Document:

zentalis10-qq22020exhibi

                                                                 Exhibit 10.3   [***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.                                                                                  GREATER CHINA AMENDMENT TO THE             SECOND AMENDED AND RESTATED LICENSE AGREEMENT                                     between                             Recurium IP Holdings, LLC,                                       and                               Zeno Management, Inc.                                 Dated:  May 19, 2020 

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.                            GREATER CHINA AMENDMENT                                      TO THE                 SECOND AMENDED AND RESTATED LICENSE AGREEMENT         THIS GREATER CHINA AMENDMENT TO THE SECOND AMENDED AND RESTATED  LICENSE AGREEMENT (“Amendment”), dated May 19, 2020, by and between Recurium IP Holdings,  LLC (f/k/a Zeno Royalties & Milestones, LLC), a Delaware Limited Liability Company (“LICENSOR”)  and  Zeno  Management,  Inc.,  a  corporation  organized  and  existing  under  the  laws  of  Delaware  (“LICENSEE”)  and  shall  only  become  effective  if  and  when  Zentera  Therapeutics  (Cayman)  Ltd.  (“ZTCL”) Series A financing has its initial closing (the “Effective Date”).  LICENSOR and LICENSEE  may,  from  time-to-time,  be  individually  referred  to  as  a  “Party”  and  collectively  referred  to  as  the  “Parties”.                                     RECITALS         WHEREAS, ZIP Pharma, Inc. merged into LICENSEE, effective as of September 3, 2019;         WHEREAS, LICENSOR and LICENSEE entered into that certain Second Amended and Restated  License Agreement, dated September 6, 2019 (the “Agreement”);         WHEREAS,  LICENSEE  entered  into  each  of  those certain  Amended  and  Restated  Sublicense  Agreements with each of Zeno Alpha, Inc., Zeno Beta, Inc., K-Group Alpha, Inc. and K-Group Beta, Inc.,  each dated September 6, 2019, each as amended by that certain Greater China Amendment, dated as of the  date hereof, (collectively, the “Sublicense Agreements”);         WHEREAS, each of Zeno Alpha, Inc., K-Group Alpha, Inc. and K-Group Beta, Inc. entered into  each of those certain Collaboration and License Agreements with ZTCL and Zeno Beta, Inc. entered into  that certain Option Agreement for a Collaboration and License with ZTCL, each dated as of the date hereof  (collectively, the “Greater China Sublicense Agreements”);         WHEREAS, LICENSEE and ZTCL entered into that certain Option Agreement for Collaboration  and License, dated as of the date hereof and (the “Greater China Option Agreement”); and         WHEREAS, LICENSOR and LICENSEE desire to amend certain payment terms in the Agreement  with respect to milestone, royalty and sublicensing fee payments to be made with respect to activities in the  People’s Republic of China, Macau, Hong Kong, and Taiwan (collectively, “Greater China”).         NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein  and  other  good  and  valuable  consideration,  the  receipt  and  sufficiency  of  which  the  Parties  hereby  acknowledge, the Parties, intending to be legally bound hereby, agree to amend the Agreement as follows:                                    AMENDMENT   1. Capitalized terms used but not defined herein will have the meaning ascribed to them in the Agreement.   2. First Amendment to the Agreement.  Section 4.1.3 of the Agreement is hereby replaced in its entirety     with the following:                                            

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.         “4.1.3 Sublicense  Fees.   In  consideration  of  the  licenses  and  rights  granted  to  LICENSEE              hereunder,  LICENSEE  shall  pay  to  LICENSOR  the  applicable  percentage of all  Third              Party Fees payable from any of LICENSEE’s and/or its Affiliates’ sublicensees, assignees              and other transferees (including without limitation the PRC Sublicensee but excluding any              sublicensee,  assignee  or  transferee  that  is  an  Affiliate  of  LICENSEE  immediately              following the applicable sublicense, assignment or transfer) (the “Sublicense Fees”) as set              forth below.  As used herein, “Third Party Fees” means any and all consideration in any              form  provided  by  sublicensees,  assignees  and  other  transferees (including  without              limitation  the  PRC  Sublicensee)  hereunder  for  rights  under  the  Licensed  Technology              related  to  the  Royalty  &  Milestone  Products,  excluding:  (a)  Royalties  (which  shall  be              subject to Section 4.1.2 above); (b) reimbursement of actual research and Development              expenses for Royalty & Milestone  Product; (c) manufacturing costs for the  Royalty &              Milestone  Product;  (d)  payments  for  prosecution,  enforcement  or  maintenance  of  any              Licensed Technology; (e) Milestone Payments which are less than the Milestone Payments              due to LICENSOR hereunder, if for achievement of the same Milestone event; and (f) any              consideration received in connection with a Change in Control of LICENSEE and/or its              Affiliates.  LICENSEE shall pay all Sublicense Fees received during each Calendar Quarter              within [***] following the expiration of each such Calendar Quarter.  All payments shall              be accompanied by a report that includes a calculation of all Sublicense Fees payable to              LICENSOR for the applicable Calendar Quarter.               Sublicense Fees Percentage by LICENSOR’s Product Family Equity                                         Percentage of Third Party Fees By LICENSOR                                                     Ownership                    LICENSOR’s Product     [***]        [***]         [***]                   Family Equity                    Percentage of Third    [***]        [***]         [***]                   Party Fees      For clarity, all sublicense fees due under the Agreement resulting from activity concerning each and     every sublicensee, assignee and transferee of LICENSEE and/or its Affiliates anywhere in the Territory,     including the sublicensees pursuant to the Greater China Sublicense Agreements, shall be determined     pursuant to Section 4.1.3 as amended herein.     3. Second Amendment to Agreement.  Article 14 of the Agreement is hereby replaced in its entirety     with the following:        “14.     DISPUTE RESOLUTION/DAMAGES         14.1  General.  Except for disputes for which injunctive or other equitable relief is sought to              prevent  the  unauthorized  use or disclosure of  proprietary  materials  or  information  or              prevent the infringement or misappropriation of a Party’s Intellectual Property Rights, the              following procedures shall be used to resolve any dispute arising out of or in connection              with this Agreement.                                          2 

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.         14.2  Meeting.   Promptly  after  the  written  request  of  either  Party,  each  of  the  Parties  shall              appoint a designated representative to meet in person or by telephone to attempt in good              faith to resolve any dispute arising out of or resulting from this Agreement (“Dispute”).  If              such designated representatives do not resolve such Dispute within [***] of such written              request, then the Executive Officer of each Party shall meet in person or by telephone to              review and attempt to resolve such Dispute in good faith, and such Executive Officers shall              have [***] to attempt to resolve such dispute (such total [***] the “Dispute Resolution              Period”).  If the Parties are unable to resolve a Dispute within a Dispute Resolution Period              then such Dispute shall be resolved in accordance with Sections 14.3 and 14.4 or Section              14.5, as applicable.         14.3  Mediation.  If the Parties are unable to resolve a Dispute (other than a Dispute subject to              Section 14.5) within a Dispute Resolution Period in accordance with Section 14.2, then              either Party may submit such Dispute (other than a Dispute subject to Section 14.5) for              resolution by mediation pursuant to the Center for Public Resources Model Procedure for              Mediation of Business Disputes as then in effect.  The mediation shall be conducted in San              Diego County, California.  At the request of either Party, the mediator will be asked to              provide an evaluation of the Dispute and the Parties’ relative positions.  Each Party shall              bear its own costs with respect to the mediation effort.  The Parties shall have [***] to              attempt to resolve the dispute through mediation.         14.4  Arbitration.               14.4.1. Any Disputes (other than a Disputes subject to Section 14.5) that are not resolved                    by  the  Parties in  accordance  with  Section 14.2 and 14.3 shall  be  submitted  to                    binding  arbitration  with  the  office  of  the  American  Arbitration  Association                    (“AAA”) in San Diego County, California in accordance with the then-prevailing                    commercial  arbitration  rules  of  the  American  Arbitration  Association.  Such                    Dispute shall be heard by a panel of three (3) arbitrators appointed in accordance                    with such rules.               14.4.2. All such arbitration proceedings shall be held in English and a transcribed record                    shall be prepared in English.  The Party submitting the Dispute to arbitration shall                    select the first of the three (3) arbitrators and shall provide notice of the same at                    the time it submits the Dispute to arbitration.  The non-initiating Party shall then                    have [***] to  select  the  second  arbitrator.   Thereafter,  the  first  and  second                    arbitrators  shall  have [***] to  choose  the  third  arbitrator.   If  no  arbitrator  is                    appointed  within  the  times  herein  provided  or  any  extension  of  time  which  is                    mutually agreed upon, the AAA shall make such appointment of the first two (2)                    arbitrators within [***] of such failure who shall thereafter pick the third as set                    forth herein.  Each Party in any arbitration proceeding commenced hereunder shall                    initially bear such Party’s own costs and expenses (including expert witness and                    attorneys’ fees) of investigating, preparing and pursuing such arbitration claim.                     The fees and expenses of the arbitrators, will be shared equally by the Parties.                     Nothing in this Agreement shall be deemed as preventing either Party from seeking                    injunctive  relief  (or  any  other  provisional  remedy)  from  any  court  having                    jurisdiction over the Parties and the subject matter of the Dispute as necessary to                    protect either Party’s name, Confidential Information, Intellectual Property Rights                    or  any  other  proprietary  rights.   If  the  Dispute  involves  scientific  or  technical                    matters,  each  arbitrator  chosen  hereunder  shall  have  educational  training  and                                         3 

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.                     experience relevant to the field of pharmaceuticals.  The award rendered by the                    arbitrators shall be written, final and non-appealable, and judgment upon the award                    rendered by the arbitrator may be entered in any court having jurisdiction thereof.                     The  prevailing  Party  shall  be  entitled  to  recover  from  the  losing  Party  the                    prevailing Party’s attorneys’ fees and costs.  The arbitrator shall have the right to                    apportion liability between the Parties, but will not have the authority to award any                    damages or remedies not available under the express terms of this Agreement.  The                    arbitration award will be presented to the Parties in writing, and upon the request                    of either Party, will include findings of fact and conclusions of law.  The award                    may be confirmed and enforced in any court of competent jurisdiction.         14.5  Baseball Arbitration for Certain Sublicensing Fee Related Disputes.  In the event of              any  Dispute  arising  under  Section 4.1.3 (including  if the  Parties  fail  to  agree  on              apportionment of the amount of proceeds that are and are not Sublicense Fees subject to              Section 4.1.3), the Parties shall submit such Dispute to mediation and binding baseball              arbitration pursuant to the mediation and baseball arbitration process set forth under this              Section 14.5.  The purpose of the mediation and baseball arbitration shall be to resolve only              those issues that remain in dispute under Section 4.1.3 following good faith negotiations              within a Dispute Resolution Period in accordance with Section 14.2.  The mediation and              baseball  arbitration  shall  be  conducted  in  San  Diego  County,  California  under  the              applicable AAA rules (except as modified by this Section 14.5 below) and the proceedings              shall be held in English.  Each Party shall bear its own costs with respect to the mediation              and baseball arbitration proceedings and share the cost of the Third Party Expert (defined              below).                 14.5.1. Any  Dispute  arising  under  Section 4.1.3 that  the  Parties  are  unable  to  resolve                    within a Dispute Resolution Period in accordance with Section 14.2 shall, on the                    written request of either Party, be submitted to a Third Party expert (a “Third                    Party Expert”) mutually acceptable to the Parties having relevant expertise with                    respect to the Dispute and who is independent, conflict-of-interest-free, and not                    affiliated or consulting with either Party or its Affiliates, (or in the event that the                    Parties fail to agree on the selection of such Third Party Expert within [***] of the                    submission of such matter to resolution in accordance with this Section 14.5, by                    an  appropriately  qualified,  independent,  conflict-of-interest-free  individual  not                    affiliated or consulting with either Party or its Affiliates, and appointed by AAA).                     The Parties shall use reasonable efforts to mutually agree on the Third Party Expert                    within [***] after  either  Party  designates  the  Dispute  for  resolution  under  this                    Section 14.5.  The Third Party Expert shall initially attempt to resolve the Dispute                    through non-binding mediation.  At the request of either Party, the mediator will                    be asked to provide an evaluation of the Dispute and the Parties’ relative positions.                     If the Third Party Expert is  unable to resolve the Dispute through non-binding                    mediation within [***] of submission of such Dispute to mediation, the Dispute                    will, upon the written request of either Party, be resolved through Section 14.5.2.                 14.5.2. Within [***] days of completion of non-binding mediation, each Party will deliver                    to  both  the  Third  Party  Expert  and  the  other  Party  a  detailed  written  proposal                    setting forth its proposed terms for the resolution of the Dispute (the “Proposed                    Terms”) and a memorandum (the “Support Memorandum”) in support thereof,                    not exceeding [***] in length each.  The Parties will also provide the Third Party                    Expert with a copy of this Agreement, as amended through such date.  Within [***]                                         4 

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.                     after receipt of the other Party’s Proposed Terms and Support Memorandum, each                    Party may submit to the  Third Party Expert (with a copy  to the other Party) a                    response to the other Party’s Proposed Terms and Support Memorandum, such                    response  not  exceeding [***] in  length.   Neither  Party  may  have  any  other                    communications (either written or oral) with the Third Party Expert; provided that                    the Third Party Expert may, in its discretion, convene a hearing to ask questions of                    the Parties and hear oral argument and discussion regarding each Party’s Proposed                    Terms  and  Support  Memorandum  and  response  to  the  other  Party’s  Proposed                    Terms and Support Memorandum, at which time each Party shall have an agreed                    upon time to argue and, if requested by the Third Party Expert, present witnesses                    in support of its Proposed Terms.               14.5.3. Within [***] after the Third Party Expert is appointed, the Third Party Expert shall                    select  one  of  the  two  Proposed  Terms  (without  modification)  provided  by  the                    Parties which most closely reflects a commercially reasonable interpretation of the                    terms of this Agreement.  In making its selection, (i) the Third Party Expert shall                    only have the authority to accept one or the other Party’s Proposed Terms and shall                    not modify the terms or conditions of either Party’s Proposed Terms nor shall the                    Third Party Expert combine  provisions  from both Proposed Terms  and  (ii) the                    Third Party Expert shall consider the terms and conditions of this Agreement, the                    relative  merits  of  the  Proposed  Terms,  the  Support  Memorandums  and,  if                    applicable, the oral arguments of the Parties.  Subject to the foregoing, the Third                    Party Expert shall make its decision known to both Parties as promptly as possible                    by delivering written notice to both Parties.  The decision of the Third Party Expert                    shall be final and binding on the Parties, and specific performance may be ordered                    by any court of competent jurisdiction.          14.6  Confidentiality of Disputes.  The existence, content and/or results of any Dispute, as well              as any mediation or arbitration proceedings conducted under this Section 14, shall be the              Confidential Information of both Parties.”   4. Greater China Milestones and Royalties.  For all Product Families sublicensed to ZTCL under the     Greater  China  Sublicense  Agreements  or  the  Greater  China  Option  Agreement,  all  milestone  and     royalty payments due under the Agreement resulting from activity anywhere in the Territory shall be     determined pursuant to this Amendment, notwithstanding anything to the contrary in Sections 4.1.1 or     4.1.2 of the Agreement.     5. Any Milestone First Accrued Outside Greater China.  For any Product Family that is sublicensed     to ZTCL under the Greater China Sublicense Agreements or the Greater China Option Agreement, if a     Milestone under Section 4.1.1 of the Agreement is achieved in the Territory outside of Greater China     before it is achieved in Greater China, the corresponding Milestone Payment in Section 4.1.1 of the     Agreement shall be due to LICENSOR and, if and when, the corresponding Greater China Milestone     (as defined in Paragraph 7 of this Amendment) is achieved no Greater China Milestone Payment (as     defined in Paragraph 7 of this Amendment) shall be due to LICENSOR.     6. Any Milestone First Accrued Inside Greater China.  For any Product Family that is sublicensed to     ZTCL under the Greater China Sublicense Agreements or the Greater China Option Agreement, if a     Greater China Milestone under Paragraph 7 of this Amendment is achieved in Greater China before the     corresponding  Milestone  is  achieved  in  the  Territory  outside  of  Greater  China,  the  Greater  China     Milestone  Payment  in  Paragraph 7 of this  Amendment shall  be  due  to  LICENSOR  as  set  forth  in                                         5 

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.      Paragraph 7 and,  if  and  when,  the  corresponding  Milestone  in  Section  4.1.1  of  the  Agreement  is     achieved  in  the  Territory  outside  of  Greater  China,  the  corresponding  Milestone  Payment  due  to     LICENSOR under Section 4.1.1 of the Agreement shall be due as set forth therein, provided that the     amount due under Section 4.1.1 of the Agreement for the milestone achieved in the Territory outside     of Greater China shall be reduced by the amount previously paid for the corresponding Greater China     Milestone Payment.   7. Greater China Milestone Payments.  LICENSEE shall notify LICENSOR as soon as practicable upon     achievement by ZTCL (or its sublicensee) of each milestone set forth in the applicable table below     (each, a “Greater China Milestone”).  In further consideration of the licenses and rights granted to     LICENSEE,  within [***] days  of  achievement  of  each  Greater  China  Milestone  set  forth  in  the     applicable table below, LICENSEE shall pay to LICENSOR the corresponding creditable and non-    refundable milestone payment (each, a “Greater  China Milestone Payment”) as determined on a     Product Family-by-Product Family basis according to Recurium Equity, LLC’s (“Recurium Equity”)     aggregate direct and/or indirect equity ownership percentage (on a fully diluted basis) of ZTCL or the     furthest downstream Affiliated Sublicensee of the applicable Product Family in the case of a Product     Family  that  has  been  further  sublicensed  by  ZTCL  to  an  Affiliated  Sublicensee  (the  applicable     percentage with respect to a Product Family is referred to herein as “Recurium’s Product Family     Equity”) at the time such Greater China Milestone is achieved by ZTCL or its sublicensee (or with     respect to Royalties under Paragraph 8, at the time the applicable Net Sales are made), as set forth     below; provided that any sales by Recurium Equity of direct or indirect equity of ZTCL owned by     Recurium  Equity  as  of  the  Effective  Date  shall  be  disregarded  for  purposes  of  the  foregoing     calculations,  such  that  Recurium  Equity  cannot  unilaterally  reduce  its  ownership  percentage.   (For     example, if Recurium Equity’s equity ownership percentage of LICENSEE is [***] and LICENSEE’s     equity ownership percentage of ZTCL is [***], then Recurium’s Product Family Equity with respect     to such Product Family would be [***] (i.e., [***] multiplied by [***]).)                (a)   If Recurium’s  Product  Family  Equity  is  less  than [***] with  respect  to  an                    applicable Product Family:               MILESTONE                                         MILESTONE                                                                PAYMENT               (1) Upon Commencement of the first Phase II Clinical Trial in [***]                 Greater  China  for  a  Royalty  &  Milestone  Product  in  such                 Product Family*                (2) Upon Commencement of the first Phase III Clinical Trial in [***]                 Greater  China  for  a  Royalty  &  Milestone  Product  in  such                 Product Family*               (3) Upon the first NDA Filing Acceptance in Greater China for a [***]                 Royalty & Milestone Product in such Product Family*               (4) Upon obtaining Regulatory Approval in Greater China for the [***]                 first  indication  of  a  Royalty  &  Milestone  Product  in  such                 Product Family*                                           6 

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.               MILESTONE                                         MILESTONE                                                                PAYMENT               (5) Upon  obtaining  Regulatory  Approval  in  Greater  China  for [***]                 each additional indication of a Royalty & Milestone Product                 in such Product Family**                    *such Greater China Milestone shall only be payable once per Product Family.                    **such Greater China Milestone shall only be payable once per each indication.               (b)   If Recurium’s Product Family Equity is not less than [***], but no greater than                    [***] with respect to an applicable Product Family:               MILESTONE                                         MILESTONE                                                                PAYMENT               (1) Upon Commencement of the first Phase II Clinical Trial in [***]                 Greater  China  for  a  Royalty  &  Milestone  Product  in such                 Product Family*                                                                 [***]              (2) Upon Commencement of the first Phase III Clinical Trial in                 Greater  China  for  a  Royalty  &  Milestone  Product  in such                 Product Family*                                                                [***]              (3) Upon the first NDA Filing Acceptance in Greater China for a                 Royalty & Milestone Product in such Product Family*                                                                [***]              (4) Upon obtaining Regulatory Approval in Greater China for the                 first  indication  of  a  Royalty  &  Milestone  Product  in  such                 Product Family*                                                                 [***]              (5) Upon  obtaining  Regulatory  Approval  in  Greater  China  for                 each additional indication of a Royalty & Milestone Product                 in such Product Family**                    *such Greater China Milestone shall only be payable once per Product Family.                    **such Greater China Milestone shall only be payable once per each indication.               (c)   IF  Recurium’s  Product  Family Equity is  greater  than [***] at  the  time ZTCL                    achieves any specific Greater China Milestone, no payments will be due resulting                    from such Greater China Milestone.                (d)   For the avoidance of doubt and notwithstanding anything to the contrary herein:                    (i)  payment  of  a  Greater  China Milestone by  a  sublicensee,  assignee  or  other                    transferee of, or Third Party retained by, LICENSEE shall be deemed to have been                    satisfied by LICENSEE for purposes of this Paragraph 7; and (ii) if a clinical trial                    is designed to accomplish the end point of both a Phase II Clinical Trial and a                    Phase III Clinical Trial, then (A) the Greater China Milestone Payment under (1)                    above for Commencement of the Phase II Clinical Trial will only be due at the                                         7 

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.                     Commencement of  such  combined  trial  and  (B)  the  Greater  China Milestone                    Payment under (2) above, for Commencement of the Phase III Clinical Trial will                    only be due upon the filing for Regulatory Approval of a Royalty & Milestone                    Product in Greater China or at the commencement of the necessary subsequent trial                    required to file, whichever comes first.  For the sake of clarity, in the case of (B)                    in the preceding sentence, LICENSEE must also pay the Greater China Milestone                    Payment due under (3) above, when due.   8. Greater China Royalties.  In consideration of the licenses and rights granted to LICENSEE hereunder,     LICENSEE shall pay to LICENSOR a royalty equal to the Royalty Percentage of Net Sales of Royalty     & Milestone  Product  by  ZTCL  (and  its  sublicensees)  during  the  Royalty  Term  (collectively,     “Royalties”).   As  used  herein,  “Royalty  Percentage”  means  a  percentage,  as  determined  by     Recurium’s Product Family Equity, as set forth below.                 Recurium’s Product Family Equity Above [***] [***]     Below [***]               Royalty Percentage              [***]       [***]      [***]   9. Quarterly Payments.  LICENSEE shall pay to LICENSOR the applicable Royalties within [***] days     following the expiration of each Calendar Quarter after the date of the First Commercial Sale in Greater     China.   Royalties  will  be  payable  on  a  country-by-country  (or  region-by-region)  and  Royalty  &     Milestone Product-by-Royalty & Milestone Product, basis commencing as of the First Commercial     Sale of a Royalty & Milestone Product in each country (or region) until the expiration of the Royalty     Term for such Royalty & Milestone Product in each country (or region).   10. Reports.  All payments of Royalties shall be accompanied by a report that includes reasonably detailed     information regarding a total monthly sales calculation of Net Sales of Royalty & Milestone Product     (including all Deductions) and all Royalties payable to LICENSOR for the applicable Calendar Quarter     (including any foreign exchange rates employed).   11. Anti-Stacking.  Royalties may be reduced with respect to Net Sales in a particular country (or region)     in Greater China by deducting [***] of any and all royalties paid by LICENSEE, its Affiliates and/or     sublicensees to any Third Party for the Royalty & Milestone Product in such country (or region), up to     a maximum reduction of [***] in the aggregate of the Royalties owing for Net Sales in such country     (or region) for: (i) any license that LICENSEE or its Affiliates or their sublicensees determines in good     faith would be prudent to obtain given the potential to resolve or avoid any claims that any Royalty &     Milestone Product infringes or misappropriates the Intellectual Property Rights of any Third Party in     such country (or region); (ii) any final, unappealed judgment awarded against LICENSEE, its Affiliates     or sublicensees for damages for infringement of Third Party Intellectual Property Rights with respect     to Use of a Royalty & Milestone Product in such country (or region); or (iii) any license for technology     that is necessary to Develop or Commercialize a Royalty & Milestone Product in such country (or     region).  LICENSEE shall use Commercially Reasonable Efforts to minimize any such royalties or     other payments to Third Parties on account of sales of Royalty & Milestone Products hereunder.   12. Combination Products.  In the event that a Royalty & Milestone Product is Commercialized in Greater     China  in  combination  with  one  or  more  products  which  are  themselves  not  Royalty  &  Milestone     Products under this Agreement for a single price, the Net Sales for such Royalty & Milestone Product     shall be calculated by [***].  If the fair market value for any product sold in combination with a Royalty     & Milestone Product in Greater China cannot be reasonably determined, the price attributed to such                                         8 

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is not material and would likely cause competitive harm to the  registrant if publicly disclosed.      product will be based on the relative cost of goods for such product, as determined in accordance with     GAAP.  In addition, in the event that a Royalty & Milestone Product is sold in Greater China with any     other product(s) or if any giveaways, discounts, rebates or charge-backs (whether as part of a customer     loyalty,  bundling  or  “loss  leader”  program,  or  otherwise)  are  provided  for  a  Royalty  &  Milestone     Product to promote or sell other products or otherwise, the Net Sales for such Royalty & Milestone     Product shall be no less than the fair market value of such Royalty & Milestone Product on a stand-    alone basis (excluding any such discounts, rebates or charge-backs).   13. Downstream Sublicense Fee  Disputes.  LICENSOR hereby acknowledges and agrees that, in the     event that a dispute arises concerning Sublicense Fees under            a. any Sublicense Agreements, it acknowledges and agrees that to the extent it participates in              any  such  dispute  brought  pursuant  to  Section 14.5  of  the  applicable  Sublicense              Agreements, (i) it  will  comply  with  the  provisions  of  Sections 14.5  and 14.6  of  the              applicable Sublicense  Agreement and  (ii)  it will  be  bound  by  any  binding  baseball              arbitration  proceeding  brought  pursuant  to  Section 14.5  of  the  applicable Sublicense              Agreement; or            b. any of the Greater China Sublicense Agreements or the Greater China Option Agreement,              it acknowledges and agrees that to the extent it participates in any such dispute brought              pursuant to Section 16.5 of the applicable Greater China Sublicense Agreements or the              Greater China Option Agreement, (i) it will comply with the provisions of Sections 16.5              and 16.6 of the applicable agreement and (ii) it will be bound by any binding baseball              arbitration proceeding brought pursuant to Section 16.5 of the applicable Greater China              Sublicense Agreements or the Greater China Option Agreement.     14. General Provisions.  Article 15 of the Agreement is incorporated herein by reference in its entirety.                                 [Signatures on next page]                                         9 

 

   IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the Effective Date.      LICENSOR:                              LICENSEE:                                                                                       RECURIUM IP HOLDINGS, LLC              ZENO MANAGEMENT, INC.                                                                                                                                                                           By: /s/ Ned A. Israelsen               By: /s/ Anthony Y. Sun, M.D.           Ned A. Israelsen                       Anthony Y. Sun, M.D.Document

DESCRIPTION OF SECURITIES
General
The following summary describes our securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), certain provisions of our certificate of incorporation and bylaws, and certain provisions of Delaware law. Because it is only a summary, it does not contain all of the information that may be important to you.  For a complete description of the matters set forth in this Description of Securities, you should refer to our amended and restated certificate of incorporation (“Restated Certificate”), amended and restated bylaws (“Bylaws”), form of warrant certificate and form of warrant agent agreement, each of which are filed as exhibits to this Annual Report on Form 10-K for the year ended December 31, 2019, as well as the relevant provisions of the Delaware General Corporation Law (“DGCL”).  The Restated Certificate authorizes us to issue 200,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. Our board of directors has the authority, without stockholder approval, except as required by the listing standards of The Nasdaq Stock Market LLC, to issue additional shares of our capital stock. In addition, our board of directors has the authority, without further action by our stockholders, to designate the rights, preferences, privileges, qualifications and restrictions of our preferred stock in one or more series.
Common Stock
Voting Rights
Our common stock is entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors, and does not have cumulative voting rights. The Restated Certificate establishes a classified board of directors that is divided into three classes with staggered three-year terms. Only the directors in one class will be subject to election by a plurality of the votes cast at each annual meeting of our stockholders, with the directors in the other classes continuing for the remainder of their respective three-year terms.
Economic Rights
Except as otherwise expressly provided in the Restated Certificate or required by applicable law, all shares of common stock have the same rights and privileges and rank equally, share ratably, and are identical in all respects for all matters, including those described below.
Dividends. Subject to preferences that may be applicable to any then-outstanding preferred stock, the holders of common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors out of legally available funds.
Liquidation Rights. In the event of our liquidation, dissolution or winding-up, holders of our common stock are entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities, subject to the satisfaction of any liquidation preference granted to the holders of any outstanding shares of preferred stock.
No Preemptive or Similar Rights
The holders of our shares of common stock are not entitled to preemptive rights, and are not subject to conversion, redemption or sinking fund provisions. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.
Fully Paid and Non-Assessable
All of our outstanding shares of common stock are fully paid and nonassessable.
Warrants

Each warrant issued in our initial public offering entitles the holder to purchase one share of our common stock at an initial exercise price of $6.125, subject to adjustment. Each warrant became exercisable 30 days after our initial public offering and will expire at 5:00 p.m. New York City time on August 21, 2023. The warrants were issued in registered form, in each case pursuant to a warrant agreement between American Stock Transfer & Trust Company, LLC, as warrant agent, and us.
The exercise price and number of shares issuable upon exercise of the warrants may be adjusted upon the occurrence of certain events, including but not limited to any stock split, stock dividend, extraordinary dividend, recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of common stock or securities convertible or exercisable into common stock at a price below the then current exercise price of such warrant. 
If, at any time warrants are outstanding, we consummate any fundamental transaction, as described in such warrants and generally including any consolidation or merger with or into another corporation, the consummation of a transaction whereby another entity acquires more than 50% of our outstanding common stock, or the sale or other disposition of all or substantially all of our assets, or other transaction in which our common stock are converted into or exchanged for other securities or other consideration, the holder of any such warrants will thereafter receive upon exercise of such warrants, the securities or other consideration to which a holder of the number of common stock then deliverable upon the exercise or conversion of such warrants would have been entitled upon such consolidation or merger or other transaction. 
The number of shares of our common stock that may be acquired by any holder upon any exercise of the warrants will be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of common stock then beneficially owned by such holder and its affiliates and any other persons whose beneficial ownership of common stock would be aggregated with the holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 9.99% (or in certain instances 4.99%) of the total number of issued and outstanding shares of our common stock (including for such purpose the common stock issuable upon such exercise), which we refer to as the beneficial ownership limitation; provided, however, that if a holder and/or its affiliates already own 9.99% (or 4.99%, as applicable) on the date of this offering then the beneficial ownership limitation will not apply to such holder. A holder may elect to increase or decrease this beneficial ownership limitation from 9.99% (or 4.99%, as applicable) to any other percentage of the total number of issued and outstanding shares of our common stock (including for such purpose the common stock issuable upon such exercise) upon providing us with not less than 61 days’ prior written notice, and any such increase will apply only to such holder. 
The warrants may be exercised, at the option of each holder, in whole or in part, upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price for the number of common stock purchased upon such exercise, by certified check payable to us or by wire transfer of immediately available funds to an account designated by us. Subject to applicable laws, the warrants may be transferred at the option of the holders upon surrender of the warrants to us together with the appropriate instruments of transfer. 
The warrant holders do not have the rights or privileges of holders of our common stock or any voting rights until they exercise their warrants and receive common stock. After the issuance of common stock upon exercise of such warrants, each holder will be entitled to one vote for each common stock held of record on all matters to be voted on by stockholders. If we fail to issue a holder of our warrants, within three business days after receipt of an applicable exercise notice, a certificate for the number of shares of our common stock to which such holder is entitled, then such holder can rescind the exercise of such warrant. If we are otherwise unable to issue and deliver the number of shares of our common stock that a holder is entitled to under the warrant, we have no obligation to pay such holder any cash or other consideration to settle such warrant. 
Under the terms of the warrant agreement, we have agreed to use our reasonable best efforts to maintain the effectiveness of the registration statement and current prospectus relating to common stock issuable upon exercise of the warrants at any time that the warrants are exercisable. During any period that we fail to have maintained an 

effective registration statement covering the common stock underlying such warrants, the holder may exercise such warrants on a cashless basis.
Anti-Takeover Provisions
The provisions of the DGCL, the Restated Certificate and the Bylaws, certain provisions of which are summarized below, may have the effect of delaying, deferring or discouraging another person from acquiring control of our company. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.
Delaware Anti-Takeover Law
 
We are subject to Section 203 of the DGCL, which generally prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless: 
				
		

•prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
•the interested stockholder owned at least 85% of the voting stock of the corporation outstanding upon consummation of the transaction, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also officers and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
•on or subsequent to the consummation of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

Section 203 of the DGCL defines a business combination to include:
				
		

•any merger or consolidation involving the corporation and the interested stockholder;
•any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;
•subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder;
•subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; and
•the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 of the DGCL defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.
Certificate of Incorporation and Bylaws  
Because our stockholders do not have cumulative voting rights, stockholders holding a majority of the voting power of our shares of common stock may be able to elect all of our directors. The Restated Certificate and the Restated Bylaws provide for stockholder actions at a duly called meeting of stockholders or, before the date on which all shares of common stock convert into a single class, by written consent. A special meeting of stockholders may be called by a majority of our board of directors, the chair of our board of directors, or our chief executive officer. The 

Bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors. Our board of directors is divided into three classes with staggered three-year terms.
The foregoing provisions make it difficult for another party to obtain control of us by replacing our board of directors. Since our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management. In addition, the authorization of undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change our control.
These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and may have the effect of deterring hostile takeovers or delaying changes in our control or management. As a consequence, these provisions may also inhibit fluctuations in the market price of our stock that could result from actual or rumored takeover attempts.
Choice of Forum
The Restated Certificate provides that the Court of Chancery of the State of Delaware is the exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty; (iii) any action asserting a claim against us or any of our directors or officers or other employees arising under the Delaware General Corporation Law, the Restated Certificate or the Bylaws; or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. The Restated Certificate further provides that U.S. federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions of the Restated Certificate will not apply to suits brought to enforce a duty or liability created by the Exchange Act.

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