owner of the Yakult
Technology.

 

7.1.2                                 Celsion Technology.  As
between the Parties, Celsion is and shall remain the sole owner of the Celsion
Technology.

 

7.1.3                                 Joint Improvements and Yakult Improvements.  The
Parties recognize that, as a result of the collaboration, certain Improvements
may be deemed to be Joint Improvements or Yakult Improvements.  Celsion shall solely own all Joint
Improvements and Yakult Improvements.  Yakult hereby irrevocably transfers and
assigns, and shall cause each of its employees and personnel to irrevocably
transfer and assign, its and their entire right, title and interest in
any Joint Improvement and Yakult Improvement to Celsion.  Yakult shall promptly take all necessary
actions, and shall cause each of its employees, agents, representatives and
personnel to promptly take all necessary actions, including executing documents
of assignment, to vest all right, title and interest in any Joint Improvement
and Yakult Improvement to Celsion.

 

7.1.4                                 Inventorship.  For purposes of determining whether an
Improvement is solely invented by Yakult or solely invented by Celsion, or a
Joint Improvement, questions of inventorship shall be resolved in accordance
with the U.S. patent Laws, but for any Improvement submitted for a patent
application in Japan, in accordance with the Japanese patent Laws.

 

7.2                               Prosecution and Maintenance of Patents.

 

7.2.1                                 Prosecution and Maintenance of Celsion Patent Rights.  Celsion shall have the first
right to prepare, file, prosecute, and maintain all Patent Rights to Celsion
Technology, Joint Improvements and Yakult Improvements (the “Patent
Portfolio Rights”) throughout the world (including in the Territory);
provided that all Patent Costs incurred by Celsion in prosecuting and
maintaining Patent Portfolio Rights throughout the world will be borne by
solely by Celsion.  Upon Yakult’s written
request, and provided Yakult provides such written request reasonably in
advance of any relevant filing deadline or intended filing date, Celsion may
file patent applications in good faith (including continuations, divisionals
and continuations-in-part) or add new claims to existing patent applications
directed to the ThermoDox Product.

 

7.2.2                                 Right to Comment.  Celsion will keep Yakult fully informed of
the status of the Patent Portfolio Rights in the Territory that could
reasonably affect a ThermoDox Product, and will provide Yakult with copies of
all substantive documentation submitted to, or 

 

* Material has
been omitted and filed separately with the Commission.

 

31

 

received from, any patent offices in the Territory
in connection therewith immediately after such submission or receipt.  With respect to any
substantive submissions that Celsion is required to or otherwise intends to
submit to a patent office in the Territory and that could reasonably affect a
ThermoDox Product, Celsion shall, if reasonably practical, provide a draft of
such submission to Yakult at least [  *  ] prior to the deadline or intended filing date, whichever is earlier,
for submission of such documentation. 
Yakult shall have the right to review and comment upon any such
submission by Celsion to a patent office, if any, no later than [  *  ] prior
to the applicable deadline or intended filing date.  Celsion shall consider in good faith all
comments provided by Yakult with respect to a Patent Portfolio Rights, to the
extent that it could reasonably relate to a ThermoDox Product, and incorporate
all such comments that Celsion deems reasonable and appropriate.

 

7.2.3                                 Yakult Step-In Rights.  Celsion will notify Yakult in writing of any
decision (a) not to file applications for, or (b) to cease
prosecution and/or maintenance of, any Patent Portfolio Rights in the Territory
that could reasonably affect a ThermoDox Product (herein any such Patent Portfolio Rights will be “Abandoned
Patent Portfolio Rights”).  Celsion will
provide such written notice to Yakult upon the earlier of (i) its decision
with respect to any of the foregoing, or (ii) [  *  ] prior to any filing
or payment due date, or any other due date that requires action, in connection
with such Abandoned Patent Portfolio Rights. 
In such event, Yakult shall have the right to make the filing, or to
continue the prosecution or maintenance of such Abandoned Patent Portfolio
Rights in Celsion’s name, if necessary, and at Yakult’s expense.

 

7.2.4                                 Execution of Documents by Agents.  Each Party shall promptly
execute or have executed by its appropriate agents such documents as may be
necessary to obtain, perfect or maintain any Patent Rights filed or to be filed
pursuant to this Agreement, including any assignments required to enable Yakult
to file, prosecute or maintain Patent Rights in its own name pursuant to Section 7.2.3,
and shall cooperate with the other Party so far as reasonably necessary with
respect to furnishing all information and data in its possession reasonably
necessary to obtain or maintain such Patent Rights.

 

7.3                               Patent Infringement.

 

7.3.1                                 Third Party Patent Invalidity Claims.  Each Party shall promptly
notify the other in the event of any legal or administrative action by any
Third Party involving a Celsion Patent Right of which it becomes aware,
including any nullity, challenge to the validity, revocation, reexamination or
compulsory license proceeding.  Celsion
shall defend against any such action involving a Celsion Patent Right using
counsel of its choice, in its own name, and any such defense shall be at
Celsion’s sole expense.  Yakult, upon the
request of Celsion, shall reasonably cooperate with Celsion in any such action
at Celsion’s expense.  If Celsion fails
to defend against any such action involving a Celsion Patent Right in the
Territory, then Yakult shall have the right to defend such action, in its own
name, and any such defense shall be at Celsion’s expense.

 

7.3.2                                 Infringement of Celsion Patent Rights.  In the event that Celsion or
Yakult becomes aware of actual or threatened infringement of a Celsion Patent
Right that 

 

* Material has
been omitted and filed separately with the Commission.

 

32

 

directly affects ThermoDox Product Patents Rights during the Term, that Party will promptly
notify the other Party in writing. 
Celsion shall in Celsion’s or the relevant Celsion
Affiliate’s name and on Celsion’s or the relevant Celsion Affiliate’s behalf,
bring an infringement action against the infringing Third Party by counsel of
its choice, and any such action shall be at Celsion’s expense.  Upon request of Celsion, Yakult agrees to
timely join as party-plaintiff in any such litigation, and in any event to
cooperate with Celsion in connection with such infringement action including
timely filing such action in Celsion’s name if required.  Yakult may elect to participate in such
action with counsel of its own choosing at its sole cost and expense.  If Celsion fails to pursue any actual
infringement action where the Third Party is actually infringing Celsion Patent Rights in the Territory and where the infringement
directly affects ThermoDox Products, then Yakult shall have the right to pursue
such action, and any such action shall be at Yakult’s expense in which case Celsion shall use its best
efforts to work with Duke University to assign Celsion Patent Rights in the
Territory to Yakult.  If Celsion fails to bring an infringement
action against the infringing Third Party where the Third Party is actually
infringing and the infringement directly affects ThermoDox Products within [  *  ] after it becomes
aware of such infringement, Yakult shall have the right to bring such
infringement action in which case Celsion shall use its best efforts to work with Duke
University to assign Celsion Patent Rights in the Territory to Yakult.  Upon request of Yakult,
Celsion agrees to timely join as party-plaintiff in any such litigation (i) at Yakult’s expense if such Celsion
Patent Rights successfully assigned to Yakult, or (ii) at Celsion’s
expense if such Celsion Patent Rights cannot be assigned to Yakult, and in any event to cooperate with Yakult in connection with such
infringement action.  Celsion shall have
the right to retain any and all amounts received by Celsion as a result of
Celsion’s enforcement of the Celsion Patents Rights hereunder. For clarity, if any Celsion Patent Right is
assigned to Yakult, such Celsion Patent Right becomes Yakult Patent Right and
should no longer be subject to Royalty Term calculation.

 

7.4                               Notice of Generic Product Introduction in the Territory.  Notwithstanding the
obligations in Section 7.3.2, if either Party learns of a Third Party
introducing or planning to introduce a Generic Product in the Territory, that
Party shall immediately notify the other Party.

 

7.5                               Patent Term Extension.  Celsion shall seek, in Celsion’s name if so
required, Patent Term Extensions of Celsion Patent Rights, supplemental patent protection
certificates and the like, in the Territory. Celsion and Yakult
shall cooperate with each other in connection with all such activities at Celsion’s expense, and Celsion and its agents and attorneys will give due consideration
to all suggestions and comments of Yakult regarding any such activities.

 

7.6                               Patent Challenge. 
Yakult and its Affiliates hereby covenant and agree not to, directly or
indirectly, commence or maintain any opposition proceeding, challenge the
validity or enforceability of, or, without limiting Yakult’s rights under Section 7.5,
oppose any extension of or the grant of a supplementary protection certificate,
with respect to any Celsion Patent Rights, actively participate in any
interference proceeding (each such action, a “Patent Challenge”).  To the extent the foregoing is unenforceable
under the Law of a particular Country where a patent application within the
Celsion Patent Rights is pending or a patent within the Celsion Patent Rights
is issued, (a) Yakult and its Affiliates shall provide at least [  *  ] notice to Celsion before
challenging the validity of any Celsion Patent Right and (b) Celsion shall
be permitted to terminate this Agreement by written notice effective upon
receipt if Yakult or its Affiliates 

 

* Material has
been omitted and filed separately with the Commission.

 

33

 

directly, or indirectly through a Third Party, commence or maintain any
Patent Challenge.  Yakult shall include
provisions in all agreements granting sublicenses of Yakult’s rights hereunder
providing that if the sublicensee or its Affiliates undertake a Patent
Challenge with respect to any Celsion Patent Right under which the sublicensee
is sublicensed, Yakult shall be permitted to terminate such sublicense
agreement in its entirety.  If a
sublicensee of Yakult (or an Affiliate of such sublicensee) undertakes a Patent
Challenge of any such Celsion Patent Right under which such sublicensee is
sublicensed, then Yakult upon receipt of notice from Celsion of such Patent
Challenge may terminate the applicable sublicense agreement in its
entirety.  If Yakult fails to so
terminate such sublicense agreement, Celsion shall terminate all licensed
rights granted to Yakult covered by such sublicense agreement and any
sublicenses previously granted in such Country(ies) shall automatically
terminate.  Yakult shall cooperate with
Celsion’s reasonable requests to cause such terminated sublicensee to
discontinue all activities under such sublicense agreement.

 

ARTICLE 8  REGULATORY
MATTERS

 

8.1                               General.  Yakult shall own, control and
be solely responsible for filing of all Regulatory Materials in relation to the
Development and Commercialization of the ThermoDox Products in the Territory,
and for obtaining all necessary Regulatory Approvals in the Territory with
respect to the ThermoDox Products purchased, and for all ongoing communications
with the Regulatory Authorities from the Effective Date, subject to Celsion’s
right to use the INDs and NDAs and all data generated in connection therewith
for commercialization of ThermoDox Products outside the Territory, pursuant to
the license granted by Yakult to Celsion set forth in ARTICLE 3 hereof.  Yakult’s responsibilities shall include
without limitation, responsibility for:  (i) filing,
maintaining and updating any INDs and NDAs for ThermoDox Product(s); (ii) reporting all Adverse Events to the appropriate
Regulatory Authorities; (iii) submitting Regulatory Materials to the
appropriate Regulatory Authorities for Marketing Authorization; (iv) handling
medical and technical complaints and disputes with the appropriate Regulatory
Authorities, patients or physicians, and (v) dealing with Product Recalls.  All Regulatory Materials (including Marketing
Authorization) shall be owned solely by Yakult, including any data package
related to such Marketing Authorizations, subject to the license granted to
Celsion pursuant to ARTICLE 3 hereof.

 

8.2                               Communications with Regulatory Authorities.

 

8.2.1                                 Yakult shall keep Celsion generally apprised of the status of all
ongoing discussions with Regulatory Authorities.  Yakult also shall provide Celsion with notice
of all meetings, conferences, and discussions (including without limitation any
meetings or any other meeting of experts convened by the MHLW concerning any
topic relevant to the ThermoDox Products) scheduled with the MHLW concerning
any regulatory matters relating to the ThermoDox Products promptly after the
scheduling of such meeting, conference, or discussion.  Celsion shall be entitled to have one or more
representatives, as appropriate under the circumstance, present at all such
meetings.  Celsion and Yakult, through
the Committee, shall use all reasonable efforts to agree in advance on the
scheduling of such meetings, conferences and discussions and on the objectives
to be accomplished at such meetings, conferences and discussions and the agenda
for the meetings, conferences and discussions with the MHLW.

 

34

 

8.2.2                                 Each Party shall provide to the other Party,
as soon as reasonably practicable but in no event more than [  *  ] after its receipt, copies of
any material documents or other material correspondence received from the Regulatory Authorities pertaining to a ThermoDox
Product. Yakult shall forward to Celsion English translations of all meeting
minutes with the MHLW.

 

8.3                               Drug Safety.  The Parties shall separately execute a pharmacovigilance agreement (“Pharmacovigilance Agreement”) for exchanging Adverse Event and other safety information relating to
ThermoDox Products prior to Yakult’s initiation of any clinical activity for
the ThermoDox Product in the Territory. 
Such Pharmacovigilance
Agreement shall ensure that Adverse Event and other
safety information is exchanged according to a schedule that will permit each
Party to comply with local regulatory requirements and all Laws.

 

8.4                               Regulatory Information.  Each Party agrees to provide the other with
all reasonable assistance and take all actions reasonably requested by the
other Party that are necessary or desirable to enable the other Party to comply
with any Law applicable to the ThermoDox Products, including, but not limited
to, Yakult’s meeting its reporting and other obligations to maintain and update
any Marketing Authorizations for the ThermoDox Products.

 

8.5                               Suspension of Clinical Development Activities.  Either Celsion or Yakult shall
have the right to immediately suspend clinical development activities with
respect to a ThermoDox Product for a particular indication, formulation or
dosage form if such Party, in good faith, determines that there exists
significant and urgent concerns relating to patient safety with respect to such
clinical activities.  The Party making
the determination to suspend such clinical activities shall notify the other
party in writing immediately of any such suspension and the reasons
therefor.  The Committee then shall
promptly determine what actions should be taken with respect to such clinical
activities.  Once a determination is made
by the Committee with respect to the appropriate actions to be taken, the
Committee shall review and re-evaluate the Development Plan and make any
changes necessary to implement such actions.

 

8.6                               Recalls or Other Corrective Action.  Yakult shall promptly notify
Celsion of any material actions to be taken by Yakult with respect to any Product
Recall prior to such action, if reasonably practicable under the circumstances,
to permit Celsion a reasonable opportunity to consult with Yakult with respect
thereto.  Additional rights and
obligations relating to a Product Recall may be further set forth in the
Quality Agreement.  [  *  ] (“Recall Costs”). Recall Costs means all [  *  ] (i) [ 
*  ], (ii) [  *  ], (iii) [  *  ], and (iv) [  *  ].

 

ARTICLE 9  CONFIDENTIAL
INFORMATION; PUBLICATIONS AND PUBLICITY

 

9.1                               Confidential Information.

 

9.1.1                                 Yakult and Celsion each agree that during the Term and thereafter for
so long as such Confidential Information remains confidential and proprietary
to the Disclosing Party, it will keep confidential and will cause each of its
Affiliates to keep confidential, all Celsion Confidential Information or Yakult
Confidential Information, as the case may be, that is

 

* Material has
been omitted and filed separately with the Commission.

 

35

 

disclosed to it or to any of its Affiliates,
pursuant to this Agreement, and not to use any Confidential Information except
as expressly permitted hereunder. 
Notwithstanding the foregoing, in the case of Confidential Information identified in writing by one Party to the other, the obligations of
confidentiality shall continue until such information is no longer considered a
trade secret. When Confidential Information is disclosed other than in writing
(in which case the Disclosing Party shall mark the document
Confidential), the Disclosing Party shall make a reasonable
effort to summarize such Confidential Information in writing and submit it to
the Receiving Party within [  *  ] of initial disclosure.  Unmarked
or non-written information shall be treated as Confidential Information if it
can be reasonably determined given the nature of the information and disclosure
that such information should be treated as such. Yakult and Celsion each agree
to take such action, and to cause its Affiliates to take such action, to
preserve the confidentiality of Celsion Confidential Information and/or Yakult
Confidential Information, as the case may be, as it would customarily take to
preserve the confidentiality of its own confidential information, which in any
event shall be no less than reasonable actions.

 

9.1.2           Neither Yakult nor Celsion, nor any of their respective Affiliates,
shall use the other Party’s Confidential Information, except as expressly
permitted in this Agreement.

 

9.1.3           Yakult and Celsion each agree that any disclosure (a) by Yakult or
any of its Affiliates of Celsion Confidential Information, or (b) by
Celsion or any of its Affiliates of Yakult Confidential Information, shall be
made subject to obligations of confidentiality at least as stringent as confidentiality
obligations hereunder and only if and to the extent necessary to carry out its
responsibilities or exercise its rights under this Agreement or as otherwise
required by Law.  Except as permitted by
this ARTICLE 9, Yakult agrees not to disclose any Celsion Confidential
Information and Celsion agrees not to disclose any Yakult Confidential
Information, to any Third Parties, other than its directors, subcontractors,
consultants, licensees and agents as permitted under this Section 9.1.3,
under any circumstance, without the prior written consent of the other
Party.  Except as otherwise contemplated
or required by this Agreement, Yakult and Celsion each agree, upon the other’s
request, to return all Celsion Confidential Information or Yakult Confidential
Information, as the case may be, disclosed to the other Party pursuant to this
Agreement, including all copies and extracts of documents, as promptly as
practicable following such request upon the termination of this Agreement,
except for one (1) copy which may be kept and used for the sole purpose of
complying with any continuing obligations under this Agreement.

 

9.1.4           Celsion and Yakult each represent, warrant and covenant that all of its
directors, officers, employees, and any subcontractors, consultants,
investigators, sublicensees or agents of such Party, who shall have access to
Yakult Confidential Information or Celsion Confidential Information, as the
case may be, are or shall be bound by written agreement to maintain such
information in confidence consistent with the provisions hereof.  Each Party agrees to use, and agrees to cause
its Affiliates to use, reasonable efforts to enforce such obligations and to
prohibit its employees and consultants from using such Confidential Information
except as expressly permitted hereunder. 
Each Party shall be responsible for any breach of its obligations under this Article 9
in the event of a disclosure by its Affiliates, directors, officers, employees consultants, and advisors.

 

* Material has been omitted and filed separately with
the Commission.

 

36

 

9.1.5           Notwithstanding anything to the contrary in this ARTICLE 9, Yakult
may disclose Celsion Confidential Information and Celsion may disclose Yakult
Confidential Information (a) to Governmental Authorities (i) to the
extent reasonably necessary to obtain or maintain INDs or Regulatory Approvals
for any ThermoDox Product, and (ii) in order to respond to inquiries,
requests or investigations relating to this  Agreement; (b) to
outside consultants and contractors, advisory boards, managed care
organizations, and non-clinical and clinical investigators, in each case to the
extent reasonably necessary to Develop, register or Commercialize any ThermoDox
Product; provided that Yakult or Celsion, as the case may be, shall obtain the
same confidentiality obligations from such Third Parties as it obtains with
respect to its own similar types of confidential information; (c) in
connection with filing or prosecuting Patent Rights as permitted by this
Agreement; (d) in connection with prosecuting or defending litigation as
permitted by this Agreement; (e) in connection with or included in
scientific presentations and publications relating to ThermoDox Products,
including abstracts, posters, journal articles and the like, which
presentations and publications are authorized pursuant to Section 9.2; and
(f) to the extent reasonably necessary in order to exercise or enforce its
rights under this Agreement.  In
addition, either Party may disclose any Confidential Information of the other
Party as may be otherwise required or requested to be disclosed in compliance
with applicable Laws or regulations or order by a court or other Governmental
Authority having competent jurisdiction; provided, that if either Celsion or
Yakult is required to make any such disclosure of the Yakult Confidential
Information or the Celsion Confidential Information, respectively, such Party
shall give reasonable advance notice (to the extent possible) to the other
Party of such disclosure requirement and the original Disclosing Party may in
its discretion seek to secure confidential treatment of the Celsion
Confidential Information or the Yakult Confidential Information, as the case
may be, requested or required to be disclosed.

 

9.2          Publications.  The Parties acknowledge that scientific and
medical publications and presentations will be made in a manner consistent with
industry standards for the development and commercialization of drugs in the
Field, but must be strictly monitored to prevent any adverse effect from
premature publication or dissemination of the results of the activities
hereunder.  Neither Party, nor any of its
employees or contractors shall publish or present any information, including
the results of any preclinical or clinical studies with respect to any
ThermoDox Product without prior written approval of the Committee or the other
Party.  In the event either Party reviews
a proposed Third Party academic, scientific, medical or other publication or
presentation with respect to any ThermoDox Product, such Party shall submit a
copy of such publication or presentation to the other Party’s representatives
on the Committee at least [  *  ] in advance (or, if such Party has fewer than [  *  ] to review a
proposed Third Party publication or presentation, as soon as reasonably
practicable) of such proposed publication or presentation being submitted to a
publisher or other Third Party.  In the
event a Party or a Party’s employee proposes to publish or make a publication
or presentation with respect to any ThermoDox Product, such Party shall submit
a copy of such publication or presentation to the other Party at least [  *  ] in advance of such
proposed publication or presentation being submitted to a publisher or other
Third Party.  Nothing in this
ARTICLE 9 shall be construed to (a) limit the right of Celsion’s or
Yakult’s clinical investigators to publish the results of their studies; or (b) prevent
either Party from complying with applicable Law with respect to the disclosure
of Clinical Study data and results.  In
any permitted publication or 

 

* Material has
been omitted and filed separately with the Commission.

 

37

 

presentation
by a Party, the other Party’s contribution shall be duly recognized, and
co-ownership shall be determined in accordance with customary standards.

 

9.3          Registration and Filing of This Agreement.  If a Party determines that it
is required by Law to publicly file, register or notify this Agreement with a
Governmental Authority, such Party shall (a) initially file a redacted
copy of this Agreement approved by both Parties (the “Redacted Agreement”),
(b) request, and use commercially reasonable efforts to obtain, confidential treatment of all terms
redacted from this Agreement, as reflected in the Redacted Agreement, for a
reasonable period, (c) permit the other Party to review and approve such
request for confidential treatment and any subsequent correspondence with
respect thereto at least [ 
*  ] prior to its
submission to such Governmental Authority, (d) promptly deliver to the
other Party any written correspondence received by it or its representatives
from such Governmental Authority with respect to such confidential treatment
request and promptly advise the other Party of any other communications between
it or its representatives with such Governmental Authority with respect to such
confidential treatment request, (e) upon the written request of the other
Party, request an appropriate extension of the term of the confidential
treatment period, and (f) if such Governmental Authority requests any
changes to the redactions set forth in the Redacted Agreement, discuss such
changes with the other Party and take the other Party’s comments into
consideration when deciding whether to agree to such changes.  Notwithstanding the foregoing, the Party who
determines that it is required by Law to publicly file, register or notify this
Agreement with a Governmental Authority shall have the final determination with
respect to the redactions.  Each Party
shall be responsible for its own Out-of-Pocket Costs and Expenses in connection
with any such filings, registrations or notifications.

 

9.4          Publicity.  The public announcement of the
execution of this Agreement is set forth on Schedule 9.4 attached
hereto and shall be promptly disseminated following the execution of this
Agreement by the Parties.  In addition,
the Parties may make public statements, including in analyst meetings,
concerning the progress of the ThermoDox Products consistent with the
disclosures that the Parties make for their other pharmaceutical products under
development; provided that each Party shall obtain the other Party’s prior
written consent before making such public statements, such consent not to be
unreasonably delayed, withheld or conditioned. 
Each Party shall cooperate with the other Party 

 

* Material has
been omitted and filed separately with the Commission.

 

38

 

with respect to review and comment on such public statements.  Without limiting the immediately preceding
sentence, each Party shall not, without the other Party’s prior written
consent, such consent not to be unreasonably delayed, withheld or conditioned,
make any public statement (written or oral) concerning the terms of this
Agreement or concerning any ThermoDox Product, except where such
statement:  (a) is required by Law, (b) is
required to be contained in financial statements of the Parties prepared in
accordance with GAAP, or (c) has been announced previously in accordance
with Section 9.1.5 or this Section 9.4.  In the case of any public statement (written
or oral) pursuant to (a) or (b) above, the Parties shall give the
other Party sufficient advance notice of the text of such statement so that the
other Party will have the opportunity to comment upon the statement, and the
Party issuing such statement shall give due consideration to any such comments
in the final statement.

 

9.5          Prohibition on Solicitation.  Without
the prior written consent of the other Party, neither Party nor its Affiliates
shall during the Term of this Agreement or for a one-year period after the
termination of this Agreement, solicit to hire (directly or indirectly), or
hire any employee of the other Party.

 

ARTICLE
10   REPRESENTATIONS AND WARRANTIES;
COVENANTS

 

10.1        Mutual Representations and Warranties. 
Celsion and Yakult each represents and warrants to the other as of the
Effective Date that:

 

10.1.1         It has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, and the execution, delivery and performance of this Agreement by
such Party have been duly and validly authorized and approved by proper
corporate action on the part of such Party, and it has taken all other action
required by Law, its certificate of incorporation or by-Laws, or any agreement
to which it is a party or to which it may be subject, required to authorize
such execution, delivery and performance. 
Assuming due authorization, execution and delivery on the part of the
other Party, this Agreement constitutes a legal, valid and binding obligation
of such Party, enforceable against it in accordance with its terms, except as
such enforceability may be limited by applicable insolvency and other Laws
affecting creditors’ rights generally, or by the availability of equitable
remedies.

 

10.1.2         The execution and delivery of this Agreement
by such Party and the performance by such Party contemplated hereunder does not
and will not violate any Laws or any order of any court or Governmental
Authority to which it is subject, except for such violations that would not
have a material adverse effect on the ability of such Party to perform its
obligations under this Agreement.

 

10.1.3         Neither the execution and delivery of this Agreement nor the
performance hereof by such Party requires it to obtain any permits,
authorizations or consents from any Governmental Authority (other than any Regulatory Approvals relating
to the manufacture, use, importation or sale of any ThermoDox Product), or from
any other person, firm or corporation, and such execution, delivery and
performance will not result in the Material Breach of or give
rise to any right of termination under any agreement or contract to which it is
a 

 

39

 

party or to which it may be subject, except for
those breaches or rights that would not adversely affect its ability to perform
its obligations under this Agreement.

 

10.1.4         There is no action, claim, demand, suit, proceeding, arbitration,
grievance, citation, summons, subpoena, inquiry or investigation of any nature,
civil, criminal, regulatory or otherwise, in law or in equity, pending or, to
the knowledge of such Party, threatened against it or any of its Affiliates
relating to the transactions contemplated by this Agreement.

 

10.1.5         Its employees have executed agreements or have existing obligations
under Law requiring assignment to such Party of all Improvements made by such
individuals during the course of and as a result of their employment with such
Party, and obligating such employees to maintain as confidential such Party’s
Confidential Information.

 

10.2        Additional Yakult Representations and
Warranties.  Yakult further represents and warrants to
Celsion as of the Effective Date that:

 

10.2.1         Neither it nor any of its Affiliates
currently has in clinical development, or has, prior to the Effective Date,
adopted a plan to initiate Clinical Studies, for a Competing Product; and

 

10.2.2         It has utilized its own scientific, marketing
and distribution expertise and experience to analyze and evaluate both the
scientific and commercial value of the Celsion ThermoDox Products and has
relied on such analysis and evaluations in deciding to enter into this
Agreement.

 

10.3        Additional Celsion Representations and
Warranties.  Celsion further represents and warrants to
Yakult as of the Effective Date that:

 

10.3.1         No Third Party has challenged or has threatened in writing to challenge
the extent, validity or enforceability of the patents encompassed within the
Celsion Patent Rights relating to the ThermoDox Products (including by way of
example through the institution or written threat of institution of
interference, nullity or similar invalidity proceedings before the United
States Patent and Trademark Office or any analogous foreign entity), and to the
knowledge of Celsion, all application, registration, maintenance and
renewal fees in respect of the Celsion Patent Rights have been paid and all
documents and certificates required to be filed with the relevant agencies for
the purpose of maintaining such Celsion Patent Rights have been filed;

 

10.3.2         To the knowledge of Celsion, none of the research,
development, making, having made, use, sale, offering for sale or importation
of any ThermoDox Product by or on behalf of Celsion has infringed or is
infringing the claims of any patents of a Third Party.  Neither Celsion nor any of its Affiliates have
received any written notice or claim that the research, development, making,
having made, use, sale, offering for sale or importation of any ThermoDox
Product has infringed or is infringing the claims of any patents of a Third
Party;

 

40

 

10.3.3         A complete and
correct list of the Celsion Patent Rights is set forth in Section 1.12;

 

10.3.4         Celsion Controls the Celsion Patent Rights, free of any lien,
encumbrance, charge, security interest, mortgage or other similar restriction,
and neither Celsion nor any of its Affiliates has entered into any agreement
(other than fee for services agreements or material transfer agreements entered
into in the ordinary course of business to develop the ThermoDox Products or
any research agreements for non-commercial purposes) granting any right,
interest or claim in or to any Celsion Patent Rights to any Third Party
(including any academic organization or agency) with respect to the Territory;

 

10.3.5         Except as disclosed in Section 1.12, none of the
Celsion Patent Rights have been acquired by in-license, or otherwise made
available (including pursuant to any immunity from suit arrangement) to Celsion
or any of its Affiliates from a Third Party;

 

10.3.6         Celsion has obtained assignment of the Celsion Patent Rights listed in Section 1.12, other than those
acquired by in-license, from the inventors named therein, and all such
assignments of inventorship rights are valid and enforceable;

 

10.3.7         None of the rights of Celsion or its
Affiliates under the Celsion Patent Rights were developed with federal funding
from the United States government or any other Governmental Authority such that
the United States government or other Governmental Authority has any march-in
rights in or to any Celsion Patent Rights or such that Celsion or its
Affiliates would be subject to any compulsory licensing requirements or any
rights under 35 U.S.C. §§201-212;

 

10.3.8         In the course of the Development of the ThermoDox Products, Celsion has
not used any employee or consultant that is debarred by any Regulatory
Authority, or who is or was to the knowledge of Celsion the subject of debarment
proceedings by any Regulatory Authority; and

 

10.3.9         All Development activities relating to the ThermoDox Products performed
by Celsion, and to the knowledge of Celsion performed on its behalf,
have been conducted in material compliance with applicable Law, except where
failure to so comply would not be reasonably expected to have a material
adverse effect on Yakult’s rights hereunder.

 

10.4        Covenants.  Each Party hereby covenants
and agrees during the Term that:

 

10.4.1         It shall carry out the Development and
Commercialization of the ThermoDox Products and its other obligations or
activities hereunder in accordance with: (a) the 

 

41

 

terms of this Agreement, the
Development Plan, and the Commercialization Plan, and (b) GCPs, GLPs and
GMPs and all other applicable Laws and Marketing Authorizations;

 

10.4.2         It will not enter into any agreement with a Third Party or undertake
other activities or commitments which would have a material adverse effect
on:  (a) its ability to perform all of the obligations
required of it hereunder, or (b) any of the rights granted to the other
Party hereunder; and

 

10.4.3         In the course of the Development or Commercialization of ThermoDox
Products, it will not use any employee or consultant who has been debarred by
any Regulatory Authority, or, to the best of such Party’s knowledge, is the
subject of debarment proceedings by a Regulatory Authority.

 

10.5        Representations and Warranties of Celsion
Concerning the Duke Agreement  Celsion represents and warrants to
Yakult that, as of the Effective Date:

 

10.5.1         The Duke Agreement, is in full force and
effect and has not been modified or amended (other than the amendments effective
January 15, 2003 and June 20, 2007), except that no representation or
warranty relating to the Duke Agreement is made with respect to Duke University
or matters solely within the control or direction of Duke University that are
not known to Celsion;

 

10.5.2         To the best of Celsion’s knowledge, Celsion is
not in breach with respect to a material obligation under the Duke Agreement;

 

10.5.3         Section 2.02 of the Duke Agreement
requires that upon any termination of the Duke Agreement, all sublicenses
granted by Celsion, which would include this Agreement with Yakult, shall be
automatically assigned to Duke University, which shall thereafter receive all
benefits and have all obligations under the sublicenses as in the place and stead
of Celsion; and

 

10.5.4         Celsion has not waived or allowed to lapse any
of its rights under the Duke Agreement, and no such rights have lapsed or
otherwise expired or been terminated.

 

10.6        Celsion’s Obligations Concerning the Duke Agreement  Celsion agrees that during the term of this
Agreement:

 

	
  10.6.1

  	
  [
   *  ];

  
	
   

  	
   

  	
   

  
	
  10.6.2

  	
  [
   *  ].

  
	
   

  	
   

  	
   

  
	
  10.6.3

  	
  [
   *  ];

  
	
   

  	
   

  	
   

  
	
  10.6.4

  	
  [
   *  ];

  
	
   

  	
   

  	
   

  
	
  10.6.5

  	
  [
   *  ];

  

 

* Material has been omitted and filed separately with the Commission.

 

42

 

	
  10.6.6

  	
  [
   *  ]; and

  
	
   

  	
   

  	
   

  
	
  10.6.7

  	
  [
   *  ].

  
			

 

10.7        Additional Covenants of Celsion. 
Celsion covenants and agrees during the Term, except as required
pursuant to any consent decree or agreement with any Governmental Authority or
by Law and except as otherwise provided for in this Agreement, neither Celsion
nor its Affiliates shall enter into any agreement with any Third Party, whether
written or oral, with respect to, or otherwise assign, transfer, license, or
convey its right, title or interest in or to, the Celsion Patent Rights,
Celsion Know-How, any ThermoDox Product, in each case, that is in conflict with
the rights granted by Celsion to Yakult under this Agreement.

 

10.8        Disclaimer of Warranty. 
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY
EXPRESSLY DISCLAIMS, WAIVES, AND RENOUNCES ANY WARRANTY, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF VALIDITY, NON-INFRINGEMENT,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

ARTICLE
11   INDEMNIFICATION

 

11.1        Indemnification by Yakult.  Subject to the provisions of Section 11.3,
Yakult shall defend, indemnify and hold harmless Celsion and its Affiliates and
each of their respective officers, directors, shareholders, employees,
successors and permitted assigns (“Celsion Indemnitees”) from and
against all Third Party Claims, and all associated Losses, to the extent
arising out of:  (a) Yakult’s
negligence or willful misconduct in performing any of its obligations under
this Agreement, (b) a breach by Yakult of any of its representations,
warranties, covenants or obligations under this Agreement, (c) subject to Section 11.3,
the development, use, promotion, marketing, distribution, storage or sale of
ThermoDox Products in the Territory by Yakult or any of
its Affiliates, sublicensees, subcontractors, distributors or agents or on
behalf of Yakult by a Third Party, or any warranty claims, Product Recalls, or any
claims of personal injury or property damage occurring in the Territory, or (d) the manufacture, use, marketing, distribution, storage or
sale of any product containing a ThermoDox Product developed or commercialized by or on behalf
of Yakult outside of this Agreement; provided, however, that in all cases
referred to in this Section 11.1, Yakult shall not be liable to indemnify
Celsion for any Losses of Celsion to the extent that such Losses of Celsion
arise from any action or non-action of Celsion for which Celsion is obligated
to indemnify Yakult pursuant to Section 11.2.

 

11.2        Indemnification by Celsion. 
Subject to the provisions of Section 11.3, Celsion shall defend,
indemnify and hold harmless Yakult and its Affiliates and each of their
officers, directors, shareholders, employees, successors and permitted assigns
(“Yakult Indemnitees”) from and against all Third Party Claims, and all
associated Losses, to the extent arising out of:  (a) Celsion’s negligence or willful
misconduct in performing any of its obligations under this Agreement, (b) a
breach by Celsion of any of its representations, warranties, covenants or
obligations under this Agreement, (c) subject to Section 11.3,
the Development, use, promotion, marketing, distribution, storage or sale of
ThermoDox Products outside of the Territory by 

 

* Material has been omitted and filed separately with the Commission.

 

43

 

Celsion or any of its Affiliates, subcontractors, distributors or agents or on
behalf of Celsion by a Third Party, or any warranty claims, Product Recalls, or any
claims of personal injury or property damage occurring outside of the Territory, (d) the manufacture of ThermoDox Products by
Celsion or on behalf of Celsion by a Third Party, which indemnification
will be more specifically set forth in the supply agreement referenced in Section 6.1, or (e) the manufacture, use,
marketing, distribution, storage or sale of any product containing a ThermoDox
Product to which Yakult’s rights have been terminated and have reverted to
Celsion, but only to the extent such Claims arise out of Celsion’s activities
after such reversion, developed or commercialized by or on behalf of Celsion
outside of this Agreement; provided, however, that in all cases referred to in
this Section 11.2, Celsion shall not be liable to indemnify Yakult to the
extent that such Losses of Yakult arise from any action or non-action of Yakult
for which Yakult is obligated to indemnify Celsion pursuant to Section 11.1.

 

11.3        Procedure for Indemnification.

 

11.3.1         Notice.  Each Party (the “Indemnified Party”)
will notify promptly the other Party (the “Indemnifying Party”) if it
becomes aware of a Claim (actual or potential) by any Third Party (a “Third
Party Claim”) for which indemnification may be sought by the Indemnified
Party, and will give such information with respect thereto as the Indemnifying
Party shall reasonably request.  If any
proceeding (including any governmental investigation) is instituted involving
the Indemnified Party, the Indemnified Party shall not make any admission or
statement concerning a Third Party Claim, but shall promptly notify the
Indemnifying Party in writing and the Indemnifying Party and Indemnified Party
shall meet to discuss how to respond to such Third Party Claim.  The Indemnifying Party shall not be obligated
to indemnify the Indemnified Party to the extent any admission or statement
made by the Indemnified Party, or any failure by the Indemnified Party to
notify the Indemnifying Party of the Claim, materially prejudices the defense
of the Third Party Claim.

 

11.3.2         Defense of Claim.  The Indemnifying Party shall defend the
Indemnified Party against the Third Party Claim; provided, that the
Indemnifying Party has the financial resources to satisfy, and expressly agrees
that it shall be responsible for satisfying and discharging, any judgment or
award made to the Third Party as a result of such proceedings or settlement
amount agreed to with the Third Party in respect of the Third Party Claim,
without prejudice to any provision in this Agreement or right under applicable
Law that allows the Indemnifying Party subsequently to recover any amount from
the Indemnified Party.  The Indemnifying
Party shall retain counsel reasonably acceptable to the Indemnified Party (such
acceptance not to be unreasonably withheld, refused, conditioned or delayed) to
represent the Indemnified Party and shall pay the fees and expenses of such
counsel related to such proceeding.  In
any such proceeding, the Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of the Indemnified Party unless:  (a) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel, or (b) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both Parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
In the circumstance described in the preceding sentence, all reasonable
attorneys’ fees and expenses of the Indemnified Party shall be 

 

44

 

reimbursed as they are incurred.  The Indemnified Party shall have the right to
control the defense of the Third Party Claim only if the Indemnifying Party
fails to defend the Third Party Claim, and if the Indemnified Party controls
the defense of such Third Party Claim, the Indemnifying Party shall have the right to
participate in such defense at the Indemnifying Party’s own expense.  The Indemnified Party shall not settle any
claim for which it is seeking indemnification without the prior consent of the
Indemnifying Party, which consent shall not be unreasonably withheld, refused,
conditioned or delayed.  The Indemnified
Party shall, at the Indemnifying Party’s expense and request, cooperate in all
reasonable respects in the defense of the Third Party Claim.

 

11.3.3         Settlement of Claim.   The
Indemnifying Party shall not, without the written consent of the Indemnified
Party (which consent shall not be unreasonably withheld), effect any settlement
of any pending or threatened proceeding in which the Indemnified Party has
sought indemnification hereunder from the Indemnifying Party, unless such
settlement involves solely monetary damages and includes an unconditional
release of the Indemnified Party from all liability on claims that are the
subject matter of such proceeding.

 

11.4        Insurance.  Each Party shall, upon the Effective Date and
for a period of [  *  ] after the completion of its Development and Commercialization
activities hereunder, obtain and/or maintain, at its sole cost and expense,
product liability insurance (including any self-insured arrangements) against
all liabilities arising out of activities that such Party performs under or in
connection with this Agreement in such amounts and for such coverage that are
reasonable and customary in the Japanese pharmaceutical industry for companies of
comparable size and activities.

 

11.5        Limitation of Liability.  NOTWITHSTANDING ANY OTHER LANGUAGE TO THE
CONTRARY CONTAINED HEREIN, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER OR ANY OF ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT,
SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST
REVENUES OR PROFITS, BUSINESS OR GOODWILL, OR THE COST OF PROCUREMENT OF
SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES) SUFFERED OR INCURRED BY SUCH OTHER
PARTY OR ITS AFFILIATES IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS
AGREEMENT.  THE FOREGOING SENTENCE SHALL
NOT LIMIT THE OBLIGATIONS OF EITHER PARTY TO INDEMNIFY THE OTHER PARTY FROM AND
AGAINST THIRD PARTY CLAIMS UNDER THIS ARTICLE OR LIABILITIES RESULTING FROM A
BREACH OF THE CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 9 ABOVE.

 

ARTICLE
12   TERM AND TERMINATION

 

12.1        Term.

 

12.1.1         Expiration.  This Agreement shall commence
as of the Effective Date and, unless sooner terminated as provided herein,
shall expire upon [ 
*  ] (the “Term”).  Notwithstanding the foregoing, If Celsion’s
Phase III HCC Study does not lead to approval by

 

* Material has been omitted and filed separately with the Commission.

 

45

 

the FDA, then (a) the
Parties may mutually elect to extend the Term as will be reasonably necessary
to conduct a Phase III HCC Study (the “Follow-Up HCC Study”) to lead to
approval in the Territory, (b) [  *  ] and
(c) either party shall have the right to terminate the Agreement.

 

12.2        Termination for Cause.

 

12.2.1         Termination for Material Breach. 
Celsion shall have the right to terminate this Agreement pursuant to the
provisions of Sections 12.2.1(a) and 12.2.1(b) below by
provision of written notice to Yakult, and Yakult shall have the right to
terminate this Agreement pursuant to the provisions of Sections 12.2.1(c) and
12.2.1(d) below by provision of written notice to Celsion:

 

(a)           Upon Celsion’s notice to Yakult that a Material Breach by Yakult has occurred,
the Parties will meet to discuss in good faith whether a plan to remedy the
Material Breach can be mutually agreed upon. 
If the Parties fail to so agree within [  *  ] after the date of
such notice, Section 12.2.1(b) below shall apply.

 

(b)           Subject to the terms hereof, upon the occurrence of any Material Breach
by Yakult after compliance with the provisions of Section 12.2.1(a),
Celsion may terminate this Agreement upon [  *  ] prior written
notice to Yakult, with such termination to be effective upon the expiration of
such [ 
*  ] period; provided, however, that in case of a default of a payment
obligation, such notice will lapse without effect if Yakult cures such default
within such time.

 

(c)           Upon Yakult’s notice to Celsion that a Material Breach by Celsion has
occurred, the Parties will meet to discuss in good faith whether a plan to
remedy the Material
Breach can be mutually agreed upon.  If
the Parties fail to so agree within [  *  ]
after the date of such notice, Section 12.2.1(d) below shall apply.

 

(d)           Subject to the terms hereof, upon the occurrence of any Material Breach
by Celsion after compliance with the provisions of Section 12.2.1(c),
Yakult may terminate this Agreement upon [  *  ] prior written
notice, with such termination to be effective upon the expiration of such [  *  ] period; provided,
however, that in case of a default of a payment obligation, such notice will
lapse without effect if Celsion cures such default within such time.

 

(e)           The provisions of Section 12.2.1(b) and 12.2.1(d) shall
be stayed during the pendancy of the matters (including, without limitation,
the notice and meeting processes) contemplated by this Section 12.2.1.

 

12.2.2     Termination as a Result of Insolvency.  This
Agreement may be terminated in its entirety at any time during the Term by
either Party upon the filing or institution of bankruptcy, reorganization,
liquidation or receivership proceedings, or upon an assignment of a substantial
portion of the assets for the benefit of creditors by the other Party;
provided, however, that in the event of any involuntary bankruptcy or
receivership proceeding, such right to terminate shall 

 

* Material has
been omitted and filed separately with the Commission.

 

46

 

only become effective if the Party consents to the involuntary
bankruptcy or receivership or such proceeding is not dismissed within [  *  ] after the filing thereof.

 

12.2.3     Termination by Yakult.  [  *  ]

 

12.2.4     Termination for Failure to Achieve Minimum Sales Targets. 
Celsion shall have the right to terminate this Agreement, if Yakult
fails to reach, for [ 
*  ], any of the sales milestones set forth in the
Commercialization Plan for ThermoDox Products as
determined by an independent expert that has substantial experience developing
sales forecasts (including drug pricing and marketing policies) for
multi-national pharmaceutical and/or biotechnology companies in the market of the Territory, as selected by Yakult.

 

12.3        Change of Control.  This
Agreement shall survive and remain in full force and effect after the
consummation of a Change of Control transaction involving either Celsion or
Yakult.

 

12.4        Termination of Duke Agreement  Upon any termination of the Duke Agreement
with respect to the Territory or in its entirety, the sublicense granted by
Celsion to Yakult under this Agreement shall be, as provided in Article 2.02
of the Duke Agreement regarding survival of sublicenses, automatically assigned
to Duke University.  Duke University shall
thereafter receive all benefits of Celsion and be obligated to perform all
covenants of Celsion under this Agreement in the place and stead of Celsion,
and Celsion shall not retain any such rights and duties.  Yakult shall thereafter receive all of its
benefits and be obligated to perform all of its covenants under this Agreement
for the benefit of Duke University, and shall in no event incur, merely as the
result of the assignment of this Agreement to Duke University, any obligation
for any additional payments or royalties or any other financial obligation not
already provided for in this Agreement.

 

ARTICLE 13   EFFECTS OF TERMINATION

 

13.1        Effect of Termination by Celsion for Cause or by Yakult Voluntarily.  Without limiting any other
legal or equitable remedies that Celsion may have and in addition to each Party’s
rights and obligations under Section 13.5, if Celsion terminates this
Agreement in accordance with Section 12.2, or if Yakult terminates this
Agreement for convenience pursuant to Section 12.2.3, then with respect to
each applicable ThermoDox Product that was contributed to the Collaboration by
Celsion:

 

13.1.1         The licenses granted by Celsion to Yakult
under this Agreement shall immediately terminate;

 

13.1.2         Yakult shall, within [  *  ] after the termination, pay
Celsion all amounts due pursuant to this Agreement that accrued prior to the
effective date of termination;

 

13.1.3         Celsion may elect to have any Third Party
agreements to which Yakult is a party providing for Development,
Commercialization or manufacturing services assigned to Celsion, to the extent
assignment is permitted by such agreements and provided that Yakult is 

 

* Material has been omitted and filed separately with
the Commission.

 

47

 

not required to pay any
consideration or commence litigation in order to effect an assignment of any
such agreement to Celsion; and

 

13.1.4         Unless Celsion agrees otherwise, after the notice of termination is
given, Yakult shall continue its Development and/or Commercialization
activities in accordance with the applicable Development Plan or
Commercialization Plan until the effective date of such termination; provided,
however, that during such period the Parties will develop a transition plan in
order to facilitate the transfer of Development and Commercialization
activities from Yakult to Celsion thereafter. 
The Parties shall carry out the transition in accordance with Section 13.5.

 

13.2        Effect of Termination by Yakult for Cause.  Without limiting any other legal
or equitable remedies that Yakult may have, and in addition to each Party’s
rights and obligations under Section 13.5, if Yakult has the right to
terminate this Agreement under Section 12.2.1 then Yakult may elect to (a) terminate
this Agreement pursuant to Section 12.2.1, as applicable, or (b) continue
this Agreement by notice to Celsion; provided, however, that if Yakult opts to
continue this Agreement pursuant to subparagraph (b), then (i) all
documents and other materials that support all INDs and NDAs in the Territory
(if any) owned by Celsion for ThermoDox Products shall be immediately
transferred to Yakult and Yakult shall assume responsibility for all Clinical
Studies for the ThermoDox Products then under Development in the Territory, (ii) Celsion’s
rights and Yakult’s obligations under ARTICLE 3 shall terminate, and (iii) 
the Committee established pursuant to ARTICLE 2 shall be permanently disbanded.

 

13.3        Effect of Termination for Insolvency.  If either Party terminates the
Agreement pursuant to Section 12.2.2, then (a) the Parties shall
carry out the transition in accordance with Section 13.5, (b) the
terminating Party’s rights and the non-terminating Party’s obligations under
ARTICLE 3 shall terminate, and (c) the Committee established pursuant to
ARTICLE 2 shall be permanently disbanded.

 

13.4        Effect of Termination for Failure to Meet Minimum Sales Targets.  Upon
termination pursuant to Section 12.2.4:

 

(a)           [  *  ], and

 

(b)           [  *  ].

 

13.5        Termination Assistance and Technology Transfer.  Prior to the effective date of
termination of this Agreement pursuant to Section 12.2.2, 12.2.3 and
12.2.4, the Parties shall agree upon a transition plan to minimize any
disruption to the Development or Commercialization of the ThermoDox Products.  The transition plan shall include a mutually
agreed-upon schedule for transition activities. 
The Discontinuing Party, which shall be Yakult if terminated under
Sections 12.1.2, 12.2.3 or 12.2.4, and the insolvent party if terminated to
subject to 12.2.2 (the “Discontinuing Party”), and the other Party (the “Non-Discontinuing
Party”) shall conduct transition activities pursuant to the transition plan
and Sections 13.5.1 through 13.5.4 below:

 

* Material has been omitted and filed separately with the Commission.

 

48

 

13.5.1     Technology Transfer.  Consistent with the principle of avoiding
supply disruption and in accordance with the transition plan established
pursuant to Section 13.3, the Discontinuing Party shall promptly provide
the Non-Discontinuing Party with any then-existing documentation, technical
information and other Know-How, in the form and format in which such materials
are maintained by the Discontinuing Party in the ordinary course of its
business (provided that the Discontinuing Party shall use Commercially Reasonable Efforts to provide
such materials in a form and format useable by the Non-Discontinuing Party),
that are necessary for the manufacture and sale of ThermoDox Products.  Such documentation, technical  information and
other Know-How shall include without limitation:  (a) [  *  ], (b) [  *  ], (c) [  *  ], (d) [  *  ], (e) [  *  ], and (f) [  *  ].  In addition, prior to the effective date of
termination, and for up to [  *  ]
thereafter, the Discontinuing Party shall make
available to the Non-Discontinuing Party, the reasonable assistance of the
Discontinuing Party’s employees, and shall request that any external Third
Party manufacturers be available, to support the transfer of the manufacturing
technology to the Non-Discontinuing Party. 
The Discontinuing Party shall use commercially reasonable efforts to
ensure that these personnel will cooperate with the Non-Discontinuing Party in
the implementation of the manufacturing technology until such implementation
has been completed successfully.

 

* Material has been omitted and filed separately with the Commission.

 

49

 

13.5.2         Delivery of Collateral Materials.  As soon as reasonably
practicable after the effective date of termination of this Agreement for each
applicable ThermoDox Product, the Discontinuing Party shall provide to the
Non-Discontinuing Party or its designee the following materials, provided that
such materials shall be provided in the form and format in which such materials
are maintained by the Discontinuing Party in the ordinary course of business
(provided that the Discontinuing Party shall use commercially reasonable
efforts to provide such materials in a form and format useable by the Non-Discontinuing
Party), and such materials to the extent that they are related to such
ThermoDox Products as to which such termination relates, shall be provided to the
Non-Discontinuing Party such that the
Non-Discontinuing Party will be in a position to continue to
research, Develop and Commercialize ThermoDox Products
anywhere in the world:

 

(a)           all
data, information and materials (including source data and source documents)
that (i) was used for the preparation and/or filing of, or otherwise
supports, any NDA, IND or Phase IV Study, (ii) obtained
during Development, or (iii) is related to the applicable ThermoDox Products, including, without limitation, all
Regulatory Approvals and clinical trial agreements (to the extent such
agreements have not been cancelled, and are assignable without the Discontinuing Party being required to pay any
consideration or commence litigation in order to effect an assignment of any
such agreement to the Non-Discontinuing Party);

 

(b)           all final pre-clinical and clinical study reports and clinical study
protocols in the Discontinuing Party’s possession or in the possession of its
Affiliates and permitted sublicensees;

 

(c)           all products and materials with trademarks and product logos, if any,
prepared for or actually used in commerce by the Discontinuing Party or its
Affiliates for the applicable ThermoDox Product; and

 

(d)           Commercialization Plans, to the extent relating to ThermoDox Products
(with information relating to other Yakult products redacted) and Promotional
Materials.

 

13.5.3         Assignment of Rights and Grant of Licenses. 
Effective upon termination of this Agreement:

 

(a)           the Discontinuing Party shall promptly assign to the Non-Discontinuing
Party, or a Non-Discontinuing Party Affiliate identified by the
Non-Discontinuing Party, all of Discontinuing Party’s right, title and
interest in and to the materials transferred by the Discontinuing Party
pursuant to Section 13.5.2, including the goodwill attendant to any
trademarks or logos relating to any ThermoDox Product, if the Discontinuing Party is Celsion, all of Celsion’s right, title and
interest in and to the material that are necessary for the Development and
Commercialization of any ThermoDox Product hereunder, including without
limitation the rights granted by Duke University to Celsion under the License
Agreement entered into on November 20, 1999 and amended effective January 15,

 

50

 

2003 and further amended effective June 20, 2007, to the extent the Discontinuing Party Controls such materials;

 

(b)           If First Commercial Sale of a ThermoDox Product has
occurred prior to the effective date of such termination and such ThermoDox Product is being
Commercialized at the time of such termination and any of the Discontinuing
Party housemarks are being used on packaging or advertising and Promotional Materials for such ThermoDox Product, Yakult
and Celsion shall enter into a customary transitional trademark license
agreement in order to permit the Non-Discontinuing Party to continue to use, ThermoDox Product packaging
and advertising and promotional materials bearing such Discontinuing Party
housemark; and

 

(c)           the Discontinuing Party grants to the Non-Discontinuing Party a
non-exclusive, irrevocable, perpetual, fully paid up, royalty free,
sublicenseable, transferable license under all Patent Rights and Know-How
Controlled by the Discontinuing Party and actually being used by the
Discontinuing Party at the time of termination in connection with the
Development or Commercialization of the ThermoDox Products that are subject to
termination, to make, have made, sell, offer to sell, import and use such
ThermoDox Products containing such ThermoDox Products in the Field in the
Territory and any other Collateral Materials relating to the ThermoDox Products
to which such termination relates, to the extent such Collateral Materials
cannot be assigned pursuant to Section 13.5.3(a).  The foregoing license shall include the right
to copy,  create derivative works of, perform, publicly display, use, and modify,
Collateral Materials relating to such ThermoDox Products.  For clarity, the foregoing license may not be
exercised until the applicable effective termination date of this Agreement.
the Non-Discontinuing Party shall be liable for any royalties or other payments
due and owing by the Discontinuing Party to a Third Party as a result of the
Non-Discontinuing Party’s exercise of the license granted in this Section 13.5.3(c).

 

13.5.4         Inventory.  Upon
the applicable effective termination date, the Discontinuing Party shall
transfer to the Non-Discontinuing Party, [  *  ].  The Non-Discontinuing Party
shall have the right [  *  ].  For clarity, the
Non-Discontinuing Party shall have the right [  *  ].

 

13.6        Termination Due To Serious Safety Concern .  In the event either Party has
notified the other Party in writing that it has determined in good faith that
it is not advisable to continue Development or Commercialization of a ThermoDox
Products as a result of a serious safety issue regarding the use of such
ThermoDox Products pursuant to Section 8.5, then the Parties will promptly
wind-down and terminate all Development and Commercialization of the applicable
ThermoDox Products and all costs of such wind-down and termination will be
Development Costs or marketing expenses, as the case may be, to be borne as
otherwise set forth in this Agreement depending on the activity involved. However, before deciding to wind down and
terminate, if Yakult has a reasonable belief of a sound scientific and medical
basis as to the safety of the approved dosage form and formulation of the
ThermoDox Product in the Territory, then the Parties shall enter into
discussions about the advisability and terms of continuing to market the ThermoDox
Product in the Territory.

 

* Material has been omitted and filed separately with the Commission.

 

51

 

13.7        Survival.  Termination, relinquishment or expiration of
this Agreement for any reason shall be without prejudice to any rights that
shall have accrued to the benefit of any Party prior to such termination,
relinquishment or expiration. Such termination, relinquishment or expiration
shall not relieve any Party from obligations which are expressly or by
implication intended to survive termination, relinquishment or expiration of
this Agreement and shall not affect or prejudice any provision of this
Agreement which is expressly or by implication provided to come into effect on,
or continue in effect after, such termination, relinquishment or expiration.

 

ARTICLE 14   MISCELLANEOUS

 

14.1        Relationship of the Parties.  Each Party shall bear its own
costs incurred in the performance of its obligations hereunder without charge
or expense to the other except as expressly provided in this Agreement.  Neither Party shall have any responsibility
for the hiring, termination or compensation of the other Party’s employees or
for any employee benefits of such employees. 
No employee or representative of a Party shall have any authority to
bind or obligate the other Party to this Agreement for any sum or in any manner
whatsoever, or to create or impose any contractual or other liability on the
other Party without said Party’s approval. 
For all purposes, and notwithstanding any other provision of this
Agreement to the contrary, each Party’s legal relationship under this Agreement
to the other Party shall be that of independent contractor.  This Agreement is not a partnership agreement
and nothing in this Agreement shall be construed to establish a relationship of
co-partners or joint venturers between the Parties.

 

14.2        Further Assurances.  Each Party hereby agrees to execute,
acknowledge and/or deliver such further instruments, and to do all other acts,
as may be necessary or appropriate in order to carry out the purposes and
intent of this Agreement.

 

14.3        Force Majeure.  Neither Party shall be liable to the other
Party for any direct, indirect, consequential, incidental, special, punitive,
exemplary or other damages arising out of or relating to the suspension or
termination of any of its obligations or duties under this Agreement by reason
of the occurrence of a Force Majeure Event (a “Force Majeure Event”), provided
such Party complies with its obligations under this Section 14.3.

 

(a)           A Force Majeure Event is an event that is unforeseen and beyond the
reasonable control of a Party or its Affiliates, and not due to the malfeasance
of the Party or its Affiliates, that could not reasonably have been avoided by
the exercise of due care and prevents the Party from performing its obligations
under this Agreement, including, but not limited to, injunction, fire,
accident, labor difficulty, strike, riot, civil commotion, act of God,
inability to obtain raw materials, or delay or errors by shipping companies (not
occasioned by negligence of the Party).

 

52

 

(b)           A Force Majeure Event that materially interferes with the ability of a
Party to perform its obligations or duties under this Agreement shall not
excuse such Party from the performance of its obligations or duties, but shall
merely suspend such performance during the continuation of the event.  The affected Party shall promptly notify the
other Party of the occurrence and particulars, and shall provide the other
Party with its best estimate of the duration of the Force Majeure Event.  The Party so affected shall use Commercially Reasonable Efforts to avoid or remove such causes of nonperformance as soon as is
reasonably practicable.  Upon termination
of the Force Majeure Event, the performance of any suspended obligation or duty
shall promptly recommence.

 

14.4        Governing Law.  This
Agreement shall be construed, and the respective rights of the Parties
determined, according to the substantive law of the State of New York, notwithstanding the provisions governing
conflict of laws under New York law to the contrary, except matters of
intellectual property law which shall be determined in accordance with the
intellectual property laws applicable to the intellectual property in question.

 

14.5        Arbitration.

 

(a)           With the exception of those matters referred for decision making under
Section 2.14.4 and under Section 5.14 for resolution by independent accountants, in the
event of any dispute arising out of or
relating to this Agreement, the Parties shall first attempt to resolve such dispute through good-faith negotiations. Such negotiations
shall not extend for a period of
more than [  *  ] following
notification of such dispute to the other Party.

 

(b)           Either Party may refer any such dispute to the Parties’ respective
Chief Executive Officers or Managing Director, who shall confer on the resolution of the issue.  Any final decision mutually agreed to by such
officers shall be conclusive and binding on the Parties.  If such officers are not able to agree on a
resolution within [ 
*  ] after such
issue was first referred to them, either Party may, by written notice to the
other Party, elect to initiate arbitration pursuant to Section 14.5 (c).

 

(c)           Any arbitration under this Section 14.5
shall be administered by the American Arbitration Association under its
Commercial Arbitration Rules then in effect (the “Arbitration Rules”) and
as otherwise described in this Section 14.5(c).  The arbitration shall take place at a
location to be agreed by the Parties; provided, however, that in the event that
the Parties are unable to agree on a location for an arbitration under this
Agreement within [ 
*  ] of the demand
therefore, such arbitration shall be
held in New York, New York.

 

(i)            Full Arbitration.  Unless Section 14.5(c)(ii) is
invoked for an expedited arbitration, the following procedures apply:

 

(1)           The
Parties shall appoint an arbitrator by mutual agreement.  If the Parties cannot agree on the
appointment of an arbitrator within [  *  ] of
the demand for arbitration, an arbitrator shall be appointed in accordance with
the Arbitration Rules.

 

* Material has been omitted and filed separately with the Commission.

 

53

 

(2)           Either
Party may apply to the arbitrator for interim injunctive relief until the
arbitration decision is rendered or the matter is otherwise resolved.  Either Party also may, without waiving any
right or remedy under this Agreement, seek from any court having jurisdiction
any injunctive or provisional relief necessary to protect the rights or
property of that Party pending resolution of the arbitration matter pursuant to
this Section 14.5(c)(i).  The
arbitrator shall have the authority to grant any equitable and legal remedies
that would be available in any judicial proceeding instituted to resolve the
dispute submitted to arbitration; provided, however, that the arbitrator shall
not have the power to alter, amend, or otherwise affect the terms or provisions
of this Agreement.  Judgment upon any
award rendered pursuant to this Section may be entered by any court having
jurisdiction over the Parties’ other assets.

 

(3)           Each
Party shall bear its own costs and expenses and attorneys’ fees, and the Party
that does not prevail in the arbitration proceeding shall pay the arbitrator’s
fees and any administrative fees of arbitration.

 

(4)           Except
to the extent necessary to confirm an award or decision or as may be required
by applicable Law, neither Party may, and the Parties shall instruct the
arbitrator not to, disclose the existence, content, or results of an
arbitration without the prior written consent of both Parties. In no event
shall an arbitration be initiated after the date when commencement of a legal
or equitable proceeding based on the arbitration matter would be barred by the
applicable New York statute of limitations.

 

(5)           The
Parties hereby agree that any payment to be made by a Party pursuant to a
decision of the arbitrator shall be made in United States Dollars, free of any tax or other deduction.  The Parties further agree that the decision
of the arbitrator shall be the sole, exclusive and binding remedy between them
regarding determination of the arbitration
matters presented and the Parties hereby waive
the right to contest the award in any court or other forum.

 

(ii)           Expedited Arbitration.  Any dispute may be referred by either Party
for expedited arbitration, in which case the procedures set forth in Section 14.5(a) shall
apply, except as follows:

 

(1)           A
single, independent, conflict-free arbitrator shall be appointed, who shall
have sufficient background, expertise, and experience to resolve the dispute (“the
Expert”);

 

(2)           Each
Party shall submit a written summary of such Party’s position to the Expert
within [  *  ] of the selection of the
Expert.  Within [  *  ] after receipt of such
summaries by the Expert, the Expert shall make a determination that the Expert
considers the most fair and reasonable to the Parties, and shall provide the
Parties with a written statement setting forth the basis of the determination.

 

(iii)  Binding Arbitration. 
All arbitration decisions and
outcomes to resolve disputes are binding to both Parties and will serve as the
final decision.

 

14.6        (Intentionally Deleted)

 

* Material has been omitted and filed separately with the Commission.

 

54

 

14.7        Assignment.  This Agreement, and any rights
or obligations of either Party hereunder, may not be assigned by either Party
without the prior consent of the other Party; provided, however, that either
Party may assign this Agreement, in whole or in part, to any of its Affiliates
if such Party remains secondarily liable for performance of this Agreement; and
provided further that either Party may assign this Agreement to a successor to
all or substantially all of the assets of such Party whether by merger, sale of
stock, sale of assets or other similar transaction.  This Agreement shall be binding upon and,
subject to the terms of the foregoing sentence, inure to the benefit of the
Parties hereto, and their permitted successors, legal representatives and
assigns, including without limitation, any successor of a Party as a result of
a Change of Control transaction involving such Party.

 

14.8        Notices.  All demands, notices,
consents, approvals, reports, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if mailed by
express delivery service (which notice shall be effective five (5) Business
Days after such mailing) to the Parties at the following addresses:

 

Celsion Corporation:

 

Celsion Corporation

10220 Old Columbia Road

Suite L

Columbia, MD 21046

Attn:  Michael H. Tardugno, President

 

With a copy to:

 

Venable LLP

750 E. Pratt Street

Suite 900

Baltimore, Maryland  21202

Attn: 
Michael J. Baader, Esquire

 

Yakult:

 

Yakult Honsha Co., Ltd.

6 F Ginza-Kobiki
Bldg., 16-21,

Ginza 7-Chome,
Chuo-ku, Tokyo, Japan

Attn: [  *  ], Head of the Pharmaceutical Division

 

With a copy to:

 

Yakult Honsha Co., Ltd.

6 F Ginza-Kobiki
Bldg., 16-21,

Ginza 7-Chome,
Chuo-ku, Tokyo, Japan

Attn: General
Manager, Pharmaceutical Department

 

* Material has been omitted and filed separately with the Commission.

 

55

 

or
to such other address as the addressee shall have last furnished in writing in
accordance with this provision to the addressor.

 

14.9                        Severability.  In
the event of the invalidity of any provisions of this Agreement, the Parties
agree that such invalidity shall not affect the validity of the remaining
provisions of this Agreement.  The
Parties will replace an invalid provision with valid provisions which most
closely approximate the purpose and economic effect of the invalid provision.
In the event that the terms and conditions of this Agreement are materially
altered as a result of the preceding sentences, the Parties shall renegotiate
the terms and conditions of this Agreement in order to resolve any
inequities.  Nothing in this Agreement
shall be interpreted so as to require either Party to violate any applicable
Laws, rules or regulations.

 

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

 

14.11                 Waiver.  Any term or condition of this
Agreement may be waived at any time by the Party that is entitled to the
benefit thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the Party waiving such term
or condition.  No waiver by any Party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.  Except as expressly set forth in this
Agreement, all rights and remedies available to a Party, whether under this
Agreement or afforded by Law or otherwise, will be cumulative and not in the
alternative to any other rights or remedies that may be available to such
Party.

 

14.12                 Entire Agreement.  This
Agreement (including the exhibits and schedules hereto) constitutes the entire
agreement between the Parties hereto with respect to the within subject matter
and supersedes all previous agreements and understandings between the Parties,
whether written or oral, including the terms of binding agreement between Yakult and
Celsion for Development and marketing of ThermoDox Product in Japan, dated August 13, 2008.  This Agreement may be
altered, amended or changed only by a writing making specific reference to this
Agreement and signed by duly authorized representatives of Celsion and Yakult.

 

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

 

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

 

14.15                 Counterparts.  This Agreement may be executed in two or more
counterparts or facsimile versions (to be promptly followed by original
signatures), each of which, when

 

56

 

executed,
shall be deemed to be an original and all of which together shall constitute
one and the same document.

 

57

 

IN WITNESS WHEREOF, Celsion and Yakult, by their duly authorized
officers, have executed this Agreement as of the Effective Date.

 

	
  Celsion Corporation

  	
   

  	
   

  	
  Yakult Honsha Co., Ltd.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Michael H. Tardugno

  	
   

  	
  By:

  	
  /s/
  Sumiya Hori

  
	
  Name:

  	
  Michael
  H. Tardugno

  	
   

  	
   

  	
  Name:
  Sumiya Hori

  
	
  Title:

  	
  President &
  CEO

  	
   

  	
   

  	
  Title:   President

  

 

58

 

SCHEDULE
1.53

 

Hepatocellular
Carcinoma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59

 

SCHEDULE
2.3.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60

 

SCHEDULE
2.8.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

SCHEDULE
9.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

62

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