Document:

Exhibit 10.6

 

 

INDEMNIFICATION AGREEMENT

 

This INDEMNIFICATION AGREEMENT is made this [___] day of [_______________], 2016 (“Agreement”), by and between Quality Care Properties, Inc., a Maryland corporation (the “Company”), and [____________________________] (“Indemnitee”).

 

RECITALS

 

WHEREAS, at the request of the Company, the Indemnitee currently serves as [a director] [an officer] of the Company and renders valuable services to the Company; and

 

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as directors and officers of the Company and its related entities; and

 

WHEREAS, both the Company and the Indemnitee recognize the increased legal risks and potential liabilities to which directors and officers of corporations are subject in connection with their positions and that liability insurance for directors and officers and statutory indemnification provisions may be inadequate to provide proper protection to individuals requested to serve as directors and officers of the Company; and

 

WHEREAS, in order to induce Indemnitee to continue to provide services to the Company as an officer and/or director, the Company desires to provide for the indemnification of, and the advancement of expenses to, Indemnitee as set forth in this Agreement.

 

NOW THEREFORE, in consideration of the foregoing premises, the covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Indemnitee do hereby agree as follows:

 

1.                                    Certain Definitions.  For purposes of this Agreement, the following terms should have the following meanings:

 

(a)                              “Board of Directors” means the Board of Directors of the Company.

 

(b)                              “Bylaws” mean the bylaws of the Company, as the same may be amended from time to time.

 

(c)                              “Change in Control” shall be deemed to have occurred if (i) any “person” (as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the total voting power represented by the Company’s then outstanding voting securities, or (ii) during any period of two consecutive years, individuals who at the beginning of the two year period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board of

 

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Directors, or (iii) there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization  not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter.

 

(d)                              “Charter” means the corporate charter of the Corporation, as the same may be amended from time to time.

 

(e)                              “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding (as hereinafter defined) in respect of which indemnification or advance of Expenses (as hereinafter defined) is sought by Indemnitee.

 

(f)                                 “Expenses” shall mean any and all expenses, including, without limitation, reasonable attorneys fees, disbursements and retainers, accounting and witness fees, travel and deposition costs, transcript costs, fees of experts, expenses of investigations and court costs, customarily incurred in connection with investigating, prosecuting, defending, being a witness in or participating in (including on appeal), or preparing to prosecute or defend, to be a witness or other participant, in a Proceeding.

 

(g)                              “Indemnifiable Event” shall mean any actual or asserted event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, partner, employee, trustee, manager, member, agent or fiduciary of another corporation, partnership, limited liability company, association, joint venture, trust, employee benefit plan or other entity or enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity.  As a clarification and without limiting the circumstances in which lndemnitee may be serving at the request of the Company, service by lndemnitee shall be deemed to be at the request of the Company: (i) if lndemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, real estate investment trust, partnership, limited liability company, joint venture, trust or other enterprise (1) of which a majority of the voting power or equity interest is or was owned directly or indirectly by the Company or (2) the management of which is controlled directly or indirectly by the Company and (ii) if, as a result of lndemnitee’s service to the Company or any of its affiliated entities, lndemnitee is subject to duties by, or required to perform services for, an employee benefit plan or its participants or beneficiaries, including as deemed fiduciary thereof.

 

(h)                              “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  If a Change of Control has not occurred, Independent Counsel shall be selected by the Board of Directors, with the approval of Indemnitee, which approval will not be unreasonably withheld.  If a Change of Control has occurred, Independent Counsel shall be selected by Indemnitee, with the

 

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approval of the Board of Directors, which approval will not be unreasonably withheld, and by such approval, the Board of Directors shall be deemed to have joined in such selection.

 

(i)                                   “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding (including any appeals in any of the foregoing), whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee pursuant to Section 6 of this Agreement to enforce Indemnitee’s rights under this Agreement.  If lndemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.

 

2.                                    Indemnification.

 

2.1                            Indemnification with Respect to Proceedings Other Than Proceedings brought by or in the Right of the Company.  In the event that Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to, or a witness or other participant in, any Proceeding (other than a Proceeding brought by or in the right of the Company) by reason of (or arising in whole or in part from) an Indemnifiable Event, the Company shall indemnify the Indemnitee, to the fullest extent permitted by applicable law, from and against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee, or on behalf of Indemnitee, in connection with such Proceeding.

 

2.2                            Indemnification with Respect to Proceedings by or in the Right of the Company.  In the event that Indemnitee was, is or becomes a party to, or witness or other participant in, any Proceeding brought by or in the right of the Company to procure a judgment in favor of the Company by reason of (or arising in whole or in part from) an Indemnifiable Event, the Company shall indemnify Indemnitee, to the fullest extent permitted by applicable law, from and against all Expenses and amounts paid in settlement actually and reasonably incurred by Indemnitee, or on behalf of Indemnitee, in connection with such Proceeding.

 

2.3                            Partial Indemnification.  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some portion of the Expenses, judgments, penalties, fines and amounts paid in settlement of a Proceeding which Indemnitee was, is or becomes a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, by reason of an Indemnifiable Event, but not, however, for all of the total amount of such Expenses, judgments, fines, penalties and amounts paid in settlement, the Company will nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

 

2.4       Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of an Indemnifiable Event, made a party to and is successful, on the merits or otherwise, in the defense of, any Proceeding, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee, or on behalf of Indemnitee, in connection therewith.  Without limiting any other rights of Indemnitee in this Agreement, if Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with each successfully resolved claim, issue or matter allocated on a reasonable and proportionate basis.  For purposes of this Section and without

 

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limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

3.                                    Advance of Expenses.  The Company shall advance all Expenses reasonably incurred by or on behalf of Indemnitee in connection with any Proceeding to which Indemnitee is, or is threatened to be made, a party or with respect to which Indemnitee is, or is threatened to be made, a witness or other participant, by reason of (or arising in whole or in part from) an Indemnifiable Event, prior to final disposition of such Proceeding, to the fullest extent permitted by applicable law and without requiring a preliminary determination as to Indemnitee’s ultimate entitlement to indemnification, within ten days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and, if required by applicable law, shall include or be preceded or accompanied by (a) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and (b) a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that such standard of conduct has not been met.  Any advances to, and undertakings to repay by, Indemnitee pursuant to this Section 3 shall be unsecured and shall not bear interest, without regard to Indemnitee’s ability to repay.

 

4.                                    Procedure for Determination of Entitlement to Indemnification.

 

4.1        Request for Indemnification.  To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  Promptly upon receipt of such a request for indemnification, the Company shall cause its Board of Directors to be so advised in writing that Indemnitee has requested indemnification.

 

4.2        Determination of Right to Indemnification.  Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 4.1 hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors, or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company. If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination.  Indemnitee shall cooperate with the person making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person making such determination, in response to a request by such person, shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification).  The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.

 

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5.                                    Presumptions and Effect of Certain Proceedings.

 

(a)                              In making a determination with respect to entitlement to indemnification hereunder, (i) the person making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 4.1 of this Agreement, and (ii) the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.

 

(b)                              The termination of any proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, does not create a presumption that the Indemnitee did not meet the requisite standard of conduct required under applicable law for indemnification.

 

6.                                    Remedies of Indemnitee.

 

(a)                              In the event that (i) a determination is made pursuant to Section 4.2 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 3, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 4.2 within sixty days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 2.4 within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Maryland, or in any other court of competent jurisdiction, of his or her entitlement to such indemnification or advancement of Expenses.  Neither the failure of the Board of Directors or a committee thereof, or the stockholders of the Company, or Independent Counsel to have made a determination pursuant to Section 4.2 that Indemnitee is entitled to indemnification, nor an actual determination by the Board of Directors or a committee thereof, or the stockholders, of the Company, or Independent Counsel, that Indemnitee is not entitled to indemnification shall be a defense to any judicial adjudication sought by Indemnitee or create a presumption that the Indemnitee is not entitled to indemnification or advancement of Expenses.

 

(b)                              In any judicial proceeding commenced pursuant to this Section 6, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

 

(c)                              If a determination shall have been made pursuant to Section 4.2 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 6, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)                              In the event that Indemnitee, pursuant to this Section 6, seeks a judicial adjudication to establish or enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all expenses (of the types described in the definition of Expenses in Section 1) actually and reasonably incurred by Indemnitee in connection with such judicial adjudication, regardless

 

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of the outcome of such judicial adjudication unless the court in such judicial adjudication determines that  the material assertions made by Indemnitee in such judicial adjudication were not made in good faith or were frivolous.

 

7.                                    Indemnification Hereunder Not Exclusive.  The indemnification and advance of expenses provided by this Agreement shall not be deemed exclusive of, and shall be in addition to, any indemnification or other rights to which the Indemnitee may be entitled under the Charter, the Bylaws, any vote of stockholders or Disinterested Directors, applicable law, or otherwise, both as to action in his or her official capacity and as to action in another capacity on behalf of the Company while holding office; provided, however, that to the extent that the Indemnitee otherwise would have any greater right to indemnification under any provision of the Charter or Bylaws as in effect on the date hereof, the Indemnitee shall be deemed to have such greater right hereunder; and provided, further, that to the extent that any change is made to the Charter and/or Bylaws which permits any greater right to indemnification than that provided under this Agreement, the Indemnitee shall be entitled to have such greater right. No modification or amendment of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any Indemnifiable Event prior to such modification or amendment.

 

8.                                    Liability Insurance.

 

(a) The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, covering lndemnitee or any claim made against lndemnitee by reason of an lndemnifiable Event and covering the Company for any indemnification or advance of Expenses made by the Company to lndemnitee for any claims made against lndemnitee by reason of an lndemnifiable Event. In the event of a Change in Control, the Company shall maintain in force any and all directors and officers liability insurance policies that were maintained by the Company immediately prior to the Change in Control for a period of six years with the insurance carrier or carriers and through the insurance broker in place at the time of the Change in Control, including through purchase of a “tail” policy for such six year period; provided, however, (i) if the carriers will not offer the same policy and an expiring policy needs to be replaced, a policy substantially comparable in scope and amount shall be obtained and (ii) if any replacement insurance carrier is necessary to obtain a policy substantially comparable in scope and amount, such insurance carrier shall have an AM Best rating that is the same or better than the AM Best rating of the existing insurance carrier; provided, further, however, in the event a tail policy is purchased to fulfill the Company’s obligations in this Section 8(a), in no event shall the Company be required to expend in the aggregate for each year covered by the “tail” policy in excess of 300% of the annual premium or premiums paid by the Company for directors and officers liability insurance in effect on the date of the Change in Control in order to purchase such tail policy. In the event that 300% of the annual premium or premiums paid by the Company for such existing directors and officers liability insurance for each year covered by the “tail” policy is insufficient to purchase a tail policy providing such coverage, the Company shall spend up to that amount to purchase a tail policy providing such lesser coverage as may be obtained with such amount.

 

(b) Without in any way limiting any other obligation under this Agreement, the Company shall indemnify lndemnitee for any payment by lndemnitee which would otherwise be indemnifiable hereunder arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by lndemnitee in connection with a Proceeding over the coverage of any insurance referred to in Section

 

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8(a). The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or lndemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the lndemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies. If, at the time the Company receives notice from any source of a Proceeding to which lndemnitee is a party or a participant (as a witness or otherwise) the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

 

(c) The lndemnitee shall cooperate with the Company or any insurance carrier of the Company with respect to any Proceeding.

 

9.                                    Subrogation.  In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the related rights of recovery of Indemnitee against other person or entities, and Indemnitee shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

10.                            No Duplication of Payment.  The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received payment of such amount under any insurance policy, contract, agreement, any provision of the Charter or Bylaws, or otherwise.

 

11.                            Exclusions.  Notwithstanding any other provision of this Agreement to the contrary, the Company shall not be liable for, and the Indemnitee shall not be entitled to, indemnification or advance of Expenses under this Agreement with respect to: (i) any settlement or judgment for insider trading or for disgorgement of profits pursuant to Section 16(b) of the Securities Exchange Act of 1934; or (ii) any Proceeding initiated or brought by Indemnitee, and not by way of defense (other than an action or proceeding under Section 6 of this Agreement), unless the bringing of such Proceeding has been approved by the Board of Directors.

 

12.                            Duration of Agreement.  This Agreement shall continue until and terminate ten years after the date that Indemnitee shall have ceased to serve as a director, officer, employee, or agent of the Company or of any other corporation, partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise which Indemnitee served at the request of the Company; provided, that the rights of Indemnitee hereunder shall continue until the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 6 relating thereto.

 

13.                            Section 409A.  If the Indemnitee’s right to payment of indemnification pursuant to Section 2 or right to the advancement of Expenses under Section 3 would not be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) pursuant to Final Treasury Regulation 1.0409A-1(b)(10), then (i) the payment of indemnification and Expenses provided or advanced to or for Indemnitee pursuant to this Agreement in one taxable year shall not affect the amount of indemnification and Expenses provided or advanced to or for Indemnitee in any other taxable year, (ii) any reimbursement to Indemnitee of Expenses under this Agreement shall be paid to Indemnitee on or before the last day of Indemnitee’s taxable year following the taxable year in which

 

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the Expense was incurred and (iii) the right to advancement, reimbursement or payment of indemnification and Expenses under this Agreement may not be liquidated or exchanged for any other benefit. In addition, to the extent that this Agreement is subject to Section 409A of the Code, the parties agree to cooperate and work together in good faith to timely amend this Agreement to comply with Section 409A of the Code.

 

14.                            Successors and Assigns.  This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his or her heirs, executors and administrators.  The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all, of the business and/or assets of the Company, by written agreement in form and substance reasonably satisfactory to lndemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place and the Company shall not permit any such succession (purchase of assets or business, acquisition of securities or merger or consolidation) to occur until such written agreement has been executed and delivered. No such assumption and agreement shall relieve the Company of any of its obligations hereunder, and this Agreement shall not otherwise be assignable by the Company.

 

15.                            Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:  (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

16.                            Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

17.                            Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

18.                            Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

19.                            Notice by Indemnitee; Company Participation.

 

(a)                              Indemnitee shall promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advance of Expenses covered hereunder. The failure to give any such notice shall not disqualify lndemnitee from the right, or otherwise affect in any manner any right of lndemnitee, to indemnification or the advance of Expenses

 

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under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

 

(b)          With respect to any Proceeding which may be subject to indemnification or advance of Expenses under this Agreement, unless Indemnitee waives its indemnification rights under this Agreement with respect to such Proceeding, the Company will be entitled to participate in the Proceeding at its own expense and, except as otherwise provided below, if it so elects, the Company may assume the defense of the Proceeding, with counsel satisfactory to the Indemnitee.  After notice from the Company to the Indemnitee of its election to assume the defense of a Proceeding, during the Company’s good faith active defense, the Company will not be liable to the Indemnitee under this Agreement for any Expenses subsequently incurred by the Indemnitee in connection with the defense of the Proceeding, other than reasonable costs of investigation or as otherwise provided below.  The Company shall not settle any such Proceeding in any manner which would impose any penalty or limitation on the Indemnitee without the Indemnitee’s written consent.  The Indemnitee shall have the right to employ separate counsel in any such Proceeding, but the fees the expenses of such counsel incurred after notice from the Company of its assumption of the defense of the Proceeding shall be at the expense of the Indemnitee, unless (i) the employment of counsel by Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be conflict of interest between the Company and the Indemnitee in the conduct of the defense of the Proceeding, or (iii) the Company shall not in fact have employed counsel to assume the defense of a Proceeding, in each of which cases the fees and expenses of Indemnitee’s counsel shall be Expenses for which Indemnitee may receive indemnification or advances under this Agreement. The Company shall not be entitled to assume the defense of any Proceeding bought by or on behalf of the Company or as to which the Indemnitee has reasonably concluded there may be a conflict of interest between the Company and the Indemnitee.

 

20.         Contribution.  To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to lndemnitee for any reason whatsoever, the Company, in lieu of indemnifying lndemnitee, shall contribute to the amount incurred by lndemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and lndemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and lndemnitee in connection with such event(s) and/or transaction(s).

 

21.         Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when hand-delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed) or three calendar days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid or one business day after having been sent for next day delivery by a nationally recognized courier service, addressed as follows:

 

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(a)
    	
If to Indemnitee, to:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(b)
    	
If to the Company to:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Quality Care Properties, Inc.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

22.         Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland.

 

23.         Entire Agreement.  This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior written or oral negotiations, understandings or agreements between the parties with respect to the subject matter hereof; provided however that this Agreement is not intended to, and does not, supersede any indemnification or other rights to which the Indemnitee may be entitled under the Charter, the Bylaws or applicable law, or pursuant to any employment agreement between Indemnitee and the Company.

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

 

	
 
    	
 
    
	
 
    	
Quality Care   Properties, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INDEMNITEE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    

 

 

 

[Signature Page to Indemnification Agreement]Exhibit 4.19

Master Services Agreement

 

	
Date

	
September, 2015

	 	 
	
Parties

	
Orgapharm S.A.S.

of Rue du Moulin de la Canne, Pithiviers France 45 300

(Orgapharm)

	 	 
	 	
Prana Biotechnology Ltd ACN 080 699 065

of Level  2, 369 Royal Parade, Parkville Victoria Australia 3052

(Prana)

 

(each a party and collectively, the parties)

 

 

Introduction

 

	A	Prana is in the business of developing drug candidates for the treatment of neurodegenerative diseases.

 

	B	Orgapharm is in the business of manufacturing fine chemicals.

 

	C	Prana has sought the assistance of Orgapharm to manufacture PBT2 API. There may also be occasions in future where Prana may call on Orgapharm to provide other pharmaceutical manufacturing and related services.

 

	D	This Agreement contains the terms and conditions upon which Orgapharm will provide services to Prana.

 

Agreement

 

 

	1	Definitions and Interpretation

 

Definitions

 

	1.1	In this Agreement:

 

Agreement means this agreement including any schedule or annexure to it.

 

Agreement IP means, for each Project, the following:

 

		(a)	the Deliverables; and

 

		(b)	the Results,

 

and all Intellectual Property Rights throughout the world subsisting in them, excluding any Existing IP.

 

API means an active pharmaceutical ingredient.

 

Approved Purposes means:

 

(a)            the performance of the Services and production of the Deliverables by Orgapharm;

 

		(b)	Prana’s input in pursuance of this Agreement to facilitate the performance of the Services by Orgapharm; and

 

		(c)	the use of the Agreement IP by Prana for its business purposes.

 

Business Day means a day other than Saturday, Sunday or a public holiday or bank holiday in the place where an act is to be performed or a payment is to be made.

 

Cause Event means:

 

		(a)	a material breach by Orgapharm of its obligations under this Agreement or the Quality Agreement;

 

		(b)	receipt by Orgapharm of an FDA Form 483 or Warning Letter or other like document from the EMA or any other regulatory authority;

 

		(c)	any audit, inspection or product, documentation or information request by the FDA, TGA or other regulatory authority which is specific to Prana’s Compounds.

 

cGMP or GMP means all applicable Laws of any country, region or Governmental Agency having jurisdiction over the manufacture of Products having regard to the purpose for which they are to be used, which Laws relate to current good manufacturing practices and includes ICH Q7 'Guidance for Industry Q7 Good Manufacturing Practice for Active Pharmaceutical Ingredients',  the EU Code of GMP (as amended or replaced) and other codes of practice, regulations, rules, principles and guidelines which are obligatory in relation to any Product under any such Laws.

 

 Change Order means a change in respect of the work to be performed by Orgapharm under a given Work Order.

 

EU Code of GMP means:

 

		(a)	the principles and guidelines of good manufacturing practice stated in Commission Directive 2003/94/EC; and

 

		(b)	the guidelines published by the European Commission in EudraLex Volume 4,

 

as amended or replaced from time to time.

 

Commencement Date means the date of this Agreement.

 

Compounds means Prana’s proprietary compounds (current and future), including the compounds known as PBT2 and PBT 434 and any APIs of them.

 

Confidential Information means Orgapharm Confidential Information or Prana Confidential Information as the context allows.

 

Corporations Law means the Corporations Act 2001 (Cth).

Deliverables means data, results, information, advice, reports, analyses, documents, materials, APIs, compounds, products, procedures, processes, techniques and other items or things prepared, obtained, generated by Orgapharm as part of the Services, and to be delivered to Prana, all in accordance with the requirements specified in the relevant Work Order and this Agreement.

 

EMA means the European Medicines Agency, and any successor agency having substantially the same functions.

 

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Existing IP of a party means the Technology owned, developed or obtained by or on behalf of that party:

 

		(a)	prior to the Commencement Date; or

 

		(b)	independent of this Agreement and without the use of the other party’s Confidential Information,

 

and includes all Intellectual Property Rights throughout the world subsisting in such Technology.

 

FDA means the United States Food and Drug Administration, and any successor agency having substantially the same functions.

 

Force Majeure means an act of God, strike, lock-out or other labour dispute, war declared or undeclared, blockade, riot, insurrection, lightning, fire, earthquake, storm, flood, explosion, restraint of government or government agency, prohibition or any other cause whether or not of the kind listed above which is beyond the control of the party affected.

 

Governmental Agency means any court, administrative agency or commission or other governmental agency, body or instrumentality, domestic or foreign, and includes, without limitation, the EMA, FDA and TGA.

 

Initial Project means PBT2 synthesis and manufacturing development work and subsequent pilot and large scale cGMP manufacture of PBT2 API for use in a Phase 3 clinical trial to be conducted in one or more of Australia, Europe and the USA.  

 

 Insolvency Event means the happening of any of the following:

 

		(a)	an application is made to a court for an order that a party be wound-up or that a provisional liquidator be appointed (unless the application is withdrawn, struck out or dismissed within 45 days of it being made);

 

		(b)	a liquidator is appointed in respect of a party;

 

		(c)	an administrator, receiver or receiver and manager is appointed in relation to a party or in respect of any of its assets;

 

		(d)	except to reconstruct or amalgamate while solvent on terms approved by the other party, a party enters into, or resolves to enter into, an arrangement or composition with, or assignment for the benefit of, all or any of its creditors, or it, or anyone on its behalf, proposes a reorganisation, moratorium, deed of company arrangement or other administration involving any of them or the winding up or dissolution of the party;

 

		(e)	a party is, states that it is or is presumed under any applicable law to be, insolvent; and

 

		(f)	anything having a substantially similar effect to any of the events specified above happens under the law of any jurisdiction.

 

Intellectual Property Rights means all intellectual and industrial property rights throughout the world (whether registered or unregistered) including rights and interests (including applications for and any right to apply for registrations of such rights) in respect of or in connection with designs, discoveries, inventions (including patents), copyright (including future copyright and rights in the nature of or analogous to copyright), trade marks, database rights, confidential information, know how and trade secrets.

 

Laws means the common law and any statute, regulation, order, rule, subordinate legislation, code of practice or other document enforceable under any statute, regulation, order, rule or subordinate legislation.

 

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Material Form in relation to information, includes any form (whether visible or not) of storage from which the information can be reproduced, and any form in which the information is embodied or encoded and in relation to Prana’s Compounds means whatever form they are present in the possession of Orgapharm or their Representatives.

 

Orgapharm Confidential Information means:

		(a)	Proposals; and

 

		(b)	all:

		(i)	Existing IP of Orgapharm;

 

		(ii)	information concerning Orgapharm’s affairs, assets or property or any business, property or transaction in which it may be or may have been concerned or interested;

 

		(iii)	information which, by its nature or by the circumstances of its disclosure, is or could reasonably be expected to be regarded as confidential to Orgapharm,

 

which is or has been disclosed by Orgapharm to Prana (whether orally, electronically or in writing) or is otherwise obtained by Prana but does not include Public Information.

 

Prana Confidential Information means:

		(a)	the Compounds;

 

		(b)	RFPs;

 

		(c)	Agreement IP; and

 

		(d)	all:

 

		(i)	Existing IP of Prana;

 

		(ii)	data, results, information, analyses, papers, materials, records, notes, documents and reports concerning:

 

		(A)	the Compounds;

 

		(B)	the synthesis or commercial manufacture of the Compounds;

 

		(C)	research, tests, trials and studies planned or conducted in relation to the Compounds;

 

		(D)	Prana’s dealings with regulatory authorities around the world in relation to any Compound;

 

		(ii)	information concerning Prana’s affairs, assets or property or any business, property or transaction in which it may be or may have been concerned or interested;

 

		(iii)	information which, by its nature or by the circumstances of its disclosure, is or could reasonably be expected to be regarded as confidential to Prana,

 

which is or has been disclosed by Prana to Orgapharm (whether orally, electronically or in writing) or is otherwise obtained by Orgapharm but does not include Public Information

 

Products means PBT2 API and such other products to be manufactured by Orgapharm pursuant to this Agreement.

 

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Projects means:

 

(a)           the Initial Project; and

 

		(b)	any subsequent project for the delivery of agreed Services by Orgapharm to Prana under this Agreement.

 

Proposal means a proposal for the provision of Services submitted to Prana by Orgapharm.

 

Public Information means:

 

		(a)	information which, at the time of disclosure, was published, known publicly or otherwise in the public domain;

 

		(b)	information which, after disclosure, is published, becomes known publicly, or otherwise becomes part of the public domain through no fault of the receiving party;

 

		(c)	information which, prior to the time of disclosure, is known to the receiving party as evidenced by its written records or other tangible evidence;

 

		(d)	information which is made available to the receiving party in good faith by a third party who is under no obligation of confidence to the disclosing party;

 

		(e)	information which the receiving party is required to disclose by law, provided the receiving party has given the disclosing party prompt prior notice and assistance in any reasonable effort to obtain confidential treatment with respect to such disclosure; or

 

		(f)	information which is independently developed by or for the receiving party without use of, reliance upon, or with reference to the disclosing party’s Confidential Information.

 

Quality Agreement means the quality agreement to be entered by the parties pursuant to clause 5.7.

 

Representative in relation to a party means a director, officer, employee or contractor (approved by Prana under clause 14.4 in the case of an Orgapharm contractor) of that party.

 

Results means:

		(a)	all results, data, information, processes, procedures, methodologies, techniques, concepts, ideas, compounds, formulations, materials, reports, analyses, documents, items or things; and

 

		(b)	all discoveries, inventions, developments, modifications, innovations, enhancements or improvements,

 

that are made, generated, brought into existence, conceived, discovered, invented, developed, created,  derived, modified, improved, enhanced, adapted or reduced to practice by either party or their Representatives (whether alone or jointly with the other party) under or in connection with or as a consequence of a Project.

 

RFP means a request submitted by Prana to Orgapharm for a proposal for the provision of Services under this Agreement.

 

Services means for a given Project, the services to be provided by Orgapharm under this Agreement, as agreed and specified in a Work Order for the Project.

 

Specification means an agreed specification for a Deliverable which may be either:

 

		(a)	annexed to a Work Order or incorporated therein by reference; or

 

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		(b)	prepared and agreed by the parties during the course of a Project.

 

Sub-Project in relation to a Project, means a sub-project or discrete pieces of work (if any) described in the corresponding Work Order for performance by Orgapharm, subject in each case to Orgapharm receiving prior written approval from Prana and the parties agreeing on the Specification/s for the Deliverable/s for the sub-project or discrete piece of work..

 

Technology means:

 

		(a)	proprietary compounds, samples, prototypes, formulations, ideas, knowledge, concepts, methods, techniques, processes, procedures, trade secrets, technology, discoveries, inventions, know-how, data, technical and scientific information, research and development results, development plans, test results, procedures for experiments and tests and manufacturing scale-ups, methods or schemes for synthesising chemicals and compounds, isolation and purification methods, hardware and software;

 

		(b)	patents, patentable inventions, designs, trade marks, works of copyright and rights in confidential information;

 

		(c)	all other intellectual property of any kind, whether or not protectable under patent, trade mark, copyright, design or other intellectual property laws.

 

TGA means the Australian Therapeutic Goods Administration, and any successor agency having substantially the same functions.

 

Work Order means one or more written Work Orders referencing this Agreement or otherwise attached to this Agreement and executed by both parties pertaining to the Services to be supplied by Orgapharm under this Agreement. A template Work Order is set out in Schedule 1.

 

Interpretation

 

	
1.2

	
In this Agreement, unless the context requires another meaning:

 

		(a)	a reference to:

 

(i)             the singular includes the plural and vice versa;

 

		(ii)	a document (including this Agreement) is a reference to that document (including any Schedules and Annexures) as amended, consolidated, supplemented, novated or replaced;

 

		(iii)	an item, Recital, clause, Schedule or Annexure is to an item, Recital, clause, Schedule or Annexure of or to this Agreement;

 

		(iv)	a notice means a notice, approval, demand, request, nomination or other communication given by one party to another under or in connection with this Agreement;

 

		(v)	a person (including a party) includes an individual, company, other body corporate, association, partnership, firm, joint venture, trust or government agency; and

 

		(vi)	the words "including" or "includes" means "including, but not limited to", or "includes, without limitation" respectively;

 

		(b)	where a word or phrase is defined, its other grammatical forms have a corresponding meaning; and

 

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		(c)	headings are for convenience only and do not affect interpretation of this Agreement.

 

	
1.3

	
This Agreement may not be construed adversely to a party only because that party was responsible for preparing it.

 

 

	2	Term

 

	
2.1

	
This Agreement commences on the Commencement Date and continues for five (5) years or until the completion of any then current Work Order by Orgapharm, unless terminated earlier in accordance with this Agreement. This Agreement may be extended by mutual agreement of the parties in writing.

 

	3	Services and Work Orders

 

	3.1	If at any time during the Term Prana wishes to engage Orgapharm to provide Services to it, then subject to the parties entering a Work Order in respect of the Services, Orgapharm  agrees to provide the Services on the terms and conditions contained in this Agreement.

 

	3.2	Each Work Order:

 

		(a)	is incorporated herein by reference;

 

		(b)	shall be in a form similar to the sample Work Order attached to this Agreement as Annexure A;

 

		(c)	shall include a description of the specific services to be performed by Orgapharm, the deliverables, timelines, protocols, specifications, fees and charges payable by Prana and such other details and terms as are agreed to by the parties;

 

		(d)	is taken to include the Quality Agreement and all applicable Specifications.

 

	3.3	In the event of any conflict between the terms and conditions of a Work Order and a provision of this Agreement, the terms and conditions of this Agreement shall prevail unless the Work Order expressly specifies that the particular term of the Work Order takes precedence.

 

	3.4	Any change to a Work Order must be mutually agreed and documented by Orgapharm in a written amendment to the Work Order (a “Change Order”). When a signed Change Order is received from Prana, the Change Order shall constitute an amendment to the applicable Work Order and shall be considered part of this Agreement.  No changes to a Work Order will take effect and Orgapharm must not commence any new or changed Services unless and until it has received a signed Change Order from Prana.

 

 

	4	Orgapharm’s Obligations and Warranties

 

	4.1	Orgapharm will perform each Project and the associated Services:

 

		(a)	using suitably qualified Representatives;

 

		(b)	in a timely manner in accordance with the Work Order;

 

		(c)	with due care and skill and to the best of Orgapharm’s knowledge and expertise;

 

		(d)	in accordance with relevant local industry standards, best practice and guidelines or where none apply, relevant international industry standards, best practice and guidelines;

 

		(e)	in accordance with cGMP, the Work Order and all applicable Laws;

 

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		(f)	in accordance with any reasonable direction given by Prana; and

 

		(g)	otherwise in accordance with the provisions of this Agreement.

 

	4.2	Orgapharm represents and warrants that:

 

		(a)	it has the right to enter into this Agreement;

 

		(b)	it has and will maintain the requisite licences from the EMA, FDA, TGA and all other applicable governmental, municipal and public agencies, bodies and authorities for the conduct of its business at each of its premises;

 

		(c)	it has and will maintain all rights, title, licences, interests, property, equipment and resources necessary to fully and lawfully perform each Project and the associated Services;

 

		(d)	it and its Representatives  have the necessary experience, skill, knowledge and competence to perform each Project and the associated Services;

 

		(e)	each Deliverable will meet the Specification and be:

 

		(i)	complete, accurate, free from errors and fit for the purpose/s for which it is required by Prana;

 

		(ii)	compliant with all requirements specified in this Agreement and the relevant Work Order;

 

		(iii)	cGMP compliant and otherwise compliant with all other applicable Laws;

 

		(iv)	provided at the time and in the manner and form prescribed in the relevant Work Order.

 

	4.3	Orgapharm will:

 

		(a)	permit all relevant inspections by the EMA, FDA, TGA or other regulatory authorities of its premises, procedures and documentation;

 

		(b)	notify Prana:

 

		(i)	within five (5) Business Days of receiving any notice of inspection from the EMA, FDA, TGA or other regulatory authority;

 

		(ii)	within three (3) Business Days of receiving any request from the EMA, FDA, TGA or other regulatory authority for Prana’s Compounds, products or samples or related batch or other documentation or information;

 

		(iii)	within one (1) Business Day of receiving any FDA Form 483 or Warning Letter or other like document from the EMA, TGA or any other regulatory authority which relates to Prana’s Compounds or which may impact on Orgapharm’s ability to supply such products (in accordance with a Work Order) or the facilities used to produce, test or package them,

 

and provide Prana with copies of all such letters, notices or documents and Orgapharm’s response to them (in each case redacted, where appropriate, to exclude text not relevant to Prana or the Services, Results or Compounds).

 

	4.4	Orgapharm must:

 

		(a)	take out and maintain during the term of this Agreement and for 12 months thereafter, appropriate public and product liability insurance policies with a reputable insurer which give coverage against all usual risks and for an amount of at least $ €10,000,000 per occurrence.

 

		(b)	at Prana’s request provide Prana with certificates of currency for those policies.

 

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	5	Project Obligations

 

	5.1	For each Project:

 

		(a)	Orgapharm will designate a project leader to liaise with Prana in relation to Orgapharm’s performance of the Services and the provision of the Deliverables (the “Project Leader”); and

 

		(b)	Prana will designate a contact who will be the point of contact for the Project Leader (the “Prana Contact”).

 

	5.2	The parties must agree the Specifications for each Deliverable and Orgapharm must receive written authority from the Prana Contact or Prana’s Chief Operating Officer before commencing any Sub-Project.  Without such agreement and authority for a given Sub-Project, Orgapharm must not undertake and may not charge Prana its fee for the Sub-Project or any other amount. If in relation to a given Sub-Project, Prana provides written authority to undertake the Sub-Project after the relevant commencement date specified in the Work Order, then Orgapharm shall commence the Sub-Project as soon as is reasonably practicable thereafter, and in any event, not later than 14 days after Prana provides written authority to undertake the Sub-Project.

	5.3	Orgapharm must provide the following updates and reports to the Prana Contact for each Project:

 

		(a)	prompt email notification of any material technical or operational problems or issues encountered by Orgapharm;

 

		(b)	fortnightly written updates (in a format acceptable to Prana) of the work undertaken and the Results obtained for the fortnight, problems encountered by Orgapharm, the stage of each Project or Sub-Project, as applicable that Orgapharm is up to and any other information that would be relevant to Prana in relation to the Project; and

 

		(c)	such reports specified in the applicable Work Order for the Project.

 

	5.4	Orgapharm must create a separate project folder in the applicable department directory in its computer system:

 

		(a)	which is dedicated to Prana Projects; and

 

		(b)	accessible only by those Orgapharm Representatives working on such projects.

 

	5.5	Copies of all letters, reports, memos, notes, documents and other written materials created or brought into existence by Orgapharm in relation to each Project shall be saved electronically and stored by Orgapharm on the Prana drive.

 

	5.6	All Results arising out of the Project must be recorded in a written format.  The results captured in a written format must:

 

		(a)	be maintained and signed in accordance with best industry practice; and

 

		(b)	be made available for inspection by Prana upon request by Prana in writing.

 

	5.7	If they have not already done so, the parties agree to put a quality agreement in place for the purpose of the Services to be undertaken by Orgapharm under this Agreement.

 

	5.8	On 30 days prior written notice, Orgapharm (or such shorter period of notice as may be agreed in good faith by the parties) must allow Prana to undertake an audit of its premises, procedures actions and documentation in relation to Prana’s Projects, Compounds and Agreement IP and Orgapharm’s observance of obligations under this Agreement and the Quality Agreement. Prana audits shall be limited to one audit with a maximum of two (2) auditors for two (2) days (or otherwise as may be negotiated in advance and agreed  by the parties) per calendar year except if Prana reasonably believes that  a Cause Event has occurred, in which case Prana may conduct an additional audit with  48 hrs  prior written notice.

 

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	5.9	At any time during the conduct of a Project on prior notice by Prana, Orgapharm must allow Prana or any Representative of it to attend any premises at which a Project is being conducted for the purpose of assessing the progress of the Project.

 

	5.10	If at any time during or after the termination of this Agreement, Prana requires a third party to perform any work relating to a Compound, including its manufacture, then Orgapharm must, at the request of Prana, co-operate with Prana and the third party and provide such assistance, advice, documentation and information (including the relevant Results) as is necessary to enable the third party to perform the work requested by Prana. Prana agrees to pay all out-of-pocket expenses reasonably incurred by Orgapharm, provided that any anticipated expenses in excess of USD$1,000 are approved by Prana in writing before they are incurred.

 

	5.11	It is agreed in relation to any Deliverables supplied by Orgapharm pursuant to this Agreement that Prana shall have fifteen (15) days (“Testing Period”) from the date they are delivered to perform acceptance testing on the Deliverables in order to confirm that they comply with the Specifications  (“Acceptance Testing”). If Prana is satisfied that the Deliverables meet Specification, then it will confirm this in writing to Orgapharm and pay the applicable payment.  If Prana finds that any Deliverables supplied by Orgapharm do not meet specification, then Prana will immediately notify Orgapharm in writing of any non-compliance.  If the non-compliance relates to:

 

		(a)	Product supplied to Prana, then Prana may by written notice:

 

		(i)	require that Orgapharm (at Orgapharm’s cost) manufacture and supply the applicable quantity of Product again based on:

 

		(A)	a manufacture start  as soon as practicable after the date of Prana’s notice, and as agreed in good faith by both parties, given the understanding that delay in delivery of  acceptable Product will adversely impact Prana;

 

		(B)	a manufacturing period less than or equal to the period of time originally allocated for the activity in the Work Order; or

 

		(ii)	terminate the Project in whole or in part, in which case Prana will not be liable to pay for, and Orgapharm must immediately refund any moneys paid by Prana (if any) on account of, the Project or the terminated part of it;

 

		(b)	services or documents or Results supplied, then Prana may by written notice:

 

		(i)	require that Orgapharm (at Orgapharm’s cost) immediately repeat the services or re-write the documents to rectify the non-compliance as soon as practicable thereafter;; or

 

		(ii)	terminate the Project in whole or in part, in which case Prana will not be liable to pay for, and Orgapharm must immediately refund any moneys paid by Prana (if any) on account of, the Project or the terminated part of it.

 

 

	6	Fees and Charges

 

	6.1	Orgapharm shall invoice Prana in a manner consistent with the payment schedule and other terms and conditions set out in the relevant Work Order.  Payment of invoices shall be due thirty (30) days after the date of each invoice unless any milestone or Deliverable or Service referable to the invoiced Services has not been satisfied or supplied in accordance with the Work Order or this Agreement in which case payment shall be due on the later of thirty (30) days after the date of the invoice or the date when the milestone is satisfied or the Deliverable or Service is supplied in accordance with the Work Order or this Agreement.

 

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	7	Risk and Property

 

	7.1	Property in any Product produced by Orgapharm pursuant to a Work Order will pass to Prana upon payment for it in full. Risk in the Product will remain with Orgapharm while in storage at Orgapharm’s premises but will otherwise pass to Prana on despatch from its premises to Prana or Prana’s nominee.

 

 

	8	Intellectual Property

 

	8.1	The parties acknowledge and agree that all Agreement IP will vest in and be solely owned by Prana. Orgapharm hereby assigns all of Orgapharm’s right, title and interest (if any) in the Agreement IP to Prana with effect from the time it is generated or comes into existence.

 

	8.2	Orgapharm and its Representatives must give Prana all assistance and advice and execute all documents as may be required by Prana from time to time in relation to:

 

		(a)	any assignment that may be required to transfer Agreement IP to Prana;

 

		(b)	any applications by Prana for patents or other registrable Intellectual Property Rights in respect of the Agreement IP;

 

		(c)	any applications, submissions or other documents that Prana seeks to file with a regulatory authority or other government department, agency or body to obtain an approval or consent in relation to its proprietary compounds;

 

		(d)	any other purpose reasonably arising from or incidental to this Agreement.

 

	8.3	This Agreement will not affect the ownership of a party’s Existing IP which is, and will continue to be, solely owned by that party. In particular, it is expressly agreed Orgapharm will remain the sole owner of any and all of its Existing IP (including its Existing IP used in connection with any given Project or Work Order).

 

	8.4	Orgapharm grants Prana a non-exclusive, perpetual, worldwide, royalty-free licence (with the right to grant sublicences) to use and reproduce its Existing IP to the extent necessary to enable Prana to use the Agreement IP for the sole purpose of manufacturing and marketing PBT2 or any other PBT2 pharmacophore Compound.

 

 

	9	Confidentiality

 

	9.1	Each party:

 

		(a)	acknowledges and agrees that the Confidential Information of the other party will at all times remain the exclusive property of that other party; and

 

		(b)	undertakes to keep the Confidential Information of the other party secret and to protect and preserve the confidential nature and secrecy of that Confidential Information.

 

	9.2	Prana agrees and acknowledges in relation to Orgapharm Confidential Information, and Orgapharm agrees and acknowledges in relation to Prana Confidential Information, that it:

 

		(a)	may only use or reproduce the other party’s Confidential Information for the Approved Purposes;

 

		(b)	must not disclose the other party’s Confidential Information to any person except as permitted by this Agreement;

 

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		(c)	must not permit unauthorised persons to have access to the other party’s Confidential Information;

 

		(d)	must not make, or assist or permit any person (including its Representatives) to make any unauthorised use, disclosure or reproduction of the other Party’s Confidential Information;

 

		(e)	must ensure that any person who has access to the other party’s Confidential Information does not make any unauthorised use, reproduction or disclosure of that information;

 

		(f)	must enforce the confidentiality obligations imposed or required to be imposed by this Agreement, including diligently prosecuting at its cost any breach or threatened breach of those confidentiality obligations by a person to whom that party has disclosed the other Party’s Confidential Information and, where appropriate, making applications for interim or interlocutory relief; and

 

		(g)	must provide assistance reasonably requested by the other party, in relation to any proceedings the other party may take against any person for unauthorised use, copying or disclosure of the other Party’s Confidential Information.

 

	9.3	A party may disclose the other party’s Confidential Information to a Representative on a need to know basis but in each case, only to the extent necessary for the Approved Purposes, and provided the Representative is placed under confidentiality obligations no less onerous than those set out in this Agreement.

 

	9.4	Each party must:

 

		(a)	establish and maintain effective security measures to safeguard the other party’s Confidential Information from access or use not authorised under this Agreement;

 

		(b)	keep the other party’s Confidential Information under its own control;

 

		(c)	immediately notify the other party of any suspected or actual unauthorised use, copying or disclosure of the other party’s Confidential Information;

	9.5	Either party may at any time by notice in writing to the other party request the return, deletion or destruction of all Material Forms of its Confidential Information in the possession, power or control of the other party or any of its Representatives (whether or not those Material Forms were created by the other party or its Representatives) and the other party must immediately comply with such request.  In the case of Prana Compounds to be returned by Orgapharm, the parties acknowledge and agree that Orgapharm may retain samples of any Compounds manufactured by it so that it may comply with its cGMP obligations.

 

	9.6	The return, deletion or destruction, as applicable, of the Material Forms of Confidential Information under clause 9.5 does not release a Party from its obligations under this clause 10.

 

	9.7	Each party acknowledges and agrees that:

 

		(a)	its breach of this Agreement would be harmful to the business interests of the other party;

		(b)	monetary damages alone would not be a sufficient remedy for a breach of this Agreement; and

		(c)	in addition to any other remedy which may be available in law or equity, a party is entitled to interim, interlocutory and permanent injunctions or any of them, to prevent breach of this Agreement and to compel specific performance of it.

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10

	
Liability

 

	10.1	Except as expressly provided to the contrary in this Agreement, all terms, conditions, warranties, guarantees, undertakings or representations of any kind made by or on behalf of a party, prescribed by statute or implied in relation to the subject matter of this Agreement are, to the fullest extent permitted by law, excluded.

 

	10.2	Subject to clause 10.4 and except to the extent that liability may not be lawfully excluded, Orgapharm’s liability in respect of all and any claims arising under this Agreement in relation to a Work Order, including any breach of this Agreement by Orgapharm or any negligence of Orgapharm or its Representatives, cannot exceed three times the agreed aggregate contract price for all works specified in the Work Order.

 

	10.3	Notwithstanding any other provision of this Agreement, neither party shall have any liability to the other for any consequential loss suffered or incurred by the other party, however arising.

 

	10.4	Clauses 10.2 and 10.3 shall have no application to any claim arising from a breach by either party of clause 9.

 

	10.5	Prana shall indemnify and hold harmless Orgapharm in respect of any and all claims or demands by any third party against Orgapharm alleging loss, damage, personal injury or death arising out of the Deliverables provided by Orgapharm save and except for claims for loss, damage, injury or death arising directly or indirectly from any negligence or recklessness on the part of Orgapharm or any intentionally harmful act or omission by Orgapharm or any Representative of it  or any infringement by Orgapharm of the third party’s intellectual property rights.

 

 

	11	Termination

 

	11.1	Either party may terminate this Agreement and/or any Work Order by written notice to the other party with immediate effect from the date of the notice or any later date that it may nominate if:

 

		(a)	the other party materially breaches this Agreement and fails to remedy such breach within 30 days of receipt of notice from the first party specifying the breach and requiring it to be remedied;

 

		(b)	the other party materially breaches this Agreement and the breach is incapable of remedy; or

 

		(c)	an Insolvency Event happens to the other party.

 

	11.2	Prana may terminate this Agreement and/or or any Work Order (or any part of a Work Order) by giving Orgapharm 30 days written notice. For any incomplete Work Order, Orgapharm must, unless otherwise directed by Prana, cease work immediately and use its commercially reasonable efforts to mitigate any reimbursable expenses or non-cancellable commitments properly incurred in accordance with this Agreement or the applicable Work Order.

 

	11.3	Upon the termination of this Agreement or any Work Order pursuant to clauses 11.1, 11.2 or 11.2, Orgapharm may invoice Prana for Services and reimbursable expenses and non-cancellable commitments properly performed or incurred in accordance with this Agreement and the applicable Work Order through to the date of termination (Final Invoice). In the absence of any offsetting claim, Prana agrees to immediately pay all outstanding invoices and otherwise pay the Final Invoice (or so much thereof as may be due having regard to any up-front fees already paid) within 30 days of the date of the invoice. If after raising the Final Invoice, Prana’s account is in credit, then Orgapharm shall immediately refund the credit balance.

 

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	11.4	The expiry or termination of this Agreement will not affect or limit any accrued rights of the parties.

 

	11.5	Clauses 1, 4.2, 4.4, 5.10, 7, 8, 9, 10, 11, 14.15 and 14.16 shall survive the termination of this Agreement.

 

 

	12	Force Majeure

 

	12.1	If any party to this Agreement is unable to carry out any obligation (other than to pay money), by reason of Force Majeure, then that obligation will be suspended so far as it is affected by the Force Majeure for the duration of the Force Majeure.  The party affected must promptly give written notice to the other party of the Force Majeure with full particulars thereof and so far as is known, the probable extent to which that party will be unable to perform or will be delayed in performing the obligation.

 

	12.2	If:

 

		(a)	performance of an obligation is prevented by Force Majeure; or

 

		(b)	a delay caused by Force Majeure exceeds 90 days,

 

then either party may terminate this Agreement by written notice to the other party.

 

 

	13	Notices

 

Requirements

 

	13.1	All notices must be:

 

		(a)	in legible writing and in English;

 

		(b)	addressed to the recipient at the address or facsimile number set out below or to any other address or facsimile number that a party may notify to the other:

 

to Orgapharm:

 

	 	
Address:

	
Rue du Moulin de la Canne,

Pithiviers France 45 300

	 	
 

Attention:

	
 

Rabiaâ Berkous

	 	
Facsimile no:

	
33(0)2 38 30 24 2 4

	 	 	 
	 	
to Prana:

	 
	 	 	 
	 	Address:  	Level 2, 369 Royal Parade
	 	 	Parkville Victoria 3052
	 	 	Australia
	 	 	 
	 	
Attention:

	Dianne Angus
	 	 	 
	 	
Facsimile no:          

	9348 0377

        

		(c)	signed by the party or, where the sender is a company, by an authorised representative of the sender; and

 

14

		(d)	sent to the recipient by hand, prepaid post or facsimile.

 

	13.2	Without limiting any other means by which a party may be able to prove that a notice has been received by the other party, a notice will be considered to have been received:

 

		(a)	if sent by hand, when left at the address of the recipient;

 

		(b)	if sent by prepaid post, 2 days after the date of posting; or

 

		(c)	if sent by facsimile, on receipt by the sender of an acknowledgment or transmission report generated by the sender's machine indicating that the whole facsimile was sent to the recipient's facsimile number;

 

but if a notice is served by hand, or is received by the recipient's facsimile, on a day that is not a Business Day, or after 5:00 pm (recipient's local time) on a Business Day, the notice will be considered to have been received by the recipient at 9.00 am (recipient's local time) on the next Business Day.

 

 

	14	General provisions

 

Entire agreement

 

	14.1	This Agreement and any other documents referred to in this Agreement or executed in connection with this Agreement is the entire agreement of the parties about the subject matter of this Agreement and supersedes all other representations, negotiations, arrangements, understandings or agreements and all other communications.  No party has entered into this Agreement relying on any representations made by or on behalf of the other, other than those expressly made in this Agreement.

 

Further assurances

 

	14.2	Each party must, at its own expense, whenever reasonably requested by the other party, promptly do or arrange for others to do, everything reasonably necessary or desirable to give full effect to this Agreement and the transactions contemplated by this Agreement.

 

Costs

 

	14.3	Each party must pay its own costs in respect of this Agreement and the documents and transactions contemplated by this Agreement.

 

Subcontracting and Assignment

 

	14.4	Orgapharm must not subcontract the Services or assign or otherwise transfer, create any charge, trust or other interest in, or otherwise deal in any other way with any of its rights under this Agreement without the prior written consent of Prana.  Orgapharm shall remain responsible for any Services performed by any subcontractors to the same extent as if such Services were being performed by Orgapharm itself.

 

Invalid or unenforceable provisions

 

	14.5	If a provision of this Agreement is invalid or unenforceable in a jurisdiction:

 

		(a)	it is to be read down or severed to the extent of the invalidity or unenforceability; and

 

		(b)	that fact does not affect the validity or enforceability of the remaining provisions.

 

Waiver and exercise of rights

 

	14.6	A waiver by a party of a provision of or of a right under this Agreement is binding on the party granting the waiver only if it is given in writing and is signed by the party or an authorised representative of the party granting the waiver.

 

	14.7	A waiver is effective only in the specific instance and for the specific purpose for which it is given.

 

15

	14.8	A single or partial exercise of a right by a party does not preclude another exercise of that right or the exercise of another right.

 

	14.9	Failure by a party to exercise or delay in exercising a right does not prevent its exercise or operate as a waiver.

 

Amendment

 

	14.10	This Agreement may be amended only by a document signed by all parties.

 

Counterparts

 

	14.11	This Agreement may be signed in counterparts, both of which shall be deemed to be an original but when taken together shall constitute one and the same agreement and shall become effective when a counterpart has been signed by each of the parties hereto and delivered to the other (by facsimile, pdf or otherwise).

 

Rights cumulative

 

	14.12	The rights, remedies and powers of the parties under this Agreement are cumulative and do not exclude any other rights, remedies or powers.

 

Consents and approvals

 

	14.13	A party may give its approval or consent conditionally or unconditionally or withhold its approval or consent in its absolute discretion unless this Agreement expressly provides otherwise.

 

Successors and assigns

 

	14.14	This Agreement is binding on, and has effect for the benefit of, the parties and their respective successors and permitted assigns.

 

Governing law

 

	14.15	This Agreement is governed by the laws of Victoria, Australia.

 

	14.16	Each party irrevocably and unconditionally:

 

		(a)	submits to the non-exclusive jurisdiction of the courts of Victoria in relation to any dispute or claim arising out of or in connection with the subject matter of this agreement;

 

		(b)	waives, without limitation, any claim or objection based on absence of jurisdiction or inconvenient forum.

 

16

 

Executed as an agreement

 

	
Signed for and on behalf of

	 	 
	
Orgapharm S.A.S.

	 	 
	
by its authorised  representative:

	 	 
	 	 	 
	 	 	 
	
Signature of authorised representative

	 	 
	 	 	 
	 	 	 
	
Name (please print)

	 	 

 

 

	
Title (please print)

	 	 
	
 

Signed for and on behalf of

Prana Biotechnology Ltd

ACN 080 699 065

	 	 
	
by its authorised representative:

	 	 
	
 

 

	 	 
	
Signature of authorised representative

	 	 
	 	 	 
	 	 	 
	
Name (please print)

	 	 
	
 

 

	 	 
	
Title (please print)

	 	 

 

17

 

ANNEXURE A

 

WORK ORDER NO. [#]

 

This Work Order No. [#] is issued pursuant to the Master Services Agreement dated [insert date of MSA] (the “MSA”) between Prana Biotechnology Ltd ACN 080 699 065 of Level 2, 369 Royal Parade, Parkville Victoria 3052 Australia (“Prana”) and Orgapharm S.A.S. of Rue du Moulin de la Canne, Pithiviers France 45 300 ("Orgapharm").

Once executed by both parties, this Work Order will be incorporated into the MSA. Capitalized terms not defined in this Work Order shall have the meanings ascribed to them in the MSA.

[Work Orders will contain the following, as applicable:]

	1.	Background

	2.	Description of Services and Deliverables

	3.	Responsibilities

	4.	Project Timeline

	5.	Fees, Reimbursable Expenses and Payment Schedule

	6.	Any other applicable terms and conditions not covered in the MSA

	7.	Exhibits to the Work Order (e.g. specifications, Quality Agreement)

 

WORK ORDER AGREED TO AND ACCEPTED BY:

	
Orgapharm S.A.S

	
Prana Biotechnology Ltd

	 
	 	 	 
	
By:

	
By:

	 
	 	 	 
	
Name:

	
Name:

	 
	 	 	 
	
Title:

	
Title:

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