Document:

Exhibit 10.10

 

***Text Omitted and Filed Separately with

the Securities and Exchange Commission.

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 230.406.

 

LICENSE AGREEMENT

 

Case Western Reserve University — Tracon Pharmaceuticals Inc.

 

This Agreement (hereinafter “this Agreement”) entered into as of this 2nd day of August, 2006 (“Effective Date”) by and between Case Western Reserve University, an Ohio non-profit corporation, having a principal place of business at 10900 Euclid Avenue, Cleveland, Ohio 44106 (“CASE”) and Tracon Pharmaceuticals, Inc., a Delaware for-profit corporation, having a principal place of business at 4510 Executive Drive, Suite 330, San Diego, California 92121 (“Licensee”).

 

WITNESSETH

 

WHEREAS, CASE owns certain rights in certain technology relating to the technology described in the patents and patent application itemized in Attachment A on an “as is” basis on the Effective Date and is interested in licensing same;

 

WHEREAS, Licensee desires to acquire rights in and to the technology upon the terms and conditions herein set forth;

 

NOW THEREFORE, in consideration of the mutual covenants contained herein and intending to be legally bound hereby, the parties agree as follows:

 

1.                                    DEFINITIONS

 

1.1       The term “Acceptance for Review” shall mean the acceptance for review of the NDA (or Foreign Equivalent) representing the FDA’s (or Foreign Equivalent’s) determination that the application is sufficiently complete to permit a substantive review.

 

1.2       The term “Affiliate” shall mean any corporation or other legal entity “controlled,” “controlling,” or “under common control with,” another corporation or legal entity, where “control” means ownership, directly or indirectly, of greater than fifty percent (50%) or more of the voting capital shares or similar voting securities of the other entity that has signed an agreement with Licensee in the form of Attachment B and such entity shall be bound as a Licensee and have all of the rights and obligations of Licensee provided by this License Agreement after the date it (they) deliver to CASE a copy of Exhibit B attached hereto executed by a duly authorized representative.

 

1.3       The term “Biological Materials” shall mean any biological materials created through use of any Licensed Technology or supplied by CASE together with any Progeny or Unmodified Derivatives thereof created by Licensee. CASE may supply Biological Materials to Licensee pursuant to a separate materials transfer agreement to be negotiated in good faith by the parties that, among other terms, will incorporate the license terms of this Agreement by reference.

 

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1.4       The term “Clinical Trial” shall mean the use of a Licensed Product(s) in Subjects in accordance with 21 C.F.R. §312.

 

1.5       The term “Combination Therapeutic” shall mean a first formulation comprising methoxyamine (or a methoxyamine derivative) and an additional formulation(s) (to be administered in conjunction with the first formulation, albeit not necessarily simultaneously) falling within the definition of Licensed Technology, comprising one or more therapeutic compounds distinct from methoxyamine (or a methoxyamine derivative) administered to a Subject

 

1.6       The term “Completion of the Phase II” shall mean the date on which the Food & Drug Administration and the Licensee agree that sufficient data and information have been submitted to the FDA to permit the initiation of a Phase III Clinical Trial of a Licensed Product(s) without requiring the conduct of further Clinical Trials or the submission of additional data or information as evidenced by the date on which the FDA and the Licensee complete an End-of-Phase 2 Meeting as defined by 21 CFR 312.47(b).

 

1.7       The term “Completion of the Phase III” shall mean the date on which the Food & Drug Administration and the Licensee agree that sufficient data and information have been submitted to the FDA to permit the initiation of an NDA of a Licensed Product(s) without requiring the conduct of further Clinical Trials or the submission of additional data or information as evidenced by the occurrence of an Acceptance for Review.

 

1.8       The term “Copyrights” shall mean CASE’s copyrights in the Licensed Technology.

 

1.9       The term “Derivative” shall mean intellectual property developed by Licensee, which includes, or is based in whole or in part on, the Licensed Technology, including, but not limited to computer software, translations of the Licensed Technology to other foreign languages, adaptation of the Licensed Technology to hardware platforms, abridgments, condensations, revisions, and software incorporating all or any part of the Licensed Technology which may also include Licensee-created modifications, enhancements or other software. Licensee shall be entitled to establish all proprietary rights for itself in the intellectual property represented by Derivatives, whether in the nature of trade secrets, copyrights, patents or other rights, provided (a) that Derivatives shall be [...***...], (b) Derivatives may not [...***...], unless the License granted under 2.1 of this Agreement is then in effect, and (c) Licensee shall promptly notify CASE of Licensee-originated bug fixes to the Licensed Technology, which shall be part of the Licensed Product and owned by CASE. Any copyright registration by Licensee for Derivatives shall give full attribution to CASE’s Copyrights. CASE, and any non-profit health care institution affiliated with it, shall have the right to use Derivatives for research, educational, academic and administrative purposes.

 

***Confidential Treatment Requested

 

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1.10     The term “Dispose” or “Disposition” shall mean the sale, lease or other transfer of Licensed Product(s).

 

1.11     The term “Dollar,” “U.S. Dollar,” and “U.S. $” shall mean lawful money of the United States of America.

 

1.12     The term “EMEA” shall mean the European Agency for the Evaluation of Medicinal Products.

 

1.13     The term “FDA” shall mean the United States Food & Drug Administration.

 

1.14     The term “Field of Use” shall mean all mammalian therapeutic uses.

 

1.15     The term “First Dosing” shall mean the first date a Licensed Product is administered or dispensed to, or used involving, one or more human Subjects.

 

1.16     The term “Fiscal Quarter” or “Quarter” shall refer to the normal quarterly accounting periods of Licensee; if Licensee does not have normal quarterly accounting periods, then “Fiscal Quarters” shall mean the calendar three months periods commencing with January of each year.

 

1.17     The term “Foreign Equivalent” shall mean the performance or occurrence of activities in non-U.S. jurisdictions similar to the performance or occurrence of activities in the United States covered by the terms “Clinical Trial,” “Phase II Clinical Trial,” “Completion of a Phase II Clinical Trial,” “Phase III Clinical Trial,” “Completion of a Phase HI Clinical Trial,” “IND,” “NDA,” “Submit an NDA” “NDA Approval,” and “Regulatory Approval,” as each such term is defined in this Article.

 

1.18     The term “IND” shall mean an Investigational New Drug application submitted under 21 C.F.R. §312.

 

1.19     The term “Investigational New Drug” shall mean a new drug or biological drug that is used in a Clinical Trial.

 

1.20     The term “Launch” shall mean the same as Product Launch.

 

1.21     The term “Licensed Product” or “Product” shall mean any product, service and/or process which constitutes, is based on, incorporates or utilizes, wholly or in part, Licensed Technology and/or any and all Biological Materials.

 

1.22     The term “Licensed Technology” or “Technology” shall mean (i) the technology described in the patents and patent application itemized in Attachment A on an “as is” basis on the Effective Date; (ii) the trade secrets, know-how, design architecture and the software and algorithm related to the technology described in the Patents, including related code and related Copyrights, on an “as is” basis on the Effective Date; (iii) any claims issuing on Patents covering the foregoing parts (i) or (ii), and (iv) Derivatives. If Biological Materials which contain

 

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Licensed Technology are provided to Licensee, they shall be considered (to the extent of such Licensed Technology) Licensed Technology.

 

1.23     The term “MHLW” shall mean the Japanese Ministry of Health, Labour and Welfare.

 

1.24     The term “NDA” shall mean a New Drug Application submitted under 21 C.F.R. §314.

 

1.25     The term “NDA Approval” shall mean the grant by the FDA under 21 C.F.R. §314 of the right to market commercially and distribute a Licensed Product(s) within the Field of Use.

 

1.26     The term “Net Sales” shall mean the total Revenues received by Licensee, its Affiliates, sublicensees or sub-sublicensees from the manufacture use or Disposition of Licensed Product(s), less the total of all:

a.         discounts allowed in amounts customary in the trade;

b.         sales tariffs, duties and/or taxes imposed on the Licensed Product(s);

c.         outbound transportation prepaid or allowed;

d.         shipping packaging and freight charges; and

e.         amounts allowed or credited on returns.

 

No deduction shall be made for commissions paid to individuals (whether independent sales agents or persons regularly employed by Licensee).

 

Notwithstanding anything herein to the contrary, the Disposition of a Licensed Product to a Third Party without consideration to Licensee in connection with the research, development or testing of a Licensed Product shall not be considered a Disposition of a Licensed Product under this Agreement. Nor shall the Disposition of a Licensed Product solely for indigent or similar public support programs be considered a Disposition of Licensed Product under this Agreement.

 

Notwithstanding anything herein to the contrary, the Disposition of a Licensed Product between the Licensee, its Affiliate, its sublicensee or its sub-sublicensee shall not be considered a sale of Licensed Product under this Agreement unless (i) such party is the end user of such Licensed Product or (ii) such Disposition is accompanied by an exchange of funds.

 

1.27     The term “Non Royalty Sublicensing Income” or “NRSI” shall mean all non royalty considerations received by Licensee related to a sublicense or sub-sublicense agreement. NRSI would include but not be limited to all sublicense or sub-sublicense issue fees, maintenance fees and non-sales related sublicense and sub-sublicense milestone payments received by Licensee directly related to the sublicensing or sub-sublicensing by Licensee of rights to commercialize Licensed Product(s), but shall exclude:

 

a.             [...***...];

 

***Confidential Treatment Requested

 

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b.            [...***...];

c.             [...***...]; and

d.            [...***...].

 

1.28     The term “Patent(s)” shall mean the patents and patent application itemized in Attachment A: any patent, patent application, continuation, continuation-in-part, divisional, reissue or reexamination in the U.S.A. or in any other country, which issues to CASE and is based on intellectual property in existence at the date of the signing of this Agreement.

 

1.29     The term “Phase II Clinical Trial” shall mean a Clinical Trial either (i) designed to provide a preliminary evaluation of the activity or effectiveness, common short-term side effects, risks, or other characteristics of a Licensed Product for particular indications; or (ii) as otherwise indicated as being a Phase H Clinical Trial in its protocol and as defined in 21 C.F.R. § 312.21 (b).

 

1.30     The term “Phase HI Clinical Trial” shall mean a Clinical Trial conducted subsequent to Completion of Phase II, which the FDA and Licensee agree is “adequate and well-controlled” as those terms are defined in 21 C.F.R. § 314.126 in its design and conduct and is intended to demonstrate that a Licensed Product(s) has sufficient safety and effectiveness as necessary for NDA Approval of such Licensed Product(s) and as defined in 21 C.F.R. § 312.21 (c).

 

1.31     The term “Prime Rate” shall mean the interest rate per annum announced from time to time by Key Bank, Cleveland, Ohio, as its prime rate.

 

1.32     The term “Product Launch” shall mean the initial delivery to an end user of a Licensed Product(s) that is subject to, and in accordance with, an NDA Approval for such Licensed Product(s).

 

1.33     The term “Progeny” shall mean an unmodified descendant of Biological Material, such as virus from virus, cell from cell, or organism from organism, and any immediate or remote progeny of or descendant from organisms or cell lines containing the same genetic mutation(s) or lesion(s) as the Biological Material

 

1.34     The term “Regulatory Approval” shall mean FDA approval or Foreign. Equivalent.

 

1.35     The term “Revenue” shall mean the U.S. Dollar value of all consideration realized by Licensee for the Disposition of Licensed Product(s).

 

***Confidential Treatment Requested

 

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1.36     The term “Royalties” shall mean Disposition royalties which are calculated as a percentage of Net Sales and will be payable by Licensee to CASE under the provisions of this Agreement.

 

1.37     The term “Stand-Alone Therapeutic” shall mean a single formulation comprising methoxyamine (or a methoxyamine derivative) and one or more therapeutic compounds (falling within the definition of Licensed Technology) distinct from methoxyamine (or a methoxyamine derivative) administered to a Subject.

 

1.38     The term “Subject” shall mean a human who participates in a Clinical Trial, either as the recipient of the Investigational New Drug or as a control. A Subject may be a healthy human or a patient with a disease.

 

1.39     The term “Submit an NDA” shall mean the initial filing of an NDA with the FDA or Foreign Equivalent.

 

1.40     The term “Third Party(ies)” shall mean any party other than the Licensee or CASE.

 

1.41     The term “Unmodified Derivative” shall mean substances created by Licensee which constitute an important unmodified functional sub-unit or expression product of Biological Material, e.g., subclones of unmodified cell lines, purified or fractionated sub-sets of Biological Material such as novel plasmids or vectors, proteins expressed as DNA or RNA, or antibodies secreted by a hybridoma.

 

1.42     The term “Year” refers to contract years of the License Agreement, i.e., a 12-month period starting with the date (or anniversary) of the Effective Date of the License Agreement.

 

2.                                    LICENSE GRANT

 

2.1       CASE hereby grants to Licensee, and Licensee hereby accepts, an exclusive, world-wide right to use the Licensed Technology to make, have made, use, have used, offer to sell, produce, manufacture, distribute, market, import and Dispose of Licensed Product(s) and to create Derivatives and/or Biological Materials for the Field of Use.

 

2.2       Licensee shall have the right to sublicense the rights granted to Licensee to Third Parties in its sole discretion, subject to the following (i) Licensee shall give CASE prompt notice of the execution of any sublicense or sub-sublicense agreement and (ii) each sublicense and sub-sublicense agreement shall contain covenants by the sublicensee and sub-sublicensee for such sublicensee and sub-sublicensee to observe and perform the same terms and conditions as those set forth for Licensee in this Agreement. Licensee understands that any sublicense or sub-sublicense agreements granted by Licensee to entities other than customers must provide that the obligations to CASE under this Agreement, including but not limited to, Indemnification, Insurance, No Warranty, and procedures for Dispute Resolution shall be binding upon such sublicensee and sub-sublicensee as if it were a party to this Agreement. The Licensee shall be

 

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responsible for curing the acts or omissions of its sublicensees and sub-sublicensees and shall not grant any rights which are inconsistent with the rights granted to and obligations of the Licensee hereunder. Any act or omission of a sublicensee or sub-sublicensee which would be a breach of this License Agreement if committed by the Licensee must be cured by such sublicensee or sub-sublicensee within sixty (60) days of the date on which Licensee becomes aware of such breach by such sublicensee or sub-sublicensee. If such sublicensee or sub-sublicensee does not cure such breach within sixty (60) days, then Licensee shall terminate such sublicense or sub-sublicense agreement and, if practicable, shall cure such breach as soon as practicable.  Each sublicense agreement and sub-sublicense agreement granted by the Licensee shall include an audit right by CASE of the same scope as provided hereinbelow with respect to the Licensee. Should this Agreement terminate, sublicenses and sub-sublicenses granted prior to the termination shall become direct licenses from CASE. The Licensee shall give CASE prompt notification of the identity and address of each sublicensee and sub-sublicensee with whom it concludes a sublicense and sub-sublicense agreement and shall supply CASE with a copy of each such sublicense and sub-sublicense agreement.

 

2.3       CASE, and any non-profit health care institution affiliated with it, shall have the right to use, free of charge, any product or process, developed by Licensee which contains or is based on any of Licensed Technology, and/or Derivatives, for research, patient care, educational, academic, or administrative purposes, provided however, that such use does not generate a profit for CASE or any non-profit health care institution affiliated with it.

 

2.4       No provision of this Agreement shall restrict CASE’s ability to conduct further research and development in the area of Licensed Technology or other areas.

 

2.5       All Licensed Product(s) shall be manufactured, sold and performed by Licensee in compliance with all applicable governmental laws, rules and regulations. Licensee shall keep CASE fully informed of, and shall move expeditiously to resolve, any complaint by a governmental body relevant to Licensed Product(s), except for complaints subject to the Section of this Agreement entitled “Infringement”.

 

2.6       Each party shall promptly notify the other parties hereto of its receipt of any allegations that Licensed Products infringe the intellectual property rights of any Third Party’s allegations. Nothing in this Section 2.6 shall be construed as obligating CASE to resolve any dispute or to settle or defend any claim, suit or proceeding arising out of Licensee’s manufacture, use or sale of Licensed Product(s). CASE retains the right to grant either exclusive or non-exclusive licenses for the Licensed Technology in fields of use other than the Field of Use for which the license hereunder is granted. CASE retains the right, ultimately exercisable in the sole discretion of CASE, after conducting reasonable legal analysis with outside legal counsel, to grant nonexclusive licenses under the Licensed Technology in the Field of Use to Third Parties as a means to resolve disputes or settle claims, suits or proceedings arising out of allegations of infringement of the intellectual property rights of the Third Party; provided that before exercising such right CASE shall notify Licensee of the situation with the Third Party and permit Licensee to participate in negotiations with the Third Party and to provide CASE with legal analyses of the Third Party’s allegations. If CASE grants such non-exclusive license, the parties will negotiate

 

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in good faith to modify terms of this License Agreement, if necessary to address in an equitable manner the economic consequences of such non-exclusive license.

 

2.7       If Licensed Technology was supported under a United States Government funding agreement, then (a) the United States Government has been or will be granted licensing rights as required under the terms of those federal agreements, (b) all rights and requirements of the United States Government and others under Public Law 96-517, and Public Law 98-620, including but not limited to government purpose license, march-in rights, and obligations to provide materials to other researchers shall remain and shall in no way be affected by this Agreement and any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification as may be required to conform to the provisions of those statutes, and (c) products sold in the United States of America, embodying or produced through use of Licensed Technology, will be manufactured substantially in the United States of America, unless a waiver has been obtained from the federal funding agency under whose funding agreement the Licensed Technology was generated.

 

2.8       Retained Rights to the Licensed Technology. Notwithstanding the license granted in this Agreement, CASE, and any non-profit health care institution affiliated with it, shall retain all rights to use the Licensed Technology for non-commercial research, patient care, educational, academic, or administrative purposes, even in the Field of Use, provided however, that such use does not generate a profit for CASE or any non-profit health care institution affiliated with it.

 

2.9       Supply of Research Materials. At [...***...], and subject to one or more of a materials transfer, confidentiality, and/or supply agreement(s) to be negotiated in good faith by the parties, Licensee will provide to CASE reasonable quantities of all research materials produced, or in the future developed, by the Licensee for the use by CASE in a manner consistent with Section 2.8 above. Provided, however, that the total amount of each such research material supplied to CASE without charge in any calendar year be limited to [...***...]. Further requests for said research material (up to [...***...] of said material) within that calendar year shall be provided [...***...]. CASE shall not use such research materials in a manner detrimental to the Licensee’s legitimate commercial interests in the Licensed Technology granted under this Agreement or transfer such research materials obtained under this Section 2.9 to any Third Party(ies) without the prior written consent of the Licensee. Any sale, offer for sale, distribution or marketing of such research materials and their derivatives within the Field of Use shall be deemed “detrimental to the Licensee’s commercial interests” within the intent of this Section.

 

2.10     CASE-based Clinical Studies. The Licensee will use reasonable and good faith efforts to ensure that, under financial terms that are customary and reasonable and in accordance with the Licensee’s standard clinical research terms, CASE and its affiliated hospitals have, subject to applicable FDA and governmental regulations and policies pertaining to conflicts, [...***...]. The ultimate decision regarding the selection of [...***...] shall be made by Licensee after reasonable and good faith consideration of one or more factors

 

***Confidential Treatment Requested

 

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including, but not limited to: [...***...] (the “Decision Factors”). The [...***...] shall be made by Licensee after a reasonable and good faith analysis of [...***...] ability to meet the Decision Factors.

 

3.                                    TERM OF THIS AGREEMENT

 

The term of this Agreement shall cover the period commencing on the Effective Date and shall conclude at on the expiration date of the last-to-expire Patent on a country-by-country basis, whichever comes later, unless otherwise terminated pursuant to another provision of this Agreement.

 

4.                                    DUE DILIGENCE

 

4.1       Licensee shall use its best efforts to effect introduction of Licensed Technology into the commercial market as soon as possible; thereafter, until the termination of this Agreement, Licensee shall keep Licensed Technology reasonably available to the public.

 

4.2       Licensee shall, at a minimum, achieve the following milestones (“Diligence Milestones”):

 

(a)                               On or before the first anniversary of the Effective Date, a Development Committee (the “Committee”) shall be organized to monitor the clinical progress of the Licensed Products at Licensee’s expense. The Committee will consist of independent scientific and technical thought leaders that are highly regarded by the scientific community in the field of each Licensed Product and at least one representative from each of CASE and Licensee. The Committee will be responsible for (i) making recommendations to Licensee’s management relating to the pre-clinical and clinical development strategy; (ii) analyzing and assessing ongoing pre-clinical and clinical development of each Licensed Product; and (iii) assisting Licensee in preparing pre-clinical and clinical development budgets. The actions and opinions of the Committee will be confidential (specifically, CASE may be asked to enter into a separate confidentiality agreement to govern the Committee meetings), however, the CASE representative may report clinical updates to a designated senior official at CASE and the Technology Transfer Office of CASE who will agree to keep such information confidential. The Committee will meet at least once a year.

 

(b)                              On or before the [...***...] anniversary of the Effective Date, [...***...].

 

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(c)                               On or before the [...***...] anniversary of the Effective Date, [...***...].

 

(d)                              Within [...***...] years of [...***...].

 

(e)                               Within [...***...] years of [...***...].

 

(f)                                Within [...***...] years of [...***...].

 

4.3       Licensee’s default in performance in accordance with Section 4 herein shall be grounds for CASE to terminate this Agreement pursuant to the Section entitled “Termination”.

 

5.                                    ROYALTIES AND NRSI

 

5.1       Royalties payable by Licensee to CASE shall be [...***...] percent ([...***...]%) of Net Sales by Licensee or its Affiliates and [...***...] percent ([...***...]%) of all Royalties received by Licensee and its Affiliates from the Net Sales of Licensed Product(s) by sublicensees or sub-sublicensees, provided however, that in no event shall CASE receive less than [...***...] percent ([...***...]%) of Net Sales of Licensed Product(s) by such sublicensees or sub-sublicensees.

 

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5.2       Licensee shall pay CASE a non-refundable up-front fee of [...***...] dollars ($[...***...]), due and payable thirty (30) days after the Effective Date of this Agreement. This up-front fee will not be credited against any other amounts due under this Agreement.

 

5.3       Licensee shall pay CASE a minimum royalty of seventy-five thousand dollars ($75,000) per year (“Annual Minimum Royalty”), payable on each anniversary of the Effective Date commencing on the [...***...] anniversary of the Effective Date or the [...***...] anniversary of the Effective Date following the [...***...], whichever comes earlier. The Annual Minimum Royalty shall be credited against the Royalties payable in a Year.

 

5.4       Annual Minimum Royalty payments are to be adjusted by [...***...].

 

5.5       Milestone Payment Amounts. The Licensee will make a payment to CASE within thirty (30) days of each occurrence of the achievement of a Milestone as follows:

 

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MILESTONE
    	
MILESTONE PAYMENT 
   AMOUNT
    
	
[...***...]
    	
[...***...] 
   Dollars (U.S. $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] Dollars (U.S. 
   $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] Dollars (U.S. $[...***...]) 
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] 
   Dollars (U.S. $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] 
   Dollars (U.S. $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] Dollars (U.S. $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] Dollars (U.S. 
   $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] Dollars (U.S. $[...***...])
    
	
 
    	
 
    

 

***Confidential Treatment Requested

 

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[...***...]
    	
[...***...] Dollars (U.S. 
   $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] 
   Dollars (U.S. $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] Dollars (U.S. 
   $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] 
   Dollars (U.S. $[...***...])
    
	
 
    	
 
    
	
[...***...]
    	
[...***...] Dollars (U.S. $[...***...])
    

 

5.6       Royalty Adjustments. If [...***...], and, after written notice to CASE and good faith negotiations with [...***...], the Licensee is required to [...***...], then the Licensee may deduct [...***...] from the Royalty(ies) payable to CASE pursuant to this Agreement up to, but no more than [...***...] percent ([...***...]%) of the Royalty(ies) otherwise payable to CASE under this Agreement, without a carryover to subsequent annual periods in which Royalties are payable.

 

5.7       Milestone Cure. If the Licensee fails to achieve any Diligence Milestone under Section 4.2, the Licensee has the right to cure such failure as provided under Section 11.2 of this Agreement. Upon expiration of the pertinent cure period, and in lieu of termination, CASE, at its sole option upon sixty (60) days prior written notice, may convert the Licensee’s exclusive 

 

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license under this Agreement into a non-exclusive license and may grant non-exclusive licenses and other rights to the Licensed Technology to Third Parties, even in the Field of Use, whether such be commercial entities, academic institutions or other persons.

 

5.8       NRSI Royalty. Licensee shall pay to CASE [...***...] percent ([...***...]%) of all NRSI.

 

5.9       In the event that a Licensed Product is Disposed in the form of a combination product containing the Licensed Product and one or more Useful Components (as hereinafter defined) which are not themselves a Licensed Product, the Net Sales for such combination product shall be calculated by multiplying the sales price of such combination product by the fraction (A+B) where: A is the invoice price of the Licensed Product, if sold separately, and if not sold separately, the fair market value of the Licensed Product; and B is the total invoice price of the Useful Component, if sold separately, and if not sold separately, the fair market value of the Useful Component.

 

For purposes of this Section 5.9 only, “Useful Component” means an ingredient that is used for enhancing the efficacy and/or safety of a Licensed Product; formulating a Licensed Product and/or delivering a Licensed Product.

 

5.10     No multiple Royalties. Multiple Royalties shall not be payable because the use or Disposition of any Licensed Product is or shall be covered by more than one of the group consisting of Patents, Derivatives, and/or Biological Materials. Royalties will not be payable on Disposition by a sublicensee if Royalties are or will be paid upon the Disposition by Licensee to the sublicensee in question.

 

6.                                    PAYMENT TERMS

 

6.1       Royalties shall be paid by Licensee to CASE, as defined in the Section entitled “Royalties” for each Fiscal Quarter within sixty (60) days of the end of such Fiscal Quarter, until this Agreement expires or is terminated in accordance with this Agreement. If this Agreement terminates before the end of a Fiscal Quarter, the payment for that terminal fractional portion of a Fiscal Quarter shall be made within ninety (90) days of the date of termination of this Agreement.

 

6.2       All Royalties hereunder shall be paid in U.S. Dollars and shall be made by wire transfer to CASE’s account, or by Licensee’s check sent in accordance with the Section entitled “Notices”.

 

6.3       All Royalties payable hereunder which are overdue shall bear interest until paid at a rate equal to the Prime Rate in effect at the date such Royalties were due plus [...***...] percent ([...***...]%) per annum, but in no event to exceed the maximum rate of interest permitted by applicable law. This provision for interest shall not be construed as a waiver of any rights CASE has as a result of Licensee’s failure to make timely payment of any amounts.

 

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7.                                    REPORTS AND AUDITS

 

7.1       Licensee shall report Quarterly to CASE its Net Sales and Revenues, which are subject to Royalty payments.

 

7.2       No later that sixty (60) days after June 30 of each calendar year, Licensee shall provide to CASE a written annual progress report (“Progress Report”) describing progress on research and development, Regulatory Approvals, manufacturing, sublicensing, marketing and sales during the most recent twelve (12) month period ending June 30 and plans for the forthcoming year. Specifically, Licensee shall provide to CASE written annual reports of progress towards Diligence Milestones with supporting documentation in addition to the Progress Report (the “Annual Report”). If multiple Licensed Product(s) are being developed, the Progress Report and the Annual Report shall provide the information set forth above for each Licensed Product.

 

7.3       No later than thirty (30) days after the completion of a Diligence Milestone, Licensee shall provide to CASE a written report on the completion of said Diligence Milestone.

 

7.4       Licensee shall maintain accurate books and records such that the Royalties due and payable hereunder can be easily ascertained. Such books and records shall be maintained at Licensee’s principal place of business and shall be available for inspection by CASE or its representatives during the normal business day upon not less than ten (10) days prior written notice, provided that CASE or its representatives agree to protect the confidentiality of the information as to the customers of Licensee.

 

7.5       Licensee shall make available Licensee’s books and records for audit by an accounting firm or representative of CASE’s selection, and Licensee agrees to cooperate fully in any such audit, provided that the auditors agree to protect the confidentiality of the information as to the customers of Licensee. Any such audit shall not be more frequent than annually. In the event that such audit determines that the amount of Royalties paid to CASE was in error by more than [...***...] ([...***...]%) percent, Licensee shall pay the costs of the audit.

 

7.6       CASE agrees to hold in confidence each such report delivered by Licensee pursuant to this Article 7 until the termination of this Agreement unless or until the information contained therein is or becomes public through no fault of CASE.

 

8.                                    IMPROVEMENTS AND COLLABORATIONS

 

8.1       Discussion of technical matters with each other by the parties will not create any rights to ownership of patents, copyrights, mask work rights, trade secrets or other intellectual property rights in solutions to the problem developed solely by employees or agents of the other party hereto.

 

8.2       Licensee will own all of the right, title and interest (including patents, copyrights, mask work rights, trade secrets and any other intellectual property rights, but 

 

***Confidential Treatment Requested

 

15

 

excluding Patents) in and to the results of the collaboration between the parties that are developed solely by Licensee employees or agents.

 

8.3       CASE will own all of the right, title and interest (including patents, Patents, copyrights, mask work rights, trade secrets and any other intellectual property rights) in and to the results of the collaboration between the parties that are developed solely by CASE employees or agents.

 

8.4       All intellectual property that is not governed by a sponsored research, clinical research or other agreement with CASE, and which results in Patents or Licensed Technology developed jointly by employees or agents of CASE and Licensee shall be owned by CASE. Licensee may utilize such jointly developed property pursuant to the terms of this License Agreement. CASE may issue licenses to others regarding such jointly developed propertywhich result in Patents or Licensed Technology, as long as such licenses do not violate any exclusive license to Licensee then existing under the Section entitled “License Grant”.  If any other intellectual property is developed jointly by employees or agents of CASE and Licensee which would not constitute a Patent or Licensed Technology and which are not subject to another agreement between CASE and Licensee, CASE and Licensee shall jointly own (without any duty to account to the other for profits) all right, title and interest (including patents, copyrights, mask work rights, trade secrets, and other intellectual property rights) therein. If any patentable invention which would not constitute a Patent or Licensed Technology arises out of such joint development by employees or agents of CASE and Licensee, CASE and Licensee will engage in good faith efforts to mutually agree on whether and how to pursue patent, copyright or mask work protection of the invention in the U.S. and elsewhere.

 

8.5       Except as provided in this Section, nothing herein shall be deemed to grant any license or rights in any other technology in addition to the Licensed Technology.

 

9.                                    PATENTS AND OTHER INTELLECTUAL PROPERTY

 

9.1       CASE Property. Intellectual property rights to Licensed Technology such as Patent(s), patent(s), and Copyrights which may be obtainable will remain the property of CASE. Trademarks existing on the Effective Date of this License Agreement belong to CASE. CASE maintains the right to apply for and prosecute Patents.

 

9.2       Licensee shall bear all patenting and other intellectual property protection costs for protection of Licensed Technology (the “Patent Costs”). Licensee will reimburse CASE for all past and future fees and expenses related to the preparation, filing, prosecution and maintenance of the Patents, within thirty (30) days of the receipt of each notification or bill, provided however, that in no event shall the amount Licensee will reimburse CASE for expenses incurred prior to the Effective Date exceed [...***...] dollars ($[...***...]) if this Agreement is executed before July 1, 2006.

 

9.3       CASE shall provide Licensee with ample time in which to review any correspondence for which submission to any patent authority is intended, prior to such 

 

***Confidential Treatment Requested

 

16

 

submission and CASE shall consider in good faith any comments regarding such submission provided to CASE by Licensee.

 

9.4       CASE shall retain patent counsel reasonably suitable to Licensee with respect to quality of work, cost and responsiveness.

 

9.5       CASE has applied for, and/or will apply for and prosecute Patent coverage, at Licensee’s expense, in any country if so requested by Licensee, for any and all Patents listed in Attachment A, to the extent that such protection is reasonably obtainable. Within one (1) year of the Effective Date, CASE and Licensee shall reasonably agree upon a budget with respect to the Patent Costs (the “Patent Budget”). CASE and Licensee shall update said Patent Budget every one (1) year thereafter. CASE and Licensee shall use reasonable efforts to maintain the Patent Costs actually incurred within fifteen percent (15%) of the Patent Costs forecast in the Patent Budget for any given one (1) year period, unless the prior written agreement of the Licensee is obtained.

 

9.6       CASE may, at its option and sole discretion and at its own expense, pursue patent, copyright and/or trademark rights for Licensed Technology in any country for which coverage has not been requested by Licensee in accordance with Subsection 9.5 above. If Licensee does not reimburse CASE for such fees within thirty (30) days of the receipt of each notification, then Licensee shall have no rights under any Patent in that country.

 

9.7       If CASE pursues a patent application or patent for which Licensee does not wish to assert any licensing rights, Licensee may terminate its obligations with respect to any such given patent application or patent upon thirty (30) days prior written notice to CASE and thereupon relinquish any rights to the specific technology covered by such patent; provided, however, any relinquishment of a patent application or patent by the Licensee under this section shall not affect in any way Licensee’s rights and obligations to CASE arising from Licensee’s continued use of any patent or patent application that is not so specifically relinquished. CASE will use its reasonable efforts to curtail such patent costs chargeable to the Licensee under this Agreement after this notice is received from Licensee. CASE may continue prosecution or maintenance of these application(s) or patent(s) at its sole discretion and expense, and Licensee will have no further rights or licenses to them. Licensee shall grant and hereby does grant CASE a world-wide, royalty-free, non-exclusive, irrevocable, sub-licensable commercial license to Patents and Licensed Technology, within the Field of Use, for the sole and exclusive purpose of being able to commercially practice and to sublicense for commercially practicing the rights relinquished by Licensee and gained by CASE under this Section 9.7.

 

10.                            MARKINGS, TRADEMARKS AND TRADE NAMES

 

10.1     Licensee shall have marked the appropriate portions of all Licensed Product with any applicable United States of America and foreign Patent numbers in accordance with the applicable laws of the countries in which the materials are intended to be used. Licensee shall neither register nor use any CASE trademarks or trade names.

 

17

 

10.2     Licensee acknowledges that it does not have any rights or any title whatsoever in or to CASE’s technology, trade name or in or to any of CASE’s trademarks, except as provided under this Agreement. Any reference by Licensee to CASE beyond the above may only be done with express written permission of CASE’s Associate Vice President for Technology Transfer.

 

11.                            TERMINATION

 

11.1     In the event that Licensee defaults in the payment in full of any amount required to be paid under this Agreement on the date such payment is due, in addition to utilizing any other legal and/or equitable remedies, CASE shall have the right by written notice to Licensee after such default either (i) to terminate the exclusivity, if any, of the license hereunder (by amending the word “exclusive” in the License Grant to read “non-exclusive”) without any reduction in any of the payments due from Licensee, or (ii) to terminate this Agreement. CASE shall give written notice of the default (the “Notice of Default”) to Licensee. If Licensee has not cured such default by full payment of such amount, including any interest payable on amounts due hereunder, within ninety (90) days of the effective date of the Notice of Default, CASE shall have the right by a second written notice to Licensee to terminate the exclusivity of this Agreement or to terminate this Agreement (the “Notice of Termination”).  If CASE terminates this Agreement pursuant to this Section, Licensee shall still pay CASE any Annual Minimum Royalties due for the next Year thereafter, notwithstanding termination of Licensee’s rights hereunder.

 

11.2     In the event that either party to this Agreement defaults in the performance of any of its obligations hereunder (other than the defaults referred to in Section 4 (Due Diligence) and Section 11.1. (Termination), hereof) and fails to cure such default within sixty (60) days after written notice of such default from such other party, the other party shall have the right by written notice to the defaulting party within sixty (60) days after the expiration of such sixty (60) day cure period to terminate this Agreement.

 

11.3     The termination of this Agreement shall not terminate (i) the obligation of Licensee to pay any amounts, which have accrued or which are otherwise to be paid by Licensee under the terms of this Agreement, or (ii) the obligations of Licensee under the Sections entitled “Reports and Audits,” “Patents and Other Intellectual Property,” “Termination,” “Taxes,” “Confidentiality and Trade Secrets,” “Indemnification,” “Insurance,” “Dispute Resolution,” and “Infringement” hereunder.

 

11.4     Upon termination of this Agreement, Licensee will immediately discontinue any further use of Licensed Technology and discontinue production of any Licensed Product(s).

 

11.5     Provided that this Agreement has not been terminated by Licensee or CASE, then on a country by country basis (effective on the later of (a) fourteen (14) years and (b) the date of the last to expire Patent in such country) licensee shall have a royalty free non-exclusive license under Licensed Technology to make, have made, use, have used, offer to sell, produce, manufacture, distribute market and Dispose of Licensed Product(s) and to create Derivatives and/or Biological Materials for the Field of Use.

 

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11.6     Licensee shall have the right at any time to terminate this Agreement in its entirety for any reason or no reason, by giving thirty (30) days notice thereof in writing to CASE. Notwithstanding anything to the contrary, in the event that Licensee terminates this Agreement in its entirety, Licensee shall tender to CASE the termination fee of [...***...] dollars ($[...***...]) and shall further pay any amounts due and owing to CASE pursuant to this Agreement upon such termination. A termination pursuant to this section shall be subject to the provisions of Section 11.3 as with all other terminations.

 

12.                            TAXES

 

Licensee shall pay all taxes which may be assessed or levied on, or on account of, the Licensed Technology, Licensed Product made, used or Disposed of by Licensee or its Affiliates hereunder and all taxes (other than taxes imposed by the United States of America or the State of Ohio or jurisdictions within such State) levied on or on account of the amounts payable to, or for the account of, CASE under this Agreement.

 

13.                            REPRESENTATIONS AND WARRANTIES

 

13.1     Each party hereby represents and warrants to the other party as follows:

 

13.1.1  Corporate Existence. Such party is a corporation duly organized, validly existing and in good standing under the laws of the state in which it is incorporated.

 

13.1.2  Authorization and Enforcement of Obligations. Such party (a) has the corporate power and authority and the legal right to enter license agreements and (b) has taken all actions necessary under its governing documents and policies to execute this license agreement. This Agreement has been executed and delivered on behalf of such party as required by its governing documents and policies, and constitutes a legally binding obligation, enforceable against such party in accordance with its terms.

 

13.1.3  No Consents. No consents by governmental authorities are required to be obtained for execution of this Agreement.

 

13.1.4  Patents. Neither Dr. Stanton Gerson nor Michael Haag or Steve Tan, to the best of their knowledge, have received oral or written notice of a claim that any of the patents or patent application listed on Attachment A infringe the intellectual property rights of a Third Party other than claim(s) listed in Attachment C which CASE has previously disclosed to Licensee.

 

13.2     NO WARRANTY. ALL LICENSED TECHNOLOGY, INFORMATION, MATERIALS, SERVICES, INTELLECTUAL PROPERTY OR OTHER PROPERTY OR RIGHTS, GRANTED OR PROVIDED BY CASE PURSUANT TO THIS AGREEMENT (“DELIVERABLES”) ARE PROVIDED ON AN “AS IS” BASIS. CASE MAKES NO WARRANTIES OF ANY KIND, EITHER EXPRESSED OR IMPLIED, AS TO ANY MATTER INCLUDING, BUT NOT LIMITED TO, WARRANTY OF FITNESS FOR PARTICULAR PURPOSE, OR MERCHANTABILITY, EXCLUSIVITY OR RESULTS 

 

***Confidential Treatment Requested

 

19

 

OBTAINED FROM USE. NOR SHALL EITHER PARTY HERETO BE LIABLE TO THE OTHER FOR INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES SUCH AS LOSS OF PROFITS OR INABILITY TO USE SAID INTELLECTUAL PROPERTY OR ANY APPLICATIONS AND DERIVATIONS THEREOF. CASE DOES NOT MAKE ANY WARRANTY OF ANY KIND WITH RESPECT TO FREEDOM FROM PATENT, TRADEMARK, OR COPYRIGHT INFRINGEMENT, OR THEFT OF TRADE SECRETS AND DOES NOT ASSUME ANY LIABILITY HEREUNDER FOR ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, OR COPYRIGHT ARISING FROM THE USE OF DELIVERABLES. LICENSEE AGREES THAT IT WILL NOT MAKE ANY WARRANTY ON BEHALF OF CASE, EXPRESSED OR IMPLIED, TO ANY ENTITY CONCERNING THE APPLICATION OF OR THE RESULTS TO’BE OBTAINED WITH DELIVERABLES.

 

14.                            COSTS

 

All costs and expenses incurred by Licensee in carrying out Licensee’s obligations under this Agreement shall be paid by Licensee, and Licensee shall not be entitled to reimbursement from Royalties hereunder or otherwise therefor from CASE. Licensee shall possess or obtain at its own expense all necessary licenses and permits and shall comply with all laws, ordinances, rules or regulations affecting the exportation, use, and/or sale or transfer of the Licensed Product, Licensed Technology and/or Derivatives.

 

15.                            CONFIDENTIALITY, TRADE SECRETS, AND PUBLICATION

 

15.1     “Confidential Information” shall mean any information relating to the Licensed Technology, the terms of this Agreement (as from time to time amended), Patents, copyrights, algorithms, and software covered by this Agreement or information disclosed to Licensee in connection with performance of this Agreement, provided that such information is marked “Confidential” or designated in writing as “Confidential” within thirty (30) days after an oral disclosure to Licensee. All such information shall be Confidential Information, including information disclosed to Licensee prior to the date of this Agreement, unless such information (i) was already in Licensee’s possession prior to the disclosure thereof by CASE as provided in this Section I5.1; (ii) has been published or is published hereafter, unless such publication is a breach of this Agreement; (iii) is received by Licensee from a Third Party not under an obligation of confidentiality with respect thereto; (iv) is independently developed by Licensee; (v) is approved for disclosure in writing by CASE or (v) is required to be disclosed by law, provided however, in the case of disclosure pursuant to legal process, reasonable notice of the impending disclosure is provided to the disclosing party. In the event that such information shall be established to have been known to Licensee prior to the disclosure thereof by CASE by reference to any publication thereof by Licensee or by reference to any internal writing or other business record maintained by Licensee in the ordinary course of business, such information shall not be deemed to be Confidential Information for purposes of this Agreement following notification to CASE of such fact.

 

15.2     Licensee shall maintain in confidence and shall not disclose to any person not a party hereto, nor shall Licensee use or exploit in any way without CASE’s written agreement, any Confidential Information until three (3) years after the later of the date of the termination of

 

20

 

this Agreement or the end of the term of the last to expire Patent, unless such information ceases to be Confidential Information prior to the end of such period through no fault of Licensee or Licensee and CASE enter into an agreement authorizing same.

 

15.3     Licensee shall maintain with respect to such Confidential Information a standard of care which is no less than that standard which Licensee maintains to prevent the disclosure of its own most valuable confidential information but in no event shall Licensee exercise less than reasonable care to prevent the disclosure of Confidential Information by its employees or representatives.

 

15.4     Upon termination of this Agreement for any reason, Licensee agrees to return at once to CASE, without copying, all originals and copies of all materials (other than this Agreement) containing any Confidential Information, provided however, Licensee shall be entitled to retain one (1) copy of all such Confidential Information solely for purposes of establishing its obligations hereunder.

 

15.5     For purposes of this Section the term “CASE” shall include inventors of the Licensed Technology and those working with or under them.

 

15.6     During the period five (5) years from the Effective Date, CASE will provide Licensee a copy of any proposed publication containing Licensed Technology fifteen (15) days before submission for publication other than for the submission of abstracts and concerning abstracts CASE will provide Licensee a copy of any proposed abstract containing Licensed Technology five (5) days before submission of said abstract.

 

16.                            INDEMNIFICATION

 

Licensee hereby agrees to defend, indemnify and hold harmless CASE, its trustees, officers, employees, attorneys and agents from all claims or demands made against them (and any related losses, expenses or attorney’s fees) arising out of or relating to Licensee’s and/or any of its sublicensee’s use of or conduct regarding Licensed Product(s), Licensed Technology, Deliverables or Derivatives, including but not limited to, any claims of product liability, personal injury, death, damage to property or violation of any laws or regulations.

 

17.                            INSURANCE

 

Before Licensed Technology is administered to human beings, Licensee shall obtain and maintain appropriate coverage of general liability, product liability, and public liability insurance in the amount of no less than Three Million Dollars (U.S. $3,000,000) to protect CASE, its trustees, officers, employees, attorneys, and agents under the indemnification provided hereunder. CASE, its trustees, officers, employees, attorneys, and agents shall be named as additional insureds on Licensee’s insurance policies and shall be provided appropriate certificates of insurance thereunder.

 

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18.                            BREACH

 

No acquiescence in any breach of this Agreement by either party shall operate to excuse any subsequent or prior breach.

 

19.                            PRIOR AGREEMENT

 

Except for any confidential disclosure agreement executed by the parties, this Agreement supersedes all previous agreements relating to the subject matter hereof, whether oral or in a writing, and constitutes the entire agreement of the parties hereto and shall not be amended or altered in any respect except in a writing executed by the parties.

 

20.                            INTERPRETATION

 

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio, United States of America, without regard to conflict of law principles.

 

21.                            DISPUTE RESOLUTION

 

21.1                    Subject to Subsection 21.2, any controversy or dispute arising under this Agreement (including, but not limited to, the validity, scope and enforceability of this arbitration clause) shall be referred to and finally settled by arbitration in the City of Cleveland, Ohio, under the auspices of, and conducted in accordance with, the rules of the American Arbitration Association. All arbitration proceedings shall be before a board of three (3) arbitrators, for each of which each party shall select one (1) arbitrator and the selected arbitrators shall select the third arbitrator. The costs of the third arbitrator shall be divided equally between the parties, and each party shall pay the costs of the arbitrator selected by it. Any award of the arbitrators shall be final and conclusive on the parties to this Agreement, and judgment upon such award may be entered in any court having jurisdiction thereof

 

21.2                    Either party may seek injunction relief for: (a) violation by the other party of the Sections entitled “Reports and Audits, “Markings, Trademarks and Trade Names;” “Confidentiality and Trade Secrets,” “Insurance” and “Dispute Resolution”; (b) for enforcement of any arbitration award; or (c) for enforcement of any non-arbitrable matter. The prevailing party shall be entitled to recover from the other all costs, including attorney’s fees, related to the action for injunctive relief.

 

21.3                    Licensee hereby irrevocably and unconditionally:

 

(i)                                  Agrees that any legal action, suit or proceeding contemplated by this Section entitled “Dispute Resolution” hereof (collectively, “Related Litigation”) may be brought in any state or federal court of competent jurisdiction sitting in Cuyahoga County, Ohio, submits to the jurisdiction of such courts, and to the fullest extent permitted by law agrees that it will not bring any Related Litigation in any other forum (but nothing herein shall affect the right of CASE to bring any action, suit or proceeding in any other forum);

 

22

 

(ii)                              Waives any objection which it may have at any time to the laying of venue of any Related Litigation brought in any such court located in Cuyahoga County, Ohio, waives any claim that any such Related Litigation has been brought in an inconvenient forum, and waives any right to object, with respect to any Related Litigation brought in any such court, that such court does not have jurisdiction over Licensee; and

 

(iii)                          Consents and agrees to service of any summons, complaint or other legal process in any Related Litigation by registered or certified mail, postage prepaid, to Licensee at the address for notices described in the Section entitled “Notices” hereof, and consents and agrees that such service shall constitute in every respect valid and effective service (but nothing herein shall affect the validity or effectiveness of process served in any other manner permitted by law).

 

22.                            INFRINGEMENT

 

22.1                    Licensee shall have the first right, but not the obligation, during the term of this Agreement to commence an action for infringement of the Patents against any Third Party for any infringement occurring within the Field of Use, provided that Licensee shall provide CASE thirty (30) days prior written notice of such infringement and of Licensee’s intent to file such action. CASE shall have the right at its own expense to appear in such action by counsel of its own selection. If required by the jurisdictional laws of the forum that any such action be prosecuted in the name of the owner of the Patent, CASE shall voluntarily appear at Licensee’s expense; provided that if such appearance subjects CASE to any unrelated action or claim of a Third Party or Licensee in such jurisdiction, then CASE shall have the right to decline such appearance. Settlement of any action brought by Licensee shall require the consent of CASE (if rights under the Patents or past or future economic recovery upon such rights are affected) and Licensee, which neither shall unreasonably withhold from the other, and any settlement amount or recovery for damages shall be applied as follows: (i) first, to reimburse the parties for their expenses in connection with the litigation; and (ii) second, CASE shall receive reasonable compensation for the time of any CASE personnel (in excess of [...***...] hours in aggregate) involved in the action at the request of Licensee; and (iii) third, CASE shall receive [...***...] percent of any portion of any amount received from such action which was calculated on the basis of payment of a reasonable royalty to Licensee and [...***...] percent of all other amounts received. For the avoidance of doubt the [...***...] percent shall not be calculated on [...***...].

 

22.2                    CASE shall have the right in its sole discretion during the term of this Agreement to commence an action for infringement of the Patents against any Third Party for any infringement occurring anywhere in the world, provided that, before commencing any such action concerning products within the Field of Use, CASE shall provide Licensee not less than thirty (30) days’ prior written notice of such infringement and of CASE’s intent to file such action and the option to commence an action for infringement of the Patents in its own name in accordance with Section 22.1. Licensee shall have the right at its own expense to appear in such

 

***Confidential Treatment Requested

 

23

 

CASE commenced action by counsel of its own selection. If CASE provides Licensee with such notice before instituting an action concerning products within the Field of Use and Licensee fails to initiate an action against such Third Party prior to the commencement of an action by CASE, then any settlement amount or recovery for damages shall [...***...] and [...***...].

 

22.3                    Notwithstanding the pendency of any infringement (or other) claim or action by or against Licensee, Licensee shall have no right to terminate or suspend (or escrow) payment of any amounts required to be paid to CASE pursuant to this Agreement.

 

22.4                    Cooperation. In any suit to enforce and/or defend the Patents pursuant to this Agreement, the party not in control of such suit shall, at the request and expense of the controlling party, cooperate in all respects and, to the extent reasonably practicable, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like.

 

23.                            NOTICES

 

Any notice under any of the provisions of this Agreement shall be deemed given when deposited in the mail, postage prepaid, registered or certified first class mail and addressed to the applicable party at the address stated on the signature page hereof, or such other address as such party shall specify for itself by like notice to other party. Each party shall transmit to the other a facsimile copy of each such notice promptly after such deposit in the mail.

 

24.                            ASSIGNMENT

 

Except in the instance of (a) a merger of Licensee with another entity or the sale of the Licensee (effectuated either by the sale or exchange of the Licensee’s stock or the sale or transfer of substantially all of the Licensee’s assets), in which the License is transferred to the surviving entity (b) the transfer of this Agreement along with or the sale or transfer of the assets of Licensee to which this Agreement relates or (c) to an Affiliate of Licensee, provided that any successor Affiliate entity must have a net asset value (using GAAP and not including the value of the Licensed Technology) of at least [...***...] dollars ($[...***...]), or shall have a net asset value (using GAAP and not including the value of the Licensed Technology) of at least [...***...] dollars ($[...***...]) within twelve (12) months of such assignment; if such successor entity does not have such net asset value within twelve (12) months of such assignment, the assignment shall be deemed null and void. Subject to the provisions of this Article 24, Licensee shall neither assign nor transfer this Agreement or any interest herein without the prior written consent of CASE.

 

25.                            HEADINGS

 

The section headings contained in this Agreement are set forth for the convenience of the parties only, do not form a part of this Agreement and are not to be considered a part hereof for the purpose of construction or interpretation hereof, or otherwise.

 

***Confidential Treatment Requested

 

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26.                            EXPORT CONTROLS

 

It is understood that CASE is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities (including the Arms Export Control Act, as amended and the Export Administration Act of 1979), and that its obligations hereunder are contingent on compliance with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by Member that Member shall not export data or commodities to certain foreign countries without prior approval of such agency. CASE neither represents that a license shall not be required nor that, if required, it shall be issued.

 

27.                            TECHNOLOGY TRANSFER

 

Within a reasonable period of time following the execution of this Agreement, CASE shall make a good faith effort to transfer to Licensee, at no additional cost, copies of relevant information regarding Licensed Technology from the following: (pre-clinical and clinical data; human safety data; preliminary efficacy data; INDs and other regulatory data and submissions; information relating to Patents, Licensed Products, or Licensed Technology; communications with the FDA, MHLW and/or EMEA (including the minutes of any meetings therewith); Clinical Trial master files, including case report forms; listings and tables of results from the Clinical Trials; treatment related serious adverse event reports from the Clinical Trials; and data and reports regarding manufacturing and drug substance relating to the Licensed Technology and/or Licensed Product(s),) except to the extent prohibited by governmental statutes or regulations or policies or protocols of CASE or any non-profit health care institutions affiliated with it. In the case of original laboratory or research notebooks CASE shall not be required to provide copies of the entire notebook, instead CASE may make copies of the relevant portions of said notebooks or provide written summaries of relevant information contained in said notebooks where appropriate. All such copies provided to Licensee under this Section 27 shall be considered Confidential Information.

 

28.                            USE OF NAMES

 

Unless otherwise required by law, at no time following the execution of this Agreement shall either party use the name of the other, or any person or entity affiliated with either party or discuss the terms hereof with any person or entity, without the prior written consent of the other or such person. Licensee may use CASE’s name only to designate CASE as the licensor of the Licensed Technology.

 

(The balance of this page is intentionally left blank)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in duplicate counterparts, each of which shall be deemed to constitute an original, effective as of the date first above written.

 

The undersigned verify subject to the penalties of Section 2921.13 of the Ohio Revised Code relating to unsworn falsification to authorities that they have the authority to bind to this Agreement the party on behalf of which they are executing below.

 

	
Case Western Reserve University
    	
 
    	
Case Western Reserve University
    
	
 
    	
 
    	
 
    
	
By:
    	
   /s/ Arthur W. Roos
    	
 
    	
By:
    	
   /s/ Mark E. Coticchia
    
	
 
    	
 
    	
 
    
	
Title:
    	
   Treasurer
    	
 
    	
Title:
    	
   VP Research & Technology Mgmt.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
   9/20/06
    	
 
    	
Date:
    	
   9/20/06
    
							

 

Address for Notices:

 

Case Western Reserve University

 

10900 Euclid Avenue

Cleveland, Ohio 44106, USA

Attention: Assistant Vice President for Technology Transfer

 

Facsimile: 216-368-0196

 

 

 

Tracon Pharmaceuticals, Inc.

 

	
By:
    	
   /s/ Charles P. Theuer
    	
 
    
	
 
    	
 
    
	
Title:
    	
   CEO
    	
 
    
	
 
    	
 
    	
 
    
	
Date: 
    	
   18 Sep 2006
    	
 
    
				

 

Address for Notices:

 

4510 Executive Drive, Suite 330

San Diego, California 92121

 

Attention:  Frank Taffy, Esq.

 

Facsimile:  858-550-0786

 

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Attachment A

 

Description of Licensed Technology

 

[...***...]

 

***Confidential Treatment Requested

 

27

 

Attachment B

 

Agreement by Subsidiary regarding the License Agreement

between Case Western Reserve University and Tracon Pharmaceuticals, Inc.

dated                               , 2006

 

This Agreement is entered into by                                                                      (hereinafter “Licensee’s Subsidiary”), a corporation having the address of                                                           , which represents and warrants that it is a subsidiary of Tracon Pharmaceuticals, Inc., and that more than fifty percent (50%) of the stock of Licensee’s Subsidiary is owned directly by Tracon Pharmaceuticals, Inc. (or by a wholly owned Tracon Pharmaceuticals, Inc. subsidiary). Licensee’s Subsidiary agrees that it is a Licensee under the attached License Agreement between Licensee and Case Western Reserve University dated                                          (hereinafter the “License Agreement”) and further agrees to be bound as a Licensee and to have all of the rights and obligations of the Licensee provided by said License Agreement. This Agreement is executed by Licensee Subsidiary with the intent to be legally bound hereby.

 

The undersigned verifies subject to the penalties of Section 2921.13 of the Ohio Revised Code relating to unsworn falsification to authorities that he/she has the authority to bind Licensee’s Subsidiary to this Agreement.

 

	
Attest:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
Name
    	
 
    	
 
    	
 Name
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title
    	
 
    	
 
    	
Title
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Date:
    	
 
    
							

 

28Exhibit 10.11

 

***Text Omitted and Filed Separately with

the Securities and Exchange Commission.

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 230.406.

 

 

 

LICENCE AGREEMENT

 

 

between

 

 

LONZA SALES AG

 

 

and

 

TRACON PHARMACEUTICALS INC

 

 

 

INDEX

 

 

 

	
ARTICLE
    	
TITLE
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
Definitions
    	
 
    	
 
    
	
2.
    	
Supply of System and   Know-How
    	
 
    	
 
    
	
3.
    	
Ownership of   Property and Intellectual Property
    	
 
    	
 
    
	
4.
    	
Licences
    	
 
    	
 
    
	
5.
    	
Payments
    	
 
    	
 
    
	
6.
    	
Royalty Procedures
    	
 
    	
 
    
	
7.
    	
Liability and   Warranties
    	
 
    	
 
    
	
8.
    	
Indemnification
    	
 
    	
 
    
	
9.
    	
Confidentiality
    	
 
    	
 
    
	
10.
    	
Intellectual   Property Enforcement
    	
 
    	
 
    
	
11.
    	
Term and Termination
    	
 
    	
 
    
	
12.
    	
Assignment
    	
 
    	
 
    
	
13.
    	
Governing Law and   Jurisdiction
    	
 
    	
 
    
	
14.
    	
Force Majeure
    	
 
    	
 
    
	
15.
    	
Illegality
    	
 
    	
 
    
	
16.
    	
Miscellaneous
    	
 
    	
 
    
	
17.
    	
Notice
    	
 
    	
 
    
	
18.
    	
Interpretation
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULE
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
1
    	
Patent Rights
    	
 
    	
 
    

 

 

THIS AGREEMENT is made the    29th     day of    June                         2009

 

BETWEEN

 

LONZA SALES AG incorporated and registered in Switzerland whose registered office is at Muenchensteinerstrasse 38, CH-4002, Basel, Switzerland (hereinafter referred to as “Lonza”), and

 

TRACON PHARMACEUTICALS INC, of 4510 Executive Drive, Suite 330, San Diego, CA 92121, USA, (hereinafter referred to as “Licensee”)

 

WHEREAS

 

A.                                  Lonza is the proprietor of the System and has the right to grant certain Intellectual Property rights in relation thereto (all as hereinafter defined), and

 

B.                                 The Licensee wishes to take a licence under Intellectual Property (as hereinafter defined) of which Lonza is the proprietor to commercially exploit the Product (as hereinafter defined) in the form hereunder.

 

NOW THEREFORE the parties hereby agree as follows:

 

1.                                    Definitions

 

1.1                            “Affiliate” means any company, corporation, limited liability company, partnership or other entity which directly or indirectly controls, is controlled by or is under common control, directly or indirectly, with the relevant party to this Agreement.  “Control” means the ownership of more than fifty percent (50%) of the issued share capital of the party in question or the legal power to direct or cause the direction of the general management and policies of the party in question.

 

1.2                            “Cell Lines” means those cell lines referred to in Clause 2.1.1(b).

 

1.3                            “Competing Contract Manufacturer” shall mean any party who undertakes or performs more than [...***...] percent ([...***...]%) of their business as a third party

 

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manufacturer of [...***...] or any product of a similar nature to which this Agreement relates.

 

1.4                            “Effective Date” means the date first above written.

 

1.5                            “First Commercial Sale” means the date of the first sale or other disposal of Product for consideration by the Licensee or its sublicensee.

 

1.6                            “Intellectual Property” means System Know-How and Patent Rights.

 

1.7                            “Know-How” means all proprietary and confidential unpatented technical and other information, including, but without prejudice to the generality of the foregoing, ideas, concepts, trade secrets, know-how, inventions, discoveries, data, formulae, specifications, processes, procedures for experiments and tests and other protocols, results of experimentation and testing, fermentation and purification techniques and assay protocols that are not in the public domain.

 

1.8                           “Net Selling Price” means all monies received by or on behalf of Licensee or its sublicensee hereunder in respect of the sale of Product in the Territory less the following items to the extent that they are paid or allowed and included in the invoice price, whether or not invoiced separately:

 

1.8.1                 normal discounts actually granted, including without limitation, quantity, trade, cash and other discounts, rebates and charge-backs;

 

1.8.2                 amounts refunded or credits allowed for Product or other goods returned or not accepted by customers;

 

1.8.3                 packaging, transportation and insurance charges on shipments or deliveries to customers; and

 

1.8.4                 taxes, tariffs, customs duties, surcharges and other governmental charges actually incurred and paid by Licensee or its sublicensee hereunder in connection with the sale, exportation, importation or delivery of Product or other goods to customers.

 

Upon any sale or other disposal of Product by or on behalf of Licensee or its sublicensee hereunder other than a bona fide arms length transaction

 

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exclusively for money or upon any use of the Product for purposes which do not result in a disposal of such Product in consideration of sales revenue customary in the country of use, such sale, other disposal or use shall be deemed to constitute a sale at the [...***...] price in the country in which such sale, other disposal or use occurs.

 

For the avoidance of doubt, the supply of Product free of charge as commercial samples, or for use in research, pre-clinical or clinical studies, or to third parties for evaluation purposes, shall not be included in this provision

 

1.9                           “Patent Rights” means the patents and applications, short particulars of which are set out in Schedule 1 hereto, and all patents and applications thereof of any kind throughout the world whether national or regional including but without prejudice to the generality of the foregoing, author certificates, inventor certificates, improvement patents, utility certificates and models and certificates of addition, and including any divisions, renewals, continuations, continuations in part, reissues, patent disclosures, improvements and extensions of reissue thereof.

 

1.10                   “Product” means TRC-105, a GS-CHO derived chimeric IgG1 antibody directed against CD105, of which Licensee is the proprietor and which is obtained by the expression of any one gene or of any combination of genes by use of the System, or any formulation containing the same.

 

1.11                   “Strategic Partner” means a party with whom Licensee has entered into a contractual relationship, to identify a therapeutic target, collaborate in the performance of research and development of a Product or a product of which the Strategic Partner is the Proprietor.  In no event may any entity that is primarily a Competing Contract Manufacturer be deemed a Strategic Partner for the purposes of this Agreement.

 

1.12                   “System” means Lonza’s glutamine synthetase gene expression system consisting of the Cell Lines, the Vectors, and the System Know-How, whether used individually or in combination with each other.  For the avoidance of doubt, any gene proprietary to Licensee inserted into the System for the purposes of producing Product does not form part of the System.

 

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1.13                    “System Know-How” means Know-How relating directly or indirectly to the System known to Lonza from time to time, of which Lonza is the proprietor.

 

1.14                    “Territory” means world-wide.

 

1.15                    “Valid Claim” means a claim within the Patent Rights (including any re-issued and unexpired patents) which has not been held unenforceable or invalid by the decision of a court or other 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 re-issue or disclaimer or otherwise.

 

1.16                    “Vectors” means those vectors referred to in Clause 2.1.1(a).

 

2.                                    Supply of the System and System Know-How

 

2.1                            Unless previously supplied by Lonza under a separate agreement, Lonza shall, if requested by Licensee in writing, arrange for supply [...***...] ex-works Lonza’s premises, Slough, Berkshire (Incoterms 2000) to Licensee the following:

 

2.1.1                 (a)                              Vectors

Approximately [...***...] of vector [...***...].

Approximately [...***...] of vector [...***...].

 

(b)                               Cell Lines

[...***...] ml vials of [...***...] cell line [...***...].

[...***...] ml vials of the [...***...] cell 
 line [...***...].

 

2.1.2                 System Know-How

 

System Know-How contained as at the date hereinabove in (a) manuals of operating procedures for the System, (b) regulatory information on CD-ROM, and (c) Vector nucleotide sequences.

 

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2.2                 Licensee shall use the System only in the expression of Product by insertion of gene(s) coding for Product(s) into the System, and shall not use, cause the use of or permit to be used the System for any purpose not directly authorised by this Agreement.

 

3.                                     Ownership of Property and Intellectual Property

 

3.1                             It is hereby acknowledged and agreed that as between the parties any and all property and Intellectual Property in the System is vested in Lonza.

 

3.2                             The provisions of this Clause 3 shall survive termination of this Agreement.

 

4.                                     Licences

 

4.1                             Lonza hereby grants to Licensee a world-wide non-exclusive licence (with the right to sublicense, subject to Clause 4.3 below) under the System Know-How and Patent Rights to use, develop, manufacture, market, sell, offer for sale, distribute, import and export Product in the Territory.

 

4.2                             Save as expressly provided by Clause 2.2 above, the Licensee hereby undertakes not to make any modifications or adaptations to the System during the subsistence of this Agreement.

 

4.3                             Subject to the provisions of this Clause 4.3, Licensee shall be entitled to grant a sublicence to the rights granted by Clause 4.1 to any one or more third parties for the purposes of any such third party producing Product for Licensee provided always:

 

4.3.1                 Licensee shall ensure such sublicensee’s use of the System, the Intellectual Property and the Product is undertaken solely for the purpose of establishing a manufacturing process for Product, or producing Product, for Licensee; and

 

4.3.2                 The sublicensee shall not, by virtue of this Agreement, be granted any right or licence, either express or implied, under any patent or proprietary right vested in Lonza or otherwise, to use the System, the Intellectual Property or the Product other than for the purposes of

 

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establishing a manufacturing Process for Product or producing Product for Licensee and Licensee agrees to ensure that such sublicensee shall not assign, transfer, further sublicense or otherwise make over the benefit or the burden of the rights granted to it pursuant to this Agreement; and

 

4.3.3                 Any sublicence granted shall be expressly subject and subordinate to the terms of this Agreement, and it shall be Licensee’s responsibility to ensure the strict adherence by any sublicensee hereunder to the terms and conditions of this Agreement; and

 

4.3.4                 Prior to the grant of any sublicence pursuant to this Clause 4 Licensee shall obtain the written consent of Lonza (such consent not to be unreasonably withheld), to the grant of such sublicence.

 

4.4                             If, on a country-by-country basis, any granted patents that form part of the Patent Rights (including any re-issued patents and unexpired patents), subsequently expire or no longer contain a Valid Claim such Patent Rights shall automatically fall outside the scope of this Agreement and the provisions of Clauses 4.1 to 4.3 shall only apply, with respect to granted patents, to those granted patents which contain a Valid Claim and form part of the Patents Rights for as long as those granted patents remain in force.

 

4.5                             On a country-by-country basis, where no Valid Claims within the Patent Rights remain in force, the provisions of Clauses 4.1 to 4.3 shall only apply for as long as the System Know-How remains secret and substantial.

 

5.                                     Payments

 

5.1                             In consideration of the licence granted to Licensee pursuant to Clause 4.1 above, and in consideration for the right to sublicense the rights granted by Clause 4.1 pursuant to Clause 4.3, Licensee shall pay Lonza as follows:

 

5.1.1               in respect of Product manufactured by Lonza, a royalty of [...***...] percent ([...***...]%) of the Net Selling Price;

 

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5.1.2               where Licensee or Licensee’s Strategic Partner manufactures Product:

 

5.1.2.1                    a payment of pounds sterling seventy five thousand (£75,000) due annually during the course of this Agreement, and being first payable upon [...***...]; and

 

5.1.2.2                    a royalty of [...***...] percent ([...***...]%) of the Net Selling Price of such Product manufactured.

 

5.1.3               where any party other than Lonza, Licensee or Licensee’s Strategic Partner manufactures Product:

 

5.1.3.1                    a payment of pounds sterling three hundred thousand (£300,000) per sublicence due annually during the course of such sublicence, and being first payable on the [...***...]; and

 

5.1.3.2                    a royalty of [...***...] percent ([...***...]%) of the Net Selling Price of such Product manufactured.

 

5.3                            If, on a country-by-country basis, the manufacture and/or sale of the Product are not protected by a Valid Claim within the Patent Rights then in respect of sales in such countries:

(a)                               the royalties referred to in 5.1.1, 5.1.2.2 and 5.1.3.2 shall be due only in respect of the System Know-How;

(b)                               the royalties referred to in 5.1.1 and 5.1.2.2 shall be at the rate of [...***...] per cent ([...***...]%) of the Net Selling Price;

(c)                               the royalties referred to in 5.1.3.2 shall be at the rate of [...***...] per cent ([...***...]%) of the Net Selling Price

(d)                            such royalty shall expire twelve (12) years following the first commercial sale of the Product.

 

5.4  In the event Lonza is the only manufacturer of Product but Licensee wishes to secure a second source manufacturer of Product (the ‘Second Source’), then provided Lonza continues to manufacture at least [...***...] percent ([...***...]%) of Licensee’s requirement for Product, the payment applicable to such Product as is manufactured

 

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by the Second Source shall be that referred to in clause 5.1.1 (and not 5.1.2 or 5.1.3), namely as if such Product was manufactured by Lonza.

 

5.5  In the event (a) Licensee requests that Lonza (or one of its Affiliates) manufacture clinical batches (i.e. phase I, II or III) with a lead time until start of the first GMP production run of:

 

(i)                                   [...***...] months in respect of a production run at less than [...***...]L ([...***...] litres); or

(ii)                                [...***...] months in respect of a production run at or above [...***...]L ([...***...] litres)

 

and Lonza does not have capacity available to initiate such production run following such time period, or (b) Licensee has entered into an agreement with Lonza (or one of its Affiliates) to manufacture Product, and Lonza (or such Affiliate) in breach of such agreement cannot manufacture due to capacity constraints or other reasons within Lonza’s (or such Affiliate’s) control, then the payment applicable to such Product shall be that referred to in clause 5.1.1 (and not 5.1.2 or 5.1.3), namely as if such Product was manufactured by Lonza.

 

6.                                     Royalty Procedures

 

6.1                             Licensee shall keep true and accurate records and books of account containing all data necessary for the calculation of royalties payable to Lonza.  Such records and books of account shall, upon reasonable notice having been given by Lonza (which in no event shall be less than thirty (30) days prior notice), be open at reasonable times during regular business hours for inspection by an independent certified public accounting firm of nationally recognized standing, selected by Lonza and reasonably acceptable to Licensee, as reasonably necessary to verify the accuracy of the royalty reports hereunder for the [...***...] calendar quarters immediately prior to the date of such notice.  Such independent auditors shall agree to maintain the confidentiality of the information and materials disclosed during the audit.  The independent auditor shall disclose to Lonza only whether the royalty reports are correct or not and the amount of any discrepancy.  No other information shall be shared.  Any such audit shall be conducted in a manner that does not interfere unreasonably with the operations of Licensee’s business.  Lonza may perform an audit once each calendar year.  Each audit shall begin upon the date specified by Lonza within the time frame specified above, and shall be completed as soon as reasonably practicable.  Lonza

 

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shall pay the costs of the independent auditors conducting such audit, unless the results of the audit reveal an underpayment of [...***...]% or more by Licensee, in which case, Licensee shall pay the reasonable out-of-pocket costs of the independent auditors.  If an audit concludes that an overpayment or underpayment has occurred during the audited period, such payment shall be remitted by the party responsible for such payment to the other party within thirty (30) days after the date such auditor’s written report identifying the overpayment or underpayment is delivered to the party responsible for such payment.

 

6.2                             Licensee shall prepare a statement in respect of each calendar quarter which shall show for the immediately preceding quarter details of the sales of Product and the royalty due and payable to Lonza thereon.

 

Such statement shall be submitted to Lonza within forty-five (45) days after the end of the calendar quarter to which it relates, together with a remittance for the royalties due to Lonza.

 

6.3                             All sums due under this Agreement:

 

6.3.1                 shall be made in pounds sterling to Lonza.  Payments due to Lonza in currencies other than pounds sterling shall first be calculated in the relevant local currency before being calculated at the rate of exchange in effect at the close of business on the day payment is due or made, whichever is earlier.  The rate of exchange shall be the mean value of the Pound Spot Rate in London first published in the Financial Times on the day following the day for determining such rates.

 

6.3.2                 are exclusive of any Value Added Tax or of any other applicable taxes, levies, imposts, duties and fees of whatever nature imposed by or under the authority of any government or public authority, and shall be paid by Licensee (other than taxes on Lonza’s income).  The parties agree to co-operate in all respects reasonably necessary to take advantage of such double taxation treaties as may be available.

 

6.4                             Where Lonza does not receive payment of any sum by the due date, interest shall accrue thereafter on the sum due and owing to Lonza at the rate of [...***...]

 

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percent ([...***...]%) over the base rate from time to time of National Westminster Bank plc, interest to accrue on a day-to-day basis without prejudice to Lonza’s right to receive payment on the due date.

 

7.                                     Liability and Warranties

 

7.1                            Lonza gives no representation or warranty that the Patent Rights will be valid nor that the exercise of the rights granted to Licensee hereunder will not infringe other patent rights or intellectual property rights vested in Lonza or any third party.

 

7.2                            Lonza warrants that (a) it has the power, authority and legal right to enter into this Agreement and to grant to Licensee the license rights purported to be granted hereby, (b) this Agreement and the license rights purported to be granted hereby do not conflict with, or constitute a default under, any contractual obligation of it, (c) the patents included in the Patent Rights are the only patents that must be licensed from Lonza and/or its Affiliates in order to operate the System, (d) the System Know-How is the only Know-How that must be licensed from Lonza and/or its Affiliates in order to operate the System, and (e) it has not received any suit or claim alleging that the Intellectual Property infringes the intellectual property rights of a third party.

 

7.3                            Licensee acknowledges that it may require licences under Lonza patent rights other than those herein licensed or under third party patent rights (including those vested in Affiliates of Lonza) in order to use enhancements to or optimization tools for the System.  It is hereby agreed that it shall be the Licensee’s responsibility to satisfy itself as to the need for such licences and if necessary to obtain such licences.  No licence is granted save as expressly provided herein and no licence in addition thereto shall be deemed to have arisen or be implied by way of estoppel or otherwise.

 

7.4                            Each Party (“Indemnifying Party”) shall indemnify and hold harmless the other Party (“Indemnified Party”) and its officers, employees and agents at all times in respect of any and all losses, damages, costs and expenses suffered or incurred as a result of any contractual, tortious or other claims or proceedings by third parties against Indemnified Party arising out of the Indemnifying Party’s breach of this Agreement, including breach of representations and warranties, violation of applicable law, negligence or wilful misconduct.

 

7.5                            With respect to product liability claims or proceedings, the following shall apply: (a) except to the extent provided in (b) below, Licensee shall indemnify and hold harmless Lonza and its officers, employees and agents at all times in

 

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respect of any and all losses, damages, costs and expenses suffered or incurred as a result of any tortious claims or proceedings by third parties against Lonza, its officers, employees and agents for death or bodily injury to the extent relating to the Product, and (b) Lonza shall indemnify and hold harmless Licensee and its officers, employees and agents at all times in respect of any and all losses, damages, costs and expenses suffered or incurred as a result of any tortious claims or proceedings by third parties against Licensee, its officers, employees and agents for death or bodily injury relating to the Product to the extent such claims or proceedings result from defects in the materials provided by Lonza, or from Lonza breach of this Agreement.

 

7.6                            Any condition or warranty other than those relating to title which might otherwise be implied or incorporated within this Agreement by reason of statute or common law or otherwise is hereby expressly excluded.

 

7.7                            IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOSS OF PROFITS, SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT.

 

7.8                            The terms of this Clause 7 shall survive expiration or termination of this Agreement for whatever reason.

 

8.                                     Confidentiality

 

8.1                             Licensee expressly acknowledges that the System Know-How and any other Know-How with which it is supplied by Lonza pursuant to this Agreement is supplied in circumstances imparting an obligation of confidence and Licensee agrees to keep such Know How or System Know-How secret and confidential and to respect Lonza’s proprietary rights therein and to use the same for the sole purpose of this Agreement and not during the period of this Agreement or at any time for any reason whatsoever to disclose or permit to be disclosed such Know How or System Know-How to any third party other than its sublicensee hereunder for use in accordance with the terms of this Agreement.  Licensee shall procure that only its employees and agents and employees and agents of its sublicensee hereunder shall have access to the

 

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Know How or System Know-How on a need to know basis and that all such employees and agents shall be informed of their secret and confidential nature and shall be subject to the same obligations as Licensee and its sublicensee hereunder pursuant to this Clause 8.1.

 

8.2                             Licensee hereby undertakes and agrees to keep the System secure and safe from loss, damage, theft, misuse and unauthorised access and shall procure that the System shall be made available only to employees and agents of Licensee and employees and agents of its sublicensee hereunder on a need to know basis and subject to the same obligations of confidence as provided in Clause 8.1 hereof, and to use the same for the sole purpose of this Agreement.

 

8.3                             Both parties undertake and agree not to at any time for any reason whatsoever disclose or permit to be disclosed to any third party or otherwise make use of or permit to be made use of any trade secrets or confidential information or materials relating to the business affairs or finances of the other or of any suppliers, agents, distributors, licensees or other customers of the other which comes into their possession pursuant to this Agreement.

 

8.4                             The obligations of confidence referred to in this Clause 8 shall not extend to any information which the receiving party demonstrates:

 

8.4.1                 is or shall become generally available to the public otherwise than by reason of a breach by the recipient party of such information of the provisions of this Clause 8;

 

8.4.2                 is known to the recipient party of such information and is at its free disposal prior to its receipt from the other;

 

8.4.3                 is subsequently disclosed to the recipient party without obligations of confidence by a third party owing no such obligation of confidentiality to the disclosing party; and

 

8.4.4                  Lonza or Licensee may be required to disclose to a government agency for the purpose of any statutory, regulatory or similar legislative requirement applicable to the production of Product or to

 

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meet the requirements of any Stock Exchange to which the parties may be subject, but only to the extent such disclosure is required, and subject to obligations of secrecy wherever possible; and

 

8.4.5               can be demonstrated by competent written evidence as having been independently developed by the recipient of the information in question without access to or use or knowledge of the information of the disclosing party.

 

8.5                             The obligations of both parties under this Clause 8 shall survive the expiration or termination of this Agreement for whatever reason.

 

9.                                     Intellectual Property Enforcement

 

9.1                             Lonza hereby undertakes and agrees that at its own cost and expense it will:

 

9.1.1                 prosecute or procure prosecution of such of the Patent Rights which are patent applications diligently so as to secure the best commercial advantage obtainable, as determined by Lonza in its commercially reasonable discretion, and will pursue, as determined by Lonza in its commercially reasonable discretion, all necessary actions against any third party that Lonza reasonably believes is infringing, misappropriating or violating any Intellectual Property; and

 

9.1.2                 pay or procure payment of all renewal fees in respect of the Patent Rights valid and subsisting for the full term thereof and in particular will procure such renewal of the registrations thereof as may be necessary from time to time so far as it is reasonable to do so with particular reference to commercial considerations.

 

9.2                                                                            Licensee shall promptly notify Lonza in writing of any infringement or improper or unlawful use of or of any challenge to the validity of the Patent Rights and/or Know-How of which Licensee becomes aware.  Lonza undertakes and agrees to take all such steps and proceedings and to do all other acts and things as may in Lonza’s sole discretion be necessary to restrain any such infringement or improper or unlawful use or to defend such challenge to validity and Licensee shall permit

 

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Lonza to have the sole conduct of any such steps and proceedings including the right to settle them whether or not Licensee is a party to them. Licensee shall have the right at its own cost and for its own benefit to initiate, prosecute and control the enforcement of the the Patent Rights against infringement by a Third Party in the Territory if all of the following conditions are fulfilled (a) the product manufactured through the infringing activity is a competing product to the Product, (b) Lonza has not granted rights to third parties which prevent Lonza from granting such a right to enforce to Licensee, and (c) Lonza does not initiate proceedings within sixty (60) days of being requested to do so by Licensee.

 

10.                             Term and Termination

 

10.1                     Unless terminated earlier in accordance with the provisions of this Clause 10 or Clause 14, this Agreement shall continue in force in each country of the world, until expiry of the last Valid Claim, or for so long as the System Know-How is identified and remains secret and substantial, whichever is later.

 

10.2                     Licensee may terminate this Agreement for any reason by giving sixty (60) days notice in writing to Lonza.

 

10.3                     Either Lonza or Licensee may terminate this Agreement forthwith by notice in writing to the other upon the occurrence of any of the following events:

 

10.3.1         if the other commits a breach of this Agreement which in the case of a breach capable of remedy shall not have been remedied within thirty (30) days of the receipt by the other of a notice identifying the breach and requiring its remedy.

 

10.3.2         if the other enters into compulsory or voluntary liquidation (other than for the purpose of effecting a reconstruction or amalgamation in such manner that the company resulting from such reconstruction or amalgamation if a different legal entity shall agree to be bound by and assume the obligations of the relevant party under this Agreement) or has a receiver appointed over all or any part of its assets or takes or

 

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suffers any similar action in consequence of a debt, or ceases for any reason to carry on business.

 

10.4                    If at any time during this Agreement Licensee knowingly and directly opposes or assists any third party to oppose the grant of letters patent or any patent application within any of the Patent Rights, or knowingly and directly disputes assists any third party to dispute the validity of any patent within any of the Patent Rights or any of the claims thereof, in each case except as required by legal process or court order, Lonza shall be entitled at any time thereafter to terminate all or any of the licences granted hereunder forthwith by notice to Licensee.

 

10.5 If this Agreement is terminated for any reason any and all licences granted hereunder shall terminate with effect from the date of termination and Licensee shall destroy all elements of the System and Product forthwith and shall certify such destruction immediately thereafter in writing to Lonza.

 

10.6                     Termination for whatever reason or expiration of this Agreement shall not affect the accrued rights of the parties arising in any way out of this Agreement as at the date of termination.  The right to recover damages against the other and all provisions which are expressed to survive this Agreement shall remain in full force and effect.

 

11.                             Assignment

 

11.1                     Save as expressly provided by Clause 4, neither party shall be entitled to assign, transfer, charge or in any way make over the benefit and/or the burden of this Agreement without the prior written consent of the other which consent shall not be unreasonably withheld or delayed, save that either party shall be entitled without the prior written consent of the other party to assign, transfer, charge, sub-contract, deal with or in any other manner make over the benefit and/or burden of this Agreement to an Affiliate or to any 50/50 joint venture company of which Lonza or Licensee, as the case may be, is the beneficial owner of not less than fifty percent (50%) of the issued share capital thereof or to any company with which that party may merge or consolidate, to any company to which that party may transfer substantially all of its assets and undertakings to which this agreement relates.  A change in control shall not be deemed to be an assignment, transfer, charge or make over.

 

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11.2                     This Agreement shall be binding upon the successors and assigns of the parties and the name of a party appearing herein shall be deemed to include the names of its successors and assigns provided always that nothing herein shall permit any assignment by either party except as expressly provided herein.

 

12.                             Governing Law and Jurisdiction

 

12.1                    The validity, construction and performance of this Agreement shall be governed by English law and the parties submit to the non-exclusive jurisdiction of the courts of England and Wales.

 

12.2                    Either party shall have the right to take proceedings in any other jurisdiction for the purposes of enforcing a judgement or order obtained from any court of competent jurisdiction.

 

13.                             Force Majeure

 

Neither party shall be in breach of this Agreement if there is any total or partial failure of performance by it of its duties and obligations under this Agreement occasioned by any act of God, including without limitation, fire, act of government or state, war, civil commotion, insurrection, embargo, epidemic, terrorism or earthquake, prevention from or hindrance in obtaining any raw materials, energy or other supplies, labour disputes of whatever nature and any other reason beyond the control of either party.  If either party is unable to perform its duties and obligations under this Agreement as a direct result of the effect of one of the reasons set out in this Clause 13 such party shall give written notice to the other of such inability stating the reason in question.  The operation of this Agreement shall be suspended during the period (and only during the period) in which the reason continues.  Forthwith upon the reason ceasing to exist the party relying upon it shall give written notice to the other of this fact. If the reason continues for a period of more than one hundred eighty (180) days and substantially affects the commercial basis of this Agreement the party not claiming under this Clause 13 shall have the right to terminate this Agreement by giving written notice of such termination to the other party.

 

14.                            Illegality

 

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14.1                    If any provision or term of this Agreement or any part thereof shall become or be declared illegal, invalid or unenforceable for any reason whatsoever including but without limitation by reason of the provisions of any legislation or other provisions having the force of law or by reason of any decision of any Court or other body or authority having jurisdiction over the parties hereto or this Agreement including the EC Commission or the European Court of Justice:

(i)                                  such provision shall, so far as it is illegal, invalid or unenforceable, be given no effect by the Parties and shall be deemed not to be included in this Agreement;

(ii)                               the other provisions of this Agreement shall be binding on the Parties as if such provision was not included therein; and

(iii)                            the Parties agree to negotiate in good faith to amend such provision to the extent possible for incorporation herein in such reasonable manner as most closely achieves the intention of the Parties without rending such provision invalid or unenforceable.

 

15.                             Miscellaneous

 

15.1                    This Agreement embodies and sets forth the entire agreement and understanding of the parties and supersedes all prior oral and written agreements, understanding or arrangements relating to the subject matter of this Agreement.  Neither party shall be entitled to rely on any agreement, understanding or arrangement which is not expressly set forth in this Agreement.

 

15.2                    This Agreement shall not be amended, modified, varied or supplemented except in writing signed by duly authorised representatives of the parties.

 

15.3                    No failure or delay on the part of either party hereto to exercise any right or remedy under this Agreement shall be construed or operated as a waiver thereof nor shall any single or partial exercise of any right or remedy under this Agreement preclude the exercise of any other right or remedy or preclude the further exercise of such right or remedy as the case may be.  The rights and remedies provided in this Agreement are cumulative and are not exclusive of any rights or remedies provided by law.

 

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15.4                    Except as required by law, the text of any press release or other communication to be published by or in the media whether of a scientific nature or otherwise and concerning this Agreement shall require the prior written approval of Lonza and Licensee.

 

15.5                    Each of the parties hereto shall be responsible for its respective legal and other costs incurred in relation to the preparation of this Agreement.

 

15.6                    The parties to this Agreement do not intend that any term hereof should be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999, or by any other statute or common-law principle, by any person who is not a party to this Agreement.

 

16.                             Notice

 

16.1                     Any notice or other document to be given under this Agreement shall be in writing and shall be deemed to have been duly given if left at or sent by registered post or by a reputable overnight courier to a party or delivered in person to a party at the address set out below for such party or such other address as the party may from time to time designate by written notice to the other(s):

 

Address of Lonza

Lonza Sales AG, 228 Bath Road, Slough, Berkshire SL1 4DX

Facsimile: 01753 777001

For the attention of the Head of Legal Services

 

Address of Licensee

TRACON PHARMACEUTICALS INC, of 4510 Executive Drive, Suite 330, San Diego, CA 92121, USA

Facsimile: 001-858-550-0780

For the attention of Vice President of Product Development

 

16.2                     All such notices and documents shall be in the English language.  Any such notice or other document shall be effective upon actual receipt.

 

17.                             Interpretation

 

20

 

17.1                     The headings in this Agreement are inserted only for convenience and shall not affect the construction hereof.

 

17.2                     Where appropriate words denoting a singular number only shall include the plural and vice versa.

 

17.3                     Reference to any statute or statutory provision includes a reference to the statute or statutory provision as from time to time amended, extended or re-enacted.

 

AS WITNESS the hands of the duly authorised representatives of the parties hereto

 

 

 

 

 

	
Signed for and on behalf of
    	
...../s/ Gerry   Kenney.......................................
    
	
LONZA SALES AG
    	
GERRY KENNEDY
    
	
 
    	
 
    
	
 
    	
....Authorised   Signatory........................ TITLE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signed for and on behalf of
    	
...../s/ K.B.   Fallen..............................................
    
	
LONZA SALES AG
    	
KAREN FALLEN
    
	
 
    	
 
    
	
 
    	
....Authorised Signatory........................   TITLE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signed for and on behalf of
    	
...../s/ Sharon   Real..............................................
    
	
TRACON PHARMACEUTICALS INC
    	
 
    
	
 
    	
 
    
	
 
    	
...VP of Product   Dev............................. TITLE
    

 

21

 

SCHEDULE 1

 

PATENT RIGHTS

 

[...***...]

 

***Confidential Treatment Requested

 

 

[...***...]

 

***Confidential Treatment Requested

 

2

 

[...***...]

 

***Confidential Treatment Requested

 

3

 

[...***...]

 

***Confidential Treatment Requested

 

4

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