Document:

Exhibit 10.1

 

Execution Version

 

REGISTRATION RIGHTS AGREEMENT

 

dated as of

 

July 29, 2016

 

among

 

VERONA PHARMA PLC

 

and

 

THE INVESTORS PARTY HERETO

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
Article I   Definitions
    	
 
    	
1
    
	
Section 1.01
    	
Definitions
    	
 
    	
1
    
	
Section 1.02
    	
Other Definitional and Interpretative Provisions
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
Article II   Registration Rights 
    	
 
    	
5
    
	
Section 2.01
    	
Shelf Registration and Registration Procedures
    	
 
    	
5
    
	
Section 2.02
    	
Rule 144 Sales; Cooperation by the Company
    	
 
    	
8
    
	
Section 2.03
    	
Conversions of Ordinary Shares into ADSs
    	
 
    	
9
    
	
Section 2.04
    	
Obligation to Register ADSs
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
Article III   Public Offering 
    	
 
    	
9
    
	
Section 3.01
    	
Participation in Public Offering
    	
 
    	
9
    
	
Section 3.02
    	
Other Agreements of Investors
    	
 
    	
10
    
	
Section 3.03
    	
Underwriting of Public Offering
    	
 
    	
10
    
	
Section 3.04
    	
Inspection of the Company Records
    	
 
    	
11
    
	
Section 3.05
    	
The Company’s Participation in Road Shows
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
Article IV   Indemnification and Contribution
    	
 
    	
12
    
	
Section 4.01
    	
Indemnification by the Company
    	
 
    	
12
    
	
Section 4.02
    	
Indemnification by Participating Investors
    	
 
    	
12
    
	
Section 4.03
    	
Conduct of Indemnification Proceedings
    	
 
    	
13
    
	
Section 4.04
    	
Survival
    	
 
    	
13
    
	
Section 4.05
    	
Contribution
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
Article V   Miscellaneous
    	
 
    	
15
    
	
Section 5.01
    	
Binding Effect; Assignability; Benefit
    	
 
    	
15
    
	
Section 5.02
    	
Notices
    	
 
    	
15
    
	
Section 5.03
    	
Waiver; Amendment; Termination
    	
 
    	
16
    
	
Section 5.04
    	
Governing Law
    	
 
    	
17
    
	
Section 5.05
    	
Jurisdiction
    	
 
    	
17
    
	
Section 5.06
    	
WAIVER OF JURY TRIAL
    	
 
    	
17
    
	
Section 5.07
    	
Specific Enforcement
    	
 
    	
17
    
	
Section 5.08
    	
Counterparts; Effectiveness
    	
 
    	
17
    
	
Section 5.09
    	
Entire Agreement
    	
 
    	
18
    
	
Section 5.10
    	
Severability
    	
 
    	
18
    
	
Section 5.11
    	
Confidentiality
    	
 
    	
18
    
	
Section 5.12
    	
Independent Nature of Investors’ Obligations and   Rights
    	
 
    	
18
    

 

Exhibit A — Joinder Agreement

 

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT dated as of July 29, 2016 (this “Agreement”) by and among Verona Pharma plc, a company incorporated under the laws of England and Wales (registered number 05375156) (the “Company”), and the investors listed on the signature pages hereto, as well as any Permitted Transferees (as defined below).

 

W I T N E S S E T H :

 

WHEREAS, the Company and certain Investors are parties to that certain Securities Purchase Agreement dated as of June 17, 2016 (the “Securities Purchase Agreement”), pursuant to which, among other things, the Company agreed to offer and sell and the Investors agreed to purchase an aggregate 1,555,796,345 Units (each, a “Unit” and collectively, the “Units”) of the Company, with each Unit consisting of one Ordinary Share and one Warrant (the “Private Placement”); and

 

WHEREAS, concurrent with the Private Placement, the Company is undertaking a placing (the “Offshore Offering” and, together with the Private Placement, the “Offerings”) of Units pursuant to Regulation S under the Securities Act;

 

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01          Definitions.  (a) As used in this Agreement, the following terms have the following meanings:

 

“ADSs” means American depositary shares, representing Ordinary Shares pursuant to a sponsored ADR facility.

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person; provided that no security holder of the Company shall be deemed an Affiliate of the Company or any other security holder of the Company solely by reason of any investment in the Company or the existence or exercise of any rights or obligations under this Agreement or the Registrable Securities held by such security holder.  For the purpose of this definition, the term “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.  Notwithstanding the foregoing, with respect to Novo A/S, in lieu of the above definition, the term Affiliate shall mean Novo Ventures (US) Inc. (together with Novo A/S, “Novo”), or any venture capital fund or other Person now or hereafter existing formed for the purpose of making investments in other Persons that is controlled by or under common control with Novo, and for the avoidance of doubt, shall not include any other affiliate of Novo.

 

 

“AIM” means a market of that name operated by the London Stock Exchange plc.

 

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City or the City of London, United Kingdom, are authorized by law to close.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Foreign Private Issuer” means a “foreign private issuer,” as defined in Rule 405 under the Securities Act.

 

“Investor” means at any time, any Person (other than the Company) who shall then be a party to or bound by this Agreement, so long as such Person shall “beneficially own” (as such term is defined in Rule 13d-3 of the Exchange Act) any Registrable Securities.

 

“IPO” means the Company’s first underwritten public offering in the United States of America of equity securities pursuant to an effective registration statement filed under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or any other registration solely relating to an offering or sale to employees or directors of the Company pursuant to an employee stock plan or other similar employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 or Form F-4 (or similar form), or (iii) in connection with any dividend or distribution reinvestment or similar plan).

 

“IPO Lock-up Period” means the period ending on the earlier of one hundred eighty (180) days after the effective date of the Company’s registration statement in connection with the IPO or such other date as the Company and the lead underwriter shall agree.

 

“Ordinary Shares” means ordinary shares of one thousandth of a pound Sterling (£0.001) each in the Company, and any shares into which such Ordinary Shares may thereafter be converted or changed.

 

“Permitted Transferee” means in the case of any Investor, a Person to whom Registrable Securities are Transferred by such Investor in accordance with Section 5.01(b); provided that (i) such transfer does not violate any agreements between such Investor and the Company or any of the Company’s subsidiaries, (ii) such transfer is not made in a registered offering or pursuant to Rule 144 and (iii) such transferee shall only be a Permitted Transferee if and to the extent the transferor designates the transferee as a Permitted Transferee entitled to rights hereunder pursuant to Section 5.01(b).

 

“Person” means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

2

 

“prospectus” means the prospectus or prospectuses included in any registration statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance on Rule 430A under the Securities Act or any successor rule thereto), as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such registration statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

 

“Public Offering” means an underwritten public offering of Registrable Securities of the Company pursuant to an effective registration statement under the Securities Act.

 

“Registrable Securities” means with respect to any Investor, Ordinary Shares owned, either of record or beneficially, by such Investor that were (a) received by such Investor in the Offerings, including Ordinary Shares issuable upon exercise of Warrants or conversion of Non-voting Ordinary Shares, (b) any Ordinary Shares issued to the Investors in a private placement that is completed concurrently with the closing of the Company’s IPO, (c) any other securities issued or issuable in respect of such Ordinary Shares by way of conversion, exchange, share dividend, split, combination, recapitalization, merger, consolidation, other reorganization or otherwise and (d) any ADSs issued in respect of any Ordinary Shares described in clauses (a), (b) or (c) (it being understood that, for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has been effected), until all such Ordinary Shares or ADSs, as applicable, (i) have been disposed of pursuant to a registration statement covering such Ordinary Shares or ADSs, as applicable,  that has been declared effective by the SEC, (ii) have (with respect to Ordinary Shares) been sold through the AIM market; (iii) have ceased to be outstanding, (iv) have been sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, or (v) are eligible for sale by the holder thereof without limitations as to volume or manner of sale pursuant to Rule 144.

 

“Registration Expenses” means any and all expenses incident to the performance of, or compliance with, any registration or marketing of Registrable Securities, including all (i) registration and filing fees, and all other fees and expenses payable in connection with the listing of securities on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of compliance with any securities or “blue sky” laws (including reasonable and documented fees and disbursements of counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any registration statements, prospectuses and other documents in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses, (v) internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties), (vi) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including the expenses relating to any comfort letters or costs associated with the delivery by independent certified public accountants of any comfort letters requested pursuant to Section 3.03(b)), (vii) reasonable fees and expenses of any special experts retained by the Company in connection with such registration, (viii) fees

 

3

 

and expenses in connection with any review by FINRA of the underwriting arrangements or other terms of the offering, and all fees and expenses of any “qualified independent underwriter,” including the reasonable and documented fees and expenses of any counsel thereto, (ix) fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding Selling Expenses, (x) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering, (xi) expenses relating to any analyst or investor presentations or any “road shows” undertaken in connection with the registration, marketing or selling of the Registrable Securities, (xii) all out-of-pocket costs and expenses incurred by the Company or its appropriate officers in connection with their compliance with Section 3.05 and (ix) reasonable fees and expenses of one (1) legal counsel for the Investors selected by the majority-in-interest of the Investors participating in such registration, such expenses not to exceed US$100,000.  Registration Expenses shall not include any out-of-pocket expenses of the Investors (or the agents who manage their accounts), except as provided above in (ix).

 

“registration statement” means any registration statement of the Company including the prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement.

 

“Rule 144” means Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the SEC.

 

“SEC” means the United States Securities and Exchange Commission or any other federal agency at the time administering the federal securities laws.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

 

“Selling Expenses” shall mean, collectively, any selling commission, discounts or brokerage fees and stock transfer taxes applicable to the sale of Registrable Securities.

 

“Transfer” means, with respect to any Registrable Securities, (i) when used as a verb, to sell, assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such Registrable Securities or any participation or interest therein, whether directly or indirectly (including pursuant to a derivative transaction), or agree or commit to do any of the foregoing and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, encumbrance, hypothecation, or other transfer of such Registrable Securities or any participation or interest therein or any agreement or commitment to do any of the foregoing.

 

“Warrants” means the warrants issued by the Company in the Offerings.

 

(b)           Each of the following terms is defined in the Section set forth opposite such term:

 

4

 

	
Term
    	
 
    	
Section
    
	
 
    	
 
    	
 
    
	
Agreement
    	
 
    	
Preamble
    
	
Company
    	
 
    	
Preamble
    
	
Damages
    	
 
    	
4.01
    
	
Indemnified Party
    	
 
    	
4.03
    
	
Indemnifying Party
    	
 
    	
4.03
    
	
Inspectors
    	
 
    	
3.04
    
	
Joinder Agreement
    	
 
    	
5.01(b)
    
	
Notice
    	
 
    	
5.02
    
	
Offering
    	
 
    	
Preamble
    
	
Records
    	
 
    	
3.04
    
	
Securities Purchase Agreement
    	
 
    	
Preamble
    
	
Shelf Registration
    	
 
    	
2.01
    
	
Suspension Period
    	
 
    	
2.01(e)
    

 

Section 1.02          Other Definitional and Interpretative Provisions. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.  References to Articles, Sections or Exhibits are to Articles, Sections and Exhibits of this Agreement unless otherwise specified.  All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized term used in any Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import.  “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any law include all laws and regulations promulgated thereunder.  References to any Person include the successors and permitted assigns of that Person.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.  At any time the Company is not a Foreign Private Issuer, any references in this Agreement to a form or filing that may be made by a Foreign Private Issuer shall be deemed to be references to the corresponding form or filing that may be made by an entity that is not a Foreign Private Issuer.

 

ARTICLE II

 

REGISTRATION RIGHTS

 

Section 2.01          Shelf Registration and Registration Procedures.

 

(a)           Not later than the later of one hundred eighty (180) days after the commencement of the IPO or five business days after the expiration of the IPO Lock-up Period,

 

5

 

which shall be no later than two hundred thirty five (235) days after the commencement of the IPO (the “Commencement Date”), the Company shall (i) file a registration statement covering the resale of all of the Registrable Securities pursuant to Rule 415 under the Securities Act (or any successor or similar rule) (a “Shelf Registration” and the related registration statement, a “Shelf Registration Statement”), (ii) use commercially reasonable efforts to have the registration statement declared effective as promptly as practicable, and (iii) maintain an effective Shelf Registration (or other registration statement as described below) until all Registrable Securities shall have been sold under such Shelf Registration or cease to be Registrable Securities (such period, the “Effectiveness Period”).  The Company shall promptly, and within two (2) Business Days after the Company confirms effectiveness of the Shelf Registration with the SEC, notify the Investors of the effectiveness of the Shelf Registration.  In the event that Form S-3 or Form F-3 is not available for registration of the resale of the Registrable Securities hereunder, the Company shall (x) register the resale of the Registrable Securities on Form S-1 or Form F-1 or another appropriate form and (y) undertake to register the Registrable Securities on Form S-3 or Form F-3 as soon as the use of such form for such purpose is permitted, provided that the Company shall maintain the effectiveness of the registration statement then in effect until such time as the registration statement on Form S-3 or Form F-3 covering the Registrable Securities has been declared effective by the SEC.

 

(b)           Prior to filing a registration statement or prospectus or any amendment or supplement thereto (other than any report filed pursuant to the Exchange Act that is incorporated by reference therein, any post-effective amendment to incorporate by reference or otherwise include any such report, or any prospectus supplement to reflect changes in the selling stockholder table) the Company shall furnish to each participating Investor and each underwriter, if any, of the Registrable Securities covered by such registration statement copies of such registration statement as proposed to be filed. Such documents shall be subject to the review and comment of one counsel selected by the majority-in-interest of Investors participating in such registration. Thereafter the Company shall furnish to such Investor and underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424, Rule 430A, Rule 430B or Rule 430C under the Securities Act and such other documents as such Investor or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor.

 

(c)           The Company shall respond to written comments received from the SEC upon a review of any registration statement in a timely manner.

 

(d)           After the filing of the registration statement, the Company shall (i) cause the related prospectus to be supplemented by any required prospectus supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act, including as may be necessary to keep such registration statement effective and current, (ii) comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement during the applicable period in accordance with the intended methods of disposition by the Investors thereof set forth in such registration statement or supplement to such prospectus and (iii) promptly notify each Investor holding Registrable

 

6

 

Securities covered by such registration statement of any stop order issued or threatened by the SEC or any state securities commission and take reasonable best efforts to prevent the entry of such stop order or to cause it to be promptly removed if entered.

 

(e)           The Company shall use commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by such registration statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Investor holding such Registrable Securities reasonably (in light of such Investor’s intended plan of distribution) requests and (ii) cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable such Investor to consummate the disposition of the Registrable Securities owned by such Investor; provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 2.01(d), (B) subject itself to taxation in any such jurisdiction, unless the Company is already subject to taxation in such jurisdiction or (C) consent to general service of process in any such jurisdiction, unless the Company is already subject to service in such jurisdiction, except as required pursuant to the applicable rules and regulations of the SEC.

 

(f)            The Company shall promptly notify each Investor holding such Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly prepare and make available to each such Investor and file with the SEC any such supplement or amendment; provided that upon written notice to each Investor holding such Registrable Securities, the Company shall be entitled to delay the effectiveness of any registration statement or to suspend, on two occasions during any period of 12 consecutive months for a reasonable time specified in the notice but not exceeding in the aggregate 30 days (each, a “Suspension Period”), the use of any registration statement or prospectus if the Company determines in its reasonably good faith judgment, after consultation with counsel that (i) the registration statement or any prospectus may contain an untrue statement of a material fact or omit any fact necessary to make the statements in the registration statement or prospectus not misleading, provided, that in such event the Company shall promptly prepare and file a supplement or amendment to such registration statement or prospectus to correct such disclosure or (ii) proceeding with the registration would materially interfere with a significant acquisition, corporate organization or other similar transaction involving the Company, require premature disclosure of material information that the Company has bona fide business purposes for preserving as confidential or render the Company unable to comply with the requirements under the Securities Act or Exchange Act. Notwithstanding the foregoing, until such time as the Company is eligible to register the resale of Registrable Securities on Form S-3 or Form F-3, the Company shall be permitted to effect a Suspension Period to file a post-effective amendment to the registration statement at any time that the Company files a report under the Exchange Act; provided, that the Company shall use commercially reasonable efforts to file such post-effective amendment and have the registration statement declared effective as promptly as practicable.

 

7

 

(g)           The Company shall use best efforts to comply with all applicable rules and regulations of the SEC and make available to its security holders, as soon as reasonably practicable, an earnings statement or such other document covering a period of 12 months, beginning within three months after the effective date of the registration statement, which earnings statement satisfies the requirements of Rule 158 under the Securities Act.

 

(h)           The Company may require each Investor promptly to furnish in writing to the Company such information regarding the distribution of the Registrable Securities as the Company may reasonably request for inclusion in the registration statement (and the prospectus included therein) as is necessary to comply with all applicable rules and regulations of the SEC (the “Investor Information”), and that it will promptly notify the Company of any material changes in the information set forth in the registration statement furnished by or regarding the Investor or its plan of distribution.

 

(i)            Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.01(e), such Investor shall forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.01(e), and, if so directed by the Company, such Investor shall deliver to the Company all copies, other than any permanent file copies then in such Investor’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.

 

(j)            Each Investor agrees that, in connection with any offering pursuant to this Agreement, it will not prepare or use or refer to, any “free writing prospectus” (as defined in Rule 405 of the Securities Act) without the prior written authorization of the Company, and will not distribute any written materials in connection with the offer or sale of the Registrable Securities pursuant to any Public Offering conducted hereunder other than the prospectus and any such free writing prospectus so authorized.

 

(k)           The Company shall use commercially reasonable efforts to list all Registrable Securities on any securities exchange or quotation system on which any of the Registrable Securities are then listed or traded.

 

(l)            The Company shall be liable for and pay all Registration Expenses incurred in connection with a registration statement pursuant to this Agreement, other than Selling Expenses.  Selling Expenses shall be borne by the respective Investors on behalf of which the Selling Expenses have been incurred, in proportion to the respective number of shares of Registrable Securities sold by each of them.

 

(m)          The Company shall not agree to name any Investor as an “underwriter” in any registration statement registering Registrable Securities without the prior written consent of such Investor. In addition, any registration statement registering Registrable Securities shall include a plan of distribution reasonably acceptable to the Investors.

 

Section 2.02          Rule 144 Sales; Cooperation by the Company.  With a view to making available to the Investors the benefits of Rule 144 promulgated under the Securities Act and any

 

8

 

other rule or regulation of the SEC that may at any time permit the Investors to sell Registrable Securities to the public without registration, the Company agrees to use commercially reasonable efforts to:

 

(a)           make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act at all times after the date hereof;

 

(b)           file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

(c)           furnish to each Investor forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other information as such Investor may reasonably request in order to avail itself of any rule or regulation of the SEC allowing such Investor to sell any Registrable Securities without registration.

 

Section 2.03          Conversions of Ordinary Shares into ADSs.  To the extent that the Company causes ADSs to be issued in the IPO, following the IPO and as requested by the Investors, the Company will deposit Ordinary Shares held by the Investors from time to time with the ADS depositary and cause the ADS depositary to issue ADSs to the Investors upon deposit of such Ordinary Shares, provided that the Company shall not be required to deposit such Ordinary Shares in exchange for ADSs (a) on or prior to the date that is six (6) months from the date of the final prospectus for the IPO except in compliance with the Securities Act, (b) at any time at which to do so would violate obligations under any underwriter’s lock-up agreement entered into in connection with the IPO.  The Company will pay reasonable expenses of the Investors related to the issuance of ADSs upon exchange of Ordinary Shares for ADSs.

 

Section 2.04          Obligation to Register ADSs.  Notwithstanding anything to the contrary herein, unless the Company has previously caused the Ordinary Shares to be listed on a national securities exchange or trading system in the United States (it being acknowledged that the Company shall have no obligation to so list the Ordinary Shares) and a market in the United States for Ordinary Shares not held in the form of ADSs exists, in any registration pursuant to Section 2.01 or Section 2.03 any Registrable Securities registered and sold pursuant thereto shall be in the form of ADSs.

 

ARTICLE III

 

PUBLIC OFFERING

 

Section 3.01          Participation in Public Offering.  At any time after the Commencement Date, if the Company receives a request from an Investor or group of Investors, in each case holding a majority of the Registrable Securities (as determined on a fully-diluted basis) that the Company effect a Public Offering, then the Company shall use commercially reasonable efforts to promptly prepare a prospectus or a prospectus supplement to effect such Public Offering; provided that (i) the Company shall only be required to effectuate one Public Offering within any one-year period and (ii) the Company shall not be obligated to effect a Public Offering unless the

 

9

 

aggregate proceeds expected to be received from the sale of the Registrable Securities requested to be included in such Public Offering equals or exceeds $7,500,000.  The Company shall use commercially reasonable efforts to give notice of such Public Offering at least ten (10) Business Days prior to the anticipated filing date of the prospectus or prospectus supplement relating to such Public Offering to the other Investors who hold Registrable Securities at such time.  Such other Investors may, upon notice received by the Company no later than five (5) Business Days after the date of notice of a Public Offering, request that the Company also include all or any portion of such other Investors’ Registrable Securities.  Thereafter, the Company shall use commercially reasonable efforts to effect the Public Offering of all Registrable Securities requested to be included (in accordance with the methods thereof as aforesaid).  Subject to Section 3.03(b), the Company shall be permitted to include any securities other than the Registrable Securities (including for the benefit of Persons not party to this Agreement) as part of any such Public Offering.

 

Section 3.02          Other Agreements of Investors.  No Investor may participate in any Public Offering hereunder unless such Investor (i) agrees to sell such Investor’s Registrable Securities on the basis provided in any underwriting arrangements (in customary form) approved by the Company and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lock up agreements and other documents reasonably required under the terms of such underwriting arrangements and the provisions of this Agreement in respect of registration rights within the specified timelines.

 

Section 3.03          Underwriting of Public Offering.  In connection with any Public Offering, the Company shall enter into customary agreements (including an underwriting agreement in customary form) and take such all other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities in any such Public Offering.

 

(a)           In connection with any Public Offering, if required, the Company shall furnish to each underwriter, if any, a signed counterpart, addressed to such underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company’s independent public accountants, each in customary form and covering such matters of the kind customarily covered by opinions or comfort letters, as the case may be, as the managing underwriter therefor reasonably requests.

 

(b)           If the total amount of securities to be sold in any Public Offering in which the Investors are participating exceeds the amount that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities and securities other than the Registrable Securities that the underwriters and the Company determine in their sole discretion shall not jeopardize the success of the offering.  If the Investors determine to include any Registrable Securities in any such Public Offering, other than a Public Offering initiated by the Company, the number of securities that are entitled to be included in the registration and underwriting shall be allocated in the following manner: (i) first, securities other than the Registrable Securities requested to be included in such offering (including any securities that the Company proposes to register and sell for its own account) shall be excluded (as may be allocated pursuant to any agreement between holders of any such securities other than the Company) and (ii) second, Registrable Securities requested to be included in such offering by the

 

10

 

Investors shall be excluded on a pro rata basis based on the number of securities requested to be included.  If the Investors determine to include any Registrable Securities in any such Public Offering initiated by the Company, the number of securities that are entitled to be included in the registration and underwriting shall be allocated in the following manner: (i) first, securities other than the Registrable Securities requested to be included in such offering by Persons other than the Company shall be excluded on a pro rata basis based on the number of such securities requested to be included, (ii) second, Registrable Securities requested to be included in such offering by the Investors shall be excluded on a pro rata basis based on the number of such securities requested to be included and (iii) third, securities proposed to be registered and sold for the account of the Company shall be excluded.  To facilitate the allocation of securities in accordance with the above provisions, the Company or the underwriters may round down the number of securities allocated to any selling holder (including each Investor) to the nearest 100.

 

Section 3.04          Inspection of the Company Records.  Upon execution of confidentiality agreements in form and substance reasonably satisfactory to the Company, the Company shall, in connection with a Public Offering, make available for inspection by any underwriter participating in such Public Offering and any attorney, accountant or other professional (the retention of which is reasonable under the circumstances) retained by any such underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”) as shall be reasonably necessary or desirable to enable any of the Inspectors to exercise its due diligence responsibility and in accordance with applicable law, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such Public Offering and in accordance with applicable law.  Records that the Company determines in good faith to be confidential and that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a material misstatement or omission in the registration statement related to such Public Offering or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction.  Each Investor agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it or its Affiliates as the basis for any market transactions in the Ordinary Shares, ADSs or other securities of the Company unless and until such information is made generally available to the public.  Each Investor further agrees that, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, it shall give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential.

 

Section 3.05          The Company’s Participation in Road Shows.  In connection with any Public Offering, the Company shall have appropriate officers of the Company (i) prepare and make presentations at any “road shows” and before analysts and (ii) otherwise use commercially reasonable efforts to cooperate as reasonably requested by the underwriters in the offering, marketing or selling of the Registrable Securities.

 

11

 

ARTICLE IV

 

INDEMNIFICATION AND CONTRIBUTION

 

Section 4.01          Indemnification by the Company.  The Company agrees to indemnify and hold harmless each Investor beneficially owning any Registrable Securities covered by a registration statement, its officers, directors, partners, managers, members, investment managers, affiliates, agents, representatives and employees, and each Person, if any, who controls such Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and expenses (including reasonable and documented expenses of investigation and reasonable and documented attorneys’ fees and expenses) (collectively, “Damages”) caused by or relating to (i) any untrue statement or alleged untrue statement of a material fact contained in (or incorporated by reference in) any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus or free writing prospectus (as defined in Rule 405 under the Securities Act), or any filing under any state securities (or blue sky) laws, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law applicable to the Company, except insofar as such Damages are caused by or related to any such untrue statement or omission or alleged untrue statement or omission so made based upon information furnished in writing to the Company by such Investor or on such Investor’s behalf expressly for use therein.  The Company also agrees to indemnify any underwriters of the Registrable Securities, their officers and directors and each Person who controls such underwriters within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act on substantially the same basis as that of the indemnification of the Investors provided in this Section 4.01.

 

Section 4.02          Indemnification by Participating Investors.  Each Investor holding Registrable Securities covered by a registration statement agrees, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from any Damages caused by or relating to (i) any untrue statement or alleged untrue statement of a material fact contained in (or incorporated by reference in) any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus or free writing prospectus (as defined in Rule 405 under the Securities Act), or any filing under any state securities (or blue sky) laws, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only in each case with respect to information furnished in writing by such Investor or on such Investor’s behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus.  Each such Investor also agrees to indemnify and hold harmless underwriters of the Registrable Securities, their officers and directors and each Person who controls such underwriters within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act on substantially the same basis as that of the

 

12

 

indemnification of the Company provided in this Section 4.02.  As a condition to including Registrable Securities in any registration statement filed in accordance with Article 2, the Company may require that it shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify and hold it harmless to the extent customarily provided by underwriters with respect to similar securities.  No Investor shall be liable under this Section 4.02 for any Damages in excess of the net proceeds realized by such Investor in the sale of Registrable Securities of such Investor to which such Damages relate.

 

Section 4.03          Conduct of Indemnification Proceedings.  If any proceeding (including any governmental investigation) shall be brought or asserted against any Person in respect of which indemnity may be sought pursuant to Section 4.01 or 4.02, such Person (an “Indemnified Party”) shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all reasonable and documented fees and expenses, provided that the failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure to notify.  In any such proceeding, any 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 such Indemnified Party unless (a) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (b) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  It is understood that, in connection with any proceeding or related proceedings in the same jurisdiction, the Indemnifying Party shall not be liable for the reasonable and documented fees and expenses of more than one separate firm of attorneys (in addition to one local counsel per jurisdiction) at any time for all such Indemnified Parties.  In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties.  The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.  Without the prior written consent of the Indemnified Party, no Indemnifying Party shall effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.

 

Section 4.04          Survival.  Unless otherwise superseded by an underwriting agreement entered into in connection with an underwritten public offering, the obligations of the Company and the Investors under Section 4.01 and Section 4.02, respectively, shall survive the completion of any offering of Registrable Securities in a registration statement under this Agreement or otherwise.

 

Section 4.05          Contribution.  (a) If the indemnification provided for in Section 4.01 or 4.02 is unavailable to the Indemnified Parties in respect of any Damages, then each Indemnifying

 

13

 

Party, in lieu of indemnifying the Indemnified Parties, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Damages:

 

(i)            as between the Company and the Investors holding Registrable Securities covered by a registration statement on the one hand and the underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company and such Investors on the one hand and the underwriters on the other, from the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company and such Investors on the one hand and of such underwriters on the other in connection with the statements or omissions that resulted in such Damages, as well as any other relevant equitable considerations; and

 

(ii)           as between the Company on the one hand and each such Investor on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of each such Investor in connection with such statements or omissions, as well as any other relevant equitable considerations.

 

The relative benefits received by the Company and such Investors on the one hand and such underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and such Investors bear to the total underwriting discounts and commissions received by such underwriters, in each case as set forth in the table on the cover page of the applicable prospectus or prospectus supplement.  The relative fault of the Company and such Investors on the one hand and of such underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and such Investors or by such underwriters.  The relative fault of the Company on the one hand and of each such Investor on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

(b)           The Company and the Investors agree that it would not be just and equitable if contribution pursuant to this Section 4.05 were determined by pro rata allocation (even if the underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an Indemnified Party as a result of the Damages referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 4.05, no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any Damages that such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no

 

14

 

Investor shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Investor were offered to the public (less underwriters’ discounts and commissions) exceeds the amount of any Damages that such Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  Each Investor’s obligation to contribute pursuant to this Section 4.05 is several in the proportion that the proceeds of the offering received by such Investor bears to the total proceeds of the offering received by all such Investors and not joint.

 

ARTICLE V

 

MISCELLANEOUS

 

Section 5.01          Binding Effect; Assignability; Benefit.  (a) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and permitted assigns.  Any Investor that ceases to own beneficially any Registrable Securities shall cease to be bound by the terms hereof (other than (i) the provisions of Article 4 applicable to such Investor with respect to any offering of Registrable Securities completed before the date such Investor ceased to own any Registrable Securities and (ii) this Article 5).

 

(a)           Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any party hereto pursuant to any Transfer of Registrable Securities or otherwise, except that each Investor may assign all or any portion of its rights hereunder to any Permitted Transferee of such Investor with respect to securities representing not less than twenty percent (20%) of the Registrable Securities held by such Investor as of the date of completion of the IPO; provided, however, that no such minimum assignment requirement shall be necessary for an assignment by an Investor which is (i) a partnership to its partners in accordance with their partnership interests, (ii) a limited liability company to its members in accordance with their interests in the limited liability company, (iii) a corporation to its stockholders in accordance with their interests in the corporation or (iv) to an Affiliate of such Investor.  Any such Permitted Transferee shall (unless already bound hereby) execute and deliver to the Company an agreement to be bound by this Agreement in the form of Exhibit A hereto (a “Joinder Agreement”) and shall thenceforth be a “Investor.”  Any such transfer to a Permitted Transferee must be in compliance with the Securities Act and any other applicable securities “blue sky” laws.

 

(b)           Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

Section 5.02          Notices.  All notices, requests and other communications (each, a “Notice”) to any party shall be in writing and shall be delivered in person, mailed by certified or

 

15

 

registered mail, return receipt requested, or sent by facsimile transmission or email transmission so long as receipt of such email is requested and received:

 

if to the Company to:

 

Verona Pharma PLC

3 More London Riverside

London SE1 2RE

United Kingdom

E-Mail: XXX and XXX

Attention: Jan-Anders Karlsson and Claire Poll

 

with a copy to:

 

Kaye Scholer LLP

Two Palo Alto Square, Suite 400

3000 El Camino Real

Palo Alto, CA 94306-2112

E-mail: XXX

Attention: Nicholas O’Keefe

 

if to any Investor, at the address for such Investor listed on the signature pages below or otherwise provided to the Company as set forth below.

 

Any Notice shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt.  Otherwise, any such Notice shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

 

Any Person that becomes an Investor after the date hereof shall provide its address, fax number and email address to the Company.

 

Section 5.03          Waiver; Amendment; Termination.  (a) The provisions of this Agreement, including the provisions of this sentence, may not be amended, waived, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the written consent of the Company and holders of a majority of the Registrable Securities (as determined on a fully-diluted basis); provided, however, that in no event shall the obligations of any holder of Registrable Securities be materially increased or the rights of any Investor be adversely affected (without similarly adversely affecting the rights of all Investors), except upon the written consent of such holder.  Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of holders of Registrable Securities whose securities are being sold pursuant to a registration statement and that does not directly or indirectly affect the rights of other holders of Registrable Securities may be given by holders of at least a majority of the Registrable Securities being sold by such holders pursuant to such registration statement.

 

16

 

(b)           This Agreement shall terminate upon the earlier to occur of (i) the fifth anniversary of the IPO and (ii) the date on which there are no Registrable Securities.

 

Section 5.04          Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflicts of laws rules of such state.

 

Section 5.05          Jurisdiction.  The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in any state or federal court sitting in The City of New York, Borough of Manhattan, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 5.02 shall be deemed effective service of process on such party.

 

Section 5.06          WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH OF THE COMPANY AND THE INVESTORS (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT EACH OF THE COMPANY AND THE INVESTORS HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 5.07          Specific Enforcement.  Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond or furnishing other security, and in addition to all other remedies that may be available, shall be entitled to the fullest extent permitted by law to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available.

 

Section 5.08          Counterparts; Effectiveness.  This Agreement may be executed (including by facsimile or other electronic image scan transmission) with counterpart signature pages or in any number of counterparts, each of which shall be deemed to be an original, and all of which

 

17

 

shall, taken together, be considered one and the same agreement, it being understood that each party need not sign the same counterpart.  This Agreement shall become effective when each party hereto shall have executed and delivered this Agreement.  Until and unless each party has executed and delivered this Agreement, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).

 

Section 5.09          Entire Agreement.  This Agreement constitutes the entire agreement and understanding among the parties hereto with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous agreements and understandings, both oral and written, among the parties hereto with respect to the subject matter hereof.

 

Section 5.10          Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

Section 5.11          Confidentiality.

 

(a)           Each Investor agrees that any notice received pursuant to this Agreement, including any notice of a proposed public offering, postponement of an offering or other similar notice regarding the Company’s securities, is confidential information and that any trading in securities of the Company following receipt of such information may only be done in compliance with all applicable securities laws.

 

(b)           Each Investor shall have the right, at any time and from time to time (including after receiving information regarding any potential Public Offering), to elect not to receive any notice that the Company or any other Investor otherwise are required to deliver pursuant to this Agreement by delivering to the Company a written statement signed by such Investor that it does not want to receive any notices hereunder (an “Opt-Out Request”); in which case and notwithstanding anything to the contrary in this Agreement the Company and other Investors shall not be required to, and shall not, deliver any notice or other information required to be provided to Investors hereunder to the extent that the Company or such other Investors reasonably expect would result in an Investor acquiring material nonpublic information. An Opt-Out Request may state a date on which it expires or, if no such date is specified, shall remain in effect indefinitely.  An Investor who previously has given the Company an Opt-Out Request may revoke such request at any time, and there shall be no limit on the ability of an Investor to issue and revoke a subsequent Opt-Out Request.

 

Section 5.12          Independent Nature of Investors’ Obligations and Rights.  The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor hereunder, and no Investor shall be responsible in any way for the performance of the obligations

 

18

 

of any other Investor hereunder.  Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement.  Each Investor shall be entitled to protect and enforce its rights, including the rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose.

 

[Signature pages follow]

 

19

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement or have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

	
VERONA PHARMA PLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Jan-Anders Karlsson
    	
 
    
	
 
    	
Name: Jan-Anders Karlsson
    	
 
    
	
 
    	
Title:Chief Executive   Officer
    	
 
    

 

[Signature Page to Registration Rights Agreement]

 

 

INVESTORS:

 

ABINGWORTH BIOVENTURES VI LP acting by its
 Manager Abingworth LLP

 

	
By:
    	
/s/ James Abell
    	
 
    
	
 
    	
Name: James Abell
    	
 
    
	
 
    	
Title: Partner
    	
 
    

 

Address for Notices:

Address: 38 Jermyn Street, London SWIY 6DN, UK

Fax number: 

Email address: XXX

 

[Signature Page to Registration Rights Agreement]

 

 

INVESTORS:

 

	
AISLING CAPITAL IV, LP
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Lloyd Appel
    	
 
    
	
 
    	
Name: Lloyd Appel
    	
 
    
	
 
    	
Title: Chief Financial   Officer
    	
 
    

 

Address for Notices:

Address: 888 Seventh Avenue, 12th Floor, New York, NY 10106

Fax number: 

Email address: XXX

 

[Signature Page to Registration Rights Agreement]

 

 

INVESTORS:

 

	
DON M. BAILEY
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Don M. Bailey
    	
 
    
			

 

Address for Notices:

Address: 5748 Grandview Avenue, Yorba Linda, CA 92886

Fax number: 

Email address: XXX

 

[Signature Page to Registration Rights Agreement]

 

 

INVESTORS:

 

	
BIODISCOVERY   4 FPCI
    	
 
    
	
 
    	
 
    
	
By:   Edmund de Rothschild Investment Partners, its management company
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Gilles Nobécourt
    	
 
    
	
 
    	
Name:   Gilles Nobécourt
    	
 
    
	
 
    	
Title:   Managing Director
    	
 
    

 

Address for Notices:

	
Address:
    	
47,   Rue du Faubourg Saint-Honoré
    
	
 
    	
75401   Paris Cedex 08, France
    
	
Fax   number:
    	
 
    
	
Email   address:
    	
XXX
    

 

[Signature page to Registration Rights Agreement]

 

 

INVESTORS:

 

	
GROWTH EQUITY OPPORTUNITIES FUND IV, LLC
    	
 
    
	
 
    	
 
    
	
By: New Enterprise Associates 15, L.P., its sole   member
    	
 
    
	
By: NEA Partners 15, L.P., its general partner
    	
 
    
	
By: NEA 15 GP, LTD, its general partner
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Louis S. Citron
    	
 
    
	
 
    	
Name:   Louis S. Citron
    	
 
    
	
 
    	
Title:   Chief Legal Officer
    	
 
    

 

Address for Notices:

Address:  1954 Greenspring Drive, Suite 600, Timonium, MD 21093

Fax number: 

Email address: XXX

 

[Signature page to Registration Rights Agreement]

 

 

INVESTORS:

 

	
ORBIMED PRIVATE INVESTMENTS VI, LP
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
OrbiMed   Capital GP VI LLC,
    	
 
    
	
 
    	
its   General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
OrbiMed   Advisors LLC,
    	
 
    
	
 
    	
its   Managing Member
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Carl Gordon
    	
 
    
	
 
    	
Name:   Carl Gordon
    	
 
    
	
 
    	
Title:   Managing Member
    	
 
    
				

 

Address for Notices:

Address:  601 Lexington Ave, 54th Floor, New York, NY 10022

Fax number:

Email address: XXX

 

[Signature page to Registration Rights Agreement]

 

 

INVESTORS:

 

	
Tekla World Healthcare Fund*
    	
 
    
	
 
    	
 
    
	
/s/ Daniel R. Omstead
    	
 
    
	
By: Daniel R. Omstead
    	
 
    
	
Title: President
    	
 
    

 

Address for Notices:

	
Address:
    	
c/o   Tekla Capital Management LLC
    
	
 
    	
100 Federal Street 19th Floor
    
	
 
    	
Boston, MA 02110
    
	
 
    	
 
    
	
Fax   number:
    	
617   772 8577
    
	
 
    	
 
    
	
Email   address:
    	
XXX,   with copies to
    
	
 
    	
XXX,   XXX
    
	
 
    	
and   XXX
    
			

 

* The name Tekla World Healthcare Fund is the designation of the Trustee for the time being under a Declaration of Trust dated May 18, 2015, and all persons dealing with Tekla World Healthcare Fund must look solely to the trust property for the enforcement of any claim against Tekla World Healthcare Fund, as neither the Trustees, officers nor shareholders assume any personal liability for the obligations entered into on behalf of Tekla World Healthcare Fund.

 

[Signature page to Registration Rights Agreement]

 

 

INVESTORS:

 

	
Tekla Life Sciences Investors*
    	
 
    
	
 
    	
 
    
	
/s/ Daniel R. Omstead
    	
 
    
	
By: Daniel R. Omstead
    	
 
    
	
Title: President
    	
 
    

 

Address for Notices:

	
Address:
    	
c/o   Tekla Capital Management LLC
    
	
 
    	
100 Federal Street 19th Floor
    
	
 
    	
Boston, MA 02110
    
	
 
    	
 
    
	
Fax   number:
    	
617   772 8577
    
	
 
    	
 
    
	
Email   address:
    	
XXX,   with copies to
    
	
 
    	
XXX,   XXX
    
	
 
    	
and   XXX
    
			

 

* The name Tekla Life Sciences Investors is the designation of the Trustee for the time being under a Declaration of Trust dated February 20, 1992, as amended, and all persons dealing with Tekla Life Sciences Investors must look solely to the trust property for the enforcement of any claim against Tekla Life Sciences Investors, as neither the Trustees, officers nor shareholders assume any personal liability for the obligations entered into on behalf of Tekla Life Sciences Investors.

 

[Signature page to Registration Rights Agreement]

 

 

INVESTORS:

 

	
VIVO VENTURES FUND VII, L.P.
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
Vivo Ventures VII, LLC
    	
 
    
	
Its:
    	
General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Albert Cha
    	
 
    
	
 
    	
Name:   Albert Cha
    	
 
    
	
 
    	
Title:   Managing Member
    	
 
    

 

	
VIVO VENTURES VII AFFILIATES FUND, L.P.
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
Vivo Ventures VII, LLC
    	
 
    
	
Its:
    	
General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Albert Cha
    	
 
    
	
 
    	
Name:   Albert Cha
    	
 
    
	
 
    	
Title:   Managing Member
    	
 
    

 

	
VIVO VENTURES FUND VI, L.P.
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
Vivo Ventures VI, LLC
    	
 
    
	
Its:
    	
General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Albert Cha
    	
 
    
	
 
    	
Name:   Albert Cha
    	
 
    
	
 
    	
Title:   Managing Member
    	
 
    

 

	
VIVO VENTURES VI AFFILIATES FUND, L.P.
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
Vivo Ventures VII, LLC
    	
 
    
	
Its:
    	
General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Albert Cha
    	
 
    
	
 
    	
Name:   Albert Cha
    	
 
    
	
 
    	
Title:   Managing Member
    	
 
    

 

Address for Notices:

Address: 575 High Street, Suite 201, Palo Alto, CA 94301, USA

	
Fax number:
    	
650-688-0815
    
	
Email address:
    	
XXX
    

 

[Signature page to Registration Rights Agreement]

 

 

JOINDER TO REGISTRATION RIGHTS AGREEMENT

 

This Joinder Agreement (this “Joinder Agreement”) is made as of the date written below by the undersigned (the “Joining Party”) in accordance with the Registration Rights Agreement dated as of               , 2016 (as amended, amended and restated or otherwise modified from time to time, the “Registration Rights Agreement”) among Verona Pharma plc and the investors party thereto listed on the signature pages, as well as any Permitted Transferees.  Capitalized terms used, but not defined, herein shall have the meaning ascribed to such terms in the Registration Rights Agreement.

 

The Joining Party hereby acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, the Joining Party shall be deemed to be a party to the Registration Rights Agreement as of the date hereof as a Permitted Transferee of an Investor thereto and shall have all of the rights and obligations of an “Investor” thereunder as if it had executed the Registration Rights Agreement.  The Joining Party hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Registration Rights Agreement.

 

IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement as of the date written below.

 

Date:    ,

 

	
 
    	
[NAME   OF JOINING PARTY]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notices:
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
Fax   number:
    
	
 
    	
 
    
	
 
    	
Email   address:Exhibit 10.2

 

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

 

INTELLECTUAL PROPERTY ASSIGNMENT AND LICENCE AGREEMENT

 

DATED 7TH FEBRUARY, 2005

 

VERNALIS DEVELOPMENT LIMITED

 

and

 

RHINOPHARMA LTD.

 

 

	
CONTENTS
    
	
Clause
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Interpretation
    	
1
    
	
2.
    	
Assignment of Programme   Patents
    	
5
    
	
3.
    	
Grant in Relation to   Programme Know-How and Programme Materials
    	
5
    
	
4.
    	
Sub-Licensing
    	
6
    
	
5.
    	
Payments
    	
6
    
	
6.
    	
Rhinopharma’s   Undertakings
    	
7
    
	
7.
    	
Representations and   Warranties
    	
8
    
	
8.
    	
Third Party   Infringement of Programme IP
    	
9
    
	
9.
    	
Maintenance of Patents
    	
10
    
	
10.
    	
Term and Termination
    	
11
    
	
11.
    	
Effect of Termination
    	
12
    
	
12.
    	
Confidentiality and   Announcements
    	
12
    
	
13.
    	
Force Majeure
    	
13
    
	
14.
    	
Notices
    	
14
    
	
15.
    	
Assignment
    	
14
    
	
16.
    	
General
    	
15
    
	
17.
    	
Disputes
    	
16
    
	
18.
    	
Jurisdiction
    	
17
    
	
19.
    	
Governing Law
    	
17
    
	
 
    	
 
    	
 
    
	
Schedule
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
1.
    	
Programme Patent(s)
    	
18
    
	
2.
    	
Programme Know-How
    	
19
    
	
3.
    	
Net Sales Value   Definition
    	
24
    
	
4.
    	
Know-How Agreements
    	
29
    
	
 
    	
 
    
	
Signatories
    	
30
    

 

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

 

i

 

THIS AGREEMENT is dated 7th February, 2005

 

BETWEEN:

 

(1)                                VERNALIS DEVELOPMENT LIMITED (registered number 2600483) whose registered office is at Oakdene Court, 613 Reading road, Winnersh, Berks, RG41 5UA (Vernalis); and

 

(2)                                RHINOPHARMA LTD. (incorporation number 693217) whose registered office is at Suite 700, 625 Howe Street, Vancouver, British Columbia, Canada V6C 2T6 (Rhinopharma).

 

BACKGROUND:

 

(A)                              Vernalis owns certain compounds and know-how which it has used to progress a research and development programme of mixed PDE III and PDE IV inhibitors for use as inhaled treatments of Chronic Obstructive Pulmonary Disease.

 

(B)                              Through the conduct of that research and development programme, Vernalis has developed certain intellectual property rights comprising know-how, materials and patent rights related to the programme.

 

(C)                              Rhinopharma wishes to obtain rights to the programme and Vernalis has agreed to (i) assign those patent rights related to the programme to Rhinopharma, and (ii) grant, and Rhinopharma has agreed to take, an exclusive licence of those other intellectual property rights related to the programme, in each case on the terms set out in this agreement.

 

IT IS AGREED:

 

1.                                     INTERPRETATION

 

1.1                              In this agreement:

 

Affiliate means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with a party.  For purposes of this definition, “control” shall be presumed to exist if one of the following conditions is met:  (a) in the case of corporate entities, direct or indirect ownership of at least fifty per cent. (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty per cent. (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities.  The parties acknowledge that in the case of certain entities organised under the laws of certain countries, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty per cent. (50%), and that in such case such lower percentage shall be substituted in the preceding sentence, provided that such foreign investor has the power to direct the management and policies of such entity;

 

Commercialisation or Commercialise means any and all activities (whether before or after Regulatory Approval) directed to the marketing, detailing and promotion of a Licensed Product after Regulatory Approval for commercial sale has been obtained, and shall, without limitation, include pre-launch and post-launch marketing, manufacturing for commercial sale, promoting, detailing, distributing, offering to sell and selling a Licensed Product, importing a Licensed Product for sale, conducting clinical studies (but not Development clinical studies), and

 

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

 

1

 

interacting with Regulatory Authorities regarding the foregoing; Commercialising shall have a corresponding meaning;

 

Commercially Reasonable and Diligent Efforts means efforts and resources commonly associated with good business practice and standards in the research-based pharmaceutical industry to research, develop, manufacture or commercialise (as appropriate) a product or compound of similar market potential at a similar stage in its product life, taking into account [***].

 

Confidential Information means all materials, know-how or other information (whether or not patentable) that is disclosed by or on behalf of either party to the other party pursuant to and in contemplation of this agreement, including, without limitation, biological or chemical substances, formulations, techniques, methodology, equipment, data, reports, Know-How, sources of supply, patent positioning and business plans, and that is designated as confidential in writing by the disclosing party, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such material, know-how or other information is disclosed by the disclosing party to the other party.  Notwithstanding the foregoing, materials, know-how or other information that is orally, electronically or visually disclosed by a party, or is disclosed in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information of a party (a) if the disclosing party, within thirty (30) days after such disclosure, delivers to the other party a written document describing the materials, know-how or other information and referencing the place and date of such oral, visual, electronic or written disclosure and the names of the persons to whom such disclosure was made, or (b) such information is of the type that is customarily considered to be confidential information by persons engaged in activities that are substantially similar to the activities being engaged in by the parties;

 

Cover, Covering or Covered means, with respect to a Programme Patent, that, but for a license granted to a party under a Valid Claim included in such Programme Patent, the practice by such Party of an invention would infringe such Valid Claim including in the case of a Programme Patent that is a patent application, would infringe a Valid Claim in such patent application if it were to issue as a patent;

 

Development or Develop means, without limitation, any and all activities related to research, preclinical testing, test method development and stability testing, toxicology, formulation, process development, manufacturing scale-up, qualification and validation, quality assurance/quality control, clinical studies, regulatory affairs, statistical analysis and report writing, market research and development, the preparation and submission of drug approval applications and all other activities before and leading to Regulatory Approval, and includes, without limitation, any activities necessary or required by a Regulatory Authority (a) to obtain Regulatory Approval, or (b) as a condition of maintaining a Regulatory Approval.  Developed shall have a corresponding meaning;

 

Disclosing Party means, in relation to the Confidential Information of:

 

(a)                                Rhinopharma and its Affiliates, Rhinopharma; or

 

(b)                                Vernalis and its Affiliates, Vernalis;

 

Dispute has the meaning given in clause 17.1;

 

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

 

2

 

Field of Use means the treatment of human or animal allergic or inflammatory disorders;

 

First Commercial Sale means on a Licensed Product by Licensed Product, and country by country basis the first sale to a Third Party of a Licensed Product in a country in the Territory after required Regulatory Approvals have been granted by the applicable Regulatory Authority, but excluding Licensed Product sales for clinical study purposes or compassionate, named patient or similar use;

 

Improvement means any material developments, discoveries, inventions or other intellectual property rights, whether patentable or not, which improve or otherwise offer advantages in respect of development, manufacture and/or performance of the Licensed Products;

 

Know-How means all tangible or intangible materials, inventions, discoveries, practices, methods, knowledge, know-how, trade secrets, processes, formulas, assays, skills, experience, techniques and results of experimentation and testing, including, without limitation, clinical, biological, pharmaceutical, pharmacological, toxicological and pre-clinical and clinical test data, analytical and quality control data, software and algorithms, marketing, pricing, distribution, costs and sales data (whether patentable or otherwise);

 

Licensed Products means any phosphodiesterase inhibitors Developed using the Programme IP;

 

Manufacturing or Manufacture means all activities associated with the production, manufacture, processing, filling, finishing, packaging, labeling, shipping, and storage of Licensed Products, including, without limitation, process development, process validation, manufacturing scale-up, pre-clinical, clinical and commercial manufacture and analytical development, product characterisation, quality assurance and quality control;

 

Net Sales Value has the meaning given in Schedule 3;

 

Notice has the meaning given in clause 14.1;

 

Permitted User means, in relation to the Recipient, any of its employees, directors, subcontractors or professional advisers and, where the Recipient is Rhinopharma, any of its Affiliates, any of the employees, directors, subcontractors or professional advisers of any Affiliates of Rhinopharma;

 

Programme IP means the Programme Patents, the Programme Know-How and Programme Materials

 

Programme Know-How means the Know-How owned by Vernalis and reasonably required for the Development, Manufacture or Commercialisation of Licensed Products, including, without limitation, such Know-How as is set out in Schedule 2;

 

Programme Materials means the physical stock of compound VMX 554 and VMX 565 in Vernalis’ possession as at the date of this agreement.

 

Programme Patents means all those patent applications and granted patents [***] patents or patent applications claiming priority from such patents or patent applications in the Territory;

 

Recipient means, in relation to the Confidential Information of:

 

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

 

3

 

(a)                                Rhinopharma and its Affiliates, Vernalis; or

 

(b)                                Vernalis and its Affiliates, Rhinopharma;

 

Regulatory Approval means any and all approvals (including pricing and reimbursement approvals), licences, registrations or authorisations of any Regulatory Authority, necessary for the Development, Commercialisation or Manufacture of a Licensed Product;

 

Regulatory Authority means any governmental or regulatory authority in a country or region that regulates the manufacture or sale of pharmaceutical products for human or animal use, including, without limitation, the United States Food and Drug Administration and the European Agency for the Evaluation of Medicinal Products, and any successors thereto;

 

Royalty Term means:

 

(a)                                with respect to each Licensed Product Covered by a Programme Patent at the time of First Commercial Sale of such Licensed Product in each country, the period of time from the First Commercial Sale of such Licensed Product until the later of (i) the date ten (10) years from the date of the First Commercial Sale of such Licensed Product in such country; and (ii) the expiration of all patent rights within Programme Patents containing one or more Valid Claims Covering the Development, Manufacture or Commercialisation of such Licensed Product in such country; and

 

(b)                                with respect to each Licensed Product not Covered by a Programme Patent at the time of First Commercial Sale of such Licensed Product in each country, the period of time from the First Commercial Sale of such Licensed Product until the date ten (10) years from the date of the First Commercial Sale of such Licensed Product in such country;

 

Sales Tax means any sales, purchase or turnover tax as may be applicable in any relevant jurisdiction, including, without limitation, value added tax chargeable under or pursuant to the UK Value Added Tax Act 1994 or the EC Sixth Directive (77/388/EEC);

 

Sub-licensee means a Third Party to whom Rhinopharma grants a licence or sub-licence (as the case may be) under any Programme LP, to Develop, Manufacture or Commercialise a Licensed Product in the Field of Use in the Territory;

 

Territory means all the countries in the world;

 

Third Party means any entity other than Vernalis or Rhinopharma and their respective Affiliates; and

 

Valid Claim means any claim of a Programme Patent, which claim has not been held unenforceable, unpatentable or invalid by a final decision of a court or governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue, re-examination or disclaimer.

 

1.2                              In this agreement any reference, express or implied, to an enactment (which includes any legislation in any jurisdiction) includes references to:

 

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

 

4

 

(a)                                that enactment as re-enacted, amended, extended or applied by or under any other enactment (before, on or after the date of this agreement);

 

(b)                                any enactment which that enactment re-enacts (with or without modification); and

 

(c)                                 any subordinate legislation made (before, on or after the date of this agreement) under that enactment, as re-enacted, amended, extended or applied as described in clause 1.2(a), or under any enactment referred to in clause 1.2(b).

 

1.3                              In this agreement:

 

(a)                                references to a person include an individual, a body corporate and an unincorporated association of persons;

 

(b)                                subject to clause 15, references to a party to this agreement include references to the successors or assigns (immediate or otherwise) of that party.

 

1.4                              Clauses 1.1 to 1.3 apply unless the contrary intention appears.

 

1.5                              The headings in this agreement do not affect its interpretation.

 

1.6                              The schedules to this agreement form part of it.

 

1.7                              If there is any conflict or inconsistency between a term in the main part of this agreement and a term in any of the schedules or other documents referred to or otherwise incorporated into this agreement, the term in the main part of this agreement shall take precedence, unless the schedule or the appendix or other document which is incorporated into this agreement is expressly stated to take precedence over this agreement.

 

2.                                     ASSIGNMENT OF PROGRAMME PATENTS

 

2.1                              In consideration of payment by Rhinopharma to Vernalis of the amounts set out in clause 5, Vernalis hereby assigns to Rhinopharma such rights, title and interest as it holds in the Programme Patents.

 

2.2                              The assignment in clause 2.1 includes the right (where applicable) to file applications under the Paris Convention, corresponding to or based on any of the applications for the Programme Patents, and to claim priority from those applications.

 

2.3                              Rhinopharma shall not further assign the Programme Patents to any Third Party without the prior written consent of Vernalis.

 

2.4                              Vernalis shall transfer to Rhinopharma all records, data, files and other information (in any medium) which are in its possession, power or control (or those of its professional advisers and agents) and which relate directly to the Programme Patents as soon as reasonably possible after the date of this agreement.

 

3.                                      GRANT IN RELATION TO PROGRAMME KNOW-HOW AND PROGRAMME MATERIALS

 

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

 

5

 

3.1                              Subject to the terms and conditions of this agreement, Vernalis grants to Rhinopharma an exclusive, worldwide, royalty-bearing licence under the Programme Know-How to Develop, Manufacture and Commercialise (or any of those activities) Licensed Products in the Field of Use in the Territory.

 

3.2                              Vernalis shall provide to Rhinopharma copies of the Programme Know-How as soon as reasonably possible after the date of this agreement.

 

3.3                              Rhinopharma shall only use the Programme Know-How provided by Vernalis under clause 3.2 for the purpose of Developing, Manufacturing and Commercialising (or any of those activities) the Licensed Products or in connection with a sub-license permitted under clause 4.1.

 

3.4                              Vernalis shall transfer to Rhinopharma the Programme Materials as soon as reasonably possible after the date of this agreement.

 

4.                                     SUB-LICENSING

 

4.1                              Rhinopharma shall have the right to grant sub-licences under the Programme IP provided that:

 

(a)                                any sub-licence shall be in writing on terms consistent with this agreement (including, without limitation, those terms relating to confidentiality, but excluding the right to grant further sub-licences without Vernalis’ prior written consent);

 

(b)                                Rhinopharma shall provide a copy of each sub-licence to Vernalis; and

 

(c)                                 any sub-licence shall automatically terminate on the termination of this agreement.

 

4.2                              Save as expressly set out no further rights or licences are granted by Vernalis to Rhinopharma by this agreement.

 

5.                                     PAYMENTS

 

5.1                              Within [***] ([***]) days after achievement of the first approval of a Regulatory Authority for the Commercialisation of any Licensed Product anywhere in the Territory, Rhinopharma shall pay to Vernalis the sum of five million pounds (£5,000,000).

 

5.2                              For each Licensed Product that is Covered by a Programme Patent at the time of First Commercial Sale of that Licensed Product, during the applicable Royalty Term and prior to the Royalty Term in respect of any named patient sales, Rhinopharma shall pay Vernalis royalties on the Net Sales Value of such Licensed Product at the royalty rate of [***]% ([***] per cent.).

 

5.3                              For each Licensed Product that is not Covered by a Programme Patent at the time of First Commercial Sale of that Licensed Product, during the applicable Royalty Term and prior to the Royalty Term in respect of any named patient sales, Rhinopharma shall pay Vernalis royalties on the Net Sales Value of such Licensed Product at the royalty rate of [***]% ([***] per cent.).

 

5.4                              Rhinopharma shall pay Vernalis [***]% ([***] per cent.) of all [***] consideration (excluding royalties which are payable separately under clauses 5.2 and 5.3) paid to Rhinopharma by its Sub-licensees for licences to or transfers of any Programme Patents and sub-licences to any Programme Know-How.

 

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

 

6

 

5.5                              Within [***] ([***]) days after the first day of [***] of each year following the First Commercial Sale of any Licensed Product, Rhinophaima shall submit, or cause to be submitted, to Vernalis a statement in writing recording the calculation of the royalties payable under this agreement with respect to the preceding calendar quarter and in particular:

 

(a)                                [***];

 

(b)                                [***];

 

(c)                                 [***]; and

 

(d)                                [***].

 

5.6                              At the same time as submission of each statement in accordance with clause 5.5, Rhinopharma shall make payments to Vernalis in the amounts due for the calendar quarter covered by that statement.

 

5.7                              Royalties payable under this agreement are [***].

 

5.8                              Rhinopharma shall pay any royalties due to Vernalis gross without deduction of any withholding or other income taxes or if by law any royalties due to Vernalis are subject to withholding or other income taxes, Rhinopharma shall ensure that a sum is paid to Vernalis as shall, after deduction of any withholding or other income tax, be equivalent to the royalties otherwise payable under this agreement.  Royalties payable under this agreement shall be calculated in [***] by wire transfer to any account that Vernalis may notify to Rhinopharma in writing from time to time.

 

5.9                              For the purpose of converting any royalty payments that are due to Vernalis [***] on the date when the relevant payment first becomes due.

 

5.10                       Without prejudice to its other rights and remedies, Vernalis may charge, and Rhinopharma shall pay, interest, accruing daily from the due date to the date of actual payment on any amounts under this agreement at the rate of [***] per cent. per [***] above the base rate of [***] for the time being in force.

 

5.11                       Rhinopharma and Rhinopharma’s Affiliates shall keep records and books of account showing the quality, description and price of Licensed Products sold or put into use and those records and books shall be kept separate from any records and books not relating solely to the Licensed Products and be open at all reasonable times and on reasonable prior written notice to inspection and audit by Vernalis, or its duly authorised agent or representative, who shall be entitled to take copies of, or extracts from, the records and books and in the event that an inspection or audit should reveal a discrepancy in the royalties paid from those payable under this agreement, Rhinopharma shall make up the shortfall plus interest calculated in accordance with clause 5.11 within [***] ([***]) days after receipt of invoice for that amount from Vernalis.  Where an audit reveals an overpayment in royalties payable under this agreement, Rhinopharma shall deduct the amount of that overpayment from the next payment of royalties due under this agreement.

 

6.                                     RHINOPHARMA’S UNDERTAKINGS

 

6.1                              Rhinopharma undertakes to Vernalis that throughout the term of this agreement, Rhinopharma shall and shall procure that Rhinopharma’s Affiliates shall:

 

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

 

7

 

(a)                                use Commercially Reasonable and Diligent Efforts to progress the Development of Licensed Products with the objective of Commercialising Licensed Products as soon as is reasonably practical;

 

(b)                                obtain as soon as reasonably practicable all Regulatory Approvals for Licensed Products that are necessary, or may become necessary, to Develop, Manufacture or Commercialise (or any of those activities) Licensed Products within the Territory; and

 

(c)                                 mark all Licensed Products with the relevant patent numbers together with a statement that the Licensed Products are manufactured and/or sold under licence.

 

6.2                              Within [***] ([***]) days of the date of this agreement, Rhinopharma shall provide Vernalis with a written development plan describing Rhinopharma’s proposed worldwide Development efforts [***].  Rhinopharma shall update such development plan on an annual basis, with each such update being due from Rhinopharma to Vernalis within [***] ([***]) days of the relevant anniversary of this agreement.  At the same time as providing Vernalis with each update of the development plan, Rhinopharma shall provide Vernalis with a written progress report summarising Rhinopharma’s progress as against the previous year’s development plan.  The parties acknowledge that all plans and reports prepared in accordance with this clause 6.2 are provided to Vernalis for information purposes only.

 

6.3                              Rhinopharma acknowledges that it has received copies of the agreements listed in Schedule 4 (‘Schedule 4 Agreements’) evidencing the transfer and assignment of rights to certain know how which is incorporated as part of the Programme IP and Rhinopharma undertakes:

 

(a)                                to ensure that the exercise of its rights under this Agreement will not result in the breach by Vernalis of its obligations under the Schedule 4 agreements; and

 

(b)                                to make any additional payments to enable Vernalis to meet its payment obligations under the Schedule 4 agreements if and to the extent that Rhinopharma payment obligations under this Agreement are insufficient for Vernalis to meet its payment obligations under the Schedule 4 Agreements.

 

7.                                     REPRESENTATIONS AND WARRANTIES

 

7.1                              Vernalis represents and warrants to Rhinopharma that as of the date of this Agreement

 

(a)                                all steps necessary for the prosecution and maintenance of the Programme Patents have been taken;

 

(b)                                Vernalis has maintained and shall maintain the confidentiality of the Programme Know-How;

 

(c)                                 Vernalis is the sole legal and beneficial owner of the Programme Patents, free and clear of all liens, claims, charges and encumbrances of whatsoever nature and kind;

 

(d)                                Vernalis is a company duly incorporated, validly existing and in good standing under the laws of England and has the power and capacity to own and carry out its business as it presently exists;

 

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

 

8

 

7.2                              Rhinopharma represents and warrants to Vernalis that as of the date of this Agreement Rhinopharma is a company duly incorporated, validly existing and in good standing under the laws of British Columbia and has the power and capacity to run and carry out its business as it presently exists.

 

7.3                              Vernalis and Rhinopharma both represent and warrant to the other party that as of the date of this Agreement:

 

(a)                                the execution and delivery of this agreement and the completion of the transactions contemplated hereby has been duly authorised by all necessary corporate action and so far as it is aware (not having made enquiry) this agreement constitutes a legal, valid and binding obligation of such party enforceable against it in accordance with its terms subject to all limitations of bankruptcy, liquidation, general principles of equity (including moratorium and enforcement of creditors’ rights generally) and public policy constraints;

 

(b)                                neither the execution and delivery of this agreement nor the completion of the transactions contemplated herein will:

 

(i)                                    violate any of the terms and provisions of the corporate charter or bylaws of such party or any judgment, order, decree, statute, byelaw, regulation, covenant, restriction, license, lease, permit, approval, consent or authorisation applicable to such party;

 

(ii)                                 constitute or result in a breach or default under any instrument, agreement or other commitment of such party; and

 

(c)                                 there is no requirement under any instrument, agreement or other commitment of such party to give any notice to or obtain the consent or approval of any other party to the same relating to the consummation of the transactions contemplated by this agreement.

 

7.4                              Save as expressly provided in this agreement, no representation, warranty or condition, express or implied, statutory or otherwise is given by Vernalis to Rhinopharma in respect of the Programme Patents or Programme Know-How and any and all representations, warranties and conditions are excluded save to the extent prohibited by law.  For the avoidance of doubt, nothing in this agreement shall constitute any representation, warranty or condition that any Programme Patent (if a patent application) shall proceed to grant or if granted shall be valid, or that Rhinopharma’s use of any Programme IP in accordance with this agreement will not infringe any rights of any Third Party.

 

8.                                     THIRD PARTY INFRINGEMENT OF PROGRAMME IP

 

8.1                              Vernalis shall deliver a notice, in writing, to Rhinopharma during the term of this agreement if Vernalis becomes aware of any infringement, or suspected infringement, of any of the Programme IP by any Third Party (Infringement).

 

8.2                              Within [***] ([***]) days after delivery of the notice under clause 8.1, Rhinopharma shall decide whether to take steps to protect or enforce its rights in the Programme IP and Rhinopharma shall notify Vernalis of Rhinopharma’s decision in writing.

 

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

 

9

 

8.3                              If Rhinopharma notifies Vernalis of Rhinopharma’s decision to take steps to protect or enforce its rights in the Programme IP, Rhinopharma shall have the sole right to institute infringement proceedings against the Third Party provided Rhinopharma commences infringement proceeding within [***] ([***]) days after the notice delivery under clause 8.1.

 

8.4                              If Rhinopharma commences infringement proceedings within [***] ([***]) days after delivery of the notice under clause 8.1, Rhinopharma shall give Vernalis an opportunity to make suggestions and comments regarding any proceedings.  Rhinopharma shall keep Vernalis informed of, and shall from time to time consult with Vernalis regarding, the status of any proceedings and shall provide Vernalis with copies of all documents filed in, and all material written communications relating to, any proceedings.  Rhinopharma shall appoint counsel for the infringement proceedings.  Rhinopharma shall pay all expenses of the infringement proceedings, including, without limitation, legal fees and related costs.  Rhinopharma shall be entitled to retain for its own account any damages, settlement fees or other amounts for past infringement received as a result of the infringement proceedings.  If necessary, Vernalis shall join as a party to the infringement proceedings but shall be under no obligation to participate except to the extent that Vernalis’s participation is required as a result of being a named party to the proceedings.  Rhinopharma shall not settle any infringement proceedings involving Vernalis’s rights without obtaining Vernalis’s prior written consent which shall not be unreasonably withheld or delayed.

 

8.5                              If Rhinopharma fails:

 

(a)                                to notify Vernalis within [***] ([***]) days after the delivery of the notice under clause 8.1 then Rhinopharma shall be deemed for the purpose of this agreement to have taken a decision not to take steps to protect or enforce its rights in the Programme IP; or

 

(b)                                to institute infringement proceedings against the Third Party within [***] ([***]) days after the delivery of the notice under clause 8.1 and having given Vernalis notice of Rhinopharma’s intention to commence infringement proceeding under clause 8.3,

 

then Vernalis shall have the right, at Vernalis’s expense, to commence infringement proceedings.  Vernalis shall have the sole right to appoint counsel (reasonably acceptable to Rhinopharma) and Rhinopharma shall reimburse Vernalis in respect of all expenses reasonably incurred by Vernalis in conducting the proceedings including, without limitation, legal fees and related costs.  If necessary, Rhinopharma shall join as a party to the infringement proceedings and shall participate only to the extent that participation is required as a result of Rhinopharma being a named party to the infringement proceedings or being the owner of the relevant Programme Patent.  At Vernalis’s request, Rhinopharma shall offer reasonable assistance to Vernalis in connection with the infringement proceedings.  Rhinopharma shall have the right to be represented in any infringement proceedings by Rhinopharma’s own counsel.

 

8.6                              For the avoidance of doubt, nothing in this clause shall relieve Rhinopharma of its ongoing payment obligations under clause 5 of this agreement.

 

9.                                     MAINTENANCE OF PATENTS

 

9.1                              Subject to clause 9.2, Rhinopharma shall pay all fees and charges and do all acts and things necessary for the management and maintenance of all Programme Patents, including without limitation doing all acts and things necessary (i) to avoid minimising or reducing the scope of the Programme Patents, or (ii) to prosecute any of the Programme Patents that are applications.

 

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

 

10

 

9.2                              Rhinopharma shall not abandon any of the Programme Patents or allow any of the Programme Patents to lapse save with the prior written consent of Vernalis which shall not be unreasonably withheld or delayed.  Rhinopharma must provide at least [***] days written notice of any intention to abandon obligations in clause 9.1.  Where Rhinopharma does notify Vernalis of its intention to abandon any of the Programme Patents or allow any of the Programme Patents to lapse, Vernalis shall be entitled by written notice to Rhinopharma to either:

 

(a)                                by written notice to Rhinopharma, assume the maintenance and management of such Programme Patents; or

 

(b)                                terminate this agreement in its entirety by providing [***] ([***]) days written notice to Rhinopharma.

 

If Vernalis provides notice of termination to Rhinopharma under sub-para(b) of this clause 9.2, Rhinopharma may by written notice to Vernalis prior to the expiry of the notice period in sub-para(b) revoke its intention to abandon obligations in clause 9.1 and, in such event, Vernalis notice of termination shall cease to be effective.

 

10.                              TERM AND TERMINATION

 

10.1                       This agreement shall come into effect on the execution of this agreement and, subject to clauses 10.2 and 10.4, shall continue in force until terminated by either party in accordance with clauses 10.2, 10.3 or 10.4.

 

10.2                       Rhinopharma may, at any time, terminate this agreement in its entirety by providing ninety (90) days written notice to Vernalis.

 

10.3                       Vernalis may terminate this agreement in accordance with clause 9.2(b).

 

10.4                       Each party shall have the right, without prejudice to its other rights or remedies, to terminate this agreement immediately by written notice to the other:

 

(a)                                if the other party is in material or persistent breach of any of its obligations under this agreement and, in the case of any material breach, either that breach is incapable of remedy or the other party shall have failed to remedy that breach within thirty (30) days after receiving written notice requiring it to remedy that breach;

 

(b)                                if the other party being a company is unable to pay its debts or becomes insolvent or an order or an application is made or a resolution passed for the administration, winding-up or dissolution of the other party (otherwise than for the purposes of a solvent amalgamation or reconstruction) or an administrative or other receiver, manager, liquidator, administrator, trustee or similar officer is appointed over all or any of the assets of the other party or an application or a filing for a moratorium is made in respect of the other party under Schedule A1 Insolvency Act 1986 or the other party enters into or proposes any composition or arrangement with its creditors generally or anything analogous to the foregoing occurs in any applicable jurisdiction; or

 

(c)                                 if the other party being an individual is unable to pay his or her debts as they fall due or becomes insolvent or an order or an application is made for his or her bankruptcy or an application for an interim order is made in respect of the other party or the other party

 

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

 

11

 

enters into or proposes any composition or arrangement with his or her creditors or if the other party dies or anything analogous to the foregoing occurs in any applicable jurisdiction.

 

10.5                       If any of Rhinopharma’s Affiliates ceases to be an Affiliate of Rhinopharma then that Affiliate’s rights under this agreement shall automatically terminate.

 

10.6                       Any termination of this agreement shall not affect any accrued rights or liabilities of either party, nor shall it affect the coming into force or the continuance in force of any provision of this agreement which is expressly or by implication intended to come into force or continue in force on or after termination.

 

11.                              EFFECT OF TERMINATION

 

11.1                       Upon termination of this agreement and subject to clause 11.2, Rhinopharma shall, and shall procure that Rhinopharma’s Affiliates shall:

 

(a)                                pay all outstanding amounts that are due to Vernalis;

 

(b)                                cease any activity utilising any of the Programme IP;

 

(c)                                 assign free of charge to Vernalis such rights, title and interest as it holds in the Programme Patents [[***]] (such assignment to be on terms the same as those set out in clause 2 of this agreement);

 

(d)                                do all acts and things necessary to enable Vernalis to resume the management and maintenance of the Programme Patents;

 

(e)                                 transfer all Regulatory Approvals and related regulatory filings and any other Development or Manufacturing documentation to Vernalis;

 

(f)                                  return, or at Vernalis’s option destroy, any Programme Know-How that is in a tangible or electronic form; and

 

(g)                                 co-operate with Vernalis in cancelling any registered user agreements that Vernalis and Rhinopharma and Rhinopharma’s Affiliates may have executed.

 

11.2                       Rhinopharma and Rhinopharma’s Affiliates and Sub-licensees shall have the right to dispose of any stocks of Licensed Products for a period of one hundred and eighty (180) days from the date of termination that may be in its possession or in the process of being manufactured provided that Rhinopharma pays to Vernalis a royalty in respect of those Licensed Products in accordance with clause 5.

 

12.                              CONFIDENTIALITY AND ANNOUNCEMENTS

 

12.1                       The Recipient undertakes to the Disclosing Party to treat as confidential all Confidential Information of the Disclosing Party.

 

12.2                       The Recipient may only use the Confidential Information of the Disclosing Party for the purposes of, and in accordance with, this agreement.  The Recipient may, with Disclosing Party’s prior written consent (not to be unreasonably withheld or delayed), provide its Permitted Users with

 

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

 

12

 

access to the Confidential Information on a strict “need-to-know” basis only.  The Recipient shall ensure that each of its Permitted Users is bound to hold all Confidential Information in confidence to the standard required under this agreement.  Where a Permitted User is not an employee, officer or director of the Recipient (and is not under a professional duty to protect confidentiality) the Recipient shall ensure that the Permitted User shall enter into a written confidentiality undertaking with the Recipient on substantially equivalent terms to this agreement, a copy of which shall be provided to the Disclosing Party upon request.

 

12.3                       This clause 12 shall not apply to any information which:

 

(a)                                is in or subsequently enters the public domain other than as a result of a breach of this clause 12;

 

(b)                                has been or is subsequently received from a Third Party which is under no confidentiality obligation in respect of that information; or

 

(c)                                 has been or is subsequently independently developed by the Recipient or, one of Recipient’s Affiliates without use of the Disclosing Party’s Confidential Information.

 

12.4                       Each Permitted User may disclose Confidential Information where that Permitted User (or where the Permitted User is an individual, his or her employer or any Affiliate of his or her employer) is required to do so by law or by any competent regulatory authority.  In these circumstances the Recipient shall give the Disclosing Party prompt written notice of the disclosure (where lawful and practical to do so) so that the Disclosing Party has sufficient opportunity (where possible) to prevent or control the manner of disclosure by appropriate legal means.

 

12.5                       Neither party shall:

 

(a)                                make or authorise any public or private announcement or communication concerning this agreement its terms or the fact that the parties have entered into this agreement;

 

(b)                                refer to or use any business name or trade mark of the other party in any promotional communications,

 

without the prior written consent of the other party, which shall not be unreasonably withheld or delayed.  Without otherwise limiting the generality of clause 12.5(a), Vernalis agrees that its prior written consent will not be required for Rhinopharma to disclose that it has entered into an agreement with Vernalis relating to phosphodiesterase inhibitors at broker-arranged meetings between Rhinopharma and potential investors, where Rhinopharma does not know in advance of the meeting the identity of the potential investors and provided that Rhinopharma gives written notice to Vernalis, within seven days of such meetings, of the identity of the potential investors to whom such disclosure has been made.  For the avoidance of doubt, nothing in this clause 12.5 shall permit Rhinopharma to disclose, nor shall Vernalis be obliged to provide its consent to disclosure of, the terms of this agreement or Confidential Information to potential investors.

 

12.6                       This clause 12 shall remain in full force and effect notwithstanding any termination of this agreement.

 

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

 

13

 

13.                              FORCE MAJEURE

 

13.1                       Neither party will be liable to the other party for any delay or non-performance of its obligations under this agreement arising directly from any of the following cause or causes to the extent they were beyond its reasonable and unable to be reasonably planned for or avoided including, without limitation, any of the following:  act of God, governmental act, war, fire, flood, explosion, or civil commotion.  provided that the affected party:

 

(a)                                promptly notifies the other party in writing of the cause of the delay or non-performance and the likely duration of the delay or non-performance; and

 

(b)                                uses all reasonable endeavours to limit the effect of that delay or non-performance on the other party.

 

13.2                       In any such case the performance of the affected party’s obligations, to the extent affected by the cause, will be suspended during the period that the cause persists.  If performance is not resumed within 6 months after the notice provided under clause 13.1 the other party may terminate this agreement immediately by written notice to the affected party.

 

14.                              NOTICES

 

14.1                       Any notice or other document to be served under this agreement may be delivered or sent by post or facsimile process to the party to be served at its address set out below:

 

	
(a)                              to   Vernalis at:
    	
 
    	
 
    	
(b)                                 to Rhinopharma at:
    
	
 
    	
 
    	
 
    	
 
    
	
Oakdene Court, 613   Reading Road
   Winnersh, Berks, RG41 5UA, UK
    	
 
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    	
 
    
	
Fax: +44 118 989 9367
    	
 
    	
 
    	
Fax: (604) 222 3602
    
	
 
    	
 
    	
 
    	
 
    
	
Marked for attention of   Company Secretary
    	
 
    	
 
    	
Marked for attention of   Chairman
   and to be copied to:
   [***]
    

 

or at any other address or facsimile number or to any other addressee as it may have notified to the other party in accordance with this clause 14.  Any notice or other document sent by post shall be sent by prepaid first class recorded delivery post (if both parties’ addresses for service are within the United Kingdom) or by prepaid airmail (if elsewhere).

 

14.2                       In proving service of a notice or document it shall be sufficient to prove that delivery by post was made and recorded or that the facsimile message was properly addressed and despatched, as the case may be.

 

15.                              ASSIGNMENT

 

Neither this agreement nor any of the rights or obligations hereunder may be assigned transferred or otherwise disposed of by either party without the prior written consent of the other party, such consent not to be unreasonably withheld or delayed, except to a party that acquires, by merger, sale of assets or otherwise, all or substantially all of the business of the assigning party to which the subject matter of this agreement relates.  Any purported assignment or transfer in violation of

 

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

 

14

 

the preceding sentence shall be void.  Any permitted assignee or transferee shall assume all obligations of its assignor under this agreement.  No assignment or transfer shall relieve either party of responsibility for the performance of any accrued obligation that such party then has hereunder.

 

16.                              GENERAL

 

16.1                       No partnership or agency

 

Nothing in this agreement shall be deemed to constitute a partnership between the parties, nor constitute either party the agent of the other party or, in the case of Rhinopharma, any of its Affiliates, for any purpose.

 

16.2                       Counterparts and Delivery

 

This agreement may be executed in any number of counterparts and delivered by fax.  This has the same effect as if the signatures on the counterparts were on a single copy of this agreement.

 

16.3                       Waiver

 

The rights of each party including, in the case of Rhinopharma, of any of its Affiliates, under this agreement:

 

(a)                                may be exercised as often as necessary;

 

(b)                                are cumulative and not exclusive of rights or remedies provided by law; and

 

(c)                                 may be waived only in writing and specifically.

 

Delay in exercising or non-exercise of any such right is not a waiver of that right.

 

16.4                       Amendments

 

Any amendment of this agreement shall not be binding on the parties unless set out in writing, expressed to amend this agreement and signed by authorised representatives of each of the parties.

 

16.5                       Severability

 

If any term of this agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect:

 

(a)                                the legality, validity or enforceability in that jurisdiction of any other term of this agreement; or

 

(b)                                the legality, validity or enforceability in other jurisdictions of that or any other provision of this agreement.

 

16.6                       Further assurance

 

Each party undertakes, at the request, cost and expense of the other party, to sign all documents and to do all other acts, which may be necessary to give full effect to this agreement, including in

 

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

 

15

 

the case of any assignment of the Programme Patents (whether pursuant to clause 2 or clause 9.2), to enable the relevant assignee to fulfil all relevant national registry requirements for the recordal of the assignment of the Programme Patents.

 

16.7                       Costs

 

Each party shall pay the costs and expenses incurred by it in connection with the entering into of this agreement.

 

16.8                       Language

 

(a)                                Any notice given in connection with this agreement must be in English.

 

(b)                                Any other document provided in connection with this agreement must be:

 

(i)                                    in English; and

 

(ii)                                 (unless otherwise agreed) accompanied by a certified English translation.  In this case, the English translation prevails unless the document is a statutory or other official document.

 

16.9                       Third Party Rights

 

A person who is not a party to this agreement may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999.

 

16.10                Whole agreement

 

(a)                                This agreement and the documents referred to in it contain the whole agreement between the parties relating to the transactions contemplated by this agreement and supersede all previous agreements (including but not limited to the Confidential Disclosure Agreement dated 25th November 2004) between the parties relating to the transactions.

 

(b)                                Subject to clause 16.10(c), each party acknowledges that in entering into this agreement it has not relied on any representation, warranty, collateral contract or other assurance (except those set out in this agreement and the documents referred to in it) made by or on behalf of any other party before the date of this agreement.  Each party waives all rights and remedies which, but for this clause 16.10, might otherwise be available to it in respect of any such representation, warranty, collateral contract or other assurance.

 

(c)                                 Nothing in clause 16.10(b) limits or excludes any liability for fraud.

 

17.                              DISPUTES

 

17.1                       Any dispute arising out of or in connection with this agreement (Dispute), shall be referred by either party first to the Chief Executive Officer of each of the parties for resolution.  If the Dispute cannot be resolved by the Chief Executive Officer of the parties within fourteen (14) days after the Dispute has arisen, either party may give notice to the other party in writing (Notice) that a Dispute has arisen.  Within seven days after the date of the Notice, the Dispute shall be referred to a senior executive of each of Rhinopharma and Vernalis for resolution.  If the Dispute is not resolved by agreement in writing between the parties within [***] ([***]) days after the date of

 

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

 

16

 

the Notice, the Dispute shall be resolved in accordance with the remaining provisions of this clause 17.

 

17.2                       A Dispute may at either party’s request be referred to non-binding mediation (save for any Dispute relating to intellectual property).  Any reference to mediation shall be made in accordance with the procedures of the Centre for Alternative Dispute Resolution in London.  The mediation shall be conducted by a single mediator appointed by the parties or, if the parties are unable to agree on the identity of the mediator within [***] ([***]) days after the date of the request that the Dispute be resolved by mediation, or if the person appointed is unable or unwilling to act, the mediator shall be appointed by the Centre for Alternative Dispute Resolution on the application of either party.  The mediation shall be conducted in London in English.  Mediation is without prejudice to the rights of the parties in any future proceedings.

 

18.                              JURISDICTION

 

18.1                       The parties agree that the courts of England shall have exclusive jurisdiction with respect to any disputes arising under this agreement and the parties accordingly submit to the exclusive jurisdiction of the English courts.

 

19.                              GOVERNING LAW

 

This agreement is governed by and interpreted in accordance with English law, provided that any disputes regarding the recordal or validity of a Programme Patent shall be subject to the jurisdiction of registration of the relevant Programme Patent.

 

THIS AGREEMENT has been signed on behalf of the parties by their duly authorised representatives on the date which appears first on page 1.

 

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

 

17

 

SCHEDULE 1

 

PROGRAMME PATENTS

 

	
Vernalis Ref. No:
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Subject Matter:
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Inventors:
    	
 
    	
[***]
   [***]
    
	
 
    	
 
    	
 
    
	
Priority Application Date:
    	
 
    	
[***]
    
	
Earliest Publication Date/No:
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Applicant:
    	
 
    	
[***]
    
	
Patentee:
    	
 
    	
[***]
    

 

	
Territory
    	
 
    	
Application
   Date
    	
 
    	
Application No.
    	
 
    	
Patent
   No.
    	
 
    	
Expiry
   Date
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
[***]
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

* Includes [***].

 

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

 

18

 

SCHEDULE 2

 

KNOW HOW

 

[***]

 

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

 

19

 

[***]

 

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

 

20

 

[***]

 

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

 

21

 

[***]

 

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

 

22

 

[***]

 

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

 

23

 

[***]

 

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

 

24

 

[***]

 

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

 

25

 

[***]

 

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

 

26

 

SCHEDULE 3

 

NET SALES VALUE DEFINITION

 

Net Sales Value means with respect to any Licensed Product, all revenues (recognised in accordance with [***] generally accepted accounting principles) from sales of a Licensed Product by Rhinopharma, its Affiliates, agents and Sub-licensees, to Third Parties, less the total of the following:

 

(a)                                normal or customary trade, cash, prompt payment and/or quantity discounts actually allowed and taken;

 

(b)                                returns, allowances, free goods, rebates, chargebacks, other allowances or payments to government agencies actually allowed and taken;

 

(c)                                 retroactive price reductions applicable to sales of such product actually allowed and taken;

 

(d)                                fees paid to distributors, selling agents (excluding any sales representatives of a party or any of its Affiliates), group purchasing organisations and managed care entities;

 

(e)                                 credits or allowances (actively paid or allowed) for wastage replacement, whether cash or trade;

 

(f)                                  non-recoverable sales taxes, excise taxes, tariffs and duties (excluding taxes when assessed on income derived from sales); and

 

(g)                                 three and one half per cent (3.5%) of the amount invoiced to cover, freight or other transportation charges, insurance charges, additional special packaging, and other governmental charges directly related to the selling of Licensed Products.

 

(h)                                actual bad debt incurred.

 

In the case of any sale of a Licensed Product between or among Rhinopharma and its Affiliates, agents or Sub-licensees for resale, Net Sales Value shall be calculated as above only on the first arm’s length sale by Rhinopharma or its Affiliate, agent or Sub-licensee to a Third Party.

 

Upon any sale or other disposal of any Licensed Product for any consideration other than an exclusively monetary consideration on bona fide arm’s length terms then for the purposes of calculating the Net Sales Value under this agreement, such Licensed Product shall be deemed to be sold exclusively for money at the average sales price during the applicable reporting period generally achieved for such Licensed Product in the country in which such sale or other disposal occurred when such Licensed Product is sold alone and not with other products.

 

Where a Licensed Product is sold together with other pharmaceutical products for a single price (whether sold together in the same package, or merely price bundled), then for the purposes of calculating the Net Sales Value under this agreement such Licensed Product shall be deemed sold for an amount equal to the following:

 

(X divided by Y) multiplied by Z

 

where X is the average sales price during the applicable reporting period generally achieved for such Licensed Product in the country in which such sale or other disposal occurred when such Licensed Product is sold alone and not with other pharmaceutical products; Y is the sum of the average sales price

 

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

 

27

 

during the applicable reporting period generally achieved in that country when sold alone by each product (including the Licensed Product) included in the bundle of pharmaceutical products that is sold for the single price; and Z equals the single price at which the bundle of pharmaceutical products represented in Y was actually sold.  In the event that one or more of the products in the bundled product are not sold separately, the parties shall confer in good faith to determine a fair market price that shall equitably compensate the Net Sales Value for the value of the Licensed Product(s) within the bundled product.

 

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

 

28

 

SCHEDULE 4

 

KNOW HOW AGREEMENTS

 

Copies of the following agreements (evidencing know how transferred and assigned to Vernalis and incorporated as part of Programme IP) provided to Rhinopharma prior to the date of this Agreement.

 

[***]

 

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

 

29

 

SIGNATORIES

 

	
Signed   by: 
    	
/s/   Simon Sturge
    	
 
    
	
 
    	
 
    
	
Title:   CEO
    	
 
    
	
 
    	
 
    
	
Date:   11-Feb-05
    	
 
    
	
 
    	
 
    
	
For   VERNALIS DEVELOPMENT LIMITED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/Michael   J.A. Walker
    	
 
    
	
 
    	
 
    
	
Signed   by: Michael J. A. Walker
    	
 
    
	
 
    	
 
    
	
Title:   Chairman
    	
 
    
	
 
    	
 
    
	
Date:   February 16, 2005
    	
 
    
	
 
    	
 
    
	
For   RHINOPHARMA LTD.
    	
 
    

 

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

 

30

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00269-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00269-of-00352.parquet"}]]