Document:

Exhibit 10.1

 

PROTEON THERAPEUTICS, INC.

 

2006 EQUITY INCENTIVE PLAN

 

ADOPTED : MARCH 24, 2006
 APPROVED BY STOCKHOLDERS : MARCH 24, 2006
 TERMINATION DATE: MARCH 23, 2016

 

1.                                      PURPOSES.

 

(a)                                 Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are Employees, Directors and Consultants.

 

(b)                                 Available Stock Awards. The purpose of the Plan is to provide a means by which eligible recipients of Stock Awards may be given an opportunity to benefit from increases in value of the Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to acquire restricted stock, (v) Stock Appreciation Rights and (vi) Phantom Stock Awards.

 

(c)                                  General Purpose. The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Stock Awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

 

2.                                      DEFINITIONS.

 

(a)                                 “Affiliate” means any parent corporation or subsidiary corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

 

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

 

(c)                                  “Capitalization Adjustment” has the meaning ascribed to that term in Section 11(a).

 

(d)                                 “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)                                    any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction;

 

(ii)                                there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company if, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity

 

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in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction;

 

(iii)                            the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur; or

 

(iv)                             there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportion as their Ownership of the Company immediately prior to such sale, lease, license or other disposition.

 

The term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, or for primarily fundraising purposes.

 

Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement (it being understood, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply).

 

(e)                                  “Code” means the Internal Revenue Code of 1986, as amended.

 

(f)                                   “Committee” means a committee of one or more members of the Board appointed by the Board in accordance with Section 3(c).

 

(g)                                 “Common Stock” means the common stock of the Company.

 

(h)                                 “Company” means Proteon Therapeutics, Inc., a Delaware corporation.

 

(i)                                    “Consultant” means any person, including an advisor, (i) engaged by the Company or an Affiliate to render consulting or advisory services and who is compensated for such services or (ii) serving as a member of the Board of Directors of an Affiliate and who is compensated for such services. However, the term “Consultant” shall not include Directors who are not compensated by the Company for their services as Directors, and the payment of a director’s fee by the Company for services as a Director shall not cause a Director to be considered a “Consultant” for purposes of the Plan.

 

(j)                                    “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders

 

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such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service. For example, a change in status from an employee of the Company to a consultant to an Affiliate or to a Director shall not constitute an interruption of Continuous Service. The Board, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy or in the written terms of the Participant’s leave of absence.

 

(k)                                 “Corporate Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)                                    a sale or other disposition of all or substantially all, as determined by the Board in its discretion, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)                                a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;

 

(iii)                            a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(iv)                             a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

(l)                                    “Director” means a member of the Board.

 

(m)                             “Disability” means the inability of a person, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of that person’s position with the Company or an Affiliate because of the sickness or injury of the person.

 

(n)                                 “Employee” means any person employed by the Company or an Affiliate. Service as a Director or payment of a director’s fee by the Company for such service or for service as a member of the Board of Directors of an Affiliate shall not be sufficient to constitute “employment” by the Company or an Affiliate.

 

“Entity” means a corporation, partnership or other entity.

 

(o)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(p)                                 “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include (A) the Company or any Subsidiary of the Company, (B) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding

 

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securities under an employee benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company.

 

(q)                                 “Fair Market Value” means, as of any date, the value of the Common Stock determined in good faith by the Board, and if required by applicable law, in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations.

 

(r)                                  “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

 

(s)                                   “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

 

(t)                                    “Officer” means any person designated by the Company as an officer.

 

(u)                                 “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.

 

(v)                                 “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

 

(w)                               “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

 

(x)                                 “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

(y)                                 “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

 

(z)                                  “Phantom Stock Award” means an award of a specified number of units of value granted under the Plan, which, when redeemed, shall be a right to receive cash from the Company in an amount equal to the Fair Market Value of the Common Stock as determined in accordance with this Plan.

 

(aa)                          “Plan” means this Proteon Therapeutics, Inc. 2006 Equity Incentive Plan.

 

(bb)                          “Restricted Stock Award” means an award of shares of Common Stock that is granted pursuant to the terms and conditions of Section 7(b).

 

(cc)                            “Securities Act” means the Securities Act of 1933, as amended.

 

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(dd)                          “Stock Appreciation Right” or “SAR” means a single unit of value granted under the Plan, which, when redeemed, shall be a right to receive cash from the Company in an amount equal to the Fair Market Value of the Common Stock, as determined in accordance with this Plan, minus the exercise price, if any, of the SAR.

 

(ee)                            “Stock Award” means any right granted under the Plan, including an Option, a stock bonus and a right to acquire restricted stock.

 

(ff)                              “Stock Award Agreement” means a written agreement between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

 

(gg)                          “Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%).

 

(hh)                          “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.

 

3.                                      ADMINISTRATION.

 

(a)                                 Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in Section 3(c).

 

(b)                                 Powers of Board. The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(i)                                    To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; what type or combination of types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive Common Stock pursuant to a Stock Award; and the number of shares of Common Stock, or units of value for Stock Appreciation Rights or Phantom Stock Awards, with respect to which a Stock Award shall be granted to each such person.

 

(ii)                                To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

 

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(iii)                            To effect, at any time and from time to time, with the consent of any adversely affected Optionholder, (1) the reduction of the exercise price of any outstanding Option under the Plan, (2) the cancellation of any outstanding Option under the Plan and the grant in substitution therefor of (A) a new Option under the Plan or another equity plan of the Company covering the same or a different number of shares of Common Stock, (B) a Restricted Stock Award (including a stock bonus), (C) a Stock Appreciation Right, (D) cash (E) Phantom Stock Awards and/or (F) other valuable consideration (as determined by the Board, in its sole discretion), or (3) any other action that is treated as a repricing under generally accepted accounting principles.

 

(iv)                             To amend the Plan or a Stock Award as provided in Section 12.

 

(v)                                 To terminate or suspend the Plan as provided in Section 13.

 

(vi)                             Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan.

 

(c)                                  Delegation to Committee. The Board may delegate administration of the Plan to a Committee or Committees of three (3) or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

 

(d)                                 Delegation to an Officer. The Board may delegate to one or more Officers of the Company the authority to do one or both of the following: (i) designate Officers and Employees of the Company or any of its Subsidiaries to be recipients of Stock Awards and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Officers and Employees of the Company; provided, however, that the Board resolutions regarding such delegation shall specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself. Notwithstanding the foregoing, the Board may not delegate authority to an Officer to determine the Fair Market Value of the Common Stock.

 

(e)                                  Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.

 

4.                                      SHARES SUBJECT TO THE PLAN.

 

(a)                                 Share Reserve. Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, the Common Stock and units of value for Stock Appreciation Rights

 

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or Phantom Stock Awards that may be issued pursuant to Stock Awards shall not exceed in the aggregate three million (3,000,000)* shares of Common Stock.

 

(b)                                 Reversion of Shares to the Share Reserve. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised or redeemed in full, the shares of Common Stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan.

 

(c)                                  Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

 

(d)                                 Share Reserve Limitation. To the extent that it may be required by Section 260.140.45 of Title 10 of the California Code of Regulations, the total number of shares of Common Stock issuable upon exercise of all outstanding Options and the total number of shares of Common Stock provided for under any stock bonus or similar plan of the Company shall not exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the California Code of Regulations, based on the shares of Common Stock of the Company that are outstanding at the time the calculation is made.

 

5.                                      ELIGIBILITY.

 

(a)                                 Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants.

 

(b)                                 Ten Percent Stockholders.

 

(i)                                    A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

 

(ii)                                A Ten Percent Stockholder shall not be granted a Nonstatutory Stock Option unless the exercise price of such Option is at least (i) one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock on the date of grant as is permitted by Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the Option, if applicable.

 

(iii)                            A Ten Percent Stockholder shall not be granted a restricted stock award unless the purchase price of the restricted stock is at least (i) one hundred percent (100%) of the Fair Market Value of the Common Stock on the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock on the date of grant as is permitted by Section 260.140.42 of Title 10 of the California Code of Regulations at the time of the grant of the restricted stock award, if applicable.

 

(c)                                  Consultants.                           A Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, either the offer or the sale of the Company’s securities to such Consultant is

 

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not exempt under Rule 701 of the Securities Act (“Rule 701”) because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of some other provision of Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions, if applicable.

 

6.                                      OPTION PROVISIONS.

 

Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased on exercise of each type of Option. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

 

(a)                                 Term. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, no Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

 

(b)                                 Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

 

(c)                                  Exercise Price of a Nonstatutory Stock Option. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, the exercise price of each Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

 

(d)                                 Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock, (2) according to a deferred payment or other similar arrangement with the Optionholder or (3) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by

 

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shares of the Common Stock of the Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). At any time that the Company is incorporated in Delaware, payment of the Common Stock’s “par value,” as defined in the Delaware General Corporation Law, shall not be made by deferred payment.

 

In the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid (1) the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement and (2) the treatment of the Option as a variable award for financial accounting purposes.

 

(e)                                  Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

 

(f)                                   Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and, to the extent provided in the Option Agreement, to such further extent as permitted by Section 260.140.41(d) of Title 10 of the California Code of Regulations, if applicable at the time of the grant of the Option, and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

 

(g)                                 Vesting Generally. The total number of shares of Common Stock subject to an Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this Section 6(g) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.

 

(h)                                 Minimum Vesting. Notwithstanding the foregoing Section 6(g), to the extent that the following restrictions on vesting are required by Section 260.140.41(f) of Title 10 of the California Code of Regulations at the time of the grant of the Option, then:

 

(i)                                    Options granted to an Employee who is not an Officer, Director or Consultant shall provide for vesting of the total number of shares of Common Stock at a rate of at least twenty percent (20%) per year over five (5) years from the date the Option was granted, subject to reasonable conditions such as continued employment; and

 

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(ii)                                Options granted to Officers, Directors or Consultants may be made fully exercisable, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company.

 

(i)                                    Termination of Continuous Service. In the event that an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder’s Continuous Service (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate.

 

(j)                                    Extension of Termination Date. An Optionholder’s Option Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service (other than upon the Optionholder’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in Section 6(a) or (ii) the expiration of a period of three (3) months after the termination of the Optionholder’s Continuous Service during which the exercise of the Option would not be in violation of such registration requirements.

 

(k)                                 Disability of Optionholder. In the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option shall terminate.

 

(l)                                    Death of Optionholder. In the event that (i) an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder’s death pursuant to Section 6(e) or 6(f), but only within the period ending on the earlier of (1) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months) or (2) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate.

 

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(m)                             Early Exercise. The Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the “Repurchase Limitation” in Section 10(h), any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. Provided that the “Repurchase Limitation” in Section 10(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option.

 

(n)                                 Right of Repurchase. Subject to the “Repurchase Limitation” in Section 10(h), the Option may, but need not, include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the Option. Provided that the “Repurchase Limitation” in Section 10(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless otherwise specifically provided in the Option.

 

(o)                                 Right of First Refusal. The Option may, but need not, include a provision whereby the Company may elect to exercise a right of first refusal following receipt of notice from the Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option. Except as expressly provided in this Section 6(o) or in the Stock Award Agreement for the Option, such right of first refusal shall otherwise comply with any applicable provisions of the Bylaws of the Company. The Company will not exercise its right of first refusal until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following the exercise of the Option unless otherwise specifically provided in the Option.

 

7.                                      PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

 

(a)                                 Stock Bonus Awards. Each stock bonus agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of stock bonus agreements may change from time to time, and the terms and conditions of separate stock bonus agreements need not be identical, but each stock bonus agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(i)                                    Consideration. A stock bonus may be awarded in consideration for past services actually rendered to the Company or an Affiliate for its benefit.

 

(ii)                                Vesting. Subject to the “Repurchase Limitation” in Section 10(h), shares of Common Stock awarded under the stock bonus agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

 

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(iii)                            Termination of Participant’s Continuous Service. Subject to the “Repurchase Limitation” in Section 10(h), in the event that a Participant’s Continuous Service terminates, the Company may reacquire any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination under the terms of the stock bonus agreement. Provided that the “Repurchase Limitation” in Section 10(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following receipt of the stock bonus unless otherwise specifically provided in the stock bonus agreement.

 

(iv)                             Transferability. Rights to acquire shares of Common Stock under the stock bonus agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant.

 

(b)                                 Restricted Stock Awards. Each restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of the restricted stock purchase agreements may change from time to time, and the terms and conditions of separate restricted stock purchase agreements need not be identical, but each restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(i)                                    Purchase Price. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, the purchase price of restricted stock awards shall not be less than eighty-five percent (85%) of the Common Stock’s Fair Market Value on the date such award is made or at the time the purchase is consummated.

 

(ii)                                Consideration. The purchase price of Common Stock acquired pursuant to the restricted stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board, according to a deferred payment or other similar arrangement with the Participant; or (iii) in any other form of legal consideration that may be acceptable to the Board in its discretion; provided, however, that at any time that the Company is incorporated in Delaware, then payment of the Common Stock’s “par value,” as defined in the Delaware General Corporation Law, shall not be made by deferred payment.

 

(iii)                            Vesting. Subject to the “Repurchase Limitation” in Section 10(h), shares of Common Stock acquired under the restricted stock purchase agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

 

(iv)                             Termination of Participant’s Continuous Service. Subject to the “Repurchase Limitation” in Section 10(h), in the event that a Participant’s Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination under the terms of the restricted stock purchase agreement. Provided that the “Repurchase Limitation” in Section 10(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for

 

12

 

financial accounting purposes) have elapsed following the purchase of the restricted stock unless otherwise specifically provided in the restricted stock purchase agreement.

 

(v)                                 Transferability. Rights to acquire shares of Common Stock under the restricted stock purchase agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant.

 

(c)                                  Stock Appreciation Rights and Phantom Stock Awards. Each SAR and Phantom Stock Award agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of SAR and Phantom Stock Award agreements may change from time to time, and the terms and conditions of separate SAR and Phantom Stock Award agreements need not be identical, but each SAR and Phantom Stock Award agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(i)                                    Grants. SARs and Phantom Stock Awards granted to a Participant shall be credited to a bookkeeping account to be maintained for such Participant. A Participant may be granted more than one SAR or Phantom Stock Award under the Plan, and such Participant shall be notified of each such grant in writing within thirty (30) days of the date of grant, or within such other time period as the Board shall determine is appropriate.

 

(ii)                                Term. Each SAR and Phantom Stock Award granted pursuant to the Plan shall have a term of ten (10) years. A SAR or Phantom Stock Award not redeemed prior to the payment shall be made to the Participant holding such SAR or Phantom Stock Award in accordance with this Section 7(c).

 

(iii)                            Vesting and Forfeiture. SARs and the units subject to each Phantom Stock Award shall become vested and redeemable in periodic installments that may, but need not, be equal. The SAR or Phantom Stock Award may be subject to such other terms and conditions on the time or times when it may be redeemed (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual SARs and Phantom Stock Awards may vary.

 

A Participant’s SARs or Phantom Stock Awards shall continue to vest until either (i) the Participant’s Continuous Service terminates for any reason, or (ii) all SARs or units subject to the Phantom Stock Award under the Participant’s grant become fully vested. Only SARs and units subject to the Phantom Stock Awards that are vested may be redeemed.

 

If a Participant’s Continuous Service terminates for any reason before all SARs or units subject to a Phantom Stock Award held by such Participant have vested, the portion of those SARs or Phantom Stock Awards that has not vested as of the date of such termination of Continuous Service shall be forfeited and canceled as of such date. Such Participant’s SARs and vested units subject to the Phantom Stock Award that have vested automatically shall be redeemed on the date of his or her termination, and the Participant shall receive a cash payment for such automatically redeemed vested SARs and Phantom Stock Awards in accordance with Section 7(c)(iv).

 

13

 

If a Participant’s Continuous Service with the Company is interrupted for a period of three (3) months or more in a calendar year for any reason, including such Participant’s sick leave, maternity leave, military leave, or other leave of absence approved by the Company, before all SARs or units subject to a Phantom Stock Award held by such Participant have vested, then upon the occurrence of such interruption, further vesting of the SARs and Phantom Stock Awards shall cease until the Participant resumes Continuous Service. The unvested SARs and Phantom Stock Awards thereafter shall vest on the basis set forth in the Participant’s SAR or Phantom Stock Award agreement, with no vesting credit given for the period during which the vesting ceased.

 

Notwithstanding the foregoing, the Board shall have the power to accelerate the time of vesting for any Participant or Participants under this Section 7(c), including in the event of a Change in Control or a Participant’s termination of Continuous Service.

 

(iv)                             Redemption. SARs and Phantom Stock Awards shall entitle the holder to receive a cash payment from the Company upon redemption in an amount equal to the Fair Market Value per share of the Common Stock (or such other value per share as may be set forth in the SAR or Phantom Stock Award agreement), multiplied by the number of SARs or units as to which the Phantom Stock Award is redeemed, less the applicable exercise price, if any, and applicable withholding taxes and authorized payroll deductions. Such payments shall be made as soon as reasonably practicable following the redemption of a SAR or Phantom Stock Award.  Notwithstanding the foregoing a SAR or Phantom Stock Award agreement may provide that the Company may, in its sole discretion, make payment following a redemption of a SAR or Phantom Stock Award pursuant to a deferred payment schedule. Such deferred payment schedule shall provide that the Company shall pay the Participant the payment due with respect to the redemption within a period certain not to exceed two years from the date of the redemption. Payments made pursuant to a deferred payment schedule will include an interest payment by the Company in an amount equal to the mid-term Applicable Federal Rate established by the Internal Revenue Service, compounded annually, on the unpaid balance of the payment over the actual term of the payment.

 

At the time of the redemption of a SAR or Phantom Stock Award, the Participant shall execute such additional documents as the Company may then require in order to administer properly the terms of the grant and redemption.

 

(v)                                 Transferability. SARs and Phantom Stock Awards shall not be transferable or assignable in any manner by a Participant. During the lifetime of a Participant, vested SARs and units subject to Phantom Stock Awards held by such Participant shall be redeemed only by such Participant or his or her guardian or legal representative. In the case of the death of a Participant who holds vested SARs or units subject to Phantom Stock Awards, such vested SARs or units subject to Phantom Stock Awards automatically shall be redeemed as of the Participant’s date of death, and payment shall be made to such Participant’s designated beneficiary or, in the absence of designation, to such Participant’s beneficiary by will or by the laws of descent and distribution upon sufficient legal proof of entitlement, in accordance with Section 7(c)(iv) of the Plan.

 

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(vi)                             Funding. SARs and Phantom Stock Awards shall not be funded, the Company shall not be required to segregate any funds representing the value of SARs or Phantom Stock Awards granted to Participants, and nothing in the Plan shall be construed as providing for such segregation. A Participant’s rights to amounts received upon the redemption of SARs or Phantom Stock Awards under the Plan shall be those of an unsecured general creditor of the Company. The liability for payment upon the redemption of a SAR or Phantom Stock Award shall be a liability of the Company alone and shall not be a liability of any officer, director, shareholder or affiliate of the Company.

 

8.                                      COVENANTS OF THE COMPANY.

 

(a)                                 Availability of Shares. During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Stock Awards.

 

(b)                                 Securities Law Compliance. The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained.

 

9.                                      USE OF PROCEEDS FROM STOCK

 

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of the Company.

 

10.                               MISCELLANEOUS.

 

(a)                                 Acceleration of Exercisability or Redemption and Vesting. The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or redeemed or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or redeemed or the time during which it will vest.

 

(b)                                 Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms.

 

(c)                                  No Employment or other Service Rights. Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the

 

15

 

employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

 

(d)                                 Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000) (the “ISO Limit”), the Options or portions thereof that exceed the ISO Limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of a Stock Award Agreement; provided however, that to the extent that applicable law is amended to increase or decrease the incentive stock option value limitation, the ISO Limit shall be deemed to be such amended value.

 

(e)                                  Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

 

(f)                                   Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement, a Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under a Stock Award or redemption of a SAR or Phantom Stock Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Stock Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lower amount as may be

 

16

 

necessary to avoid variable award accounting); or (iii) delivering to the Company owned and unencumbered shares of Common Stock.

 

(g)                                 Information Obligation. To the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall deliver financial statements to Participants at least annually. This Section 10(g) shall not apply to key Employees whose duties in connection with the Company assure them access to equivalent information.

 

(h)                                 Repurchase Limitation. The terms of any repurchase option shall be specified in the Stock Award, and the repurchase price may be either the Fair Market Value of the shares of Common Stock on the date of termination of Continuous Service or the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price. To the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of Regulations at the time a Stock Award is made, any repurchase option contained in a Stock Award granted to a person who is not an Officer, Director or Consultant shall be upon the terms described below:

 

(i)                                    Fair Market Value. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon termination of Continuous Service at not less than the Fair Market Value of the shares of Common Stock to be purchased on the date of termination of Continuous Service, then (i) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise of Stock Awards after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding “qualified small business stock”) and (ii) the right terminates when the shares of Common Stock become publicly traded.

 

(ii)                                Original Purchase Price. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon termination of Continuous Service at the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price, then (x) the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the shares of Common Stock per year over five (5) years from the date the Stock Award is granted (without respect to the date the Stock Award was exercised or became exercisable) and (y) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise of Options after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding “qualified small business stock”).

 

11.                               ADJUSTMENTS UPON CHANGES IN STOCK

 

(a)                                 Capitalization Adjustments. If any change is made in, or other event occurs with respect to, the Common Stock subject to the Plan or subject to any Stock Award without the

 

17

 

receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company (each a “Capitalization Adjustment”), the Plan will be appropriately adjusted in the class(es) and maximum number of securities subject to the Plan pursuant to Sections 4(a) and 4(b) and the maximum number of securities subject to award to any person pursuant to Section 5(c), and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of securities and price per share of Common Stock subject to such outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a transaction “without receipt of consideration” by the Company.)

 

(b)                                 Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, then all outstanding Options shall terminate immediately prior to the completion of such dissolution or liquidation, and shares of Common Stock subject to the Company’s repurchase option may be repurchased by the Company notwithstanding the fact that the holder of such stock is still in Continuous Service.

 

(c)                                  Corporate Transaction. In the event of a Corporate Transaction, any surviving corporation or acquiring corporation may assume or continue any or all Stock Awards outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (it being understood that similar stock awards include, but are not limited to, awards to acquire the same consideration paid to the stockholders or the Company, as the case may be, pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or such successor’s parent company), if any, in connection with such Corporate Transaction. In the event that any surviving corporation or acquiring corporation does not assume or continue any or all such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Awards may be exercised or redeemed) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of the Corporate Transaction), the Stock Awards shall terminate if not exercised or redeemed (if applicable) at or prior to such effective time, and any reacquisition or repurchase rights held by the Company with respect to such Stock Awards held by Participants whose Continuous Service has not terminated shall (contingent upon the effectiveness of the Corporate Transaction) lapse. With respect to any other Stock Awards outstanding under the Plan that have not been assumed, continued or substituted, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised or redeemed) shall not be accelerated, unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of such Stock Award, and such Stock Awards shall terminate if not exercised or redeemed (if applicable) prior to the effective time of the Corporate Transaction.

 

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(d)                                 Change in Control. A Stock Award held by any Participant whose Continuous Service has not terminated prior to the effective time of a Change in Control may be subject to additional acceleration of vesting and exercisability or redemption upon or after such event as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration shall occur.

 

12.                               AMENDMENT OF THE PLAN AND STOCK AWARDS.

 

(a)                                 Amendment of Plan. The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 11(a) relating to Capitalization Adjustments, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy the requirements of Section 422 of the Code.

 

(b)                                 Stockholder Approval. The Board, in its sole discretion, may submit any other amendment to the Plan for stockholder approval.

 

(c)                                  Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith.

 

(d)                                 No Impairment of Rights. Rights under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.

 

(e)                                  Amendment of Stock Awards. The Board at any time, and from time to time, may amend the terms of any one or more Stock Awards; provided, however, that the rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.

 

13.                               TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)                                 Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)                                 No Impairment of Rights. Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the Participant.

 

14.                               EFFECTIVE DATE OF PLAN.

 

The Plan shall become effective as determined by the Board, but no Stock Award shall be exercised or redeemed (or, in the case of a stock bonus, shall be granted) unless and until the

 

19

 

Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.

 

15.                               CHOICE OF LAW.

 

The law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of laws rules.

 

********************

 

*      Amended on August 1, 2006 to increase shares reserved to 3,250,000.

 

Amended on June 25, 2007 to increase shares reserved to 5,387,758.

 

Amended on February 18, 2009 to increase shares reserved to 5,599,734.

 

Amended on February 25, 2009 to increase shares reserved to 9,996,108.

 

Amended on April 16, 2009 to increase shares reserved to [      ].

 

Amended on August 2, 2011 to increase shares reserved to 10,084,201.

 

Amended on May 8, 2014 to increase shares reserved to 18,222,157.

 

20Exhibit 10.7

 

 

Process Development and Manufacturing

 

Services Agreement

 

by and between

 

Proteon Therapeutics

 

and

 

Lonza Ltd

 

 

 

PROCESS DEVELOPMENT AND MANUFACTURING SERVICES AGREEMENT

 

This Process Development and Manufacturing Services Agreement (this “Agreement”) is effective as of September 1, 2009 (the “Effective Date”), by and between Proteon Therapeutics, a Delaware corporation, with an address at 200 West Street, Waltham, Massachusetts (“PROTEON”), and Lonza Ltd, a Swiss company with an address at Muenchensteinerstrasse 38, CH-4002 Basel, Switzerland (“LONZA”) (each, a “Party” and together the “Parties”).

 

RECITALS

 

WHEREAS, PROTEON intends to develop and commercialize certain products containing a recombinant form of Type 1 human pancreatic elastase as the active pharmaceutical ingredient known by PROTEON as PRT-201 (“API”) and wishes to contract with a contract manufacturing organization for the process development, manufacture and supply of API; and

 

WHEREAS, LONZA has process development, manufacturing and related services experience and expertise and owns a facility that is or would be suitable for production of API; and

 

WHEREAS, PROTEON desires to retain LONZA as a manufacturer of clinical quantities of API and to purchase process development and manufacturing services to supply clinical quantities of such product from LONZA, and LONZA desires to perform such services for PROTEON, all on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereto agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

The following capitalized terms, whether used in the singular or plural, shall have the meanings assigned to them below for purposes of this Agreement:

 

1.1                               “Acquisition Cost” means the actual price paid by LONZA to any Third Party (net of any discounts, rebates, credits or the like) for any materials (including the Raw Materials, Resins, Consumables and Wearables) used in the manufacture of the Drug Substance under this Agreement, including, but not limited to, shipping and handling costs and customs duties incurred and paid by LONZA to that Third Party in connection with the acquisition of such materials, and also including [    ]* of such actual price to cover LONZA’s acquisition and storage costs for such materials.

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

1

 

 

1.2                               “Additional Services” means any service that is not contained in the Project Plan and that requires a Change Order from PROTEON in order to authorize LONZA to commence the same or any service specifically identified as an Additional Service in this Agreement.

 

1.3                               “Affiliate” means, with respect to either Party, any other corporation or business entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, the term “control” means direct or indirect ownership of more than fifty percent (50%) of the securities or other ownership interests representing the equity voting stock or general partnership or membership interest of such entity or the power to direct or cause the direction of the management or policies of such entity, whether through the ownership of voting securities, by contract, or otherwise.

 

1.4                               “Agreement” has the meaning ascribed to it in the Recitals.

 

1.5                               “API” has the meaning ascribed to it in the Recitals.

 

1.6                               “Batch” means a specific quantity of Drug Substance produced from a single Run.

 

1.7                               “Batch Disposition Documentation” means all of the documentation associated with the production and testing of a given clinical Batch, including without limitation production records, sampling documentation, test results, Investigative and Corrective Action Reports, deviation reports, all applicable Manufacturing Process data (including any pertinent output from instrumentation), the Certificate of Analysis, the Certificate of Compliance and any additional Quality Review and Approval documentation, if applicable.

 

1.8                               “Business Days” means any day other than a Saturday or Sunday that is not a national holiday in the United States or Switzerland.

 

1.9                               [           ]*

 

1.10                        “Certificate of Analysis” means a document prepared by LONZA listing tests performed by LONZA or approved Subcontractors, the specifications and test results.

 

1.11                        “Certificate of Compliance” means a document prepared by LONZA: (i) listing the manufacturing date, unique Batch number, and quantity of Drug Substance in such Batch, (ii) certifying that such Batch was manufactured in accordance with the Master Production Record and cGMP and (iii) certifying that all Investigative and Corrective Action Reports are completed and approved. The Parties shall from time to time agree upon a format or formats for the Certificate of Compliance to be used under this Agreement.

 

1.12                        “cGMP” means the regulatory requirements for current good manufacturing practices promulgated by the FDA under 21 C.F.R. §§ 210, 211 (as applicable to bulk drug substance only) and ICH, Guidance for Industry Q7A Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients, as the same may be amended from time to time, as well as any additional regulatory agency requirements needed to seek registration in the EU, such as Part II of Volume IV of the EU Guide to Good Manufacturing Practice.

 

confidential treatment

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

2

 

 

1.13                        “Change Order” means a document mutually approved in writing by both Parties in accordance with the procedures set forth in Section 3.4 that describes in reasonable detail an amendment or modification to the Project and/or the Project Plan.

 

1.14                        “PROTEON Change Request” has the meaning ascribed to it in Section 3.4.

 

1.15                        “LONZA Change Request” has the meaning ascribed to it in Section 3.4.

 

1.16                        “PROTEON Confidential Information” means any Manufacturing Documentation provided by PROTEON to LONZA, and all elements of the Manufacturing Process provided by PROTEON to LONZA, clinical data and information, business plans, regulatory and Product information, Product strategies and all technical and other information, whether patented or unpatented, relating to PROTEON Product processes, test methods, operations, technologies, forecasts and business information that is disclosed or supplied to LONZA by or on behalf of PROTEON pursuant to this Agreement. PROTEON Confidential Information shall also include the Master Production Record, the Materials Specifications, and the Manufacturing Documentation.

 

1.17                        “PROTEON Equipment” means those certain pieces of equipment described in the Project Plan used to produce the Product that are purchased by PROTEON or for which PROTEON reimburses LONZA, including, without limitation, the related documentation regarding the design, validation, operation, calibration and maintenance of such equipment.

 

1.18                        “PROTEON Intellectual Property” means all Intellectual Property owned or Controlled by PROTEON that are conceived, discovered, developed, generated, created, made or reduced to practice or fixed in a tangible medium of expression at any time prior to the Effective Date or after the Effective Date if such Intellectual Property rights are not based upon or related to the performance of the Project.

 

1.19                        “Clinical Batch” means a Batch produced from a Clinical Run.

 

1.20                        “Clinical Run” means a Run manufactured in accordance with the Master Production Record and is used to create Drug Substance for clinical use.

 

1.21                        “Commercially Reasonable Efforts” means with respect to any objective of a Party, diligent, good faith efforts to accomplish such objective, to be undertaken in accordance with such Party’s reasonable business, legal and scientific judgment, consistent with the effort a reasonably comparable biological development company (in the case of PROTEON) or biopharmaceutical contract manufacturer (in the case of LONZA) would normally use to accomplish a similar objective under similar circumstances.

 

1.22                        “Confidentiality Agreement” means the Reciprocal Confidentiality Agreement between PROTEON and Lonza Biologics, Inc., dated May 20th, 2009.

 

1.23                        “Confidential Information” means PROTEON Confidential Information and/or LONZA Confidential Information, as the context requires, except any portion thereof which: (a) is known to the receiving party, as evidenced by the receiving party’s prior written records,

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

3

 

 

before receipt thereof under this Agreement; (b) is disclosed to the receiving party by a third person who is under no obligation of confidentiality to the disclosing party with respect to such information and who otherwise has a right to make such disclosure; (c) is or becomes generally known in the public domain through no fault of the receiving party; or (d) is independently developed by the receiving party, as evidenced by the receiving party’s written records, without access to the other Party’s Confidential Information.

 

1.24                        “Conforming Drug Substance” means Drug Substance that conforms to all of the warranties set forth in Section 14.2.1.

 

1.25                        “Consumable” means all bags, liners and other single use or regularly replaced materials that are required to perform the Manufacturing Process (excluding Raw Materials, Resins and Wearables).

 

1.26                        “Control” or “Controlled” means, with respect to any Intellectual Property, the possession (whether by ownership, license, or other agreement or arrangement existing now or after the Effective Date, other than pursuant to this Agreement) by a Party or an Affiliate thereof of the right to grant to the other Party a license as provided herein under such Intellectual Property without violating (a) any law or governmental regulation applicable to such license or sublicense or (b) the terms of any agreement or other arrangement with any Third Party that exists as of the Effective Date or, if such right is acquired after the Effective Date, as of the date the Party or an Affiliate thereof first gained possession of such right.

 

1.27                        “Decision Request” has the meaning ascribed to it in Section 3.1.2.

 

1.28                        “Designated Carrier” means the common carrier selected by PROTEON to take delivery of Drug Substance at the LONZA Facility.

 

1.29                        “Drug Substance” means API in bulk form that has been manufactured by LONZA pursuant to this Agreement.

 

1.30                        “Effective Date” has the meaning ascribed to it in the Recitals.

 

1.31                        “EMEA” means the European Medicines Agency, or any successor agency thereto.

 

1.32                        “Engineering Batch” means a Batch produced from an Engineering Run.

 

1.33                        “Engineering Run” means a Run used for process demonstration and engineering of some or all of the Manufacturing Process steps.

 

1.34                        “EXW” means “Ex Works (named place)”, as that expression is defined in Incoterms 2000, ICC Publishing S.A.

 

1.35                        “FDA” means the United States Food and Drug Administration, or any successor agency thereto.

 

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1.36                        “FDCA” has the meaning ascribed to it in Section 14.2.1.

 

1.37                        “Force Majeure Event” has the meaning ascribed to it in Section 19.1.

 

1.38                        “Governmental Authority” means any national, multi-national, regional, state or local regulatory agency, department, bureau, or other governmental entity.

 

1.39                        “Indemnitee” has the meaning ascribed to it in Section 15.3.1.

 

1.40                        “Indemnitor” has the meaning ascribed to it in Section 15.3.1.

 

1.41                        “Intellectual Property” means all worldwide (i) Patents, (ii) copyright registrations and applications and all renewals and extensions thereof, (iii) discoveries, inventions, trade secrets, know-how, techniques, methodologies, modifications, improvements, works of authorship, designs and data (whether or not protectable under patent, copyright, trade secrecy or similar laws), and (iv) Confidential Information, including all applications and registrations with respect to the items identified in clauses (iii)-(iv) (if any), but excluding all trademarks, trade names, service marks, logos and other corporate identifiers.

 

1.42                        “Investigative and Corrective Action Reports” or “ICAR” means the document that is used to record the investigation of, as well as the review and disposition of, a failure related to a cGMP manufacturing process or system.

 

1.43                        “Liabilities” has the meaning ascribed to it in Section 15.1.

 

1.44                        “LONZA” has the meaning ascribed to it in the Recitals.

 

1.45                        “LONZA Confidential Information” means all technical and other information, whether patented or unpatented, relating to the LONZA Facility and/or LONZA processes, methods, operations, technologies, forecasts and business information that is disclosed or supplied to, or used on behalf of, PROTEON by LONZA pursuant to this Agreement, or of which PROTEON may become aware through the presence of its employees or agents at LONZA offices or at the LONZA Facility, including, without limitation, trade secrets, know-how, processes, concepts, experimental methods and results and business and scientific plans and information and facility layout and schematics.

 

1.46                        “LONZA Facility” means the facility owned and operated by LONZA at Rottenstrasse 6, 3930 Visp, Switzerland or such other facility designated by LONZA and owned and operated by an Affiliate of LONZA.

 

1.47                        “LONZA Intellectual Property” means all Intellectual Property owned or Controlled by LONZA that are conceived, discovered, developed, generated, created, made or reduced to practice or fixed in a tangible medium of expression at any time prior to the Effective Date or after the Effective Date if such Intellectual Property rights are not based upon or related to the performance of the Project.

 

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1.48                        “Manufacturing Documentation” means all documents and records describing or otherwise related to the Manufacturing Process, other than those embodied in the Master Production Record.

 

1.49                        “Manufacturing Process” means the production process for the manufacture of Drug Substance, as such process may be changed from time to time in accordance with this Agreement.

 

1.50                        [          ]*

 

1.51                        “Master Production Record” or “MPR” means the document, proposed by LONZA and approved by PROTEON, that defines the manufacturing methods, test methods, specifications, materials, and other procedures, directions and controls associated with the manufacture and testing of Drug Substance. The Master Production Record shall also include or incorporate by reference, without limitation, such information as Materials Specifications, in process and final Drug Substance sampling standards, equipment and instrumentation specifications and standard operating procedures, including, without limitation, standard operating procedures for in-process quality control testing.

 

1.52                        “Materials Specification” or “MS” means a document detailing the specifications for each Raw Material, Resin or Consumable, each as mutually approved by the Parties.

 

1.53                        “NDA” means a new drug application for the Product, or any equivalent filing thereto, filed with the FDA, and any supplements or amendments to any of the foregoing.

 

1.54                        “Non-Conforming Drug Substance” means Drug Substance that fails to conform to all of the warranties set forth in Section 14.2.1.

 

1.55                        “PAI” has the meaning ascribed to it in Section 4.6.

 

1.56                        “Patents” shall mean, with respect to an invention, any patent or patent application, and any patent issuing there from, together with any extensions, reissues, reexaminations, substitutions, renewals, divisions, continuations and continuations-in-part thereof, and any patent or patent application claiming priority to any application in common with any such patent containing a disclosure substantially similar to that of any such patent, all to the extent the foregoing contain claims covering such invention.

 

1.57                        “Product” means the final dosage form of the Drug Substance.

 

1.58                        “Project” means the full range of development and manufacturing services to be provided under this Agreement as more fully described in the Project Plan.

 

1.59                        “Project Administration” has the meaning ascribed to it in Section 3.3.1.

 

1.60                        “Project Intellectual Property” means, individually and collectively, all Intellectual Property conceived, created, discovered, developed, generated, made or reduced to practice or 

 

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fixed in a tangible medium of expression as part of or based upon or related to activities undertaken as part of the Project whether: (a) solely by one or more employees or agents or Subcontractors of LONZA; (b) solely by one or more employees or agents of PROTEON; or (c) jointly by one or more employees or agents or Subcontractors of LONZA and one or more employees or agents of PROTEON.

 

1.61                        “Project Manager” has the meaning ascribed to it in Section 3.2.2.

 

1.62                        “Project Plan” means the scope of work for technology transfer, process development, process implementation, manufacturing and overall project scope, attached as Exhibit A hereto and hereby incorporated into this Agreement by reference.

 

1.63                        “Project Rates” means the applicable rates at which LONZA will charge PROTEON for the various Additional Services performed hereunder, if any, which shall be comparable to the rates utilized by LONZA to price the Project as of the Effective Date.

 

1.64                        “PROTEON” has the meaning ascribed to it in the Recitals.

 

1.65                        “PROTEON Credit” has the meaning ascribed to it in Section 6.1.

 

1.66                        “Quality Agreement” means the quality agreement between the Parties. The Quality Agreement will be negotiated and entered into by the Parties within thirty (30) days following the Effective Date and will be attached as Exhibit C hereto and incorporated into this Agreement by reference.

 

1.67                        “Quality Review and Approval” means LONZA’s review and approval, by LONZA’s quality assurance department, of a Clinical Batch and the associated Batch Disposition Documentation.

 

1.68                        “Raw Material” means all ingredients, solvents and other components of the Drug Substance required to perform the Manufacturing Process (excluding any Consumables, Resins and Wearables).

 

1.69                        “Recall” has the meaning ascribed to it in Section 11.1.

 

1.70                        “Reference Materials” means Drug Substance that is generated from a Run that is well characterized, packaged and stored in a controlled manner, and used as a standard or reference for analytical testing purposes.

 

1.71                        “Registration” has the meaning ascribed to it in Section 8.1.

 

1.72                        “Regulatory Authority” means the FDA or the EMEA, or both of the foregoing, as the case requires.

 

1.73                        “Regulatory Filing” means any or all applications, including but not limited to the NDA, submitted to Regulatory Authorities for the purpose of registering the Product or the Manufacturing Process as required by statute, and any amendments or supplements thereto,

 

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and any other filings required by the Regulatory Authorities relating to the manufacture, testing, sale or distribution of the Product.

 

1.74                        “Replacement Drug Substance” has the meaning ascribed to it in Section 10.3.

 

1.75                        “Resin” means all chromatographic media intended to refine or purify the Drug Substance, as specified in the Master Production Record.

 

1.76                        “Rules” has the meaning ascribed to it in Section 20.3.

 

1.77                        “Run” means a single complete operation of all, or a discreet portion of, the Manufacturing Process at the LONZA Facility.

 

1.78                        “Shipping Guidelines” means LONZA’s written procedures, as approved by PROTEON in writing, that describe the methods of packaging, preserving, monitoring and shipping any and all PROTEON property, including the Drug Substance.

 

1.79                        [          ]*

 

1.80                        “Subcontractor” means any independent entity that LONZA contracts with to perform any services or meet any obligations that are required under the terms and conditions of this Agreement.

 

1.81                        “Suite Activation Date” has the meaning ascribed to it in Section 18.2.

 

1.82                        “Term” has the meaning ascribed to it in Section 18.1.

 

1.83                        “Third Party” means any party other than PROTEON, LONZA and their respective Affiliates.

 

1.84                        “Transfer Batch” means a Batch produced from a Transfer Run.

 

1.85                        “Transfer Run” means a Run used to demonstrate and transfer in to LONZA the Manufacturing Process.

 

1.86                        “Waste” shall mean any “hazardous substance” and/or “hazardous material” as provided under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), any “hazardous waste” as provided under the Resource Conservation and Recovery Act (RCRA), and/or any other waste material, pollutant and/or contaminant of any kind including, without limitation, any routine process waste or any by-product arising from any activities conducted pursuant to this Agreement.

 

1.87                        “Wearables” means any coverings or protective gear used by LONZA employees or agents in the course of the performing the development and manufacturing services hereunder, including without limitation gloves, coveralls, booties, eye shields and the like.

 

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1.88                        [            ]*

 

ARTICLE 2
 COMMITMENT TO DEVELOP AND MANUFACTURE; PURCHASE

 

2.1                               Commitment to Develop and Manufacture.

 

2.1.1                     Development. PROTEON hereby retains LONZA to develop the Manufacturing Process at the LONZA Facility, LONZA shall use Commercially Reasonable Efforts to develop the same, and PROTEON shall pay LONZA for such development work, all in accordance with the Project Plan and Exhibit B.

 

2.1.2                     Manufacture. Subject to the successful completion of the development of the Manufacturing Process at the LONZA Facility as defined in the Project Plan, PROTEON retains LONZA as a manufacturer of Drug Substance. LONZA shall provide sufficient services and capacity to manufacture Drug Substance for PROTEON in accordance with the Project Plan and in accordance with the Master Production Record, and PROTEON shall purchase such services and capacity from LONZA in accordance with the Project Plan and Milestone Payment Summary (Exhibits A&B).

 

ARTICLE 3
 PROJECT PLAN; PROJECT MANAGEMENT

 

3.1                               Project Plan. In order to enable the Parties to fulfill their respective obligations under this Agreement, the Parties shall implement and perform their obligations as set out in the Project Plan. The Project Plan will be written by LONZA and submitted for PROTEON approval.

 

3.1.1                     The Project Plan may be amended by agreement of the Parties through the Change Order procedures set forth in Section 3.4. In the case of a Change Order to a Project Plan, that Change Order becomes the controlling document.

 

3.1.2                     LONZA may from time to time notify PROTEON that LONZA requires approvals or other actions by PROTEON relating to the services that do not represent a change in the terms of the Project Plan (each, a “Decision Request”). Adherence to the time-scales set out in the Project Plan is contingent in part on PROTEON’s reasonably expedient review and response to such Decision Requests. When making a Decision Request, LONZA shall provide PROTEON with written notice that includes a description of the approval that it is seeking and copies of the requisite documents, data and development paths to which such approval relates. PROTEON shall respond to each Decision Request notice within the period of time specified in the Decision Request notice (not to be less than one (1) Business Day nor more than two (2) Business Days after PROTEON has received from LONZA the Decision Request and the requisite documents, data and development paths). Any change from an approved Decision Request shall be subject to the procedures specified in Section 3.4. If PROTEON’s decision on a Decision Request affects the

 

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services specified in the Project Plan, then PROTEON shall issue a PROTEON Change Request and such PROTEON Change Request shall be subject to the procedures specified in Section 3.4.

 

3.2                               Project Management

 

3.2.1                     This Section Intentionally Omitted.

 

3.2.2                     The daily interactions and management with respect to the Project will be performed by two project managers, one appointed by each Party and each one having the authority to manage the Project in conjunction with the other Project Manager and to further the daily tasks and goals of each Party (each, a “Project Manager).

 

3.2.3                     The Project Managers shall be the principle points of contact between the Parties. As part of their duties, the Project Managers shall be responsible for monitoring and revising the Project Plan (in accordance with the procedures set forth in Section 3.4, responding to Decision Requests (in the case of PROTEON), establishing operating guidelines for the Project, defining communication formats, forming and approving Project teams and monitoring the general progress of the Project.

 

3.2.4                     The Project Managers shall be appointed by each respective Party no later than August 17, 2009. The LONZA Operations executive responsible for the early phase tasks may continue in the role of Project Manager for a designated period of time, as agreed to by PROTEON.

 

3.2.5                     Neither Party shall remove or replace its Project Manager without giving 30 days notice in writing to the other Party; provided that, such removal or replacement may be made with less than thirty (30) days notice where such person has left the employment of the relevant Party, where such Person has taken a leave of absence, where such Person is out on disability or sick leave for more than a two-week period, or if the other Party agrees in writing to such removal or replacement.

 

3.3                               Project Administration

 

3.3.1                     “Project Administration” tasks include, but are not limited to, meeting attendance, document review, document approval and project consultation.

 

3.3.2                     All hours invoiced for Project Administration must be attributed to tasks directly related to the Project and incurred only by LONZA employees who have been pre-approved by the PROTEON to accrue Project Administration hours. LONZA will submit a list of employees to PROTEON for approval. The pricing quoted in Exhibit A includes Project Administration costs and such Project Administration services shall not constitute Additional Services.

 

3.4                               Project Change Order Process. (a) Any amendments or modifications to the services specified in the Project Plan shall be set forth in writing in a Change Order mutually agreed upon by the Parties using the procedure set forth in this Section 3.4. During the Project, PROTEON may request amendments to the Project Plan to effect changes in the services specified in the Project Plan. If PROTEON wishes to make a change it shall notify LONZA of the requested change specifying the change with sufficient details to enable 

 

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LONZA to evaluate it (a “PROTEON Change Request”). Within five (5) Business Days following the date of LONZA’s receipt of a PROTEON Change Request, LONZA shall deliver a Change Order document that: (i) assesses the impact of the change on the schedule, and (ii) incorporates a description of the requested change and the cost therefor.

 

(b)                                 Within five (5) Business Days following PROTEON’s receipt of a LONZA Change Order (“Response Period”), PROTEON will notify LONZA whether or not it accepts the Change Order. If PROTEON accepts the Change Order, then the provisions of this Agreement shall be deemed amended to incorporate such change in accordance with the Change Order. If PROTEON notifies LONZA not to proceed within the Response Period, then the PROTEON Change Request shall be deemed withdrawn and LONZA shall take no further action in respect of it. If LONZA has not received any notice by the expiration of the Response Period, then PROTEON shall be deemed to have advised LONZA not to proceed, A separate Change Order will be required for each PROTEON Change Request but a PROTEON Change Request may include multiple changes; and each Change Order will become subject to this Agreement when signed by LONZA and PROTEON. Change Orders shall be implemented as soon as commercially practicable to do so. PROTEON shall be responsible for payment of any price increase resulting from any such Change Order, which shall be priced on a time and materials basis, as mutually agreed upon by the Parties; provided such pricing shall be based upon the Project Rates.

 

(c)                                  LONZA may not make any changes in the Project Plan without PROTEON’s prior written approval, which shall not be unreasonably withheld. LONZA may recommend amendments to the Project Plan to effect changes in the services specified in the Project Plan if necessary to respond to difficulties encountered in achieving the technical objectives of the Project. If LONZA wishes to recommend a Change Request, it shall notify PROTEON of the requested change in accordance with LONZA’s SOP and provide PROTEON with a LONZA Change Request and a Change Order and the provisions of Section 3.4(a)-(b) shall apply.

 

ARTICLE 4
 SERVICES

 

4.1                               Quality Agreement. The Quality Agreement specifies certain testing, storage, release, cGMP, regulatory and other quality assurance requirements relating to manufacture and shipment of Drug Substance by LONZA under this Agreement, all of which shall be deemed a material part of this Agreement.

 

4.2                               LONZA Facility. All Drug Substance manufactured for PROTEON hereunder shall be manufactured by LONZA at a LONZA Facility. LONZA shall be solely responsible for all scheduling related to the LONZA Facility and for the operation of such facility.

 

4.3                               [            ]*

 

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[               ]*

 

4.4                               Transfer and Engineering Runs. If called for in the Project Plan, LONZA shall perform manufacture Transfer Batches and/or Engineering Batches in accordance with the Project Plan.

 

4.5                               Raw Materials and Consumables.

 

4.5.1                     Procurement. Unless specifically stated otherwise in the Project Plan, LONZA shall be responsible for the procurement of all Raw Materials, Resins, Consumables and Wearables necessary for the manufacture of the Drug Substance. LONZA shall not be responsible for delays in the purchase and/or delivery of Raw Materials, Resins, and Consumables that occur despite LONZA using Commercially Reasonable Efforts to avoid such delays. All Raw Materials, Resins, Consumables and Wearables shall be invoiced to PROTEON by LONZA at the relevant Acquisition Cost.

 

4.5.2                     Compliance with Specifications. All Raw Materials, Resins and Consumables used in the Manufacturing Process shall comply with the applicable Materials Specifications, or as otherwise agreed in writing by the Parties. LONZA or a Subcontractor approved in accordance with Section 4.8 shall perform testing and evaluation of the Raw Materials, Resins and Consumables as required to meet the foregoing obligations.

 

4.5.3                     PROTEON Equipment. At PROTEON’s request, LONZA shall use PROTEON’s Equipment and PROTEON shall reimburse LONZA for the acquisition, installation and validation of PROTEON Equipment in accordance with the Project Rates. However, PROTEON shall not be required to reimburse LONZA for the costs of acquiring PROTEON Equipment under this Agreement if PROTEON paid for such PROTEON Equipment directly or if PROTEON has already reimbursed LONZA for such costs.

 

4.6                               Retention and Reserve Samples. LONZA shall identify and retain certain reserve samples of all Raw Materials and intermediate production samples generated in the production of Clinical Batches as set forth in the applicable Materials Specifications, the applicable standard operating procedures, the Master Production Record or as otherwise agreed in writing by LONZA and PROTEON.

 

4.7                               Handling of Materials; Wastes. PROTEON must notify LONZA of any hazardous conditions or Wastes known to PROTEON that may exist or be produced by LONZA in the course of performing the services contemplated by this Agreement. At PROTEON’s expense, LONZA or a designated Third Party contractor shall handle, label, package, store, transport and dispose of all Wastes generated through performance of the manufacturing and processing activities hereunder in material compliance with all Federal, state and local laws, rules, and regulations applicable to such handling, labeling, packaging, storage, transport and disposal. Each Party shall promptly notify the other of any health hazards or potential health hazards of

 

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which it is or becomes aware concerning exposure to or handling of the Raw Materials, Drug Substance or Wastes.

 

4.8                               Approval of Subcontracting. LONZA shall not subcontract or otherwise delegate all or any portion of its obligations under this Agreement without PROTEON’s prior written approval. Notwithstanding the foregoing, LONZA may subcontract certain non-essential or routine tasks without PROTEON’s consent (e.g., janitorial services, electrical upgrades, etc.). Any work relevant to the Project Plan subcontracted or delegated to a Third Party in accordance with this Section shall be invoiced to PROTEON by LONZA at cost.

 

4.9                               Document Changes. Any requests by LONZA or PROTEON for changes to documents which are part of LONZA’s cGMP documentation system, including but not limited to the Master Production Record and any standard operating procedures or Materials Specifications, will be handled by a Change Request using the procedures in Section 3.4.

 

ARTICLE 5
 DELIVERIES

 

5.1                               Delivery Terms. LONZA will deliver each Clinical Batch EXW LONZA’s Visp Facility to the Designated Carrier in accordance with the Shipping Guidelines; provided that risk of loss in and title to the Clinical Batch shall pass to PROTEON when the Clinical Batch is placed upon the Designated Carrier’s vehicle. PROTEON shall arrange for shipment and take delivery of such Batch from LONZA’s Facility via the Designated Carrier, at PROTEON’s expense, within five (5) Business Days after PROTEON’s acceptance of a Clinical Batch pursuant to Article 10, or pay applicable storage costs. LONZA shall provide storage for such Batch in accordance with the [   ]* at no charge during such five (5) business day period; provided, that any additional storage beyond such five (5) business day period will be charged to PROTEON as Additional Services in accordance with the Project Rates. Notwithstanding anything to the contrary contained in this Agreement, in no event shall LONZA be required to store any Clinical Batch for more than twenty (20) calendar days after PROTEON’s acceptance of such Batch pursuant to Article 10. LONZA shall not be required to deliver any Batch to the Designated Carrier until the Designated Carrier informs LONZA that it has obtained all appropriate approvals and consents of any Gown-mental Authority necessary for the transportation or shipment of such Batch,

 

ARTICLE 6
 PAYMENTS

 

6.1                               Compensation. For each deliverable specified in the Project Plan, PROTEON shall pay to LONZA the milestone payment amount corresponding to such deliverable, as set forth in the Project Plan. Each milestone payment shall become due and payable upon the completion by LONZA of the applicable deliverable. No milestone payment shall be contingent upon completion of any subsequent deliverable. In addition, PROTEON shall pay for any Acquisition Costs and Additional Services in accordance with the Project Rates, unless otherwise agreed to by the Parties.

 

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6.2                               Payment Terms. All invoices for completed stages and/or substages shall be issued within thirty (30) days after the applicable completion date. All amounts due thereunder shall be due and payable within thirty (30) days after receipt of such invoice. In the event that PROTEON has not paid an invoice within thirty (30) Business Days of the applicable due date (as established by the preceding sentences), PROTEON’s failure shall be considered a material breach under Section 18.3.1, subject to the cure provisions set forth therein. Payments shall be made by wire transfer or check in U.S. currency. Past due amounts shall bear interest from the date due until paid at a rate equal to the lesser of twelve percent (12%) per annum, or the maximum rate permitted by applicable law. PROTEON shall not be considered to be in breach of Section 18.3.1 with respect to payments that PROTEON contests in good faith using the procedures in Section 20.3 during the pendency of such dispute; provided that in the event PROTEON does not prevail in such dispute then interest shall accrue from the date payment was due until the date PROTEON makes payment and such payment shall when made shall be accompanied by all interest so accrued.

 

6.3                               Currency and Exchange Rate. All invoices submitted to PROTEON pursuant to Section 6.2 shall be paid by PROTEON in U.S. Dollars (USD) based on the conversion of each payment amount scheduled in the Swiss Francs (CHF) denominated Milestone Payment Schedule in Exhibit B to USD, utilizing the base exchange rate, as described in the next sentence, or as otherwise adjusted pursuant to this Section 6.3. The base exchange rate for this Agreement will be that for purchasing CHF with USD at closing on the Effective Date of the Agreement as stated in the Wall Street Journal, Eastern Edition. If the exchange rate, as stated in the Wall Street Journal, Eastern Edition, for purchasing CHF with USD increases or decreases by 5% or less from the base exchange rate at any date of invoice then no adjustment shall be made; if the exchange rate for purchasing CHF with USD increases or decreases by more than 5% from the base exchange rate at any date of invoice, then LONZA shall continue to bear the burden or benefit of the first 5% increase or decrease, and the Parties shall each assume 50% of the burden or the benefit of such increase or decrease greater than 5%.

 

6.4                               Taxes. The pricing under this Agreement includes all duties and taxes, however designated, levied or based on this Agreement or the services delivered hereunder, including, without limitation, any personal property, sales, goods and services, use or value added taxes whether such taxes are now in force or subsequently levied. PROTEON shall not be responsible for any taxes (excluding taxes based on PROTEON’s net income and FICA, workers’ compensation, unemployment and withholding taxes concerning PROTEON personnel) with respect to the transactions contemplated by this Agreement. The Parties will cooperate to minimize, to the extent legally permissible, the tax liabilities related to this Agreement. Notwithstanding the foregoing, such cooperation shall not cause any adverse tax consequences to be incurred by either Party which would not have otherwise been incurred under the provisions of this Agreement, including this Section 6.3.

 

ARTICLE 7
 MANUFACTURING AUDITS

 

During regular business hours and upon at least four (4) weeks prior notice to LONZA, PROTEON shall have the right to perform, directly or through its representatives (agreed with

 

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LONZA in advance), certain manufacturing audits as set forth in the Quality Agreement, or as otherwise agreed in writing by LONZA and PROTEON. All LONZA personnel time and resources necessary to complete the first manufacturing audit for a calendar year shall be provided at no cost to PROTEON; provided, however, any LONZA personnel time and resources necessary to complete any additional manufacturing audits (over and above one) in that same year shall be invoiced to PROTEON as Additional Services in accordance with the Project Rates, unless such additional audits are reasonably deemed necessary by PROTEON as a result of findings of the first audit. PROTEON shall be responsible for all Third Party costs of all manufacturing audits. Audits shall not exceed three (3) Business Days with no more than 2 sub-groups of Auditors.

 

ARTICLE 8
 REGULATORY MATTERS

 

8.1                               Permits. LONZA shall secure and maintain in good order, at its sole cost and expense, such current governmental registrations, permits and licenses as are required by Governmental Authorities in order for LONZA to perform all of its obligations under this Agreement (including, without limitation, Annual Registration of Drug Establishment registrations (Form FDA 2656e) granted by the FDA and any comparable registrations granted by any other Regulatory Authority) (each, a “Registration”), for so long and insofar as is necessary to permit LONZA to perform any of its obligations under this Agreement. Notwithstanding the foregoing, PROTEON shall be responsible for reimbursing LONZA for the cost of any permits that are solely and specifically required to manufacture the Drug Substance.

 

8.2                               Regulatory Documentation. Any PROTEON requests for documents or other work product that do not exist as of the date of such request or other substantive requests for assistance in compiling any Regulatory Filing shall constitute Additional Services, and LONZA shall notify PROTEON of the same, and, if PROTEON authorizes such services, LONZA shall prepare a Change Order and invoice PROTEON for such Additional Services in accordance with the Project Rates.

 

8.3                               Regulatory Communications and Correspondence. Any and all communications from and to the FDA or other Regulatory Authorities related to the Product or to the manufacture of the Drug Substance at the LONZA Facility shall be handled in accordance with the terms and conditions of the Quality Agreement, or as otherwise agreed in writing by LONZA and PROTEON.

 

8.4                               Ownership of Regulatory Filings. PROTEON shall be the sole owner of all Regulatory Filings and all governmental approvals obtained by PROTEON from any Regulatory Authority with respect to the Drug Substance or the Product.

 

8.5                               Health and Safety Information. PROTEON shall provide LONZA with all information in PROTEON’s possession or control concerning any health hazards or potential health hazards associated with exposure to or the handling, storage, use or disposal of Drug Substance, including, without limitation, a Material Safety Data Sheet for Drug Substance. In

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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the event that any such information is updated or corrected, PROTEON shall promptly notify LONZA thereof and provide LONZA with the updated or corrected information.

 

8.6                               Regulatory Authorities. PROTEON shall be responsible for handling all complaints and communications from Regulatory Authorities with respect to the Drug Substance and/or Product. As reasonably requested by PROTEON, LONZA shall cooperate in resolving such complaints and responding to such communications to the extent they pertain to the Drug Substance and/or Product. PROTEON shall reimburse LONZA for all reasonable costs and expenses incurred by LONZA in connection with the performance of LONZA’s obligations under this Section.

 

ARTICLE 9
 QUALITY ASSURANCE; QUALITY CONTROL

 

Responsibility for Quality Assurance and Quality Control. Responsibility for quality assurance and quality control of Drug Substance shall be allocated between PROTEON and LONZA as set forth in the Quality Agreement.

 

ARTICLE 10
 NON-CONFORMANCE

 

10.1                        Notice of Nonconformity. LONZA shall provide PROTEON’s quality assurance department with copies of completed Batch Disposition Documentation, and shall endeavor to do so within ten (10) Business Days of Quality Review and Approval. Within thirty (30) days after PROTEON’s receipt of such Batch Disposition Documentation, PROTEON shall determine by review of such Batch Disposition Documentation whether or not the given Clinical Batch conforms to the warranties set forth in Section 14.2.1; provided that LONZA provides timely answers to information requests and resolution of issues arising from PROTEON’s review of such Batch Disposition Documentation (and the thirty (30) day period shall be extended to account for LONZA’s failure to provide timely answers to information requests and resolution of such issues). If within the thirty (30) day period, PROTEON’s quality assurance department makes a determination that PROTEON believes such Batch to be nonconforming, PROTEON shall have the right to reject such Batch in its entirety and shall notify LONZA in writing within such thirty (30) day period. Such written notice shall specify the manner in which the Clinical Batch fails to conform to the warranties set forth in Section 14.2.1. If PROTEON does not submit written notice of rejection within such thirty (30) day period, such Batch will be deemed to be a Conforming Drug Substance and accepted by PROTEON; provided that such failure to notify shall not prejudice PROTEON’s right to reject or revoke acceptance of the Batch if the non-conforming condition which justifies rejection could not have been detected by PROTEON’s inspection undertaken pursuant to this Section 10.1; and provided further that the warranty provided in Section 14.2 and LONZA’s obligations under Section 15.2 shall survive acceptance of the Batch by PROTEON. In the event that PROTEON desires to accept such Batch prior to the end of the thirty (30) day period, PROTEON will fax written notice of such acceptance to LONZA’s Project Manager.

 

10.2                        No LONZA Liability. If PROTEON issues a notice of rejection of a Clinical Batch pursuant to Section 10.1 or revokes its acceptance of a Clinical Batch pursuant to

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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Section 10.1, the Patties shall conduct an investigation of such non-conformance in accordance with each Patty’s standard operating procedures relating to same. In the event that, after such investigation and retesting, if any, LONZA does not confirm such non-conformity, the parties shall agree to conduct an audit of the investigation relating to such Clinical Batch or otherwise in a good faith attempt to agree upon a settlement of the issue. In the event that the parties cannot resolve the issue, a qualified and independent arbitrator selected jointly by LONZA and PROTEON shall review the matter and provide a written decision that shall, save for manifest error on the face of the decision, be binding on both LONZA and PROTEON. If it is determined pursuant to this Section 10.2 that the Clinical Batch is Conforming Drug Substance, then LONZA shall have no liability to PROTEON with respect to such Clinical Batch, and PROTEON shall pay for such Clinical Batch and for the fees associated with any dispute regarding the Clinical Batch shall be treated in all other respects under this Agreement as though it conformed with all of the warranties set forth in Section 14.2.1 of this Agreement.

 

10.3                        LONZA Liability for Non-Conforming Drug Substance; Replacement. If PROTEON issues a notice of rejection of a Clinical Batch pursuant to Section 10.1 or revokes its acceptance of a Clinical Batch pursuant to Section 10.1 and the Parties or a qualified and independent arbitrator selected using the procedure specified in Section 102 determine that such Batch is Non-Conforming Drug Substance, then LONZA shall, as soon as it is commercially practicable to do so, replace such Non-Conforming Drug Substance with Conforming Drug Substance (the “Replacement Drug Substance”). Delivery of Replacement Drug Substance shall be at no additional charge to PROTEON. Notwithstanding anything to the contrary contained herein, delivery of Replacement Drug Substance shall be PROTEON’s sole remedy with respect to the Drug Substance, and in furtherance thereof PROTEON waives all other remedies at law or in equity. LONZA shall pay for the fees associated with any dispute regarding a Clinical Batch that is determined to be Nonconforming Drug Substance.

 

10.4                        Cooperation in Investigations; Disposition of Non-Conforming Drug Substance. Each Party shall act in good faith and shall cooperate with the other Party, with any qualified independent Third-Party laboratory in connection with an investigation, and with the arbitrator, as to the existence of or source of nonconformity with respect to a Clinical Batch supplied under this Agreement. In testing the Batch, any independent Third-Party laboratory shall use analytical testing methods as agreed upon by the Parties. At PROTEON’S election, LONZA shall either (i) dispose of any Non-Conforming Drug Substance in accordance with all relevant laws, rules and regulations with respect to such disposal, at LONZA’s cost if LONZA was liable for the nonconformity in accordance with Section 10.3 and at PROTEON’s cost if LONZA was not liable for the nonconformity in accordance with Section 10.2, or (ii) deliver the Non-Conforming Drug Substance to PROTEON in accordance with Section 5.1.

 

10.5                        Replacement Clinical Batches. In addition to its obligations under Section 10.3 with respect to production and delivery of Replacement Drug Substance, LONZA will, upon PROTEON’s request and at PROTEON’s expense, use Commercially Reasonable Efforts to produce additional Clinical Batches in cases where a Clinical Batch is not Non-Conforming Drug Substance but where such Clinical Batch does not satisfy PROTEON’s requirements.

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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ARTICLE 11
 RECALLS

 

11.1                        Recalls; Quality Agreement. As further set forth in the Quality Agreement, PROTEON shall notify LONZA promptly (and in any event within three (3) Business Days of receipt of written notice) if any Drug Substance or resulting Product is the subject of a recall, market withdrawal, field correction or seizure (a “Recall”). PROTEON shall (i) bear the cost of and be responsible for conducting or responding, to all Recalls of Drug Substance or Product, (ii) remain obligated to pay LONZA in accordance with this Agreement for any Drug Substance used to make such Recalled Product, and (iii) reimburse LONZA for its out-of-pocket expenses related to the Recall, if any. Notwithstanding the foregoing, if such Recall was solely attributable to LONZA’s breach of any of its warranties set forth in Section 14.2.1 hereof, upon substantiation of such causation by a mutually agreeable qualified independent arbitrator selected using the procedure specified in Section 10.2, LONZA shall credit or refund PROTEON for the total amount paid by PROTEON to LONZA for the Drug Substance used to make such Recalled Product. Notwithstanding anything to the contrary contained herein, the foregoing obligation shall be LONZA’s sole liability and PROTEON’s sole remedy under this Agreement with respect to Recalls.

 

ARTICLE 12
 LICENSE GRANTS

 

12.1                        License to LONZA. During the Term, PROTEON hereby grants to LONZA a fully paid, non-exclusive license under any and all PROTEON Intellectual Property and any Project Intellectual Property owned solely by PROTEON that is necessary for LONZA to perform its obligations under this Agreement, including, without limitation, all rights necessary for the [    ]* the Manufacturing Process, and/or the PROTEON Confidential Information, for the sole and limited purpose of LONZA’s performance of its obligations under this Agreement. For the avoidance of doubt, it is understood that LONZA may not sublicense its rights under this Section 12.1 without PROTEON’s prior written consent, which consent shall be provided or denied in accordance with the procedure in Section 4.8.

 

12.2                        License to PROTEON. (a) At the commencement of the development work contemplated by the Project Plan, PROTEON and LONZA shall review the LONZA Intellectual Property that they believe to be relevant to the Project Plan and shall determine which portions of such LONZA Intellectual Property may be useful for the development or manufacturing services contemplated by the Project Plan. The Parties shall agree upon: (i) a listing of the LONZA Intellectual Property to be utilized in such services; (ii) any limitations or restrictions upon the use, development and/or further improvement of such listed LONZA Intellectual Property; and (iii) the one-time fee (if any) applicable to such LONZA Intellectual Property in the event that PROTEON elects to make use of such LONZA Intellectual Property under the circumstances specified in Section 12.2(c), it being understood and agreed that such fee shall not exceed CHF [    ]* in the aggregate. LONZA shall not incorporate any LONZA Intellectual Property into the Drug Substance, the Product or the Manufacturing Process without the prior written consent of PROTEON. In the event and to the extent that any such

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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LONZA Intellectual Property is incorporated into the Drug Substance, the Product or the Manufacturing Process without PROTEON’s prior written consent then it shall automatically and without further action by either Party become subject to Section 12.2(b)-(c) on a fully-paid up and royalty-free basis.

 

(b)                                 LONZA hereby grants to PROTEON a fully paid (subject to compliance with Section 12.2(c) if and when applicable) and royalty-free, non-exclusive, perpetual license, with the right to grant and authorize sublicenses, under any and all LONZA Intellectual Property and Project Intellectual Property owned solely by LONZA that LONZA incorporates into the Manufacturing Process or that is necessary to the practice of the Manufacturing Process or that [    ]* for the sole and limited purpose of manufacturing Drug Substance and making, having made, using, practicing, offering to sell, selling, importing, exporting and otherwise commercially exploiting Products.

 

(c)                                  Should PROTEON, after expiration or termination of this Agreement and any and all other agreements that the Parties or their respective Affiliates, successors or assigns enter into for the provision of development or manufacturing services concerning the API, wish to continue to use LONZA Intellectual Property licensed to it under Section 12.2(b) for purposes of having a Third Party contract manufacturer supply it with Drug Substance, then PROTEON shall notify LONZA of its decision and shall pay LONZA the one-time fee agreed upon by the Parties pursuant to Section 12.2(a)(iii).

 

ARTICLE 13
 OWNERSHIP OF INTELLECTUAL PROPERTY, 
 MATERIALS AND EQUIPMENT

 

13.1                        Intellectual Property. (a) Neither Party will, as a result of this Agreement, acquire any right, title, or interest in any Intellectual Property (including any Confidential Information) of the other Party except as expressly stated under Article 12 or this Article 13.

 

(b)                                 Project Intellectual Property that relates exclusively to (i) the PROTEON Intellectual Property or (ii) the API, the Drug Substance, the Product, including the development, formulation or manufacture of the API, the Drug Substance or the Product; shall, regardless of inventorship, become the sole property of PROTEON.

 

(c)                                  Project Intellectual Property that relates exclusively to (i) the LONZA Intellectual Property or (ii) the development, formulation or manufacture of biopharmaceutical products generally, but is not useful to the development, formulation or manufacture of the API, the Drug Substance or the Product, shall, regardless of inventorship, become the sole property of LONZA; provided, that LONZA shall only use such Project Intellectual Property with respect to products that are not elastase products (i.e., any proteinase that possesses the ability to solubilize elastin).

 

(d)                                 Project Intellectual Property not covered by Section 13.1(b) or Section 13.1(c) shall, regardless of inventorship, be owned jointly by LONZA and PROTEON and will be considered Confidential Information of both Parties; provided, that each Party shall have the right to exploit and license any such jointly owned Intellectual Property without the prior consent of the other Party and without any duty to account to the other Party; provided that (i) PROTEON shall only

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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use such Project Intellectual Property with respect to the Product and other elastase products (i.e., any proteinase that possesses the ability to solubilize elastin) and (ii) LONZA shall only use such Project Intellectual Property with respect to products that are not elastase products.

 

(e)                                  During the term of this Agreement, each Party shall promptly disclose to the other in writing any Project Intellectual Property that might, under applicable law, be patentable or otherwise protectable and the determination of inventorship of such Project Intellectual Property shall be made in accordance with the rules of inventorship of the United States of America. The Parties hereby agree that neither Party shall be considered an “employee or agent” of the other Party. PROTEON shall control the filing, prosecution, maintenance and enforcement of any Patents constituting jointly-owned Project Intellectual Property, at its sole cost and expense, and shall keep LONZA regularly informed with respect to such activities.

 

(f)                                   Each Party shall sign all necessary documents or take such other actions as may reasonably be requested in order to perfect any and all rights of the applicable Party(ies) in Project Intellectual Property. Each Party will obtain all assignments and agreements necessary from their respective employees and agents and Subcontractors to secure such rights. All costs and expenses for perfecting and enforcing a Party’s rights in such Project Intellectual Property, shall be borne by the owner except as otherwise provided in Section 13.1(e).

 

13.2                        PROTEON Materials. As between the Parties, PROTEON shall own all rights in and title to the [    ]*.

 

13.3                        Ownership of PROTEON Equipment. PROTEON shall own all right, title and interest in and to any and all PROTEON Equipment, as well as all materials and other assets purchased by LONZA, for which the cost is reimbursed by PROTEON to LONZA. PROTEON shall be liable for all damage and risk of loss to the PROTEON Equipment, unless caused by LONZA’s negligence or willful misconduct.

 

13.3.1              PROTEON is responsible for the testing, installation, qualification and validation, as required, of PROTEON Equipment. LONZA will operate and maintain the PROTEON Equipment as per approved procedures once such equipment is commissioned and in operation.

 

13.3.2              PROTEON shall be liable for repair of all damage and risk of any loss to the PROTEON Equipment, unless caused by LONZA’s negligence or willful misconduct.

 

13.3.3              PROTEON is responsible for any delays to the Project Plan caused in whole or in part by delays in the delivery, testing, qualification or validation of PROTEON Equipment, including any resulting changes in the GMP Suite Activation Date as described in Section 18.2.

 

ARTICLE 14
 REPRESENTATIONS AND WARRANTIES

 

14.1                        PROTEON. PROTEON hereby represents and warrants to LONZA that:

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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14.1.1              Materials and Information. PROTEON is free to supply to LONZA the [     ]* PROTEON Confidential Information (including, without limitation, any portion of the Manufacturing Documentation supplied by PROTEON to LONZA), and any other information or materials supplied by PROTEON to LONZA;

 

14.1.2              No Patent Infringement. No Third Party has filed, pursued or maintained or threatened in writing to file, pursue or maintain any claim, lawsuit, charge, complaint or other action alleging infringement of a Third-Party Patent based on the manufacture, use, import, offer for sale or sale of the Drug Substance or the Product;

 

14.1.3              No Infringement by Performance of Obligations. To the best of PROTEON’s knowledge, PROTEON’s supply to LONZA of the [     ]* and PROTEON Confidential Information (including, without limitation, any portion of the Manufacturing Documentation supplied by PROTEON to LONZA), and any other information or materials that PROTEON intends to supply to LONZA hereunder, and LONZA’s use thereof in accordance with the terms of and in performance of its obligations under this Agreement, does not infringe any Third-Party Patent or any other intellectual property rights of any Third Party for which PROTEON lacks the right to grant LONZA a valid sublicense to manufacture the Drug Substance;

 

14.1.4              No Infringement through Manufacturing Process. To the best of PROTEON’s knowledge, the manufacturing process for the Drug Substance in effect as of the Effective Date, as well as any other Manufacturing Process to be provided by PROTEON to LONZA under this Agreement, does not infringe any Third-Party Patent or any other intellectual property rights of any Third Party for which PROTEON lacks the right to grant LONZA a valid sublicense to manufacture the Drug Substance;

 

14.1.5              No Hazards. PROTEON has made LONZA aware of any known hazards involved in handling the [   ]*, the Raw Materials, the Drug Substance, and any Wastes generated through performance of the process development and manufacturing activities contemplated hereunder;

 

14.1.6              License. PROTEON has the right, power and authority to grant LONZA the license set forth in Section 12.1 above and will not enter into any contract, arrangement or commitment in the future which prohibits the grant of such license.

 

14.1.7              Power and Authority. PROTEON has the corporate power, the authority, the financial capacity and the legal right to enter into this Agreement and to perform its; obligations under this Agreement; and

 

14.1.8              Execution, Delivery and Performance of the Agreement. PROTEON has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement. This Agreement has been duly executed and delivered on behalf of PROTEON, and constitutes a legal, valid, binding obligation, enforceable against PROTEON and its successors and assigns in accordance with its terms, except as enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and by general equitable principles. The execution, delivery and performance of this Agreement does not

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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breach, violate, contravene or constitute a default under any contracts, arrangements or commitments to which PROTEON is a party or by which it is bound nor does the execution, delivery and performance of this Agreement by PROTEON violate any order, law or regulation of any court, governmental body or administrative or other agency having authority over it.

 

14.2                        LONZA. LONZA hereby represents and warrants to PROTEON that:

 

14.2.1              Drug Substance. Each Clinical Batch of Drug Substance manufactured hereunder: (i) was manufactured and analyzed in conformance with the Master Production Record; (ii) was manufactured in compliance with the requirements of cGMP; (iii) was packaged in accordance with the Shipping Guidelines; (iv) was transferred free and clear of any liens or encumbrances of any kind to the extent arising through or as a result of the acts or omissions of LONZA; and (v) does not contain any substance that (1) causes such Clinical Batch to be adulterated within the meaning of the U.S. Federal Food, Drug and Cosmetic Act of 1938 and applicable regulations promulgated thereunder, as amended from time to time (“FDCA”) or comparable laws or regulations of another government agency or authority that has jurisdiction over the manufacture, testing, distribution, sale or use of Drug Substance or Product, or (2) is present in such Clinical Batch at a level that exceeds the level allowed under the FDCA or comparable laws or regulations of another government agency or authority that has jurisdiction over the manufacture, testing, distribution, sale or use of Drug Substance or Product;

 

14.2.2              LONZA Facility. LONZA owns or lawfully controls the LONZA Facility, and that the LONZA Facility shall be maintained in accordance with cGMP and in such condition as will allow LONZA to manufacture the Drug Substance in compliance with cGMP and in conformance with the Master Production Record;

 

14.2.3              Confidential Information. LONZA is free to supply LONZA Confidential Information to PROTEON (excluding any information related to other LONZA clients that PROTEON inadvertently becomes aware of through the presence of its employees or agents at LONZA offices or at the LONZA Facility);

 

14.2.4              License. LONZA has the right, power and authority to grant PROTEON the license set forth in Section 12.2 above and will not enter into any contract, arrangement or commitment in the future which prohibits the grant of such license.

 

14.2.5              Power and Authority. LONZA has the corporate power, authority and the legal right to enter into this Agreement and to perform its obligations under this Agreement; and

 

14.2.6              Execution, Delivery and Performance of Agreement. LONZA has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement. This Agreement has been duly executed and delivered on behalf of LONZA, and constitutes a legal, valid, binding obligation, enforceable against LONZA in accordance with its terms except as enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and by general equitable principles. The execution, delivery and performance of this Agreement does not breach, violate, contravene or constitute a default under any contracts, arrangements or commitments to which LONZA is a party or by which it is

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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bound nor does the execution, delivery and performance of this Agreement by LONZA violate any order, law or regulation of any court, governmental body or administrative or other agency having authority over it.

 

14.2.7              Performance. LONZA shall use Commercially Reasonable Efforts to develop the Manufacturing Process in a manner that (a) does not infringe any valid and enforceable Patents of any Third Party in the United States or Switzerland, and (b) does not knowingly infringe or misappropriate any other Intellectual Property rights of any Third Party.

 

14.3                        Disclaimer by LONZA.

 

OTHER THAN AS SET FORTH IN SECTION 14.2, ALL OTHER WARRANTIES, BOTH EXPRESS AND IMPLIED, ARE HEREBY EXPRESSLY DISCLAIMED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR  A PARTICULAR PURPOSE OF THE DRUG SUBSTANCE OR THE SERVICES PROVIDED HEREUNDER. OTHER THAN THE PROCESS DEVELOPMENT AND MANUFACTURING SERVICES PROVIDED HEREUNDER, LONZA HAS NOT PARTICIPATED IN THE RESEARCH AND DEVELOPMENT OF THE DRUG SUBSTANCE OR THE PRODUCT, NOR HAS LONZA IN ANY WAY EVALUATED THE DRUG SUBSTANCE OR PRODUCT’S SAFETY OR EFFICACY IN HUMANS OR OTHERS.

 

ARTICLE 15
 INDEMNIFICATION

 

15.1                        Indemnification by PROTEON. Subject to and except to the extent of any indemnification from LONZA pursuant to Section 15.2 below, PROTEON shall indemnify, defend and hold LONZA, its Affiliates, and their respective directors, officers, employees and agents harmless from and against all losses, damages, liabilities, settlements, penalties, fines, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses), (collectively, the “Liabilities”) to the extent such Liabilities arise out of or result from any claim, lawsuit or other action or threat by a Third Party arising out of (a) the manufacture, packaging, testing, labeling, handling, distribution, marketing, use, import or sale of the Product, in any form, (b) any breach of the representations, warranties and covenants made by PROTEON under this Agreement, (c) PROTEON’s negligent acts or omissions or willful misconduct, and/or (d) any Recall of the Product. The foregoing indemnification action shall not apply in the event and to the extent that such Liabilities arise out of or result from any breach of the representations, warranties and covenants made by LONZA under this Agreement, or LONZA’s negligent acts or omissions or willful misconduct.

 

15.2                        Indemnification by LONZA. Subject to and except to the extent of any indemnification from PROTEON pursuant to Section 15.1 above, LONZA shall indemnify, defend and hold PROTEON, and its Affiliates, directors, officers, employees and agents harmless from and against all Liabilities to the extent such Liabilities arise out of or result from any claim, lawsuit or other action or threat by a Third Party arising out of (a) any breach of the representations, warranties and covenants made by LONZA under this Agreement, or (b) LONZA’s negligent acts or omissions or willful misconduct.

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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15.3                        Indemnification Procedures.

 

15.3.1              Identification of Indemnitor and Indemnitee. An “Indemnitor” means the indemnifying Party. An “Indemnitee” means the indemnified Party, its Affiliates, and their respective directors, officers, employees and agents.

 

15.3.2              Indemnification Procedures. To receive the benefit of indemnification under Section 15.1 or Section 15.2, an Indemnitee which intends to claim indemnification under Section 15.1 or Section 15.2 hereof must (a) promptly notify the Indemnitor in writing of any claim, lawsuit or other action in respect of which the Indemnitee intend to claim such indemnification; provided, that failure to give such notice shall not relieve Indemnifying Party of its indemnification obligations except where, and solely to the extent that, such failure actually and materially prejudices the lights of Indemnifying Party; (b) tender to the Indemnitor, and cause its Affiliates and their respective directors, officers, employees and agents to tender to, the Indemnitor, full authority to defend or settle the claim or suit; at its discretion, to provided that no settlement requiring any admission by the Indemnitee or that imposes any obligation on the Indemnitee shall be made without the Indemnitee’s consent; and (c) provide reasonable cooperation to the Indemnitor and its legal representatives and insurer, and cause its Affiliates and their respective directors, officers, employees and agents to reasonably cooperate with the Indemnitor and its legal representatives and insurer in the investigation and defense of any claim, lawsuit or other action covered by this indemnification, as reasonably requested, at Indemnitor’s cost and expense. Neither Party, as an Indemnitor, shall have any obligation to indemnify the Indemnitee in connection with any settlement made without the prior written consent of the Indemnitor and the Indemnitor shall not be responsible for any legal fees or other costs incurred other than as provided herein. The Indemnitee shall have the right, but not the obligation, to be represented by counsel of its own selection and at its sole expense.

 

15.4                        Insurance. PROTEON shall maintain commercial general liability insurance including product liability insurance with respect to development, manufacture, import, sale, offer for sale and use of the Drug Substance and/or Products by PROTEON and its Affiliates in a minimum amount of [     ]* per occurrence (not including any self-insured retention). PROTEON will maintain such insurance policy with an insurance company having a minimum AM Best rating of A and that is licensed to do business in the Commonwealth of Massachusetts. PROTEON will provide LONZA with at least thirty (30) days’ written notice prior to non-renewal, termination, or modification of coverage. LONZA shall maintain commercial general liability insurance with respect to its activities under this Agreement in a minimum amount of [     ]* per occurrence (not including any self-insured retention). LONZA shall maintain such insurance during the Term and for a period of three (3) years thereafter. LONZA will maintain such insurance policy with an insurance company having a minimum AM Best rating of A and that is licensed to do business in the Commonwealth of Massachusetts. LONZA will provide PROTEON with at least thirty (30) days’ written notice prior to non-renewal, termination, or modification of coverage.

 

15.5                        Disclaimer of Consequential Damages. EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 16 AND EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 15.1 AND 15.2 WITH RESPECT TO THIRD

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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PARTY CLAIMS, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OF ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR GOODWILL) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES IN CONNECTION WITH THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

15.6                        Disclaimer regarding Transfer and Engineering Runs. PROTEON shall have the right to make whatever further use of the Transfer and/or Engineering Batches as it shall determine, provided that such use does not violate any applicable laws, rules or regulations. LONZA SHALL IN NO WAY BE RESPONSIBLE FOR ANY CLAIMS, DEMANDS, LOSSES, LIABILITIES, EXPENSES OR DAMAGES, WHATSOEVER, ARISING OUT OF OR IN ANYWAY RELATED TO PROTEON’S USE OF SUCH TRANSFER BATCHES AND/OR ENGINEERING BATCHES.

 

15.7                        Limitation of Liability. BOTH PARTIES HEREBY AGREE THAT TO THE FULLEST EXTENT PERMITTED BY LAW, AND EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 16 AND EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 15.1 AND 15.2 WITH RESPECT TO THIRD PARTY CLAIMS, EACH PARTY’S LIABILITY TO THE OTHER, FOR ANY AND ALL INJURIES, CLAIMS, LOSSES, EXPENSES, OR DAMAGES, WHATSOEVER, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT FROM ANY CAUSE OR CAUSES, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, ERRORS, OMISSIONS OR STRICT LIABILITY, SHALL NOT EXCEED THE TOTAL CHARGES PAID OR PAYABLE BY PROTEON TO LONZA UNDER THIS AGREEMENT. TO THE EXTENT THAT THIS CLAUSE CONFLICTS WITH ANY OTHER CLAUSE, THIS CLAUSE SHALL TAKE PRECEDENCE OVER SUCH CONFLICTING CLAUSE. IF APPLICABLE LAW PREVENTS ENFORCEMENT OF THIS CLAUSE, THEN THIS CLAUSE SHALL BE DEEMED MODIFIED TO PROVIDE THE MAXIMUM PROTECTION FOR EACH PARTY AS IS ALLOWABLE UNDER APPLICABLE LAW.

 

ARTICLE 16
 CONFIDENTIALITY

 

16.1                        LONZA Confidentiality Obligations. LONZA shall not use PROTEON Confidential Information except as authorized under this Agreement and shall not disclose PROTEON Confidential Information to any Third Patty other than: (i) employees, consultants, agents or Subcontractors of LONZA or LONZA’s Affiliates who are bound by similar obligations of confidentiality and nonuse and who have a need to know such information in order to perform their duties or services in connection with LONZA’s obligations under this Agreement; (ii) Regulatory Authorities that require such information in connection with making Regulatory Filings and maintaining Regulatory Authority approvals for the Product, provided that reasonable effort will be taken to ensure confidential treatment of such information; (iii) Governmental Authorities in connection with securing and maintaining Registrations, provided that reasonable effort will be taken to ensure confidential treatment of such information; (iv) in response to a valid order or subpoena of a court of competent

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

25

 

 

jurisdiction or other governmental body of a country or any political subdivision thereof of competent jurisdiction, provided that LONZA provides PROTEON with prior written notice of such disclosure (if practicable) in order to permit PROTEON to seek a protective order or other confidential treatment of such PROTEON Confidential Information, provided further that any PROTEON Confidential Information so disclosed will be limited to that information that is legally required to be disclosed in such response to such court or governmental order or subpoena; (v) as otherwise required by applicable law or regulation, provided that LONZA provides PROTEON with prior written notice of such disclosure (if practicable) in order to permit PROTEON to seek a protective order or confidential treatment of such PROTEON Confidential Information, provided further that any PROTEON Confidential Information so disclosed will be limited to that information that is legally required by applicable law to be disclosed; or (vi) Swiss or foreign tax authority to the extent legally required by applicable law to be disclosed.

 

16.2                        PROTEON Confidentiality Obligations. PROTEON shall not use LONZA Confidential Information except as authorized under this Agreement and shall not disclose any LONZA Confidential Information to any Third Party other than: (i) employees, consultants, or agents of PROTEON or PROTEON’s Affiliates who are bound by similar obligations of confidentiality and nonuse and who have a need to know such information in order to perform their duties or services in connection with PROTEON’s obligations under this Agreement or the development or commercialization of the Product; (ii) Regulatory Authorities that require such information in connection with making Regulatory Filings and maintaining Regulatory Authority approvals for the Product,  provided that reasonable effort will be taken to ensure confidential treatment of such information; (iii) Governmental Authorities in connection with securing and maintaining Registrations, provided that reasonable effort will be taken to ensure confidential treatment of such information; (iv) to sublicensees in connection with the exercise of the license granted to PROTEON under Article 12; (v) in response to a valid order or subpoena of a court of competent jurisdiction or other governmental body of a country or any political subdivision thereof of competent jurisdiction, provided that PROTEON provides LONZA with prior written notice of such disclosure (if practicable) in order to permit LONZA to seek a protective order or other confidential treatment of such LONZA Confidential Information, provided further that any LONZA Confidential Information so disclosed will be limited to that information that is legally required to be disclosed in such response to such court or governmental order or subpoena; (vi) as otherwise required by applicable law or regulation, provided that PROTEON provides LONZA with prior written notice of such disclosure (if practicable) in order to permit LONZA to seek a protective order or confidential treatment of such LONZA Confidential Information, provided further that any LONZA Confidential Information so disclosed will be limited to that information that is legally required by applicable law to be disclosed; or (vii) to U.S. or foreign tax authority to the extent legally required by applicable law to be disclosed.

 

16.3                        Responsibility for Compliance with Confidentiality and Nonuse Obligations. Each Party shall be responsible for any misuse or misappropriation, by such Party, its Affiliates, or the employees, consultants, agents, Subcontractors or sublicensees of such Party or such Party’s Affiliates, of the other Party’s Confidential Information.

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

26

 

 

16.4                        Terms of Agreement. Neither Party shall, without the prior written consent of the other Party, disclose in any manner to any Third Party the terms and conditions of this Agreement.

 

16.5                        Exclusions. The obligations of confidentiality and nonuse set forth in Section 16.1 and Section 16.2 and Section 16.4 shall not apply to any information that: (i) is released with the prior written consent of the disclosing Party; (ii) is required to comply with national, federal or state laws, rules or regulations (including the rules and regulations of any national stock exchange on which such Party’s securities are traded), provided that the receiving Party promptly notifies the disclosing Party of such required disclosure, takes all reasonable and lawful actions to obtain confidential treatment of such disclosure and furnishes only that portion of the Confidential Information which is legally required to be disclosed; or (iii) is disclosed to a Party’s employees, consultants, agents, Subcontractors, sublicenses, potential acquirers, investors or potential investors, on a need-to-know basis, under reasonable conditions of confidentiality. In determining whether or not the disclosing Party’s Confidential Information has entered the public domain, the obligations of confidentiality shall no longer apply to only that portion of said Confidential Information that has become public, and portions remaining confidential shall retain their status as Confidential Information. Each Party shall notify the other promptly on discovery of any unauthorized use or disclosure of the other Party’s trade secrets or proprietary information.

 

16.6                        No Licenses. Except as expressly provided in Article 12 hereof, no right or license, either express or implied, is granted under any intellectual property right or by virtue of the disclosure of Confidential Information under this Agreement, or otherwise.

 

16.7                        Maintenance of Confidentiality. Each Party shall use reasonable and customary precautions to safeguard the other Party’s Confidential Information, including ensuring that all employees, consultants, agents, Subcontractors or sublicensees who are provided access to such Confidential Information are informed of the confidential and proprietary nature of such Confidential Information and have contractual confidentiality and nonuse obligations that are at least as restrictive as those contained in this Agreement.

 

16.8                        Termination of Certain Prior Agreements. This Agreement supersedes in its entirety the Confidentiality Agreement. All Confidential Information (as defined in such Confidentiality Agreement) exchanged between the Parties under such agreement shall be deemed Confidential Information under this Agreement (either PROTEON Confidential Information or LONZA Confidential Information, as the context requires) and shall be subject to the terms of this Agreement from and after the Effective Date, but shall remain subject to the Confidentiality Agreement with respect to the period prior to the Effective Date.

 

16.9                        No Disclosure of Unrelated Information. Neither Party shall disclose Confidential Information to the other Patty that is not reasonably necessary for performance of a Party’s obligations under this Agreement, including but not limited to manufacturing processes for other products, marketing plans and clinical development plans. Notwithstanding the foregoing, nothing in this provision shall limit the confidentiality and non-use obligations and rights in this Article 16.

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

27

 

 

ARTICLE 17
 PRESS RELEASES; USE OF NAMES

 

17.1                        Press Releases. The Parties agree that any initial public announcement of the execution of this Agreement shall be in the form of a mutual press release to be agreed upon by the Parties; provided, that the Parties shall also agree on the timing of such public announcement. After such press release is published, each Party shall be entitled to make or publish any public statement consistent with the contents thereof. Except as set forth in the preceding sentence, no press release, publicity or other form of public written disclosure related to this Agreement shall be permitted by either Party unless the other Party has indicated its consent to the form of the release in writing. This Section 17.1 shall not apply to any disclosure that is deemed necessary, in the reasonable judgment of the responsible Party, to comply with national, federal or state laws or regulations (including the rules and regulations of any national stock exchange on which such Party’s securities are traded).

 

17.2                        Use of Names. Neither Party shall make use of the name of the other Party in any advertising or promotional material, or otherwise, in connection with this Agreement or any related agreements, without the prior written consent of such other Party.

 

ARTICLE 18
 TERM; TERMINATION

 

18.1                        Term; Option to Extend. Unless sooner terminated pursuant to the terms of this Agreement, the term of this Agreement shall commence on the Effective Date and shall continue until the later of (i) the third (3rd) anniversary of the Effective Date and (ii) the completion of all deliverables contemplated by the Project Plan and Exhibit B (such period during which this Agreement is in effect, the “Term”). The Parties may, by written agreement, extend the Term of this Agreement for an additional period of time.

 

18.2                        Scheduling and Rescheduling. The initial scheduling of LONZA production activities is set forth in the Project Plan. The Project Plan includes the “Suite Activation Date” (“Suite Activation Date”) which locks the target date for occupancy of this Project in the designated LONZA GMP suite or suites and dedicates LONZA resources and assets to meeting that date. If PROTEON requests to change the Suite Activation Date, LONZA will make all reasonable attempts to accommodate the request. In the event that this change would impact other projects scheduled for occupancy in the designated suite or suites, PROTEON’s Project may be delayed until an adequate time period is available in the schedule for the designated LONZA suite or suites and dedicated resources.

 

18.3                        Batch Cancellation. Stage 3 as described in the Project Plan may be cancelled by PROTEON upon written notification to LONZA (effective upon date of receipt by LONZA) under the following schedule and cancellation fees:

 

18.3.1              Cancellation for Convenience: The cancellation fee shall be a percentage of the total Stage 3 Price (where the total Stage 3 price is CHF [     ]* or as agreed otherwise in a Change Order), less any sums already received under the Project Plan in respect of Stage 3 at the time the cancellation fee is calculated. The applicable percentage shall be dependent on the period

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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of time between (i) notice of cancellation and (ii) the then current date for Suite Activation Date of Stage 3 as follows:

 

	
Period prior to Suite Activation Date of
    Stage 3
    	
 
    	
Percentage of Stage 3 Price
    	
 
    
	
[    ]* months from Suite Activation Date
    	
 
    	
[    ]*
    	
 
    
	
[    ]* from Suite Activation Date
    	
 
    	
[    ]*
    	
 
    
	
[    ]* months from Suite Activation Date
    	
 
    	
[    ]*
    	
 
    

 

18.3.2              Cancellation for Cause (i.e. clinical failure, regulatory hold, a LONZA generated or Change Order-generated Project delay(s) during Stage 1 and/or 2 of the Project Plan which result(s) in unacceptable delay(s) to the Suite Activation Date, or the like) but specifically excluding events that would permit PROTEON to terminate this Agreement pursuant to Section 18.4. The cancellation fee shall be a percentage of the total Stage 3 Price (where the total Stage 3 price is CHF [         ]*, or as agreed otherwise in a Change Order), less any sums already received under the Project Plan in respect of Stage 3 at the time the cancellation fee is calculated. The applicable percentage shall be dependent on the period of time between (i) notice of cancellation and (ii) the then current date for Suite Activation Date of Stage 3 as follows:

 

	
Period prior to Suite Activation Date of
   Stage 3
    	
 
    	
Percentage of Stage 3
   Price
    	
 
    
	
[    ]* months from Suite Activation Date
    	
 
    	
[    ]*
    	
 
    

 

18.3.3              Notwithstanding the foregoing, LONZA will use Commercially Reasonable Efforts to manufacture alternate product in the Facility for PROTEON or, if PROTEON does not so request, for a third party, in order to mitigate any financial loss suffered by LONZA or PROTEON due to the Batch Cancellation by PROTEON or a designated Affiliate of PROTEON. Should LONZA be able to manufacture alternate product for PROTEON or a third party, then the applicable cancellation fee set forth in Section 18.3.1 and 18.3.2 shall be waived and PROTEON shall not be obligated to pay any such fee, or if such fee has been previously paid by PROTEON shall be refunded by LONZA.

 

18.3.4              Any amounts payable in 18.3.1 and 18.3,2 shall be due within thirty (30) days of the receipt of invoice.

 

18.4                        Termination. This Agreement may be terminated as follows:

 

18.4.1              Material Breach. Either Party may terminate this Agreement, by written notice to the other Party, for any material breach of this Agreement by the other Party, if such breach is not cured within thirty (30) days after the breaching Party receives written notice of such breach from the non-breaching Party; provided, however, that if such breach is not capable of being

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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cured within such thirty-day period and the breaching Party has commenced and diligently continued actions to cure such breach within such thirty-day period, except in the case of a payment default, the cure period shall be extended to sixty (60) days, so long as the breaching Party is making diligent efforts to do so. Such termination shall be effective upon expiration of the applicable cure period.

 

18.4.2              Force Majeure Termination. The “disadvantaged” Party shall have the right to terminate this Agreement, upon providing written notice thereof to the other Party, such termination to be effective thirty (30) days from the date of such notice under the conditions set forth in Section 19.1.

 

18.4.3              Insolvency. Either Party may terminate this Agreement upon notice to the other Party, upon (a) the dissolution, termination of existence, liquidation or business failure of the other Party; (b) the appointment of a custodian or receiver for the other Party who has not been terminated or dismissed within ninety (90) days of such appointment; (c) the institution by the other Party of any proceeding under national, federal or state bankruptcy, reorganization, receivership or other similar laws affecting the rights of creditors generally or the making by such Party of a composition or any assignment for the benefit of creditors under any national, federal or state bankruptcy, reorganization, receivership or other similar law affecting the rights of creditors generally, which proceeding is not dismissed within ninety (90) days of filing. All rights and licenses granted pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11 of the United States Code, licenses of rights of “intellectual property” as defined therein.

 

18.4.4              Failure to Establish the Manufacturing Process. This Agreement may be terminated in its entirety by PROTEON in the event that LONZA is unable to develop a Manufacturing Process in accordance with Project Plan that meets the [     ]* specified in Exhibit D to this Agreement, despite the use of Commercially Reasonable Efforts to do so. In the event of such termination, PROTEON’s liability shall be limited to the Project costs actually incurred by LONZA prior to the effective date of termination. In addition, the Agreement may be terminated in its entirety by LONZA upon completion of Stage 2 of the Project Plan or thereafter should LONZA determine, in good faith, that the Manufacturing Process is not suitable for implementation in the cGMP Facility after Commercially Reasonable Efforts to establish the Manufacturing Process have been completed. In the event of such termination, PROTEON’s liability shall be limited to the Project costs actually incurred by LONZA prior to the effective date of termination. PROTEON shall not be liable under this Clause 18.4.4 to pay to LONZA in aggregate a sum in excess of the amount set forth in the Project Plan (plus LONZA-incurred Acquisition Costs), as may be amended from time-to-time pursuant to Section 3.4, for the completed, or partially completed, stages or sub-stages of the Project at the time of such termination.

 

18.4.5              Cumulative Remedies. Any right to terminate this Agreement shall be in addition to and not in lieu of all other rights or remedies that the Party giving notice of termination may have at law or in equity or otherwise.

 

18.5                        Consequences of Termination.

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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18.5.1              Payment of Amounts Due. Expiration or termination of this Agreement for any reason shall not exempt either Party from paying to the other Party any amounts owing to such Party at the time of such expiration or termination.

 

18.5.2              This Section Intentionally Omitted.

 

18.5.3              Termination of Runs. Runs that are in process as of the effective date of any termination hereunder shall not be cancelled without the mutual agreement of the Parties, and the Agreement shall continue to survive with respect to those in-process Runs. Drug Substance that has been fully manufactured as of the date of such termination, but for which Quality Review and Approval has not been completed, shall remain subject to the terms of this Agreement, and the Agreement shall continue to survive with respect to such Drug Substance.

 

18.5.4              Raw Materials, Consumables and Resins. Upon expiration or termination of this Agreement, PROTEON shall purchase from LONZA (to the extent not previously purchased), at LONZA’s Acquisition Cost, all remaining usable Raw Materials, Consumables and Resins acquired and paid for by LONZA for the manufacture of Drug Substance under this Agreement, provided that such Raw Materials, Consumables and Resins are in resalable condition and provided, that as of the date of receipt of the termination notice, LONZA shall place no further orders for Raw Materials, Consumables and Resins except as may be necessary for completion of any portion of LONZA’s services hereunder that are not immediately terminated.

 

18.5.5              Return of Materials and of PROTEON Confidential Information; Transfer of PROTEON Equipment. Upon expiration or termination of this Agreement, unless otherwise directed by PROTEON, LONZA shall promptly at PROTEON’s sole cost and expense (i) return or, at PROTEON’s election, destroy, all quantities of the [    ]* received by LONZA under this Agreement, (ii) return all PROTEON Confidential Information to PROTEON, except for a single copy and/or sample which may be retained for documentation purposes only and which shall remain subject to the obligations of nonuse and confidentiality set forth in this Agreement, (iii) deliver to PROTEON all Reference Materials (except that LONZA shall have the right to keep a retain sample of each Reference Material) being held by LONZA, and (iv) deliver all remaining Raw Materials, Consumables and Resins purchased pursuant to Section 18.5.4. In addition, LONZA shall transfer all PROTEON Equipment to PROTEON, at PROTEON’s sole cost and expense, within sixty (60) days of expiration or termination of this Agreement. If any PROTEON owned property (PROTEON Equipment, Drug Substance, Raw Materials, etc.) remains at the LONZA Facility for a period longer than ninety (90) days after expiration or termination of this Agreement, PROTEON shall pay for such storage as Additional Services in accordance with the applicable Project Rates. Any deliveries made pursuant to Section 18.4 shall be made FCA the LONZA Facility.

 

18.5.6              Return of LONZA Confidential Information. Upon expiration or termination of this Agreement, PROTEON shall promptly return all LONZA Confidential Information to LONZA, except for a single copy which may be retained for documentation purposes only and which shall remain subject to the obligations of nonuse and confidentiality set forth in this Agreement.

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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18.5.7              Accrued Rights. Except as otherwise expressly set forth herein, any termination or expiration of this Agreement shall be without prejudice to any right which shall have accrued to the benefit of either Party and shall not relieve either Party of any obligation which has accrued prior to the effective date of such termination or expiration, which obligations shall remain in full force and effect for the period provided therein or, if no period is provided therein, then such obligations shall remain in full force and effect indefinitely.

 

18.6                        Surviving Rights. Article 1, Section 4.7 (only with respect to hazards that may exist or handling of materials which may take place after the termination date), Article 5 (only with respect to work in progress as of the termination date), Article 6 (only with respect to invoices unpaid as of the termination date or issued thereafter for work in progress as of the termination date), Article 10, Article 11, Article 12, Article 13, Article 15, Article 16, Article 17, Section 18.4, Section 18.5, Section 18.6, and Article 20, and the rights and obligations contained therein, shall survive the termination or expiration of this Agreement.

 

ARTICLE 19
 FORCE MAJEURE

 

19.1                        Effects of Force Majeure. Except as otherwise provided in this Agreement, in the event that a delay or failure of a Party to comply with any obligation created by this Agreement (except for payment of any amounts due under this Agreement) if such failure is caused by an act of God, fire, flood, act of government or state, war, civil commotion, insurrection, acts of terrorism, embargo, sabotage, a viral, bacterial or Mycoplasmal contamination which causes a shutdown of the LONZA Facility, prevention from or hindrance in obtaining energy or other utilities, a shortage of Raw Materials, Resins, Consumables or other necessary components, labor disputes of whatever nature, or any other reason beyond the control and without the fault or negligence of the Party affected thereby (collectively, a “Force Majeure Event”), the “affected Party” will, after giving prompt notice to the “disadvantaged Party” in accordance with Section 19.2, be excused from such performance on a day-to-day basis during the continuance of such Force Majeure Event continues (and the disadvantaged Party will likewise be excused from performance of its obligations on a day-to-day basis during the same period); provided that upon cessation of such Force Majeure Event, the affected Party shall promptly resume performance under this Agreement. If Force Majeure Event conditions continue for more than ninety (90) consecutive days or an aggregate one hundred eighty (180) days in any 12-month period, then the “disadvantaged” Party may terminate this Agreement in accordance with Section 18.4.2.

 

19.2                        Notice of Force Majeure. Each Party agrees to give the other Party prompt written notice of the occurrence of any Force Majeure Event, the nature thereof, and the extent to which the affected Party will be unable to fully perform its obligations under this Agreement. Each “affected” Party further agrees to use its best efforts to correct the Force Majeure Event as quickly as practicable and to give the other Party prompt written notice when it is again fully able to perform such obligations.

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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ARTICLE 20
 MISCELLANEOUS

 

20.1                        Notices. Any notice required or permitted to be given under this Agreement by any Party shall be in writing and shall be (a) delivered personally, (b) sent by registered mail, return receipt requested, postage prepaid, (c) sent by a nationally-recognized courier service guaranteeing next-day or second day delivery, charges prepaid, (d) delivered by facsimile (with documented evidence of transmission), or (e) delivered by electronic mail (with respect to exchanges regarding the Project Plan and proposed Decision Requests or Change Orders or Change Requests and upon documented evidence of receipt, which shall consist of an acknowledgement from the recipient Party that such email transmission has been received) to the addresses or facsimile numbers or email addresses of the other Party set forth below, or at such other addresses as may from time to time be furnished by similar notice by any Party. The effective date of any notice under this Agreement shall be the date of receipt by the receiving Party.

 

If to LONZA:

Lonza Ltd

Attn: Group General Counsel

Muenchensteinerstrasse 38

CH-4002 Basel

Switzerland

Fax: +41 61 316 83 14

 

If to PROTEON:

 

Proteon Therapeutics, Inc.

200 West Street

Waltham, MA 02451

Fax: 781-487-6729

Attn: Mark Fitzpatrick, Chief Financial Officer

 

20.2                        Applicable Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal substantive laws of New York, USA, without reference to the choice of law doctrine of such state that would result in the application of the substantive law of any other jurisdiction. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement or the transactions contemplated by this Agreement.

 

20.3                        Dispute Resolution. (a)  The Parties will attempt to settle any claim or controversy arising out of this Agreement or the subject matter hereof through consultation and negotiation in good faith in a spirit of mutual cooperation. Such matters will be initially addressed by the Project Managers, who shall use reasonable efforts to attempt to resolve the dispute through good faith negotiations by telephone or in person as may be agreed. If they fail to resolve the dispute within thirty (30) days after either Party notifies the other of the dispute, then the matter will be escalated to the Chief Executive Officer of PROTEON and the

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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Chief Executive Officer of LONZA, or their designees for resolution. They will use reasonable efforts to attempt to resolve the dispute through good faith negotiations by telephone or in person as may be agreed. If they fail to resolve the dispute within thirty (30) days after it is referred to them and do not mutually agree to extend the time for negotiation, then the dispute will be submitted to arbitration in accordance with the procedure set forth in Section 20.3(b).

 

(b)                                 Except with respect to actions by either Party seeking equitable or declaratory relief, any claim or controversy arising in whole or in part under or in connection with this Agreement or the subject matter hereof that is not resolved pursuant to Section 20.3(a) will be referred to and finally resolved by arbitration in accordance with the Rules of the International Chamber of Commerce (the “Rules”) as such Rules may be modified by this Agreement, by one arbitrator, who will be agreed upon by the Parties. If the Parties are unable to agree upon a single arbitrator within thirty (30) days following the date arbitration is demanded, three arbitrators will be used, one selected by each Party within ten (10) days after the conclusion of the 30-day period and a third selected by the first two within ten (10) days thereafter. Unless the Parties agree otherwise, they will be limited in their discovery to directly relevant documents. Responses or objections to a document request will be served twenty (20) days after receipt of the request. The arbitrator(s) will resolve any discovery disputes. Arbitration proceedings may be commenced by either Party by notice to the other Party. Unless otherwise agreed by the Parties, all such arbitration proceedings will be held in New York, USA, provided that proceedings may be conducted by telephone conference call with the consent of the Parties and the arbitrator(s). The arbitrator(s) will apply the laws of New York and it is understood and agreed that the provisions of Sections 45 and 69 of the Arbitration Act of 1969 shall not apply in respect of any arbitration pursuant to this Agreement. The arbitrator(s) will only have the authority to award actual money damages (with interest on unpaid amounts from the date due) and, except with respect to a breach or nonperformance of any provision of this Agreement relating to Confidential Information, the arbitrator(s) will not have the authority to award indirect, incidental, consequential, exemplary, special or punitive damages, and the Parties expressly waive any claimed right to such damages. The arbitrator(s) also shall be authorized to grant any temporary, preliminary or permanent equitable remedy or relief the arbitrators deem just and equitable and within the scope of this Agreement, including an injunction or order for specific performance. The award of the arbitrator(s) shall be the sole and exclusive remedy of the Parties. Judgment on the award rendered by the arbitrator(s) may be enforced in any court having competent jurisdiction thereof, subject only to revocation on grounds of fraud or clear bias on the part of the arbitrator(s). The arbitration will be of each Party’s individual claims only, and no claim of any other Party will be subject to arbitration in such proceeding. The costs and expenses of the arbitration, but not the costs and expenses of the Parties, will be shared equally by the Parties. If a Party fails to proceed with arbitration, unsuccessfully challenges the arbitration award, or fails to comply with the arbitration award, the other Party is entitled to costs, including reasonable attorneys’ fees, for having to compel arbitration or defend or enforce the award. Except as otherwise required by law, the Parties and the arbitrator(s) will maintain as confidential all information or documents obtained during the arbitration process, including the resolution of the dispute. Judgment on the award granted in any arbitration hereunder may be entered in any court having jurisdiction over the award or any of the Parties or any of their respective assets. The Parties knowingly and 

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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voluntarily waive their rights to have their dispute tried and adjudicated by a judge and jury except as expressly provided herein.

 

(c)                                  Nothing in this Section 20.3 will prevent a Party from resorting to judicial proceedings if: (i) interim relief from a court is necessary to prevent serious and irreparable injury to such Party; or (ii) litigation is required to be filed prior to the running of the applicable statute of limitations. The use of any alternative dispute resolution procedure will not be construed under the doctrine of latches, waiver or estoppel to affect adversely the rights of either Party.

 

20.4                        Headings. All headings in this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

 

20.5                        Exhibits. All exhibits or appendices referred to herein form an integral part of this Agreement and are incorporated into this Agreement by such reference.

 

20.6                        Security Procedures. All PROTEON personnel visiting or having access to the LONZA Facility shall agree in writing to abide by LONZA standard policies, operating procedures and security procedures as established by LONZA and communicated to PROTEON.

 

20.7                        Assignment. 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. Neither Party may assign its rights or delegate its duties under this Agreement without the prior written consent of the other Party; provided that either party may assign. this Agreement without the consent of the other party to (i) an Affiliate or (ii) in connection with the sale or transfer or other assignment of all or substantially all of the assets of such Party or the line of business or Product to which this Agreement relates, or (iii) in connection with a merger, consolidation, acquisition or other form of business combination; provided, further, that in each instance the assignee expressly assumes all obligations imposed on the assigning Party by this Agreement in writing and the other Party is notified in advance of such assignment. Any purported assignment without a required consent shall be void. No assignment shall relieve any Party of responsibility for the performance of any obligation that accrued prior to the effective date of such assignment.

 

20.8                        Severability. If any part of this Agreement shall be found to be invalid or unenforceable under applicable law in any jurisdiction, such part shall be ineffective only to the extent of such invalidity or unenforceability in such jurisdiction, without in any way affecting the remaining parts of this Agreement in that jurisdiction or the validity or enforceability of the Agreement as a whole in any other jurisdiction. In addition, the part that is ineffective shall be reformed in a mutually agreeable manner so as to as nearly approximate the intent of the Parties as possible.

 

20.9                        Independent Contractors. Each of the Parties is an independent contractor and nothing herein contained shall be deemed to constitute the relationship of partners, joint venturers, nor of principal and agent between the Parties. Neither Party shall at any time enter

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

35

 

 

into, incur, or hold itself out to Third Parties as having authority to enter into or incur, on behalf of the other Party, any commitment, expense, or liability whatsoever.

 

20.10                 Waiver. No waiver of any term, provision or condition of this Agreement whether by conduct or otherwise in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or condition of this Agreement.

 

20.11                 Counterparts. This Agreement and any amendment hereto may be executed in any number of counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute the same instrument. This Agreement shall be effective upon full execution by facsimile or original, and a facsimile signature shall be deemed to be and shall be as effective as an original signature.

 

20.12                 No Solicitation of Employees. During the Term and for two (2) years thereafter, each of the Parties agrees not to seek to induce or solicit any employee of the other Party or its Affiliates to discontinue his or her employment with the other Party or such Affiliate in order to become an employee or an independent contractor of the soliciting Party or its Affiliates; provided, however, that neither Party shall be in violation of this Section as a result of making a general solicitation for employees or independent contractors. For the avoidance of doubt, the publication of an advertisement shall not constitute solicitation or inducement.

 

20.13                 Entirety; Amendments. This Agreement, including any exhibits attached hereto and referenced herein, and the Quality Agreement constitute the full understanding of the Parties and a complete and exclusive statement of the terms of their agreement with respect to the specific subject matter hereof, and no terms, conditions, understandings or agreements purporting to modify or vary the terms thereof shall be binding unless hereafter made in a written instrument referencing this Agreement and signed by each of the Parties.

 

20.14                 Preference. The terms of this Agreement shall prevail in the event of a conflict between this Agreement and any exhibits or appendices.

 

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* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed on its behalf by its duly authorized representative.

 

 

	
 
    	
PROTEON   THERAPEUTICS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Timothy Noyes
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Timothy   Noyes
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President   & CEO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LONZA LTD
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dr. Hans Peter Pfirter
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Dr.   Hans Peter Pfirter
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
General   Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas Keppler
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Thomas   Keppler
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Head   of Patient Department
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

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