Document:

Exhibit 10.18

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

FIRST AMENDMENT TO AMENDED AND RESTATED LICENSE AGREEMENT

 

FIRST AMENDMENT TO AMENDED AND RESTATED LICENSE AGREEMENT, (“Amendment”) effective as of June 8, 2009 (“Effective Date”), by and between The University of North Carolina at Chapel Hill, having an address at 104 Airport Drive, CB# 1350, Chapel Hill, North Carolina 27599-1350, (“University”), and Liquidia Technologies, Inc, a corporation existing under the laws of Delaware, and having its principal headquarters at Suite 100, 419 Davis Drive, Durham, NC 27713 (“Licensee”).

 

WITNESSETH:

 

WHEREAS, Licensee and University have entered into an Amended and Restated License Agreement dated as of December 15, 2008 (“Agreement”); and

 

WHEREAS; Licensee and University wish to amend the Agreement upon the terms and conditions set forth below.

 

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

 

1.                                      Sections 3.4.1 and 3.4.2 of Section 3.4 of Article 3 are hereby amended and replaced in their entirety with the following new Sections 3.4.1 and 3.4.2:

 

3.4.1 In respect to sublicenses granted by LICENSEE under Article 6 below, LICENSEE shall pay to UNIVERSITY twenty percent (20%) of any fees, minimum royalties, and any consideration other than royalties that LICENSEE receives from each sublicensee for any rights granted under a sublicense agreement within thirty (30) days of receiving any such payments from each such sublicense. LICENSEE shall not be required to make such payment to UNIVERSITY on fees or other consideration received by LICENSEE from sublicensees as: (i) payment or reimbursement for research and development (including joint development) activities by LICENSEE in connection with LICENSED PRODUCTS or the INVENTIONS (provided that (a) LICENSEE provides to UNIVERSITY the statement of work, including, to the extent available, a reasonable budget, for each research and development program prior to engaging in each such research and development program and (b) any subsequent sale of such LICENSED PRODUCTS shall be subject to the royalty calculations herein); (ii) payment for LICENSEE services provided in connection with any sublicense provided that such services do not require use of INVENTIONS or UNIVERSITY TECHNOLOGY, (iii) a loan that is not convertible to shares of LICENSEE’s stock and that bears market rate interest, (iv) the purchase of LICENSEE’s equity

 

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

securities at fair market value, (v) reimbursement of patent costs, or (vi) proceeds from private or governments research grants to LICENSEE.

 

3.4.2 LICENSEE shall pay to UNIVERSITY [***] percent ([***]%) of royalty payments LICENSEE receives from each sublicensee; provided, however, that in no event shall the royalty rate paid by LICENSEE to UNIVERSITY be less than [***] percent ([***]%) of NET SALES of LICENSED PRODUCTS sold by each sublicensee and no greater than [***] percent ([***]%) of NET SALES of LICENSED PRODUCTS sold by each sublicensee. LICENSEE shall pay to UNIVERSITY said royalties on the LICENSED PRODUCTS concurrently with the making of quarterly written reports as provided in Section 4.1 below. LICENSEE may request that UNIVERSITY accept a royalty rate less than [***] percent ([***]%) of NET SALES of LICENSED PRODUCTS sold by a sublicensee, provided that LICENSEE submits financial details that justify such request; such request shall be denied or accepted at UNIVERSITY’s sole discretion. In the event that the definition of “net sales” agreed to between LICENSEE and one of its sublicensees differs from the definition of NET SALES herein, the parties shall execute a consent letter memorializing such net sales definition between LICENSEE and such sublicensee and providing that such definition shall be used for purposes of the calculation set forth in this Section 3.4.2.

 

2.                                      Article 5 shall be amended and replaced in its entirety with the following new Article 5.

 

5.1                               LICENSEE will use commercially reasonable efforts, taking into account the financial condition of LICENSEE and general business and market conditions, to meet all obligations under the performance milestones set forth in Exhibit B, which is attached hereto. If LICENSEE is unable to satisfy the milestones set forth in Exhibit B, UNIVERSITY hereby agrees that:

 

(i)                                     LICENSEE shall have one hundred and twenty (120) days from receiving notice from UNIVERSITY of LICENSEE’s failure to meet or achieve a milestone to cure any such failure (“Cure Period”). Any efforts or activities undertaken by LICENSEE’s AFFILIATES or sublicensees will be treated as LICENSEE’s efforts and activities for purposes of determining LICENSEE’s compliance with the terms of this Article 5.

 

(ii)                                  During the 120 day Cure Period, UNIVERSITY and LICENSEE shall negotiate in good faith to revise the milestone(s) to reflect an appropriate milestone(s) at the time taking into account the financial condition of LICENSEE and general business and market conditions.

 

(iii)                               If LICENSEE is unable to cure a failure to satisfy a milestone set forth in Exhibit B under Section 5.1(i) and UNIVERSITY and

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

LICENSEE have not reached an agreement to revise such milestone under Section 5.1(ii) then UNIVERSITY shall have the right to elect to have LICENSEE and UNIVERSITY negotiate in good faith to have one SPECIFIC LICENSED FIELD excluded from this LICENSE AGREEMENT. In the event that LICENSEE and UNIVERSITY cannot agree on such SPECIFIC LICENSED FIELD to be excluded from this LICENSE AGREEMENT within ninety (90) days of UNIVERSITY’S notice of election to negotiate in good faith to have one SPECIFIC LICENSED FIELD excluded from this LICENSE AGREEMENT (“NEGOTIATION PERIOD”) then LICENSEE shall designate the SPECIFIC LICENSED FIELD to be so excluded by written documentation to UNIVERSITY within thirty (30) days of the expiration of such NEGOTIATION PERIOD (“DESIGNATION PERIOD”). In the event that LICENSEE fails to designate the SPECIFIC LICENSED FIELD prior to the expiration of the DESIGNATION PERIOD, then UNIVERSITY, at its sole discretion, shall be entitled to select the SPECIFIC LICENSED FIELD to be excluded from the then-existing LICENSED FIELD; provided, however, that UNIVERSITY shall not exclude from this LICENSE AGREEMENT any SPECIFIED LICENSED FIELD for which LICENSEE has (a) previously provided a detailed commercialization plan, (b) executed a license, sublicense or other commercial agreement, including a license, sublicense or other commercial agreement with a subsidiary or new entity, or (c) in which LICENSEE or its sublicensees or AFFILIATES have made a commercial sale of LICENSED PRODUCT.                        In such event, UNIVERSITY shall select the SPECIFIC LICENSED FIELD to be excluded and the LICENSE AGREEMENT shall be amended to reflect any exclusion of such SPECIFIC LICENSED FIELD from this LICENSE AGREEMENT within thirty (30) days of the expiration of the DESIGNATION PERIOD.

 

3.                                      Sections 6.1, 6.3, 6.4, and 6.5, are hereby amended and replaced in their entirety with the following new Sections 6.1, 6.3, 6.4, and 6.5a and 6.5b:

 

6.1                               LICENSEE may sublicense any or all of the rights licensed hereunder, including the right to sublicense through multiple tiers of sublicenses, provided that LICENSEE notifies UNIVERSITY in writing and provides UNIVERSITY with a copy of each sublicense agreement and each amendment thereto within thirty (30) days after execution of each such license agreement and amendment.

 

6.3                               LICENSEE shall require that all sublicense agreements be consistent with the terms, conditions and limitations of the licenses granted to LICENSEE under this LICENSE AGREEMENT. In addition, LICENSEE’S sublicense agreements shall (i) include the sublicensee’s acknowledgment of the disclaimer of warranty and limitation on UNIVERSITY’s liability, pursuant to Article 10, and (ii) stipulate

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

that any LICENSED PRODUCTS used or sold in the United States shall be substantially manufactured in the United States if and as required by 35 U.S.C. § 204, as specified in Section 12.6. Notwithstanding anything to the contrary contained in this Section 6.3, the requirements of the foregoing clauses (i) and (ii) shall not apply in the case of any trial or similar sublicense granted by LICENSEE solely for the purpose of determining the suitability of any INVENTIONS for a potential development, manufacturing commercialization or other business relationship.

 

6.4                               Upon execution of each sublicense agreement, LICENSEE agrees to use its commercially reasonable efforts to enforce each sublicensee’s compliance with each such sublicense agreement, and LICENSEE may terminate any sublicense agreement if the sublicensee is in material breach of the sublicense agreement and fails to cure such breach within sixty (60) days of LICENSEE’s discovery of such breach. Material breach by a sublicense shall include, but not be limited to, (i) failure to submit to LICENSEE an accurate report of NET SALES and (ii) failure to pay LICENSEE amounts due and owed under the sublicense agreement on the dates such payments are due.

 

6.5.a Any sublicense granted in accordance with this LICENSE AGREEMENT prior to expiration of this LICENSE AGREEMENT shall survive any such expiration.

 

6.5.b LICENSEE shall cause every sublicense agreement granted after June 1, 2009, and in accordance with this LICENSE AGREEMENT to provide LICENSEE the right to assign its rights under the sublicense to UNIVERSITY in the event that this LICENSE AGREEMENT terminates, such assignment shall be accepted by UNIVERSITY in writing within thirty (30) days of receiving written notice from LICENSEE of each such assignment.

 

4.                                      Sections 6.6 and 6.7 are hereby deleted in their entirety and replaced with the following new Section 6.6 and 6.7.

 

6.6 In the event that a third party company (“PROSPECTIVE SUBLICENSEE”) wishes to commercialize a product for which they require a license under the PATENT RIGHTS (“PROPOSED PRODUCT”) in a field that LICENSEE, its AFFILIATES or any sublicensee of either of the foregoing is not then developing, producing, or using the PATENT RIGHTS, then LICENSEE may elect one of the following:

 

(a)                                 provide UNIVERSITY with written notice, in the form of a reasonable business development plan, that LICENSEE (i) has initiated a development program to commercialize the PROPOSED PRODUCT, or (ii) intends to initiate a development program within eighteen (18) months of the date of said written notice; or

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

(b)                                 begin good faith negotiations with the PROSPECTIVE SUBLICENSEE; or

 

(c)                                  grant back to UNIVERSITY their rights to the PATENT RIGHTS under this LICENSE AGREEMENT in the LICENSED FIELD in which such PROPOSED PRODUCT would infringe the PATENT RIGHTS.

 

6.7 If LICENSEE elects to negotiate with the PROSPECTIVE SUBLICENSEE for a sublicense to develop and commercialize the PROPOSED PRODUCT as provided for in Section 6.6(b), LICENSEE shall make a good faith effort to complete negotiations with the PROSPECTIVE SUBLICENSEE within one hundred and eighty (180) days from the date on which it began negotiations. This one hundred and eighty (180) day period may be extended by UNIVERSITY upon documentation provided to UNIVERSITY by LICENSEE that such extension is reasonable in view of the circumstances. For the purposes of this Section, LICENSEE will have made a good faith effort to complete negotiations if it has offered a sublicense to the PROSPECTIVE SUBLICENSEE the terms of which include (i) reasonable financial terms taking into account the field in which the sublicense is being offered and LICENSEE’s obligations to UNIVERSITY pursuant to this LICENSE AGREEMENT; (ii) minimum performance requirements which would not be unreasonably burdensome upon the PROSPECTIVE SUBLICENSEE; and (iii) non-financial terms which are consistent with LICENSEE ‘s obligations to UNIVERSITY pursuant to this LICENSE AGREEMENT. In the event that LICENSEE and PROSPECTIVE SUBLICENSEE nevertheless fail to consummate any sublicensing transaction, LICENSEE shall provide written notification to UNIVERISTY providing details of the reasons for such failure and shall retain all UNIVERSITY PATENT RIGHTS and UNIVERSITY TECHNOLOGY to such PROPOSED PRODUCT and shall not be deemed to have breached the LICENSE AGREEMENT.

 

5.                                      Section 7.2 is hereby deleted in its entirety and replaced with the following new Section 7.2:

 

7.2 It is expressly agreed that, notwithstanding the provisions of any other paragraph of this LICENSE AGREEMENT, upon the occurrence of any of the following events that remain uncured after sixty (60) days of receipt of written notice from UNIVERSITY describing such occurrence, then this LICENSE AGREEMENT shall automatically terminate: (i) the failure to deliver to UNIVERISTY any royalty or other payment at the time or times that the same should be due to UNIVERSITY under this LICENSE AGREEMENT, (ii) failure to provide reports as specified in Sections 4.1 and 4.2, (iii) the failure to keep complete, true and accurate accounting as specified in Section 4.3, (iv) failure to allow representative of UNIVERSITY to inspect LICENSEE’s books and records as specified in Section 4.3, (v) failure of LICENSEE to use its commercially reasonable efforts to enforce sublicense’s compliance as specified in Section 6.4, (vi) failure of LICENSEE to elect to terminate any sublicense agreement if the

 

5

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

sublicensee is in material breach and fails to cure such breach as specified in Section 6.4 and LICENSEE believes that termination of such sublicense agreement is a commercially reasonable action under the circumstances, (vii) failure to indemnify and hold UNIVERSITY harmless as specified in Section 11.1, 11.2, and 11.4 and (viii) failure to possess and maintain insurance as set forth in Section 11.3.

 

6.                                      Section 7.5 of Article 7 of the Agreement is hereby amended and replaced in its entirety with the following new Section 7.5:

 

7.5                               Upon early termination of this LICENSE AGREEMENT in whole or in part, LICENSEE shall provide UNIVERSITY with a written inventory of all UNIVERSITY TECHNOLOGY and LICENSED PRODUCTS in the process of manufacture, in use or in stock. LICENSEE shall have the privilege of disposing of the inventory of such LICENSED PRODUCTS within a period of one hundred and eighty (180) days of such termination, and shall pay to UNIVERSITY one and [***] percent ([***]%) of NET SALES of such LICENSED PRODUCTS within thirty (30) days of such sale. LICENSEE will also have the right to complete performance of all contracts for the sale of LICENSED PRODUCTS by LICENSEE requiring use of UNIVERSITY TECHNOLOGY, PATENT RIGHTS or LICENSED PRODUCTS within and beyond said period of one hundred and eighty (180) days provided that the remaining term of any such contract does not exceed one year. All LICENSED PRODUCTS which are not disposed of as provided above shall be delivered to UNIVERSITY or otherwise disposed of, in UNIVERSITY’s sole discretion, and at LICENSEE’s sole expense.

 

7.                                      Sections 9.1 and 9.2 of Article 9 of the Agreement are hereby amended and replaced in their entirety with the following new Sections 9.1 and 9.2:

 

9.1                               If the production, sale or use of LICENSED PRODUCTS under this LICENSE AGREEMENT by LICENSEE results in any claim for patent infringement against LICENSEE, LICENSEE shall promptly notify UNIVERSITY thereof in writing, setting forth the facts of such claim in reasonable detail. As between the parties to this LICENSE AGREEMENT, LICENSEE shall have the first and primary right and responsibility, at its own expense, to defend and control the defense of any such claim against LICENSEE, by counsel of its own choice. It is understood that any settlement, consent judgment or other voluntary disposition of such actions must be approved by UNIVERSITY, such approval not being unreasonably withheld. Subject to the policies of the Board of Governors of UNIVERSITY, UNIVERSITY agrees to cooperate with LICENSEE in any reasonable manner deemed by LICENSEE to be necessary in defending any such action. LICENSEE shall reimburse UNIVERSITY for any out of pocket expenses incurred in providing such assistance. Notwithstanding any other provision of this Agreement, all royalties, upfront, milestone, and/or sales-based payments, and damages paid by LICENSEE and resulting from any claim for infringement against LICENSEE, a sublicensee of LICENSEE, or UNIVERSITY

 

6

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

and based on LICENSEE or sublicensee’s use of UNIVERSITY TECHNOLOGY or PATENT RIGHTS shall be offset against future royalties, fees, or other payments LICENSEE owes to UNIVERSITY hereunder. All other fees and expenses, including legal fees and related expenses, incurred by LICENSEE in defending UNIVERSITY TECHNOLOGY or PATENT RIGHTS against claims for patent infringement shall be offset against future royalties, fees, and other payments LICENSEE owes to UNIVERSITY upon written approval from UNIVERSITY, such approval not to be unreasonably withheld.

 

9.2 In the event that any PATENT RIGHTS licensed to LICENSEE are infringed by a third party or there is misappropriation of any UNIVERSITY TECHNOLOGY by a third party, LICENSEE shall have the primary right, but not the obligation, to institute, prosecute and control any action or proceeding with respect to such infringement or misappropriation, by counsel of its choice, including any declaratory judgment action arising from such infringement or misappropriation. It is understood that any settlement, consent judgment or other voluntary disposition of such actions must be approved by UNIVERSITY, such approval not to be unreasonably withheld. If LICENSEE recovers monetary damages from a third party, then LICENSEE shall first be reimbursed for all un-reimbursed expenses and costs incurred by LICENSEE in connection with the prosecution of such action or proceeding and then shall pay to UNIVERSITY twenty percent (20%) of the balance of such recovered monetary damages.

 

8.                                      Section 10.3 of Article 10 of the Agreement is hereby amended and replaced in its entirety with the following new Section 10.3:

 

10.3 OTHER THAN AS EXPRESSLY SET FORTH HEREIN, UNIVERSITY DISCLAIMS ALL WARRANTIES WITH REGARD TO PRODUCT(S) AND SERVICE(S) LICENSED UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ALL WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. OTHER THAN AS EXPRESSLY SET FORTH HEREIN, UNIVERSITY ADDITIONALLY DISCLAIMS ALL OBLIGATIONS AND LIABILITIES ON THE PART OF UNIVERSITY AND INVENTORS, FOR DAMAGES, INCLUDING, BUT NOT LIMITED TO, DIRECT, INDIRECT, SPECIAL, AND CONSEQUENTIAL DAMAGES, ATTORNEYS’ AND EXPERTS’ FEES, AND COURT COSTS (EVEN IF UNIVERSITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, FEES OR COSTS), ARISING OUT OF OR IN CONNECTION WITH THE MANUFACTURE, USE, OR SALE OF THE PRODUCT(S) AND SERVICE(S) LICENSED UNDER THIS AGREEMENT. LICENSEE ASSUMES ALL RESPONSIBILITY AND LIABILITY ON BEHALF OF ITSELF, ITS AFFILIATE(S) AND ITS SUBLICENSEE(S) FOR LOSS OR DAMAGE CAUSED BY A PRODUCT AND/OR SERVICE MANUFACTURED, USED, OR SOLD BY LICENSEE, ITS SUBLICENSEE(S) AND AFFILIATE(S) WHICH IS A LICENSED PRODUCT(S) AS DEFINED IN THIS AGREEMENT.

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

9.                                      Exhibit A to the Agreement is hereby amended and replaced in its entirety with the Exhibit A attached hereto.

 

10.                               As consideration for UNIVERSITY amending the PATENT RIGHTS and Exhibit A to include UNIVERSITY file 09-0078, LICENSEE shall pay UNIVERSITY five thousand dollars ($5,000) within thirty (30) days of the Effective Date of this Amendment.

 

11.                               Exhibit B to the Agreement is hereby deleted in its entirety and replaced with the new Exhibit B attached hereto.

 

12.                               This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

Signature Page Follows

 

8

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Amended and Restated License Agreement by their duly authorized officers or representatives.

 

	
THE UNIVERSITY OF NORTH   CAROLINA AT CHAPEL HILL
    	
LIQUIDIA   TECHNOLOGIES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Catherine Innes
    	
 
    	
By:
    	
/s/ Bruce Boucher
    
	
Catherine Innes
    	
 
    	
Bruce Boucher
    
	
Director, Office of   Technology Development
    	
 
    	
President
    

 

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

EXHIBIT A

 

PATENT RIGHTS

 

	
UNC Ref.
   No.
    	
 
    	
JWT or AB
   Ref. No.
    	
 
    	
LIQ Ref.No
    	
 
    	
Title
    	
 
    	
Country
    	
 
    	
App. NoJPatent
   No.
    	
 
    	
Filing Date
    	
 
    	
Status
    	
 
    
	
04-0013
    	
 
    	
421/117
    	
 
    	
64549-5001
    	
 
    	
Photocurable   Perfluoropolyethers for Use as Novel Materials in Microfluidic Devices
    	
 
    	
National
    	
 
    	
US 10/572,764 plus Foreign   Counterparts filed in AU, CA, CN, EP, IN, JP ,MX ,SG
    	
 
    	
21/Mar/06
    	
 
    	
Pending
    	
 
    
	
04-0067
    	
 
    	
421/96
    	
 
    	
64549-5003
    	
 
    	
Functional Materials and   Novel Methods for the Fabrication of Microfluidic Devices
    	
 
    	
National
    	
 
    	
US 10/589,222 plus Foreign   Counterparts filed in AU, CA, CN, EP, JP, SG
    	
 
    	
11/Aug/06
    	
 
    	
Pending
    	
 
    
	
04-0067
    	
 
    	
421/96
    	
 
    	
64549-5003/01
    	
 
    	
Methods and Materials for   Fabricating Microfluidic Devices
    	
 
    	
National
    	
 
    	
US 60/799,317 plus foreign   counterparts filed in EP, CN
    	
 
    	
10/May/05
    	
 
    	
Pending
    	
 
    
	
04-0104
    	
 
    	
421/90
    	
 
    	
64549-5002
    	
 
    	
Methods for Fabricating   Isolated Micro- and Nanostructures Using Soft or Imprint Lithography
    	
 
    	
National
    	
 
    	
US 10/583,570 plus Foreign   Counterparts filed in AU, BR, CA, CN, EP, IL, IN, JP, KR, MX, SG,   ZA
    	
 
    	
19/Jun/06
    	
 
    	
Pending
    	
 
    
	
04-0104
    	
 
    	
421/90
    	
 
    	
64549-5020
    	
 
    	
Nanoparticle Fabrication   Methods, Systems and Materials
    	
 
    	
National
    	
 
    	
US 11/921,614 plus Foreign   Counterparts filed in JP ,EP ,BR ,CN ,CA ,AU ,IN ,MX
    	
 
    	
19/Jun/06
    	
 
    	
Pending
    	
 
    
	
04-0104
    	
 
    	
421/90
    	
 
    	
64549-5021
    	
 
    	
Materials and Methods for   Fabricating Isolated Micro- and Nano- Structures Having Chemical   Functionality
    	
 
    	
PCT
    	
 
    	
PCT/US06/034997
    	
 
    	
7/Sept/06
    	
 
    	
Expired
    	
 
    
	
04-0104
    	
 
    	
421/90
    	
 
    	
64549-5023
    	
 
    	
Taggants and Methods and   Systems for Fabricating Same
    	
 
    	
National
    	
 
    	
US 12/162,264
    	
 
    	
29/Jan/07
    	
 
    	
Pending
    	
 
    
	
04-0104
    	
 
    	
421/90
    	
 
    	
64549-5022
    	
 
    	
Isolated and Fixed Micro   and Nano Structures and Methods 
    	
 
    	
US
    	
 
    	
US 11/594,023 plus foreign   counterpart
    	
 
    	
7/Nov/06
    	
 
    	
Pending
    	
 
    

 

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
thereof
    	
 
    	
 
    	
 
    	
filed in EP
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
04-0104
    	
 
    	
421/90
    	
 
    	
64549-5033
    	
 
    	
Micro and Nano-Carriers For   Biological
    	
 
    	
US
    	
 
    	
12/374,182
    	
 
    	
27/Jul/07
    	
 
    	
Pending
    	
 
    
	
05-0008
    	
 
    	
421/136
    	
 
    	
64549-5005
    	
 
    	
Low Surface Energy   Polymeric Material for Use in Liquid Crystal Displays
    	
 
    	
National
    	
 
    	
US 11/883,304 plus foreign   counterparts in JP, KR, CN, EP, SG,
    	
 
    	
3/Feb/06
    	
 
    	
Pending
    	
 
    
	
07-0006
    	
 
    	
421/90/5
    	
 
    	
064549-5026
    	
 
    	
Micro and Nano-particles for   Photovoltaics and Methods of Making the Same
    	
 
    	
National
    	
 
    	
US case filed 9/Nov/2008   plus foreign counterparts in EP, JP, KR, and CN
    	
 
    	
09/May/06
    	
 
    	
Pending
    	
 
    
	
07-0014
    	
 
    	
421/189/P ROV
    	
 
    	
064549-5009PR
    	
 
    	
New Materials Based on PFPE   With Hydrophilic Components
    	
 
    	
US
    	
 
    	
US 60/836,633
    	
 
    	
09/Aug/06
    	
 
    	
Expired
    	
 
    
	
07-0028
    	
 
    	
421/194 PCT
    	
 
    	
064549-5010
    	
 
    	
Nanoparticle Compositions   for Controlled Delivery of Nucleic Acids
    	
 
    	
US
    	
 
    	
12/444,662
    	
 
    	
09/Oct/06
    	
 
    	
Pending
    	
 
    
	
07-0044
    	
 
    	
421/187/2 PROV
    	
 
    	
064549- 5002P15
    	
 
    	
Nano-Molding of Large Area,   2-D Array Photovoltaic Cells
    	
 
    	
US
    	
 
    	
US 60/857,669
    	
 
    	
07/Nov/06
    	
 
    	
Expired
    	
 
    
	
07-0074
    	
 
    	
421/90/10 PCT
    	
 
    	
064549- 5028W0
    	
 
    	
Discrete Size and Shape   Specific Pharmaceutical Organic Nanoparticles
    	
 
    	
PCT
    	
 
    	
PCT/US2008/055109
    	
 
    	
27/Feb/07
    	
 
    	
Pending
    	
 
    
	
07-0079
    	
 
    	
421/208 PCT
    	
 
    	
064549-5027WO
    	
 
    	
Discrete Size and Shape   Specific Organic Nanoparticles Designed to
   Illicit an Immune Response
    	
 
    	
PCT
    	
 
    	
PCT/US2008/058022
    	
 
    	
23/Mar/07
    	
 
    	
Pending
    	
 
    
	
07-0047
    	
 
    	
421/197 PCT
    	
 
    	
64549-5012/WO
    	
 
    	
Polymer Particle Composite   Having High Fidelity Order, Size, and Shape
   Particles
    	
 
    	
PCT
    	
 
    	
PCT/US2007/023805
    	
 
    	
15/Nov/06
    	
 
    	
Pending
    	
 
    
	
08-0064
    	
 
    	
35052/340
   465
    	
 
    	
64549-5038PR
    	
 
    	
Delivery Apparatus and   Associated Method
    	
 
    	
PCT
    	
 
    	
PCT/US2009/36068
    	
 
    	
25/Feb/08
    	
 
    	
Pending
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
64549-5041PR
    	
 
    	
Compositions and Methods   for Intracellular Delivery and Release of
   Cargo
    	
 
    	
PROV
    	
 
    	
61/047,980
    	
 
    	
25/Apr/08
    	
 
    	
Expired
    	
 
    
	
08-0090
    	
 
    	
35052/339
   994
    	
 
    	
64549-5042PR
    	
 
    	
Degradable Compounds and   Methods of Use Thereof, Particularly with Particle Replication in Non-Wetting   
    	
 
    	
PCT
    	
 
    	
PCT/US2009/041652
    	
 
    	
25/Apr/08
    	
 
    	
Pending
    	
 
    

 

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Templates
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
64549-5043PR
    	
 
    	
High Fidelity Through Hole   Film, and Associated Method
    	
 
    	
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US 61/075,103
    	
 
    	
24/Jun/08
    	
 
    	
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09-0078
    	
 
    	
 
    	
 
    	
64549- 5046PR
    	
 
    	
Interventional Drug Delivery   System and — Associated Methods
    	
 
    	
PROV
    	
 
    	
US61/155,800
    	
 
    	
26/Feb/09
    	
 
    	
Pending
    	
 
    

 

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

EXHIBIT B

 

MILESTONES

 

Capitalized terms set out in this Exhibit B shall be defined as provided in the LICENSE AGREEMENT.

 

Milestone Q:

 

Q)                                   LICENSEE shall submit, by January 30 of each year subsequent to the Effective Date of this First Amendment, a business plan outlining its development and commercialization plans for any product covered in whole or in part by any rights in UNIVERSITY TECHNOLOGY or PATENT RIGHTS that are being developed and commercialized by LICENSEE, LICENSEE’s AFFILIATES or any sublicensee of either of the foregoing.

 

Milestones R-U:

 

R)                                   Initiation of a Phase I clinical trial by LICENSEE, LICENSEE’s AFFILIATE or sublicensee of either of the foregoing of any product covered in whole or in part by any rights in UNIVERSITY TECHNOLOGY or PATENT RIGHTS by January 1, 2013.

 

S)                                     Initiation of a Phase III clinical trial, subject to FDA agreement, by LICENSEE, LICENSEE’s AFFILIATE or sublicensee of either of the foregoing of any product covered in whole or in part by any rights in UNIVERSITY TECHNOLOGY or PATENT RIGHTS by January 1, 2016.

 

T)                                    Commercial sale by LICENSEE, LICENSEE’s AFFILIATE or sublicensee of either of the foregoing of any product covered in whole or in part by any rights in UNIVERSITY TECHNOLOGY or PATENT RIGHTS, by January 1, 2016.

 

U)                                   Commercial sale by LICENSEE, LICENSEE’s AFFILIATE or sublicensee of either of the foregoing of any product covered in whole or in part by any rights in UNIVERSITY TECHNOLOGY or PATENT RIGHTS which has not previously been commercialized by January 1, 2018.Exhibit 10.20

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

MANUFACTURING DEVELOPMENT AND SCALE-UP AGREEMENT

 

This Manufacturing Development and Scale-up Agreement (the “Agreement”) is made as of March 19, 2012 (the “Effective Date”), between Liquidia Technologies, Inc., a Delaware corporation (“Liquidia”) having its principal place of business at Suite 100, 419 Davis Drive, Morrisville, NC  27560 and Chasm Technologies, Inc., a Massachusetts corporation (“Chasm”) with principal offices located at 85 Wagon Rd, Westwood, MA 02090.

 

Whereas; Chasm and Liquidia entered into a Consulting Services and License Agreement on 31 August 2006 (the “Chasm Consulting Agreement”), which was mutually terminated by the parties as of the Effective Date; and

 

Whereas; the parties desire to now enter a manufacturing development and scale-up agreement whereby Chasm wishes to assist Liquidia in scale-up and optimization of Liquidia’s PRINT manufacturing capabilities.

 

In consideration of the mutual promises and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.                                      Definitions. Capitalized terms used in this Agreement shall have the meanings specified in this Agreement.  In addition, the following terms shall have the meanings below:

 

“Chasm Pre-Existing Intellectual Property” means Pre-Existing Intellectual Property owned or licensed by Chasm or its subcontractors.

 

“Deliverable” means any deliverable developed or prepared for Liquidia pursuant to this Agreement.

 

“Net Sales” means the worldwide gross receipts from sales to third parties of all Products, less all customary deductions actually paid using generally accepted accounting principles for i) trade, cash and quantity credits, discounts, refunds or rebates; ii) allowances or credits to customers actually granted on account of rejection, damage, or return of product; iii) sales commissions;  iv) sales and excise taxes (including value added tax) and any other governmental charges imposed upon the production, importation, use or sale of product; and v) transportation charges, including insurance, for transporting product to the extent specifically invoiced to the customer.

 

“Pre-Existing Intellectual Property” means the data, information, tools, ideas, techniques, methodologies, specifications, documentation, notes and materials, including any patents, patent rights, copyrights, mask works, trade secrets and other intellectual property rights embodied therein, owned or controlled by a party prior to or independent of Chasm’s performance under this Agreement, and whether or not used to produce, or embodied in, the Deliverables.

 

“Products” shall mean any particle or film fabricated in-whole or in-part under this Agreement.

 

 

Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

2.                                      Activities To Be Performed.

 

2.1                               Activities.  Liquidia agrees to retain Chasm, and Chasm agrees to perform the services reasonably requested by Liquidia pursuant to the terms of this Agreement (the “Activities”).  The Activities are to be performed by Chasm personnel and, subject to the prior written consent of Liquidia, not to be unreasonably withheld, Chasm subcontractors, including, utilization of the resources and any Chasm Pre-Existing Intellectual Property necessary or useful to complete the Activities.

 

2.2                               Use of Subcontractors.  Prior to entering into any subcontractor agreement, Chasm shall provide a copy, with the commercial terms redacted, of any such proposed subcontract to Liquidia and receive Liquidia’s prior written approval, which shall not be unreasonably withheld.  Any such agreement with subcontractors shall prohibit disclosure of Confidential Information and assign to Chasm all rights to any Liquidia Owned Intellectual Property developed by the subcontractor pursuant to this Agreement which Chasm shall thereafter assign to Liquidia as set forth in Sections 7.2, and require the subcontractor to license to Chasm all Subcontractor Pre-Existing Intellectual Property that is used in the Project or Deliverables which Chasm shall thereafter license to Liquidia in accordance with Sections 7.3a and 7.3b, as applicable.

 

2.3                               Changes.  This Agreement and any appendix or attachment may be changed only by an agreement in writing signed by an authorized representative of both parties.

 

2.4                               Cooperation.  Each party shall generally provide such cooperation as the other party reasonably requests regarding the Activities in accordance with customary business practices.  Unless otherwise expressly agreed and as otherwise set forth in this Agreement, such cooperation shall be provided without cost to the other party.

 

2.5                               Ownership of Equipment and Supporting Documentation.  Liquidia shall own the entire right, title and interest to all equipment, machinery and supporting documents, plans and reports for the equipment and machinery created as a result of the performance of the Activities unless otherwise agreed to in writing.  All material and information protectable by copyright are “works made for hire,” as that term is defined in the 1976 Copyright Act as amended (title 17 of the United States Code).

 

3.                                      Compensation, Royalties and Expenses.   Liquidia’s payment obligations to Chasm are limited to those expressly defined in the following Sections 3.1, 3.2 and 3.3.

 

3.1                               Compensation.  Liquidia agrees to pay Chasm for the Activities in accordance with the compensation schedule for the Activities in Appendix A.

 

3.2                               Expenses.  Liquidia agrees to reimburse Chasm for reasonable and necessary travel and out-of-pocket expenses incurred in connection with the performance of the

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

Activities.  Reimbursement by Liquidia shall be made within thirty days (30) after submission by Chasm to Liquidia of expense reports, with copies of supporting documentation.

 

3.3                               Royalties; Advanced Minimum Royalties.

 

3.3 a.                  Advance Minimum Royalties.  Upon execution of this Agreement Liquidia shall pay Chasm equal monthly installments of $[***] beginning on the first full month after the Effective Date and continuing for the next consecutive twenty (20) months for a total of $[***] as partial consideration for entering into this Agreement with the significant obligations required of Chasm (“Partial Prepayment of Future Royalties”).  In addition, upon the first dosing of the first patient in the first Phase III clinical trial using a Product (“Phase III Initiation”), $400,000 shall become due to Chasm by Liquidia and payable by Liquidia to Chasm in equal monthly installments per month for the immediately following twelve (12) consecutive months.  Together the above Partial Prepayment of Future Royalties of $[***] and Phase III Initiation payment of $400,000 shall be defined as the “Advanced Minimum Royalties”, which shall apply as partial prepayment of future royalties and be credited against the Cumulative Royalties payable by Liquidia to Chasm hereunder.

 

3.3.b                     Future Royalties.

 

3.3.b.1.  Liquidia shall pay to Chasm (i) a royalty of [***] percent ([***]%) of the Net Sales of all Products that incorporate, use, or result from using Liquidia Owned Intellectual Property (the “Sales Royalty”) and (ii) a royalty of [***] percent ([***]%) of all license fees and royalties received by Liquidia, from a party other than Chasm or its subcontractors, for each sublicense of Liquidia Owned Intellectual Property (the “License Fee”).

 

3.3.b.2  Notwithstanding the above, the License Fees in this Section 3.3.b shall not be triggered or become due for any sublicense in the context of research collaboration activities or licenses not related to commercialization activities.

 

3.3.c.  During the term of this Agreement, the total maximum amount of monies to be paid by Liquidia to Chasm under this Agreement (which amount includes the Advanced Minimum Royalties, Sales Royalty, and License Fee) shall be $[***] (“Cumulative Royalties”).  Upon Liquidia paying to Chasm the Cumulative Royalties, no further monies shall be due under this Agreement and the license grants in this Agreement shall become fully paid worldwide licenses according to their terms.  For clarity, the Advanced Minimum Royalties, Sales Royalty, and License Fee aggregate toward the Cumulative Royalties, however the Cumulative Royalties do not include consulting fees or other service related compensation paid by Liquidia to Chasm under this Agreement.

 

3.4                               Payment Terms.  Liquidia shall pay each invoice set forth in the compensation schedule in Appendix A, in full, within thirty (30) days of Liquidia’s receipt of an accurate and reasonable invoice.  Any invoice payable by Liquidia which remains unpaid after the due date shall accrue interest at a rate of 1.0% per month.  Liquidia shall be liable for all collection expenses incurred by Chasm for delinquent amounts, including without limitation reasonable attorneys’ fees.

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

3.5                               Reports and Royalty Payments.  Commencing upon the commercialization of the first Product triggering royalties under this Agreement, within thirty (30) days following the last day of each calendar quarter during the term, Liquidia shall deliver to Chasm a written report showing, in reasonable detail, the royalties owed by such party to the other party in such quarter accompanied by any royalty payments due and owing.

 

3.6                               Audit Rights.  Each party shall have the right to audit the relevant records of the other party upon reasonable notice and not more than once annually to verify compliance with the terms of this Agreement.  Fees and expenses incurred in connection with such audits will be borne by the auditing party, unless such audit reveals that an error of five percent (5%) or more and at least $2,500, in any payment was made during any given quarter, in which case the fees and expenses incurred in connection with the audit during which such error was discovered will be borne by audited party.  Any such audit shall occur during regular business hours, and shall not unreasonably interfere with regular business activities.

 

3.7                               Records.  During the term of the Agreement and for three (3) years after royalties are due and payable, each party shall maintain true and complete books and records related to all royalty sales and applications.

 

4.                                      Work Rules.  Chasm and Chasm’s Representatives (as defined below) agree to comply with Liquidia’s applicable work rules and regulations of which Chasm is informed in writing, including any security requirements while on Liquidia premises.  Chasm and Chasm’s Representatives further agree to comply with all applicable governmental regulations and abide by Liquidia’s security requirements while on Liquidia premises.

 

Each party agrees that when its clients and Representatives are present on the premises of another party to this Agreement, they each shall comply with such rules and regulations as are notified to them for the conduct of individuals on those premises, and are subject to removal from the premises in the event they fail to comply with such rules.

 

Each party acknowledges and agrees that some of its employees, consultants, subcontractors or independent contractors will be performing work (the “Use Party”) on each other party’s (the “Location Owner”) properties, including laboratories.  Each party further acknowledges that the other parties perform work for other clients, including the U.S. Government, where security and confidentiality is an issue.  Therefore, the Use Party agrees that it will, if directed by a Location Owner on whose property it is performing work, instruct the Use Party’s staff, agents, officers, directors, employees, consultants, subcontractors or independent contractors (its “Representatives”) who work on the Location Owner’s property, to execute any additional confidentiality agreements or appropriate documents as are deemed reasonably necessary by the Location Owner.

 

5.                                      Representations, Warranties and Covenants.

 

5.1                               Compliance with Other Agreements.  Chasm and Liquidia each represent to the other that to each Party’s knowledge the execution of this Agreement, the performance of

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

the obligations hereunder, and the licenses granted herein do not and will not conflict with, result in the breach or termination of any provisions, or constitute a default under, any agreement to which Chasm or Liquidia, as the case may be, is or may be bound.

 

5.2                               Necessary Licenses.  Chasm and Liquidia each represent and warrant to the other that to each Party’s knowledge each has all necessary licenses from subcontractors and licensors to perform the Activities, and to complete the Deliverables in accordance with this Agreement.

 

5.3                               Limited Warranty.  Chasm represents and warrants that, to its knowledge and belief, (i) Chasm did not use or incorporate any proprietary subcontractor, or other third party, intellectual property into the deliverables generated and/or delivered to Liquidia under the Chasm Consulting Agreement; (ii) Liquidia has the freedom to practice the deliverables generated and/or delivered to Liquidia under the Chasm Consulting Agreement with respect to Chasm pre-existing intellectual property and any intellectual property Chasm developed under the Chasm Consulting Agreement; and (iii) Chasm has the skills and experience necessary to perform the Activities required under this Agreement and that it will use best efforts to the extent commercially reasonable, to perform said Activities in a professional, competent and timely manner.

 

5.4                               Additional Representations, Warranties and Covenants.

 

5.4.1                     All respective former and current employees and subcontractors of Chasm and Liquidia that have, have had, or will have access to confidential information have executed written agreements prohibiting disclosure of confidential information and assigning to each respective party, as applicable, all rights to any and all intellectual property, including inventions made during or derived from their relationship, to each respective party, as applicable.

 

5.4.2                     Each Party has taken and will continue to take commercially reasonable precautions to protect the secrecy of its confidential information and trade secrets.

 

5.4.3                     Neither Party has been alleged to infringe or misappropriate any intellectual property right of any other person or entity, there is no claim or action served or threatened, alleging any such infringement or misappropriation and neither party is aware of any such claim or action.

 

5.4.4                     To the knowledge of the Parties, the operation of their respective businesses as presently conducted does not infringe or misappropriate any third-party intellectual property right.

 

5.4.5                     Chasm represents that, to the best of its knowledge, neither it nor any of its personnel has been debarred, and to the best of its knowledge, is not under consideration to be debarred, by the U.S. Food and Drug Administration from working in or providing consulting services to any pharmaceutical or biotechnology company under the Generic Drug Enforcement Act of 1992.

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

5.5                               No Government Funding.       Chasm covenants that none of the Activities performed by Chasm or its subcontractors under this Agreement shall be funded in whole or in part by any government entity.

 

5.6                               Additional Covenants.

 

5.6.1                     Prior to incorporating into its Deliverables any third party intellectual property of which Chasm is aware and that Chasm reasonably believes the manufacture, use, sale, offer to sell, importation or other exploitation of which would require Liquidia to obtain a further license, Chasm shall identify such third party intellectual property to Liquidia.  Liquidia shall determine at its sole discretion and notify Chasm, within a commercially reasonably time, whether or not to incorporate such third party intellectual property into the Deliverable.  If Liquidia notifies Chasm to incorporate such third party intellectual property, Liquidia shall be responsible for procuring the necessary license that would permit such third party intellectual property to be used in the Project and the Deliverable.

 

5.6.2                     At times reasonably requested by Liquidia, Chasm shall produce to Liquidia a comprehensive list of: a) agreements related to intellectual property of which Chasm is aware and reasonably believes affects or may affect the Activities and/or the use of the Deliverables; and b) all agreements between Chasm employees and their former employers or clients of which Chasm is aware, after a reasonable investigation, and reasonably believes is related to intellectual property that affects or may affect the Activities and/or the use of the Deliverables.  All such information and agreements transferred under this Agreement shall be treated as Chasm Confidential Information by Liquidia.

 

5.6.3                     All future employees of Chasm, Chasm subcontractors, and Liquidia that will have access to Confidential Information will execute written agreements prohibiting disclosure of confidential information and assigning to each respective party, as applicable, all rights to any and all intellectual property, including inventions made during or derived from their relationship, to each respective party, as applicable.

 

5.7                               Disclaimer.  EXCEPT AS OTHERWISE STATED IN SECTIONS 5.1, 5.2, 5.3, 5.4, 5.5 AND 5.6 NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, OF ANY KIND OR NATURE, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, TITLE OR NON-INFRINGEMENT.

 

6.                                      Confidentiality.

 

6.1                               Each party acknowledges that in the course of this Agreement it will receive information about, and access to, trade secrets and other confidential and proprietary information which is vital to the competitive position and success of the other party to this Agreement.  The term “Confidential Information” as used throughout this Agreement shall mean with respect to a party, all proprietary information and technology of such party that is disclosed to the other party under this Agreement, whether disclosed in oral, written, graphic, or electronic form.  Notwithstanding the foregoing, all information and technology generated under this

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

Agreement, whether generated by one or both parties shall be deemed the Confidential Information of the party that owns such information and technology under the terms of this Agreement.

 

Except as expressly provided herein, the parties agree that, under this Agreement and for ten (10) years thereafter, each party will keep completely confidential and will not publish or  otherwise disclose or use any Confidential Information of the other party except in connection with the activities contemplated by this Agreement without such other party’s prior written consent, except for that portion of such information or materials that the receiving party can demonstrate by competent tangible proof:

 

(a)                                 was already known or available to the receiving party, other than under an obligation of confidentiality or non-use to the other party, at the time of disclosure to the receiving party;

 

(b)                                 was part of the public domain, at the time of its disclosure to the receiving party;

 

(c)                                  became part of the public domain, after its disclosure to the receiving party through no fault of or breach of its obligations under this Agreement by the receiving party;

 

(d)                                 was lawfully disclosed to the receiving party, other than under an obligation of confidentiality or non-use, by a third party rightfully in possession of the Confidential Information who had no obligation to the disclosing party not to disclose such information to others;

 

(e)                                  was independently discovered or developed by or for the receiving party without access to, use of, reference to, or reliance upon Confidential Information belonging to the disclosing party; or

 

(f)                                   is required to be disclosed pursuant to any applicable law, regulation, or legal order, provided that the receiving party has notified the disclosing party upon learning of the possibility that disclosure could be required pursuant to any such law, regulation, or legal order and has given the disclosing party a reasonable opportunity to contest or limit the scope of such required disclosure and has cooperated with the disclosing party toward this end.

 

Notwithstanding the above, specific aspects or details of Confidential Information will not be deemed to be within the public domain or in the prior possession of the receiving party merely because the aspects or details of the Confidential Information are embraced by general disclosures in the public domain.  In addition, any combination of Confidential Information will not be considered in the public domain or in the prior possession of the receiving party merely because individual elements thereof are in the public domain or in the prior possession of the receiving party unless the combination is in the public domain or in the prior possession of the receiving party.

 

Each of the parties agrees that it shall provide Confidential Information received from the other party only to the receiving party’s respective directors, officers, employees, agents, and financial and legal advisors who have a need to know such Confidential Information to assist the receiving party with the activities contemplated by this Agreement and are under written agreements of confidentiality at least as restrictive as those set forth in this Agreement.

 

6.2                               Return of Confidential Information.  Upon expiration or early termination of this Agreement, each party shall return or destroy all Confidential Information received by it

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

from the other party.  Notwithstanding the foregoing, each party shall be allowed to keep one (1) archival copy of any Confidential Information of the other party for record-keeping purposes only.

 

6.3                               The Activities anticipated in this Agreement shall be performed by Representatives who may be retained by each party.  Any individual who assists in the performance of the Activities anticipated herein shall, prior to providing any such assistance, have executed an agreement with its employer or contracting party that is a signatory to this Agreement with terms no less restrictive than the terms of this Agreement.

 

7.                                      Intellectual Property Rights and Licenses

 

7.1                               Each party shall own its Pre-Existing Intellectual Property.  Liquidia and/or Chasm or Chasm subcontractors from time to time may invent and/or create and/or develop and/or license or otherwise acquire rights and/or interests in intellectual property in performing the Activities, including rights and interests in any inventions (whether patentable or not), trade secrets, know how, and works of authorship fixed in any tangible medium of expression, known or later developed, from which they can be perceived, reproduced, or otherwise communicated, whether directly or with the aid of a machine or device (whether registerable or not) in connection with performing the Activities under this Agreement (“New Project IP”); provided that New Project IP shall not include any Pre-Existing Intellectual Property.

 

7.2                               With respect to New Project IP, Liquidia and Chasm agree that all right, title and interest in New Project IP shall be owned by Liquidia (“Liquidia Owned Intellectual Property”).  Chasm agrees to assign and hereby does assign to Liquidia its entire right, title and interest to Liquidia Owned Intellectual Property including all of Chasms rights to bring suit and recover damages for past and future infringement.

 

7.3                               a. Chasm grants Liquidia a perpetual, exclusive, sublicensable worldwide license, in accordance with the terms of this Agreement, to make, have made, use, offer to sell, sell, import, reproduce, prepare derivative works, and distribute Chasm Pre-Existing Intellectual Property solely as incorporated into the Activities and/or Deliverables for use or applications related to molded particles and harvested molded particles (the “Liquidia Permitted Exclusive Uses”).

 

b. Chasm grants Liquidia a perpetual, non-exclusive, sublicensable worldwide license, in accordance with the terms of this Agreement, to make, have made, use, offer to sell, sell, import, reproduce, prepare derivative works, and distribute Chasm Pre-Existing Intellectual Property solely as incorporated into the Activities and/or Deliverables for any use or application with Liquidia’s PRINT platform technology other than molded particles and harvested molded particles (the “Liquidia Permitted Non-exclusive Uses”).

 

7.4                               All sublicenses shall include terms to protect the confidentiality of Chasm Pre-Existing Intellectual Property with terms at least as restrictive as this Agreement.

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

7.5                               Chasm may cause the exclusive license granted in Section 7.3 to Liquidia Permitted Exclusive Uses to become non-exclusive when (a) after the fourth anniversary of the Phase III Initiation if the cumulative of the Advanced Minimum Royalties, Sales Royalty and License Fee paid by Liquidia to Chasm have not exceeded $[***] and Liquidia has failed to bring such cumulative total payment to Chasm to $[***] after thirty (30) days written notice from Chasm and (b) after the eighth anniversary of the Phase III Initiation if Liquidia has not paid Chasm the Cumulative Royalties and Liquidia has failed to satisfy the Cumulative Royalties after thirty (30) days written notice from Chasm.

 

8.                                      Term and Termination.

 

8.1                               Term.     This Agreement is in effect from the Effective Date until the Activities are completed and accepted by Liquidia unless terminated earlier.

 

8.2                               Termination.

 

8.2.1                     Material Breach.  Either party may, upon giving thirty (30) days written notice, terminate this Agreement for the other party’s breach of any of its material obligations under this Agreement, provided that the breaching party shall not have cured such breach within the thirty (30) day notice period.

 

8.2.2                     Either party may terminate this Agreement for its convenience upon giving sixty (60) days prior written notice to the other party.

 

8.2.3                     Mutual Termination.   The parties may agree to terminate this Agreement in a writing signed by both parties at any time prior to completion of the Activities.

 

8.3                               Effect of Termination.

 

8.3.1                     Upon termination of this Agreement, each party shall promptly return to the other party all Confidential Information of the other party and all equipment and products owned or controlled by the other party in its possession or under its control.

 

8.3.2                     In the event of a material breach by Liquidia, all licenses granted to Liquidia shall terminate, provided Liquidia does not cure such breach within forty five (45) days following receipt of a detailed written notice of the breach by Chasm.

 

8.3.3                     In the event of a material breach by Chasm, Liquidia shall pay Chasm for all reasonable out of pocket costs and expenses for Activities accepted through the termination date subject to a set-off by Liquidia of costs associated with Chasm’s material breach and all licenses granted to Liquidia hereunder shall survive.

 

8.3.4                     Should Liquidia terminate this Agreement under Section 8.2.2 for convenience, all Liquidia Owned Intellectual Property created as of the date of termination shall remain the property of Liquidia, all license rights and obligations created under this Agreement

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

as of the date of termination shall survive the termination and Liquidia shall pay Chasm (a) reasonable costs and expenses incurred by Chasm under this Agreement through the termination date, and (b) the Advanced Minimum Royalties under Section 3.3 a.

 

8.3.5                     Should the parties terminate this Agreement under Section 8.2.3 for mutual convenience, all Liquidia Owned Intellectual Property created as of the date of termination shall remain the property of Liquidia, all license rights and obligations created under this Agreement as of the date of termination shall survive the termination and Liquidia shall pay Chasm reasonable costs and expenses incurred by Chasm under this Agreement through the termination date.

 

8.3.6                     For the avoidance of doubt, the Parties acknowledge that Liquidia’s ownership rights with respect to Liquidia Owned Intellectual Property is and shall be irrevocable and unaffected by any expiration or termination of this Agreement for any reason.

 

8.4                               Survival.  Sections 2.5, 3.3-3.7, 5, 6, 7, 8.3, 8.4, 9-15, and 18-19 shall survive the expiration or termination of this Agreement.

 

9.                                      Specific Performance.  Chasm and Liquidia each recognizes that irreparable injury may be caused to the other by its violation or material breach of Sections 6-7 of this Agreement, and Chasm and Liquidia each agrees that, in the event of any such violation, in addition to such other rights and remedies as may exist under this Agreement, the other may apply to any court of law or equity having jurisdiction to enforce the specific performance of the provisions hereof, and may apply for injunctive relief against any act which would violate any such provisions.

 

10.                               Limitation on Liability.  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR SPECIAL DAMAGES (INCLUDING LOSS OF PROFITS, DATA, BUSINESS OR GOODWILL), REGARDLESS OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF CONTRACT, TORT, STRICT LIABILITY, BREACH OF WARRANTIES, FAILURE OF ESSENTIAL PURPOSE OR OTHERWISE, AND EVEN IF ADVISED OF THE LIKELIHOOD OF SUCH DAMAGES.  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE LIABILITY OF CHASM FOR DIRECT DAMAGES, REGARDLESS OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF CONTRACT, TORT, STRICT LIABILITY, BREACH OF WARRANTIES, FAILURE OF ESSENTIAL PURPOSE OR OTHERWISE, UNDER THIS AGREEMENT OR WITH RESPECT TO THE ACTIVITIES SHALL IN NO EVENT EXCEED THE AGGREGATE AMOUNT OF FEES WHICH CHASM RECEIVES IN CONNECTION WITH THIS AGREEMENT.  THESE LIMITATIONS ARE INDEPENDENT OF ALL OTHER PROVISIONS OF THIS AGREEMENT AND SHALL APPLY NOTWITHSTANDING THE FAILURE OF ANY REMEDY PROVIDED HEREIN.

 

11.                               Independent Contractor.  Chasm and Liquidia agree that Chasm shall provide the Activities to Liquidia solely as an independent contractor.  This Agreement is not intended to and should not be deemed to create an employment or principal-agent relationship or joint venture between Chasm, or any of its employees or contractors, and Liquidia, and neither party shall

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

have the right, power or authority to obligate, commit or incur any liability on behalf of the other party or to otherwise act in any way as an agent or representative of the other party or bind the other in any manner whatsoever.

 

12.                               Bankruptcy.                            The licenses granted in this Agreement (“Licenses”) are licenses for intellectual property, as such term is defined in Section 101 of Title 11 of the United States Code (the “Bankruptcy Code”).  The parties acknowledge and agree that, upon the filing of a petition for relief under the Bankruptcy Code by or against the Grantor (a “Filing”), whether such Filing is voluntary or involuntary, it is intended that this Agreement and the Licenses shall be subject to the provisions of Section 365(n) of the Bankruptcy Code, and, as such, the parties shall retain and may fully exercise all of its rights and elections provided thereunder.  In the event of a Filing, the parties shall, promptly upon written request by the other party, comply with the provisions of Section 365(n) of the Bankruptcy Code, including subsections (3) and (4) thereof.

 

13.                               Severability.  In the event any provision of this Agreement, in whole or in part, is invalid, unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, such provision will be replaced, to the extent possible, with a provision which accomplishes the original business purposes of the provision in a valid and enforceable manner, and the remainder of this Agreement will remain unaffected and in force provided, however, that if without such invalid or unenforceable provision the fundamental mutual objectives of the parties cannot be achieved, either party may terminate this Agreement without penalty by written notice to the other.

 

14.                               Governing Law; Headings; Counterparts.  This Agreement shall be governed by and interpreted according to the laws of the State of Delaware without regard for any choice or conflict of laws rule or provision that would result in the application of the substantive law of any other jurisdiction.  The headings of the several sections are for convenience only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.  This Agreement may be executed in counterparts (all of which counterparts shall constitute one and the same agreement) and may be executed by facsimile transmission.

 

15.                               Assignment; Successors & Assigns. This Agreement and the rights and obligations hereunder may not be assigned in whole or in part by any party and any such assignment shall be null and void; provided, however, that an assignment may be made by any party to the surviving entity of a merger or acquisition of substantially all of the assets of such party.  This Agreement shall bind and inure to the benefit of all parties to this Agreement and their respective successors and permitted assigns.

 

16.                               Force Majeure.  Neither party will be liable for any delays or failures in performance due to circumstances beyond its reasonable control.  In the event that either party is prevented from performing due to causes beyond its control, such party shall notify the other party, explaining the cause for same and the dates or times for performance shall be extended for the period of the delay and a reasonable additional time.

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

17.                               Entire Agreement; Waiver.  This Agreement together with the appendices and attachments thereto, sets forth the entire agreement between the parties concerning the transactions and arrangements contemplated hereby, and supersede all prior oral or written arrangements or agreements.  This Agreement may be amended only by an instrument in writing signed by both parties and may be waived only by an instrument in writing signed by the party against whom enforcement of the waiver is sought. The waiver by either party of any breach of this Agreement on one occasion shall not operate or be construed as a waiver of any other breach on another occasion.

 

18.                               Remedies.  Except as expressly provided herein, the remedies provided in this Agreement are not and shall not be deemed to be exclusive and shall be in addition to any other remedies that a Party may have at law or in equity.

 

19.                               Publicity.  Other than with respect to any internal reports or reporting to federal, state, and local authorities for purposes of compliance with legal reporting requirements (such as, for example, any appropriate reporting to the U.S. Securities & Exchange Commission), neither Party shall, without the express written consent of the other Party, use the name or mark of the other Party in transacting business or issue any public reports, statements, or releases pertaining to the transaction contemplated by this Agreement.

 

IN WITNESS WHEREOF, Liquidia and Chasm have duly executed this Agreement as of the Effective Date.

 

	
Chasm Technologies, Inc.
    	
 
    	
Liquidia Technologies, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Robert F. Praino
    	
 
    	
By:
    	
/s/   Bruce Boucher
    
	
Name:
    	
Robert   F. Praino
    	
 
    	
Name:
    	
Bruce   Boucher
    
	
Title:
    	
Co-Founder
    	
 
    	
Title:
    	
President &   CFO
    

 

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Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

APPENDIX A

 

COMPENSATION SCHEDULE

 

Components of cost:

 

·      Consulting Activities rate will be $[***] per hour for the services of [***] and $[***] per hour for all others. It is expected that the workload related to this charge will be as needed as specified by Liquidia.

 

·      Engineering rates (other subcontractors as required) will be based on the specific resource engaged (e.g. mechanical design, electrical design, third party analytical services, machine shops, etc.).

 

·      Equipment enhancements or fabrication will be funded by Liquidia.

 

·      Travel expenses for Chasm and/or sub-contractors will be pre-approved and funded by Liquidia.

 

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