Document:

Exhibit 4.2

BANKWELL FINANCIAL GROUP, INC.

THIS SECURITY IS A GLOBAL SECURITY AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM IN ACCORDANCE WITH THE PROVISIONS OF THE NOTE PURCHASE AGREEMENT AND THE TERMS OF THE SECURITIES, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO BANKWELL FINANCIAL GROUP, INC., OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO, AND IN ACCORDANCE WITH, A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT AT THE TIME OF SUCH TRANSFER; (B) TO A PERSON THAT YOU REASONABLY BELIEVE TO BE A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR TO A PERSON THAT YOU REASONABLY BELIEVE TO BE AN INSTITUTIONAL ACCREDITED INVESTOR AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT; OR (C) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING, IF AVAILABLE, THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT).

THIS SECURITY IS NOT A DEPOSIT OR BANK ACCOUNT. THIS SECURITY IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, AND IS SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

BANKWELL FINANCIAL GROUP, INC.

THIS SUBORDINATED NOTE IS NOT A DEPOSIT AND IT IS NOT INSURED

 BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR FUND.

FIXED RATE SUBORDINATED NOTE DUE 2025

 CUSIP No.: 06654A AA1

U.S. $25,500,000 

Dated: August 19, 2015

FOR VALUE RECEIVED, the undersigned, BANKWELL FINANCIAL GROUP, INC., a Connecticut corporation (the "Company"), promises to pay to the order of Cede & Co., or registered assigns (collectively, the "Holder"), the principal amount of $25,500,000, in the lawful currency of the United States of America, or such lesser or greater amount as shall then remain outstanding under this Note, on August 15, 2025 (the "Maturity Date"), or such other date upon which this Note shall become due and payable, whether by reason of extension, acceleration or otherwise.

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

[Signatures follow on the next page.]

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

BANKWELL FINANCIAL GROUP, INC.

By:  _________________________

Name:

Title:

 

ATTEST:

______________________________

Todd Lampert

Corporate Secretary

[REVERSE SIDE OF NOTE]

BANKWELL FINANCIAL GROUP, INC.

Fixed Rate Subordinated Note due 2025

The Company promises to pay interest on the principal amount of this Subordinated Note (the "Note"), commencing on August 19, 2015 until August 15, 2025 (the "Maturity Date"), or such earlier date as this Note is paid in full, at the interest rate set forth below. The unpaid principal balance of this Note plus all accrued but unpaid interest thereon shall be due and payable on the Maturity Date, or such earlier date on which such amount shall become due and payable. This Note is one of the Subordinated Notes referred to in that certain Note Purchase Agreement, dated as of August 19, 2015, among the Company, the Holder and the other Purchasers and is entitled to the benefits thereof (the "Purchase Agreement"). Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.

1.            Computation and Payment of Interest. From and including the date on which this Note is issued to but excluding the Maturity Date, this Note shall bear interest at a rate of 5.75% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months, and payable quarterly in arrears.  The date from which interest shall accrue on the Note shall be August 19, 2015 or the most recent Interest Payment Date to which interest has been paid or duly provided for; the "Interest Payment Dates" for the Note shall be February 15, May 15, August 15 and November 15 of each year beginning on November 15, 2015 through the Maturity Date or earlier date of redemption of this Note. In the event that any scheduled Interest Payment Date for the Note falls on a day that is not a business day, then payment of interest payable on such Interest Payment Date will be postponed to the next succeeding day which is a business day (and no interest on such payment will accrue for the period from and after such scheduled Interest Payment Date). "Interest Period" means each three-month period beginning on a scheduled Interest Payment Date commencing on August 19, 2015 through the Maturity Date or earlier date of redemption of all of the Subordinated Notes. Interest on this Note shall be paid in arrears on each Interest Payment Date to holders of record (each a "Holder") on the Applicable Record Date. "Applicable Record Date" shall mean February 1 with respect to any Interest Payment Date on February 15, May 1 with respect to any Interest Payment Date on May 15, August 1 with respect to any Interest Payment Date on August 15, and November 1 with respect to any Interest Payment Date on November 15.

2.            Payment Procedures. Except as otherwise provided herein, the Company shall pay principal of and interest on this Note at the office or agency of the Paying Agent located at 8742 Lucnet Blvd, Suite 225, Highlands Ranch, CO 80129, or at such other place or places as the Company shall designate by notice to the registered Holders as the Payment Office (the "Payment Office"). Payments of interest (other than interest payable on the Maturity Date) shall be made by wire transfer in immediately available funds or check mailed to the registered Holder, as such person's address appears on the Security Register. Interest payable on any Interest Payment Date shall be payable to the Holder in whose name this Note is registered at the close of business on the Applicable Record Date, next preceding such Interest Payment Date for such Interest Payment Date, except that interest not paid on the Interest Payment Date, if any, will be paid to the Holder in whose name this Note is registered at the close of business on a Special Record Date fixed by the Company (a "Special Record Date"), notice of which shall be given to the Holder not less than ten days prior to such Special Record Date. (The Applicable Record Date and Special Record Date are referred to herein collectively as the "Record Dates"). To the extent permitted by applicable law, interest shall accrue, at the rate at which interest accrues on the principal of this Note, on any amount of principal or interest on this Note not paid when due. All payments on this Note shall be applied first to accrued interest and then the balance, if any, to principal.

 

3.            Non-Business Days. Whenever any payment to be made by the Company hereunder shall be stated to be due on a day which is not a business day, such payment shall be made on the next succeeding business day without change in any computation of interest with respect to such payment (or any succeeding payment).

4.            Subordinated Notes. This Note is one of a duly authorized issue of subordinated notes of the Company designated as Fixed Rate Subordinated Notes due 2025 (the "Subordinated Notes"), to be issued from time to time by the Company. This Note is entitled to the benefits and subject to the terms of the Purchase Agreement.

5.            Subordination. The indebtedness of Company evidenced by the principal and interest on this Note shall be subordinate and junior in right of payment to the following, whether now outstanding or subsequently created, assumed or incurred (collectively, "Senior Indebtedness"): (a) all indebtedness of the Company for money borrowed (including deposits), whether or not evidenced by bonds, debentures, securities, notes or other written instruments; (b) any deferred obligations of the Company for the payment of the purchase price of property, goods, materials, assets or services purchased or acquired by the Company (other than such obligations to trade creditors incurred by the Company in the ordinary course of business); (c) all obligations, contingent or otherwise, of the Company in respect of any letters of credit, bankers' acceptances, security purchase facilities and similar credit transactions; (d) any capital lease obligations of the Company; (e) all obligations of the Company in respect of interest rate swap, cap or other agreements, interest rate future or option contracts, currency swap agreements, currency future or option contacts, commodity contracts and other similar arrangements; (f) all obligations of the Company to its general credits (as defined for purposes of 12 C.F.R. Part 217, as the same may be amended from time to time, or any successor regulation); (g) all obligations of the Company of the type referred to in clauses (a) through (f) of other persons, for the payment of which Company is responsible or liable as obligor, guarantor or otherwise; and (h) all obligations of the types referred to in clauses (a) through (g) of other persons secured by a lien on any property or asset of the Company; provided, however, that Senior Indebtedness does not include (i) the Subordinated Notes, (ii) any obligation that by its terms is on parity with the Subordinated Notes, (iii) any indebtedness between Company and any of its Subsidiaries or affiliates, or (iv) the Junior Subordinated Indebtedness (as defined below).

In the event of any insolvency, dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or similar proceedings or any liquidation or winding up of or relating to the Company, whether voluntary or involuntary, holders of Senior Indebtedness shall be entitled to be paid in full before any payment shall be made on account of the principal of or interest on the Subordinated Notes, including this Note. In the event of any such proceeding, after payment in full of all sums owing with respect to the Senior Indebtedness, the registered holders of the Subordinated Notes from time to time, together with the holders of any obligations of the Company ranking on a parity with the Subordinated Notes, shall be entitled to be paid from the remaining assets of the Company the unpaid principal thereof, and the unpaid interest thereon before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any present or future obligations of the Company ranking junior to the Subordinated Notes (collectively, "Junior Subordinated Indebtedness"), which includes any obligation that by its terms is subordinated to the Subordinated Notes.

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If there shall have occurred and be continuing (a) a default in any payment with respect to any Senior Indebtedness or (b) an event of default with respect to any Senior Indebtedness as a result of which the maturity thereof is accelerated, unless and until such payment default or event of default shall have been cured or waived or shall have ceased to exist, no payments shall be made by the Company with respect to the Subordinated Notes. The provisions of this paragraph shall not apply to any payment with respect to which the immediately preceding paragraph of this Section 5 would be applicable.

Nothing herein shall impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note in accordance with its terms. Nothing herein shall act to prohibit, limit or impede the Company from issuing additional debt of the Company having the same rank as the Subordinated Notes or which may be junior or senior in rank to the Subordinated Notes.

6.            Transfer. Except as otherwise provided herein, this Note is transferable in whole or in part, and may be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized denominations, by the Holder in person, or by his attorney duly authorized in writing, at the Payment Office. The Registrar shall maintain a register providing for the registration of the Subordinated Notes and any exchange or transfer thereof (the "Security Register"). Upon surrender or presentation of this Note for exchange or registration of transfer, the Company shall execute and deliver in exchange therefor a Subordinated Note or Subordinated Notes of like aggregate principal amount, each in a minimum denomination of $1,000 or any amount in excess thereof which is an integral multiple of $1,000 (and, in the absence of an opinion of counsel satisfactory to the Company to the contrary, bearing the restrictive legend(s) set forth hereinabove) and that is or are registered in such name or names requested by the Holder. Any Note presented or surrendered for registration of transfer or for exchange shall be duly endorsed and accompanied by a written instrument of transfer in such form as is attached hereto and incorporated herein, duly executed by the Holder or his attorney duly authorized in writing, with such tax identification number or other information for each person in whose name a Subordinated Note is to be issued. No exchange or registration of transfer of this Note shall be made on or after the fifteenth day immediately preceding the Maturity Date.

NOTWITHSTANDING ANY PROVISIONS CONTAINED HEREIN TO THE CONTRARY, THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $1,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS NOTE IN A DENOMINATION OF LESS THAN $1,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON THIS NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS NOTE.

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7.            Global Subordinated Notes.

(a)            This Note is in the form of a Global Subordinated Note registered in the name of The Depository Trust Company or its designee, and designated as Depositary by the Company or any successor thereto (the "Depositary") or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor.

(b)            Notwithstanding any other provision herein, no Global Subordinated Note may be exchanged in whole or in part for Subordinated Notes registered, and no transfer of a Global Subordinated Note in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Subordinated Note or a nominee thereof unless (i) such Depositary advises the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Subordinated Note, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, or (iii) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clauses (i), (ii), or (iii) above, the Company or its agent shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Subordinated Note of the occurrence of such event and of the availability of Subordinated Notes to such owners of beneficial interests requesting the same.

(c)            If any Global Subordinated Note is to be exchanged for other Subordinated Notes or canceled in part, or if another Subordinated Note is to be exchanged in whole or in part for a beneficial interest in any Global Subordinated Note, then either (i) such Global Subordinated Note shall be so surrendered for exchange or cancellation as provided in this Section 9 or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such other Subordinated Note to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Company or the Registrar, whereupon the Company or the Registrar, in accordance with the applicable rules and procedures of the Depositary ("Applicable Depositary Procedures"), shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Subordinated Note by the Depositary, accompanied by registration instructions, the Company shall execute and deliver any Subordinated Notes issuable in exchange for such Global Subordinated Note (or any portion thereof) in accordance with the instructions of the Depositary.

(d)            Every Note executed and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Subordinated Note or any portion thereof shall be executed and delivered in the form of, and shall be, a Global Subordinated Note, unless such Subordinated Note is registered in the name of a Person other than the Depositary for such Global Subordinated Note or a nominee thereof.

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(e)            The Depositary or its nominee, as the registered owner of a Global Subordinated Note, shall be the Holder of such Global Subordinated Note for all purposes under this Subordinated Note, and owners of beneficial interests in a Global Subordinated Note shall hold such interests pursuant to Applicable Depositary Procedures. Accordingly, any such owner's beneficial interest in a Global Subordinated Note shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary participants. The Registrar shall be entitled to deal with the Depositary for all purposes relating to a Global Subordinated Note (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole holder of the Subordinated Note and shall have no obligations to the owners of beneficial interests therein. The Registrar shall have no liability in respect of any transfers affected by the Depositary.

(f)            The rights of owners of beneficial interests in a Global Subordinated Note shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its participants.

(g)            No holder of any beneficial interest in any Global Subordinated Note held on its behalf by a Depositary shall have any rights with respect to such Global Subordinated Note, and such Depositary may be treated by the Company and any agent of the Company as the owner of such Global Subordinated Note for all purposes whatsoever. Neither the Company nor any agent of the Company will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Subordinated Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company or any agent of the Company from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Note.

8.            Optional Redemption. The Company, in its discretion, shall have the right to redeem or prepay any or all of the Subordinated Notes, including this Note, without premium or penalty prior to the Maturity Date: (a) in whole or in part, at any time on or after August 15, 2020 and prior to the Maturity Date, but in all cases in a principal amount with integral multiples of $1,000, on any Interest Payment Date; or (b) in whole, at any time, upon the occurrence of a Tier 2 Capital Event or a Tax Event, or if the Company is required to register as an investment company pursuant to the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.). Any such redemption will be at a price equal to 100% of the principal amount of the Note to be redeemed or prepaid on such date, plus interest accrued and unpaid to, but excluding, the date of redemption or prepayment. Any such redemption or prepayment shall be subject to the prior approval of the Board of Governors of the Federal Reserve System (or its designee) or any successor agency to the extent such approval shall then be required by law, regulation or policy.  receipt of any and all required regulatory approvals and in compliance with all applicable laws, rules and regulations.

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In the case of any redemption or prepayment of this Note, the Company will give the Holders of the Subordinated Notes to be redeemed or prepaid notice not less than 30 nor more than 45 days prior to the redemption or prepayment date as to the aggregate principal amount to be redeemed or prepaid. In a case where the Company is making a redemption or prepayment with respect to the Subordinated Notes in an amount less than the aggregate principal amount of all of the Subordinated Notes then outstanding, the Company shall make such redemption or prepayment on a pro rata basis among all outstanding Subordinated Notes based on the relative outstanding principal amounts of each such Note; provided, however that the Company may elect to redeem in full any Note with an outstanding principal amount less than $1,000.

"Tax Event" shall mean the receipt by the Company of an opinion of independent tax counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the Notes, there is more than an insubstantial risk that the interest payable by the Company on the Subordinated Notes is not, or within 90 days of the date of such opinion will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.

"Tier 2 Capital Event" shall mean the receipt by the Company of an opinion of independent bank regulatory counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws or any regulations thereunder of the United States or any rules, guidelines or policies of an applicable regulatory authority for the Company or (b) any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the Subordinated Notes, the Subordinated Notes do not constitute, or within 90 days of the date of such opinion will not constitute, Tier 2 Capital (or its then equivalent if the Company were subject to such capital requirement) for purposes of capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or any successor regulatory authority with jurisdiction over bank holding companies), as then in effect and applicable to the Company. "Tier 2 Capital" has the meaning in Appendix A to 12 C.F.R. Part 222 ("Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure"), as amended, modified and supplemented and in effect from time to time or any replacement thereof.

9.            Affirmative Covenants of the Company. During the time that any portion of the principal balance of this Note is unpaid and outstanding, the Company shall take or cause to be taken the actions set forth below.

(a)            Notice of Certain Events. The Company shall provide written notice to the Holder of the occurrence of the following events as soon as practicable but in no event later than 15 business days following the Company's becoming aware of the occurrence of such event:

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(i)            the ratio of Tier I capital to average assets (the "Leverage Ratio") of the Company or the Leverage Ratio of any of the Company's banking subsidiaries becomes less than six percent (6%);

(ii)            the Company or any of its banking subsidiaries become less than "well capitalized" under the then-current regulations of the appropriate federal banking agency;

(iii)            the Company, any of the Company's banking subsidiaries, or any officer of the Company or the Company's banking subsidiaries becomes subject to a formal, written regulatory enforcement action from the appropriate federal banking agency; or

(iv)            the ratio of (A) non-accrual loans and any other loans that are 90 days or more past due plus other real estate owned (excluding any such loans that are guaranteed or covered by any governmental agency or government-sponsored entity) to (B) total assets of any banking subsidiary of the Company becomes greater than two and one-half percent (2.5%).

(b)            Compliance with Laws. The Company and each of its subsidiaries shall comply with the requirements of all laws, regulations, orders, and decrees applicable to it or its properties, except for such noncompliance which would not reasonably be expected to result in a material adverse effect (i) in the condition (financial or otherwise), or in the earnings of the Company and its subsidiaries considered as one enterprise, without or not arising in the ordinary course of business or (ii) on the ability of the Company to perform its obligations under this Note.

(c)            Taxes and Assessments. The Company and each of its subsidiaries shall punctually pay and discharge all taxes, assessments, and other governmental charges or levies imposed upon it or upon its income or upon any of its properties; provided, that no such taxes, assessments or other governmental charges need be paid if they are being contested in good faith by the Company.

(d)            Compliance Certificate. Not later than 45 days following the end of each fiscal quarter (or, in the case of any fiscal quarter ending on December 31, not later than 90 days from the end of such quarter), the Company shall provide the Holder with a certificate (the "Compliance Certificate"), executed by the principal executive officer and principal financial officer of the Company in their capacities as such, stating whether (i) the Company has complied with all notice provisions and covenants contained in this Note; (ii) whether an Event of Default has occurred or not; (iii) whether an event of default has occurred or not under any other indebtedness of the Company; and (iv) whether an event or events have occurred or not that in the reasonable judgment of the management of the Company would have a material adverse effect on the ability of the Company to perform its obligations under this Note.

10.            Events of Default. An "Event of Default" shall occur under this Note only if:

(a)            there shall be entered a decree or order by a court having jurisdiction in the premises constituting an order for relief in respect of the Company under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy law or other similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator, or similar official of the Company or of any substantial part of its properties, or ordering the winding-up or liquidation of the affairs of the Company and any such decree or order shall continue in effect for a period of 45 consecutive days; or

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(b)            the Company shall file a petition, answer, or consent seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy law or other similar law, or the Company shall consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking of possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar official of the Company or of any substantial part of properties.

11.            General Remedies of Holders. Upon the occurrence of an Event of Default, the Holders of this Note may at any time thereafter, at the Holder's option, by written notice delivered to the Company, declare the principal of this Note to be immediately due and payable, whereupon all such amounts shall immediately become absolute and due and payable, without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived, anything in this Note to the contrary notwithstanding. The Company, within 30 days after the receipt of written notice from any Holder of the occurrence of an Event of Default with respect to this Note, shall mail to all Holders of Subordinated Notes, at their addresses shown on the security register, such written notice of Event of Default, unless such Event of Default shall have been cured or waived before the giving of such notice as certified by the Company in writing.

12.            Failure to Make Payment. In the event of failure by the Company to make any required payment of principal or interest when due on this Note (and, in the case of payment of interest, such failure to pay shall have continued for 30 days), the Company will, upon demand of the Holder, pay to the Holder the whole amount then due and payable on this Note for principal and interest (without acceleration), with interest on the overdue principal and interest at the rate borne by this Note, to the extent permitted by applicable law. If the Company fails to pay such amount upon such demand, the Holder may, among other things, institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the amounts adjudged or decreed to be payable in the manner provided by law out of the property of the Company.

Upon the occurrence of a failure by the Company to make any required payment of principal or interest on the Note, the Company shall not (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock, (b) make any payment of principal or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank equal with or junior to the Subordinated Notes, or (c) make any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than: (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company's common stock; (ii) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of Company's capital stock or the exchange or conversion of one class or series of Company's capital stock for another class or series of Company's capital stock; (iv) the purchase of fractional interests in shares of Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of Company's common stock related to the issuance of common stock or rights under any of benefit plans for Company's directors, officers or employees or any of Company's dividend reinvestment plans.

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13.            Successors to the Company.

(a)            Conditions Applicable to Successors. The Company shall not merge with or into, nor sell all or substantially all of its assets to, any Person unless:

(i)            such person executes, and delivers to the Holder, a copy of an instrument pursuant to which such person assumes the due and punctual payment of the principal of and interest on this Note and the performance and observance of all the obligations of the Company under this Note, and

(ii)            immediately after giving effect to the transaction, no Event of Default and no event which after notice or lapse of time or both would become an Event of Default shall have occurred.

(b)            Successor As Company. Upon compliance with this Section 14, the Successor shall succeed to and be substituted for the Company under this Note with the same effect as if the Successor had been named as the Company herein, and the Company shall be released from the obligation to pay the principal of and interest accrued on the Note.

14.            Amendments and Waivers.

(a)            Amendment of Notes. Except as otherwise provided in Section 13 hereof, and subject to any necessary regulatory approval, the Subordinated Notes may, with the consent of the Company and the Holders of at least 51% of the aggregate outstanding principal amount of the Subordinated Notes then outstanding, be amended or any provision, past default, or non-compliance thereof waived; provided, however, that, without the consent of each Holder of an affected Note, no such amendment or waiver may:

(i)            reduce the principal amount of the Note;

(ii)            reduce the rate of or change the time for payment of interest on any Note;

(iii)            reduce the amount of principal or extend the maturity of any Note;

(iv)            make any change in this Section 14 or in Sections 8 through 15 hereof;

(v)            make any change in Section 5 hereof that adversely affects the rights of any Holder of a Note; or

(vi)             disproportionately affect any of the Holders of the then outstanding Notes.

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(b)            Effectiveness of Amendments. An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder of the Subordinated Notes, unless otherwise provided by Section 14(a) above. After an amendment or waiver becomes effective, the Company shall mail to each Holder a copy of such amendment or waiver. The Company may require each Holder to surrender this Note so that an appropriate notation concerning the amendment or waiver may be placed thereon or a new Note, reflecting the amendment or waiver, exchanged therefor. Even if such a notation is not made or such a new Note is not issued, such amendment or waiver and any consent given thereto by a Holder of this Note shall be binding according to its terms on any subsequent Holder of this Note.

(c)            Amendments Without Consent of Holders. Notwithstanding Section 15(a) hereof, the Company may amend or supplement this Note without the consent of the Holders of the Subordinated Notes to cure any ambiguity, defect or inconsistency or to provide for uncertificated Notes in addition to or in place of certificated Notes, or to make any change that does not adversely affect the rights of any Holder of one of the Subordinated Notes.

15.            Order of Payments. Any payments made hereunder shall be applied first against costs and expenses of each Holder hereunder; then against interest due hereunder; and then against principal due hereunder.

16.            Notices. All notices and other communications hereunder shall be in writing and, for purposes of this Note, shall be delivered in accordance with, and effective as provided in, the Purchase Agreement.

17.            Conflicts; Governing Law; Venue. In the case of any conflict between the provisions of this Note and the Purchase Agreement, the provisions of this Note shall control. This Note shall be construed in accordance with, and be governed by the laws of, the State of Connecticut without giving effect to any conflicts of law provisions of such laws that would result in the application of the laws of another jurisdiction. The jurisdiction and venue with respect to any disputes related to this Note shall be as set forth in the Purchase Agreement.

18.            Successors and Assigns. This Note shall be binding upon the Company and inure to the benefit of the Holder and its respective successors and permitted assigns. The Holder may assign all, or any part of, or any interest in, the Holder's rights and benefits hereunder only to the extent and in the manner permitted in the Purchase Agreement. To the extent of any such assignment, such assignee shall have the same rights and benefits against the Company and shall agree to be bound by and to comply with the terms and conditions of the Purchase Agreement as it would have had if it were the Holder hereunder.

19.            Waivers. Neither any failure nor any delay on the part of the Holder in exercising any right, power or privilege under this Note shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.

20.            Priority. The Subordinated Notes rank pari passu among themselves and pari passu, in the event of any insolvency proceeding, dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or similar proceeding or any liquidation or winding up of the Company, with all other present or future unsecured subordinated debt obligations of the Company, except any unsecured subordinated debt that may be expressly stated to be senior to or subordinate to the Subordinated Notes.

10

21.            Registrar and Paying Agent. The Company shall maintain an office or agency where the Subordinated Notes may be surrendered for registration of transfer or exchange ("Registrar") and an office or agency where Subordinated Notes may be presented for payment or for exchange ("Paying Agent"). The Company has initially appointed Computershare to act as its Registrar and Paying Agent with respect to the Subordinated Notes. The Company may vary or terminate the appointment of any of its paying or transfer agencies, and may appoint additional paying or transfer agencies.

11

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to:

	 
	
(Print or type assignee's name, address and zip code)

	 
	
(Insert assignee's social security or tax I.D. No.)

and irrevocably appoint _______________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

	
Date:

	
Your Signature:  _________________________________

 

	
Signature Guarantee:   _____________________________________________________________________________

 

	
(Signature must be guaranteed)

	 
	
Sign exactly as your name appears on the other side of this Note.

 

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

The undersigned hereby certifies that it £ is / £ is not an Affiliate of the Company and that, to its knowledge, the proposed transferee £ is / £ is not an Affiliate of the Company.

	 
	
 

 

 

	
___________________________________________

Signature

Signature Guarantee:

	
 

__________________________________________

(Signature must be guaranteed)

 

	 	
____________________________________

Signature

 

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-15.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and it is aware that the sale to it is being made in reliance on Rule 144A, and it acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.

	 	______________________________________
	
 

	
Signature

	 	
 

______________________________________

	 	Date

 

 

12EX-10.1

 Exhibit 10.1 

LICENCE AGREEMENT 
 between 

LONZA SALES AG 
 and 

CYTODYN INC. 

 INDEX 
  

							
	 ARTICLE
	 	 TITLE
	  	PAGE	 
	 1.
	 	 Definitions
	  	 	1	  
	 2.
	 	 Supply of System and System Know-How
	  	 	6	  
	 3.
	 	 Ownership of Property and Intellectual Property
	  	 	7	  
	 4.
	 	 Licences
	  	 	7	  
	 5.
	 	 Payments
	  	 	9	  
	 6.
	 	 Royalty Procedures
	  	 	11	  
	 7.
	 	 Liability and Warranties
	  	 	13	  
	 8.
	 	 Confidentiality
	  	 	16	  
	 9.
	 	 Intellectual Property Enforcement
	  	 	18	  
	 10.
	 	 Term and Termination
	  	 	19	  
	 11.
	 	 Assignment
	  	 	21	  
	 12.
	 	 Governing Law and Jurisdiction
	  	 	22	  
	 13.
	 	 Force Majeure
	  	 	23	  
	 14.
	 	 Illegality
	  	 	23	  
	 15.
	 	 Miscellaneous
	  	 	24	  
	 16.
	 	 Notice
	  	 	25	  
	 17.
	 	 Interpretation
	  	 	26	  
	 18.
	 	 Release
	  	 	26	  
		
	SCHEDULE	  			
			
	 1
	 	 Patent Rights
	  			

 THIS AGREEMENT is made as of the 29th day of July, 2015 

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 

CYTODYN INC., a Colorado corporation with offices at 1111 Main Street, Suite 660, Vancouver, Washington 98660, 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 Rights 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 third party who (together with its Affiliates) undertakes or performs more than fifty
percent 

  
 - 1 - 

	 	
(50%) of their business as a third party manufacturer of monoclonal antibodies and/or therapeutic proteins or any product of a similar nature to which this Agreement relates. 

 

	 	1.4	“Combination Product” means a product that contains the Product together with one or more other (i.e., non-Product) pharmaceutically active ingredients, and are sold either as a combined dose or as separate
doses in a single package. 

  

	 	1.5	“Confidential Information” means any Know-How and confidential information disclosed by one Party to the other in connection with this Agreement including for the avoidance of doubt the terms of this Agreement
itself. In the case of Lonza, Confidential Information shall mean all information relating to the System and any other materials, specifications or information which is provided and/or disclosed by Lonza, its Affiliates and their respective
officers, employees, agents and advisors to the Licensee and its officers, employees, agents and advisors, whether directly or indirectly, including, without limitation, all agreements, research databases, trade secrets, Intellectual Property
Rights, business and/ or commercial and/ or financial data, specifications, technical designs, documents and drawings which are related to the System and/or Lonza’s business, and shall also mean any and all such information disclosed to
Licensee by any third party at any time (whether before or after the date of this Agreement and whether or not such disclosure was authorised by Lonza). 

  

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

  

	 	1.7	“First Commercial Sale” means the date of the first sale or other disposal of Product for cash or equivalent consideration by the Licensee or its Sublicensee, at any time. 

 

	 	1.8	 “Intellectual Property Rights” means all rights, title and interests, vested and/or arising out of any industrial or intellectual property,
whether protected at common law or under statute, which includes (without limitation) any rights and interests in copyrights, designs, trademarks, 

  
 - 2 - 

	 	
servicemarks, trade-names, technology, business names, logos, commercial symbols, processes, developments, licenses, trade secrets, goodwill, drawings, computer software, formulae, technical
information, research data, procedures, designs, Confidential Information and any other knowledge of any nature whatsoever throughout the world whether in existence today or which will come into existence in the future, and including all
applications for patents, copyrights, trademarks, trade names, rights to apply and any amendments/modifications or renewals thereto; and all other intellectual property rights. 

 

	 	1.9	“IP-Respecting Entity” means any legal entity or organisation other than a legal entity or organisation which violates, has violated, or is believed reasonably likely to violate the Intellectual Property
Rights of Lonza, any Affiliate of Lonza, or of any Third Party, for clarity, any legal entity or organisation which violates, has violated, or is believed reasonably likely to violate the Intellectual Property Rights of Lonza, any Affiliate of
Lonza, or of any Third Party shall not be regarded as a IP-Respecting Entity. 

  

	 	1.10	“Know-How” means any technical and other information, whether patented or unpatented, 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. 

 

	 	1.11	“Net Selling Price” means all revenues recorded by or on behalf of Licensee or its Sublicensee hereunder in respect of the sale of Product in the Territory. The following permitted deductions booked on an
accrual basis by Licensee and its Sublicensees under their respective accounting standards may be deducted from gross sales to calculate the recorded Net Selling Price: 

 

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

  
 - 3 - 

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

  

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

  

	 	1.11.4	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 exclusively for money at market value 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 then current maximum selling 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 preclinical studies, clinical trials or
related research studies, shall not be included in this provision. When a Sublicensee manufactures Product for Licensee, the revenues recorded by Licensee for sale or disposition of the Product, and not the transfer price paid by Licensee to the
Sublicensee, determines Net Selling Price. 
 If Product is sold as part of a Combination Product in a particular country, the Net Selling
Price of Product in such country shall be determined by multiplying the Net Selling Price (as defined above) of the Combination Product in such country by the fraction A/(A+B) where “A” is the weighted (by sales volume) average sale price
in such country of Product, and “B” is the weighted (by sales volume) average sale price in such country of the product(s) containing the other component(s) in finished form. Regarding prices comprised in the weighted average price when
sold separately referred to above, if these are available for different dosages from the dosages of Product and other components that are included in the 

  
 - 4 - 

 
Combination, then the Parties shall mutually agree on the appropriate proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination. If the weighted
average sale price cannot be determined for the Product or other component(s), the calculation of Net Sales for a Combination will be mutually agreed upon by the Parties based on the relative value contributed by each component, such agreement to be
negotiated in good faith without unreasonable delay. 
  

	 	1.12	“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. 

  

	 	1.13	“Product” means the GS-CHOK1SV-derived monoclonal antibody PRO 140, of which Licensee is the proprietor, 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. 

  

	 	1.14	“Strategic Partner” means a party with whom Licensee has entered into a contractual relationship, to identify a therapeutic target or collaborate in the performance of research and development and/or
commercialisation 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.

  

	 	1.15	“Sublicensee” means any Third Party to which Licensee grants a sublicence of the rights granted to Licensee pursuant to this Agreement. 

 

	 	1.16	“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. 

  
 - 5 - 

	 	1.17	“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. 

 

	 	1.18	“Territory” means world-wide. 

  

	 	1.19	“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. 

 

	 	1.20	“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 the supply ex-works Lonza’s premises, Slough, Berkshire (Incoterms 2010) to Licensee of
the following: 

  

	 	

					
	2.1.1	    	(a)	    	Vectors
			
		    		    	Approximately 20μg of vector pEE12.4.
			
		    		    	Approximately 20μg of vector pEE6.4.
			
		    	(b)	    	Cell Lines
			
		    		    	Two 1.5 ml vials of myeloma cell line NS0.
			
		    		    	Two 1.5 ml vials of the Chinese Hamster Ovary cell line CHO-K1sv.

  
 - 6 - 

	 	2.1.2	System Know-How 

 System Know-How contained as at the Effective Date, or, the date on which
Licensee may previously have received such information from a third party, in (a) manuals of operating procedures for the System, (b) regulatory information on CD-ROM, and (c) Vector nucleotide sequences. 

 

	 	2.1.3	In the event that Licensee requires any additional quantities of the materials referred to in clause 2.1.1, and if Lonza at its sole discretion is willing to supply such additional materials, such supply shall be
subject to the payment of an additional fee by Licensee to Lonza in accordance with Lonza’s prices at the time. 

  

	 	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 Rights in the System and System Know-How and Patent Rights 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. 

  
 - 7 - 

	 	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, Lonza’s Intellectual Property Rights 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, Lonza’s
Intellectual Property Rights or the Product other than for the purposes of establishing a manufacturing process for Product or producing Product for Licensee and Licensee agrees to ensure that such Sublicensee shall not assign, transfer, novate,
further sublicense, subcontract or otherwise delegate 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 4.3, Licensee shall obtain the written consent of Lonza (such consent not to be unreasonably withheld), to the grant of such sublicence. It is agreed between
the Parties that Lonza shall be considered to be reasonably withholding its consent if it holds reasonable commercial concerns as to protection of its Intellectual Property Rights and confidentiality should Lonza’s Intellectual Property Rights
be licensed to the proposed Sublicensee. 

  
 - 8 - 

	 	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	Notwithstanding clause 4.4, 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 and Clause 5 shall only apply for as long as the System
Know-How remains secret and substantial. 

  

	 	4.6	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. 

 

	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 one and a half percent (1.5%) of the Net Selling Price; 

  

	 	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 commencement of phase II clinical trials for the Product and
thereafter on each anniversary of such date; and 

  
 - 9 - 

	 	5.1.2.2	a royalty of one and a half percent (1.5%) of the Net Selling Price of such Product. 

  

	 	5.1.3	where any party other than Lonza, Licensee or Licensee’s Strategic Partner manufactures Product (whether for clinical or commercial purposes): 

 

	 	5.1.3.1	a payment of pounds sterling three hundred thousand (£300,000) per sublicence due annually during the course of such sublicence (irrespective as to the years of manufacture, and being first payable on the
commencement date of the relevant sublicence); and 

  

	 	5.1.3.2	a royalty of two percent (2%) of the Net Selling Price of such Product. 

  

	 	5.2	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 (either because no patent or application was ever filed for such territory or the
patent or application is no longer of effect) 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 three-quarters of one per cent (0.75%) of the Net Selling Price; 

 

	 	(c)	the royalties referred to in 5.1.3.2 shall be at the rate of one per cent (1%) of the Net Selling Price. 

  

	 	5.3	 The parties agree that the annual fee in respect of the sub-licence between Licensee and FUJIFILM Diosynth Biotechnologies U.S.A., Inc.
(“Fujifilm”), to which Lonza consents, will be pounds sterling three hundred thousand (£300,000) as provided in Clause 5.1.3, for the first year of this Agreement running from the Effective Date to the first anniversary of the
Effective Date (from July 1 through June 30). Such amount shall be paid to Lonza by December 15, 2015. Annual fees for successive 12-month periods in 

  
 - 10 - 

	 	
respect of the sub-license between Licensee and Fujifilm as provided in Clause 5.1.3, or for manufacture by Licensee or Licensee’s Strategic Partner as provided in Clause 5.1.2, shall be
paid by December 15 of the applicable year. For avoidance of doubt, if Licensee terminates the FujiFilm sub-licence and begins manufacturing directly or through a Strategic Partner during the period for which the annual fee for the Fujifilm
sub-licence has been paid, then no further manufacturing fees would be due under 5.1.2.1 or 5.1.3.1 for that year. If December 15 falls on a weekend or a day on which U.S. financial institutions are not open, then the annual fee shall be due on
the next business day. Fees in relation to any other sub-licences shall be calculated and payable in accordance with Clause 5.1. 

  

	6.	Royalty Procedures 

  

	 	6.1	Licensee shall, and shall ensure that its Sublicensees 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 all reasonable times during regular business hours for inspection by independent auditors
selected by Lonza and reasonably acceptable to Licensee. Such independent auditors shall agree to maintain the confidentiality of the information and materials disclosed during the audit. 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 and shall be completed as soon as reasonably practicable. Lonza shall
pay the costs of the independent auditors conducting such audit, unless the results of the audit reveal an underpayment of 5% or more by Licensee in any consecutive three year period, in which case, Licensee shall pay the reasonable 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. 

  
 - 11 - 

	 	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 on a country by country basis 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 last business day of the period for which payment is being made. The rate of exchange shall be the rate published in the Wall Street Journal on the business day following the last business day of the
quarter for which payment is being made. Payments shall be sent to Lonza at its address for notices, or such other address or account as Lonza may specify from time to time by written notice to Licensee. 

 

	 	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, which 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. 

 

	 	6.3.3	 may be reduced by the amount of any withholding properly required under applicable law from payments to be made to Lonza under this Agreement. To the
extent such withholding is properly required, 

  
 - 12 - 

	 	
Licensee shall pay the amounts withheld to the proper governmental authority in a timely manner, and provide Lonza with appropriate evidence of payment. The parties agree to co-operate in all
respects reasonably necessary to take advantage of such double taxation treaties as may be available. 

  

	 	6.3.4	subject to Clauses 5.3 and 6.2, all payments due to Lonza under this Agreement must be paid in full within thirty (30) days of the date of the invoice. Payment shall be made without deduction, deferement, set-off,
lien or counterclaim. 

  

	 	6.4	Where Lonza does not receive payment of any sum by the due date and there is no bona fide dispute as to the amount owed, interest shall accrue thereafter on the sum due and owing to Lonza at the rate of two percent
(2%) 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 and Licensee each represents and warrants to the other that: 

  

	 	7.1.1	Such party is duly organized and validly existing under the laws of its jurisdiction of incorporation, and has full corporate power and authority to enter into this Agreement and to perform its obligations hereunder;

  

	 	7.1.2	This Agreement has been duly authorized, executed and delivered by such party and constitutes valid and binding obligations of such party, enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, and other laws of general application limiting the enforcement of creditors’ rights; 

  

	 	7.1.3	The execution, delivery and performance of this Agreement does not conflict with, or constitute a breach or default under any of the charter or organizational documents of such party ; 

  
 - 13 - 

	 	7.2	Lonza represents and warrants to Licensee that: 

  

	 	7.2.1	The patents included in the Patent Rights are the only patents that must be licenced from Lonza and/or its Affiliates in order to operate the System; 

 

	 	7.2.2	As of the Effective Date to the best of Lonza’s knowledge, there are no pending claims against Lonza by any person to the effect that the proper use of the Patent Rights, System, or System Know-How infringes any
third party patent or other Intellectual Property Rights; and 

  

	 	7.2.3	As of the Effective Date to the best of Lonza’s knowledge, Lonza has not authorised the Know-How provided or to be provided to Licensee to be used by any third party on a substantially compensation free basis.

  

	 	7.3	Subject to Clause 7.2.1, 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. 

  

	 	7.4	Subject to Clause 7.2.1, the Licensee hereby acknowledges that in order to exploit the rights granted herein the Licensee 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) that may be infringed by the use by the Licensee of the rights licensed herein and 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. 

  

	 	7.5	 Each party (“Indemnifying Party”) shall indemnify and hold harmless the other party and its Affiliates and their respective officers,
employees and agents (each an “Indemnified Party”) 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 

  
 - 14 - 

	 	
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. 

  

	 	7.6	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, its Affiliates and their
respective 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 of death or bodily injury 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 of
death or bodily injury relating to the Product to the extent such claims or proceedings result from defects in the Cell Lines and Vectors, or from Lonza’s breach of this Agreement. 

 

	 	7.7	It shall be a condition to indemnification that the Indemnified Party (a) promptly notify the Indemnifying Party of the basis for indemnification, including any claim as to which indemnification may be sought,
(b) not settle any claim as to which indemnification may be sought without the Indemnifying Party’s approval, not to be unreasonably withheld or delayed, and (c) cooperate fully with the Indemnifying Party in connection with any such
claim. 

  

	 	7.8	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.

  

	 	7.9	 EXCEPT FOR EITHER PARTY’S BREACH OF CLAUSE 8 OF THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY OR THEIR RESPECTIVE AFFILIATES BE LIABLE TO THE
OTHER PARTY OR THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, EMPLOYEES AND AGENTS WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT WHETHER IN CONTRACT IN TORT IN NEGLIGENCE OR FOR BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY LOSS

  
 - 15 - 

	 	
OF PROFITS OR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES. Nothing in this Agreement shall exclude or limit the liability of either Party for fraud or for death or
personal injury caused by its negligence or for any other liability that may not be limited or excluded as a matter of law. 

  

	 	7.10	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 Lonza’s Confidential Information, the System Know-How and any other Know-How with which it is supplied by Lonza pursuant to this
Agreement, or was supplied to Licensee by a third party at any time whether before or after the date of this Agreement, is supplied in circumstances imparting an obligation of confidence and Licensee shall keep such Confidential Information, Know
How and System Know-How secret and confidential and undertakes 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 or cause to be disclosed such Confidential Information, Know How and/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 employees of its Sublicensee hereunder shall have access to the Confidential Information, Know How or System Know-How on a need-to-know basis and that all such employees 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	 Lonza expressly acknowledges and undertakes that any Confidential Information disclosed by the Licensee to Lonza pursuant to this Agreement is
disclosed in circumstances imparting an obligation of confidence and Lonza shall keep such Licensee’s Confidential Information secure, secret and confidential and undertakes to respect Licensee’s proprietary rights

  
 - 16 - 

	 	
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 disclose and/or cause and/or permit to be
disclosed such Licensee’s Confidential Information to any third party. 

  

	 	8.3	Each party will restrict the disclosure of Confidential Information to such officers, employees, professional advisers, finance-providers, and consultants of itself and its Affiliates
(“Representatives”) who have been informed of the confidential nature of the Confidential Information and who have a need to know such Confidential Information for the purpose of this Agreement. Prior to disclosure to such persons,
the party in receipt of the Confidential Information shall bind its and its Affiliates’ Representatives to confidentiality and non-use obligations no less stringent than those set forth herein. The receiving party shall notify the disclosing
party as promptly as practicable of any unauthorized use or disclosure of the Confidential Information. 

  

	 	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; or 

 

	 	8.4.5	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. 

  
 - 17 - 

	 	8.5	Notwithstanding the foregoing it is acknowledged between the parties that Lonza or Licensee may be required to disclose Confidential Information to a government agency for the purpose of any statutory, regulatory or
similar legislative requirement applicable to the production of Product, or to a court of law or to meet the requirements of any Stock Exchange to which the parties may be subject. In such circumstances, the disclosing party will to the extent
legally permissible (i) inform the other party prior to disclosure being made as to the nature of the required disclosure, (ii) shall only make the disclosure to the extent legally required and (iii) shall seek to impose obligations
of secrecy wherever possible. Notwithstanding such disclosure such Confidential Information shall otherwise remain subject to this Clause 8. 

  

	 	8.6	Each party hereto expressly agrees that any breach or threatened breach of the undertakings of confidentiality provided hereunder by a party may cause irreparable harm to the other party (“Non-Breaching
Party”) and that money damages may not provide a sufficient remedy to the Non-Breaching Party for any breach or threatened breach. In the event of any breach and/or threatened breach, then in addition to all other remedies available at law
or in equity, the Non-Breaching Party shall be entitled to seek injunctive relief and any other relief deemed appropriate by the Non-Breaching Party. 

  

	 	8.7	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 Lonza Intellectual Property
Rights; and 

  
 - 18 - 

	 	9.1.2	pay or procure payment of all renewal fees in respect of the Patent Rights to ensure that they are 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 System Know-How. 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 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 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 the later. 

  
 - 19 - 

	 	10.2	Licensee may terminate this Agreement 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 is unable to pay its debts or 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 compounds with or convenes a meeting of its creditors or has a receiver or administrator
appointed over all or any part of its assets or takes or suffers any similar action in consequence of a debt or insolvency, or ceases for any reason to carry on business. 

 

	 	10.3.3	If Licensee fails to make any payment due to Lonza pursuant to this Agreement (including but not limited to those payments referred to in clause 18) then Lonza may terminate this Agreement immediately. For the avoidance
of doubt, if Licensee timely makes a good faith payment of royalties, and that payment is subsequently determined to be incorrect under Section 6.1, this Agreement will remain in effect if Licensee timely makes the necessary adjusting payment
required under Section 6.1. 

  

	 	10.4	 If at any time during this Agreement Licensee knowingly, directly or indirectly, opposes or assists any third party to oppose the grant of letters

  
 - 20 - 

	 	
patent or any patent application within any of the Patent Rights or disputes or knowingly, directly or indirectly, assists any third party to dispute the validity of any patent within any of the
Patent Rights or any of the claims thereof 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 expires or is terminated for any reason any and all licences granted hereunder shall terminate with effect from the date of termination, and Licensee shall immediately destroy all Vectors and Cell
Lines and Product and all Confidential Information which is provided by Lonza (including all Know-How and all System Know-How) and shall certify such destruction immediately thereafter in writing to Lonza. This Clause 10.5 shall not be applicable if
this Agreement expires because the System Know-How ceases to be secret and substantial and this is not due to the acts or omissions of the Licensee, any of its Affiliates, a Sublicencee or any other person for whom the Licensee is responsible.

  

	 	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 assign, sub-contract, transfer or delegate 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: 

  

	 	(a)	 Lonza shall be entitled without the prior written consent of the Licensee to assign, transfer, charge,
sub-contract, deal with or in any other manner make over the benefit and/or burden of this Agreement (i) to an Affiliate or (ii) to any joint venture company of which Lonza, is the beneficial
owner of at least fifty percent (50%)

  
 - 21 - 

	 	
of the issued share capital thereof or (iii) to any company with which Lonza may merge or (iv) to any company to which Lonza may transfer its assets and undertaking; and

  

	 	(b)	Lonza shall not be considered to be unreasonably withholding its consent if (inter alia) Licensee wishes to assign this Agreement to any legal person or entity which is (i) a Competing Contract Manufacturer,
or (ii) not an IP-Respecting Company. 

  

	 	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 New York, USA, law and the parties submit to the non-exclusive jurisdiction of the courts of New York. 

 

	 	12.2	Subject to Clause 12.3, the Southern District Court of New York, located in New York, New York, USA, shall have exclusive jurisdiction in relation to this Agreement provided that the parties shall have the right to
proceed to a suitable jurisdiction for the purpose of enforcing a judgment, award, or order (including without limitation seeking specific performance) and injunctive reliefs. 

 

	 	12.3	 Any dispute arising between the parties under this Agreement must be referred to and finally settled by arbitration under the Rules of Arbitration of
the International Chamber of Commerce by a single arbitrator knowledgeable in biopharmaceutical research and development related matters and familiar with the biopharmaceutical industry, appointed in accordance with the said Rules. The place of
arbitration shall be New York, New York, USA and the arbitration shall be conducted in the English language. The arbitrator’s award shall be final and binding. The parties covenant and agree that they will participate in the arbitration in good
faith 

  
 - 22 - 

	 	
and that they will share equally the costs of the arbitration, except as otherwise provided herein. Any party refusing to comply with an order of the arbitrator will be liable for costs and
expenses, including attorney’s fees, incurred by the other party in enforcing an award. Nothing in this Clause 12.3 shall prevent either Party from seeking any injunction or other legal or equitable remedy in order to protect its legal rights
or remedies in relation to the subject matter of the dispute. 

  

	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 ninety (90) 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 

  

	 	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

  
 - 23 - 

	 	
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, understandings, representations or arrangements relating to the subject
matter of this Agreement. Neither party shall be entitled to rely on any agreements, understandings, representations or arrangements 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. 

  

	 	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. 

  
 - 24 - 

	 	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, Muenchensteinerstrasse 38, CH-4402, Basel, Switzerland 
 with a copy to: 228 Bath Road, Slough, Berkshire SL1 4DX 

Facsimile: 01753 777001 
 For
the attention of the Head of Legal Services 
 Address of Licensee 

CYTODYN INC., of 1111 Main Street, Suite 660, Vancouver, Washington 98660, USA 

Facsimile: (360) 980-8549 

For the attention of the President 
  

	 	16.2	All such notices and documents shall be in the English language. Any such notice or other document shall be deemed to have been received by the addressee seven (7) working days following the date of dispatch of the
notice or other document by post or, where the notice or other document is sent by hand, at the time of such delivery. To prove the giving of a notice or other document it shall be sufficient to show that it was dispatched. 

  
 - 25 - 

	17.	Interpretation 

  

	 	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. 

 

	 	17.4	References in this Agreement to the recitals, clauses and appendix shall be deemed to be a reference to the recitals, clauses and appendix to this Agreement and shall form an integral part of this Agreement.

  

	18.	Release 

  

	 	18.1	In consideration of the Licensee’s previous use of Lonza’s System Know-How and Patent Rights from July 2012 up to and including the Effective Date of this Agreement, Licensee shall pay Lonza as follows:

  

	 	18.1.1	A payment of pounds sterling three hundred thousand (£300,000) which is to be paid by December 15, 2015; and 

  

	 	18.1.2	 A second payment on June 30, 2016, in the amount of pounds sterling six hundred thousand (£600,000), less the amount of any payment to or
judgment in favour (in each case excluding any fees and/or costs that may be awarded to Lonza) of Lonza in respect of Lonza’s claims asserted in the case of Lonza Sales AG, vs. Progenics Pharmaceuticals, Inc. No. 1:15-cv-00562-UNA
(D. Del.) (the “Litigation”), or any related proceeding; provided, however, that if such claims have not been resolved by June 30, 2016, the second 

  
 - 26 - 

	 	
payment will be made in full within 15 days. If the Litigation continues beyond June 30, 2016 and Lonza is awarded any payment or damages from Progenics Pharmaceuticals Inc. (the
“Award”) and provided that Licensee has made payment in accordance with this sub-clause, Lonza will refund the Licensee an amount equal to the Award, less the costs and expenses incurred by Lonza in relation to the Litigation, further
provided that Lonza will not be liable to pay Licensee any sum in excess of the sum actually paid by Licensee pursuant to this sub-clause. Lonza will pursue recovery on such claims in good faith, and Licensee will cooperate with Lonza with respect
to such claims, with any reasonable, wholly and properly incurred out-of-pocket expenses directly relating to such claims being credited against the second payment or being reimbursed by Lonza. 

 

	 	18.2	Except for the obligations as set forth in this Agreement, each party unconditionally, fully, and forever releases and discharges the other party and its Affiliates from any and all claims, counterclaims, demands,
liabilities, disputes, causes of action, proceedings, obligations, debts, liens, manner of actions, controversies, suits, benefits, covenants, rights of contribution or indemnity, judgments, executions, misrepresentations, allegations, promises,
costs and expenses (including attorney fees), damages, and losses related to the use of the System Know-How and Patent Rights for the making of PR0-140 (but nothing else) whether known, unknown, asserted, unasserted, fixed, conditional, or
contingent, in law or in equity, whether in contract or in tort, by statute, and otherwise, liquidated or unliquidated, matured or unmatured, which either of them has had, now has, or hereafter may have which in any way arises out of or is related
to any act, failure to act, event, occurrence, or circumstance related to the use of the System Know-How and Patent Rights for the making of PRO-140 (but nothing else) that transpired before the Effective Date. Notwithstanding the foregoing, the
indemnity at Clause 7.6 shall also apply retrospectively from 1 July 2012. 

  
 - 27 - 

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

 

					
	Signed for and on behalf of	  	 /s/ Michael Maskus
	 	
	LONZA SALES AG	  	 Michael Maskus
 Associate Director

Commercial Development
	 	TITLE
			
	Signed for and on behalf of	  	 /s/ Nadia Zieger
	 	
	LONZA SALES AG	  	 Nadia Zieger
 Senior Legal Counsel
	 	TITLE
			
	Signed for and on behalf of	  	 /s/ Nader Pourhassan
	 	
	CYTODYN INC.	  	 Nader Pourhassan
 President &
CEO
	 	

  
 - 28 - 

 SCHEDULE 1 

PATENT RIGHTS 
  

			
	Lonza Ref. No.	  	L.B.P.07 (PA 98)
		
	Subject Matter:	  	Expression of polypeptides, such as antibodies, in myeloma cell lines
		
	Title:	  	Transformed Myeloma Cell-Line and a Process for the Expression of a Gene Coding for a Eukaryotic Polypeptide Employing Same
		
	Origin:	  	Celltech invention
		
	Registered Owner:	  	Lonza Group AG
		
	Priority Application Dates:	  	1st April 1985 (GB 8508442); 3rd September 1985 (GB 8521815)
		
	Earliest Publication Date/No:	  	9th October 1986 (WO86/05807)

  

							
	 Territory
	  	Appl. Date	  	Patent No.	  	Expiry Date
	 USA (cont.III)
	  	07.06.95	  	5981216	  	09.11.16

			
	Lonza Ref. No.	  	PA 108
		
	Subject Matter:	  	GS Coding sequence
		
	Title:	  	Recombinant DNA which encodes glutamine synthetase
		
	Origin:	  	University Glasgow /R.H. Wilson joint invention with former Celltech Limited.
		
	Registered Owner:	  	Celltech Therapeutics Ltd.; The University Court of the University of Glasgow
		
	Inventors:	  	Bebbington, Christopher Robert
		  	Wilson, Richard Harris
		
	Priority Application Dates:	  	23rd January 1986 (GB 1986-1597)
		
	Earliest Publication Date/No:	  	30th July 1987 (WO87/04462)

  

							
	 Territory
	  	Appl. Date	  	Patent No.	  	Expiry Date
	 Canada
	  	23.01.87	  	1338901	  	11.02.14

			
	Lonza Ref. No.	  	L.B.P. 09 (PA 140)
		
	Subject Matter:	  	Expression systems containing a hCMV promoter
		
	Title:	  	Recombinant DNA Expression Vectors
		
	Origin:	  	Celltech invention
	Registered Owner:	  	Lonza Group AG
		
	Priority Application Date:	  	23rd July 1987 (GB 8717430)
	Earliest Publication Date/No:	  	9th February 1989 (WO89/01036)

  

							
	 Territory
	 	Appl. Date	 	Patent No.	 	Expiry Date
	USA (cont.II)	 	09.02.94	 	5591639	 	07.01.14

			
	Lonza Ref. No.	  	L.B.P. 10 (PA 177)
		
	Subject Matter:	  	Operation of glutamine synthetase expression systems in lymphoid cells
		
	Title:	  	Recombinant DNA Methods, Vectors and Host Cells
	Origin:	  	Celltech invention
		
	Registered Owner:	  	Lonza Group AG
		
	Priority Application Date:	  	18th April 1988 (GB 8809129)
	Earliest Publication Date/No:	  	25th October 1989 (EP 0338841)
		  	02nd November 1989 (WO89/10404)

  

							
	 Territory
	 	Appl. Date	 	Patent No.	 	Expiry Date
	Canada	 	18.04.89	 	1338891	 	04.02.14
	USA (cont I)	 	12.06.92	 	5879936	 	09.03.16
	USA (cont II)	 	23.01.95	 	5891693	 	06.04.16

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