Document:

f8k122812a1ex10xix_cactus.htm

Exhibit 10.19

LICENSE AGREEMENT

 

This License Agreement (the "Agreement") effective as of the Effective Date, by and between Fred Hutchinson Cancer Research Center, a research institution organized as a nonprofit corporation under the laws of the state of Washington, having its principal offices at 1100 Fairview Avenue North, Seattle, Washington 98108, USA ("FHCRC") and Actinium Pharmaceuticals, Inc., a Delaware corporation, with principal offices at 391 Lafayette Street, Newark, NJ 07105 ("Company").

 

WHEREAS, FHCRC in accordance herewith, is in possession of BC8 monoclonal antibody and related master cell bank developed at FHCRC; and

 

WHEREAS, Company is desirous of acquiring a license to the materials discussed above in certain fields of use;

 

WHEREAS, FHCRC and Company are additionally entering into a Sponsored Research Agreement on mutually agreeable terms and conditions for performance of certain Projects;

 

WHEREAS, FHCRC is willing to grant a license to Company to know-how and the materials subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto, intending to be legally bound, agree as follows:

 

	
1.

	
Definitions

	  	  
	
1.1

	
“Affiliate” or “Affiliates” means (i) any corporation, company or other entity in which a party directly or indirectly owns or controls at least fifty percent (50%) of the stock or other ownership interest entitled to vote in election of the Board of Directors; (ii) any corporation, company or other entity which directly or indirectly owns or controls at least fifty percent (50%) of the stock or other ownership interest of a party entitled to vote in the election of the Board of Directors. Affiliate or Affiliates also means any corporation, company or other entity which is under common control with a party.

	
1.2

	
“Commercially Reasonable Efforts” shall mean such application of effort and resources by the relevant party as would be consistent with its actions in respect of a product or compound owned or controlled by such party, which is of similar market potential and at a similar stage in its development or product life, taking into account, without limitation, with respect to a product issues of safety and efficacy, product profile, the proprietary position of the product, the then current competitive environment for the product and the likely timing of the product's entry into the market, the regulatory environment of the product, and other relevant scientific, technical and commercial factors. Notwithstanding the foregoing, to the extent that the performance of a party's responsibilities hereunder is adversely affected by the other party's failure to perform its responsibilities hereunder, such party will not be deemed to have failed to use its Commercially Reasonable Efforts in performing such responsibilities.

 

  

1

  

 

	
1.3

	
“Effective Date” means June 1, 2012.

	  	  
	
1.4

	
“Licensed Field” means the treatment, diagnosis, prevention and monitoring of diseases and other medical conditions in humans and animals.

	  	  
	
1.5

	
“Licensed Products” means any product or process which utilizes master cell bank (“MCB”) or the BC8 monoclonal antibody (“MAb”).

	  	  
	
1.6

	
“Licensed Know-How” means the MCB, MCB documentation, BC8 MAb manufacturing documentation and all clinical, preclinical and technical data owned or controlled by FHCRC related to the BC8 program.

	
1.7

	
“Materials” means BC8 MAb and all relevant Investigational New Drug (“IND”) and Drug Master Files.

	  	  
	
1.8

	
“Net Sales” means Company's, its Affiliates' and their sublicensees' gross receipts for the sale, lease, use or transfer of any Licensed Product to any third party, less the sum of the following:

	  	  	
●

	
Discounts, credits, refunds, chargebacks and rebates actually allowed in amounts customary in the trade directly for a Licensed Product;

	  	  	  	  
	  	  	
●

	
Sales, use, excise, import, export, customs, and value added taxes, tariffs, and duties directly imposed on the Licensed Products and actually paid by Company, its Affiliates or any of their sublicensees;

	  	  	  	  
	  	  	
●

	
Actual, separately invoiced outbound freight and insurance costs actually paid by Company directly on Licensed Products;

	  	  	  	  
	  	  	
●

	
Amounts allowed or credited on returns of sales of Licensed Products; and

	  	  	  	  
	  	  	
●

	
Amounts that are written off as non-collectible for the sale of Licensed Products after Company's, its Affiliates' or their sublicensees' commercially reasonable efforts to collect such amounts, exclusive of costs of collection.

 

	  	
1.8.1

	
No deductions may be made for commissions paid to individuals for the sale of Licensed Products, whether they are independent sales agents or regularly employed _by Company, its Affiliates or their sublicensees, nor for any other cost incurred in the manufacture, marketing, sale, distribution, shipment, promotion, advertisement, exploitation or commercialization of Licensed Products.

	  	  	  
	  	
1.8.2

	
In the case of Licensed Products transferred by Company or its Affiliate(s) to one another or to a third party where (i) such transferee is using such Licensed Products for the purposes of selling products or creating products for sale or for services in the commercial market (other than under a written agreement pursuant to which the transferee's use of the Licensed Product(s) is limited only to research purposes internal to such transferee for which such transferee does not derive a commercial or other economic benefit) and (ii) such transferee has, in connection with such transfer, paid consideration to Company in a form other than cash for Licensed Product, the Net Sales shall mean the cash consideration that the selling party would have received if they were sold to an unrelated, unaffiliated third party in an arm's length sale of the same product in similar quantities at the same time and place (the “Fair Market Value”).

 

  

2

  

 

	  	
1.8.3

	
Licensed Products will be considered “sold” when delivered, billed out, or invoiced, whichever comes first. For all Licensed Products used by Company as premiums to promote, market, sell or lease products or processes other than Licensed Products, the Licensed Products will be deemed to have been sold at the Fair Market Value.

	  	  	  
	  	
1.8.4

	
A “sale” shall not include transfers or dispositions for (i) bona fide charitable purposes; (ii) when Licensed Products are distributed alone solely for promotional purposes for the Licensed Products; or (iii) if necessary, pre-clinical, clinical, regulatory or governmental purposes prior to receiving regulatory approval for sale or use of such Licensed Products in such country, for which no compensation or financial benefit for (i), (ii) or (iii) immediately above is received by, or accrued to, Company, its Affiliates or sublicensees.

	  	  	  
	  	
1.8.5

	
With respect to a Licensed Product that is sold pre-packaged in combination with a special US FDA, or its foreign equivalent, approved device used for the administration of Licensed Products, or other US FDA, or its foreign equivalent, approved drug, where such special approved device or such other approved drug (or combination thereof) is not a Licensed Product, the Net Sales of such Licensed Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the combination product in a given country by the fraction A/(A+B) where A is the average published sales price in that country of such Licensed Product when sold separately in finished form in like quantities and B is the average published sale price in that country of such approved device or such other approved drug in the combined product sold separately in finished form in like quantities. In the event and only in the event such average published sale price in a given country of such approved device or such other approved drug in the combined product cannot be determined, Net Sales for the purposes of determining royalty payments for the combination product shall be calculated by multiplying the Net Sales of the combination product by the fraction A/C where A is the average published sale price in that country of such Licensed Product when sold separately in finished form and C is the average published sale price in that country of the combined product.

 

	  	  	
1.8.5.1

	
Notwithstanding Section 1.10.5 above, Section 1.10.5 does not apply and no reduction to Net Sales may be made pursuant thereto, for any such device or combination, where Company intends to apply any royalty reduction associated with such device or combination, or use thereof, under Section 3.3 below.

 

	
1.9

	
“Funded Research” means the research conducted for the Projects in the laboratory of Dr. John Pagel pursuant to the Sponsored Research Agreement.

	  	  
	
1.10

	
“Project” means the activities set forth in the research work plan attached hereto as Exhibit C and as subsequently modified pursuant to the Sponsored Research Agreement.

 

  

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1.11

	
“Sponsored Research Agreement” means the separate written agreement on mutually agreeable terms and conditions between FHCRC and Company by which Company shall pay to FHCRC the amount of One Hundred Fifty Thousand Dollars ($150,000.00) per year (including indirect cost) for the first two years and Two Hundred Fifty Thousand Dollars ($250,000.00) per year (including indirect cost) for the third and fourth year (“Annual Research Contribution Amount”) for a four year term in support of the Funded Research. The parties agree and acknowledge that the Sponsored Research Agreement shall provide the following: (i) commencing ninety (90) calendar days after the Effective Date, the Annual Research Contribution Amount shall be payable in quarterly installments; (ii) the parties intend that the scope of the research work plan for the Sponsored Research Agreement will be consistent with the research work plan set forth in Exhibit C; and (iii) upon Company receiving the first regulatory approval for the first Licensed Product, the Sponsored Research Agreement will be extended annually at the level of Two Hundred Fifty Thousand Dollars ($250,000.00) for five consecutive years which will be creditable to royalty payment owed to FHCRC as in Section 3.3.

	  	  
	
1.12

	
“Territory” means all of the countries and territories of the world.

	  	  
	
1.13

	
“US” means the United States of America, its territories and possessions.

	  	  
	
2.

	
Grant of License

	  	  
	
2.1

	
Subject to the terms and conditions of this Agreement including but not limited to this Section 2, FHCRC hereby grants to Company and Company hereby accepts from FHCRC, an exclusive, worldwide right and license to use Materials solely in the Field, with the right to sublicense, to develop, have developed, register, use, make, have made, market, have marketed, distribute, have distributed, sell, have sold, offer for sale, and import Licensed Products FHCRC also-grant to Company the exclusive right to utilize the Licensed Know-How solely to make Licensed Products and to sell Licensed Products in the Field. Further, Company's Affiliates that are sublicensed under the foregoing licenses shall have the right to further sublicense such rights pursuant to the terms of this Agreement.

	  	  
	
2.2

	
The right and license granted to Company by FHCRC in Section 2.1 above is subject to (i) a reservation of rights by the FHCRC and its Affiliates, including the Seattle Cancer Care Alliance (“SCCA”), to make, have made, provide and use and practice the Materials including the BC8 MAb for the FHCRC' s, its Affiliates and the SCCA' s internal educational, academic, clinical and research purposes and for collaboration projects with other academic institutions, including non-commercial clinical trials with BC8 at its own discretion using isotopes other than iodine-131, bismuth-213 or actinium-225; (ii) any and all other rights of FHCRC not expressly granted to Company in this Agreement including but not limited to any right title and interest outside of the Licensed Fields, and (iii) any rights reserved to the United States Government and others in accordance with 35 U.S.0 200-205 and P.L. 96-517, as amended by P.L. 98620 and its implementing regulations for government purposes. For the sake of clarity, FHCRC will have right to continue to completion ongoing iodine-131 trials. Commencement of any new iodine-131, bismuth-213 or actinium-225 based trials by FHCRC under investigator INDs will be subject to mutual agreement with the Company. Company will provide BC8 for such trials at direct cost to the extent that it is available but will have no responsibility to fund other aspects of such trials, provided that the Company shall be kept informed of the progress and results of any such trials and have the option to commercialize compounds which are the subject of such trials.

 

  

4

  

 

	
2.3

	
Except as expressly provided for in this Agreement, no license or other rights, either express or implied, are granted by FHCRC to Company by the execution of this Agreement or the transfer of any materials or information hereunder, including but not limited to, any right, title and interest outside of the Licensed Field for any purpose including commercial or non­commercial production, use, sale or license.

	  	  
	
2.4

	
Company shall not cause or permit any lien, mortgage, incumbrance, restriction, security interest or other legal or equitable claims to be entered or placed upon this Agreement, the license to Company under this Agreement or any rights, including sublicensing rights, under this Agreement. Company shall not offer, pledge or claim, or permit another to offer, pledge or claim, this Agreement, the license to Company under this Agreement, or any rights, including sublicensing rights, under this Agreement as security or a security interest for any purpose.

	  	  
	
3.

	
License Fees, Royalties and other Financial Consideration

	  	  
	
3.1

	
In partial consideration for the right and license granted to Company pursuant to this Agreement, Company will pay to FHCRC all reasonable MCB and mAb related out-of-pocket expenses incurred after the Effective Date of this Agreement (except for costs of MCB and mAb related to use of mAb in FHCRC research programs), including storage, stability testing, QA/QC and manufacturing expenses within forty-five (45) days upon receiving an invoice for the amount from FHCRC.

	  	  
	
3.2

	
In further consideration for the right and license granted to Company under this Agreement, Company will pay to FHCRC a milestone payment of $1,000,000 US in cash and equity (up to 50 percent equity in Company's discretion) upon first approval by the US FDA for the marketing and/or sale of the first Licensed Product in US. Such milestone payment will be due and payable to FHCRC within forty-five (45) days of Company, its Affiliates or sublicensees meeting or achieving the milestone. Any and all such milestone payments are not refundable and any and all milestone payments are only payable once, regardless of the number of times a milestone is achieved by one or more Licensed Product.

	  	  
	
3.3

	
In further consideration for the right and license granted pursuant to this Agreement, Company will pay to FHCRC, for a period ending ten (10) ears after launch of each Licensed Product, on a country by country basis, a royalty in the amount of Two percent (2%) of the Net Sales of such Licensed Product in that country received by the Company and any and all sublicense(s). Company may reduce the royalty rate payable to FHCRC upon the approval of any biosimilar generic product. Company will negotiate with FHCRC in good faith for any such reduction. Payments made by Company to FHCRC pursuant to the Sponsored Research Agreement between the parties dated June 1, 2012 will be creditable against royalties payable pursuant to this Section 3.3.

 

  

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3.4

	
Delivery of Materials

 

	 	  	  
	 	3.4.1	

 Delivery of aterials. Within sixty (60) days of the Effective Date, FHCRC will provide to Company the Materials listed in Exhibit B. If FHCRC is unable to provide any or all such Materials under Exhibit B, FHCRC will promptly inform Company and, the parties will negotiate in good faith to amend this Agreement appropriately.

	 	  	  
	 	
3.4.2

	
Supply of Antibody. FHCRC shall make, or cause to be made, in two production runs, one lot of 100 vials of GMP BC8 antibody, 5mL per vial at 5mg./mL at its direct cost to be paid by Company and to be delivered to Company before the end of November, 2012. FHCRC shall make a second lot of the same size and specifications and under the same terms and conditions to be delivered on or before April 30, 2013. FHCRC shall also provide to Company all GMP required documentation for such lots, including, without limitation, batch records, test records and validation records.

 

	
4.

	
Sublicenses

	  	  
	
4.1

	
Subject to the terms and conditions of the this Agreement, Company will have the exclusive right to grant sublicenses to others for the Licensed Products in the Licensed Field to the extent of the license granted to Company hereunder. Company will be responsible for the performance of any and all sublicensees. Company will provide FHCRC a copy of any and all sublicense agreements within sixty (60) days of execution. Company may redact financial information from such copy. Company's sublicense agreements shall be made in a manner that is consistent with FHCRC' s rights and duties under this Agreement and the obligations of Company to FHCRC under this Agreement.

	  	  
	
4.2

	
Termination of the license granted to Company by FHCRC under this Agreement will terminate all sublicenses which may have been granted by Company, provided, however, that any sublicensee who desires to continue its sublicense must so advise FHCRC in writing of sublicensee's desire to continue the sublicense within thirty (30) days of the sublicensee's receipt of written notice of the termination of Company's license and, subject to the sublicensee's agreement to assume relative to FHCRC all the obligations, including obligations for payment, contained in the sublicense agreement with Company, FHCRC shall continue the sublicense as a direct license from FHCRC.

	  	  
	
4.3

	
Any sublicense granted by Company must contain provisions relative to termination and the conditions of continuance of any sublicenses in accordance with the provisions of this Agreement.

	  	  
	
5.

	
Commercially Reasonable Efforts

	  	  
	
5.1

	
Company will pursue the development of the Licensed Products and will use Commercially Reasonable Efforts to develop and bring Licensed Products to market through a thorough program for marketing and commercialization of the Licensed Products in major markets of the Territory, including responsibility for conducting and funding all clinical trails and regulatory activities as set forth in a development plan as attached in Exhibit A. FHCRC shall have the opportunity, at its option, to participate as a clinical site for such trials, provided that it meets all relevant regulatory requirements. Furthermore and more specifically, Company will use Commercially Reasonable Efforts to develop and bring to market and sell at least one Licensed Product within the Licensed Field.

 

  

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5.2

	
Company will use Commercially Reasonable Efforts to have the Licensed Products cleared

	  	  
	  	
for marketing in those countries in which Company intends to market and/or sell Licensed Products by the responsible governmental agencies requiring such clearance. To accomplish such clearances at the earliest practicable date, Company will file, according to the usual practice of Company, any necessary data with such government agencies.

	  	  
	
6.

	
Confidentiality

	  	  
	
6.1

	
FHCRC and Company recognize that each party may need to provide confidential and proprietary information from time to time to the other parties pursuant to this Agreement. In recognition of FHCRC as non-commercial, academic institution, Company agrees to limit to the extent possible the delivery of confidential information to FHCRC. FHCRC and Company agree to hold in confidence, in accordance with this Section 6, any information disclosed by one party to the other under this Agreement (hereinafter “Information”). Information will be provided in written or other tangible form whenever possible marked as “confidential”, but if provided orally or in an other non-tangible form, the Information must be summarized in writing labeled as “confidential” and be provided to the receiving party within thirty (30) days of first disclosure to be considered confidential under this Agreement. For the purpose of this Agreement, “hold in confidence” means that FHCRC and Company will not disclose the Information of the other party to a third party and will protect the Information provided to it by the other party in the same manner in which it protects its own confidential information of similar nature, but in no event less than reasonable care. The Information will remain the property of the party disclosing such Information.

	  	  
	
6.2

	
The obligations of the receiving party to maintain confidentiality under this Agreement will survive the expiration or termination of this Agreement and will endure for five (5) years from the date of first disclosure under this Agreement.

	  	  
	
6.3

	
Information does not include:

 

	  	  	
(a)

	
information that is already known to the receiving party prior to the Effective Date;

	  	  	
(b)

	
information that is or becomes publicly known through no fault of receiving party;

	  	  	
(c)

	
information that has been or is disclosed to the receiving party by a third party who was not or is not under any obligation of confidence or secrecy to the disclosing party at the time said third party discloses to the receiving party;

	  	  	
(d)

	
information that is developed by employees of receiving party who had no knowledge of the Information, as evidenced by the contemporaneous written records of the receiving party;

	  	  	
(e)

	
information that is approved for release by written authorization of the disclosing party; and

	  	  	
(f)

	
information that is required to be disclosed by law, provided the receiving party promptly notifies the disclosing party in writing prior to such disclosure.

 

  

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6.4

	
The parties further agree that Company shall have the right to disclose Confidential Information of FHCRC or the provisions of this Agreement to: (a) its Affiliates; (b) potential sublicensees, assignees or subcontractors for the purpose of allowing any such potential sublicensee, assignee or subcontractor to evaluate such technologies and to determine whether to enter into a sublicense, assignment or subcontracting arrangement; (c) sublicensees, assignees or subcontractors, for the purpose of allowing such sublicensee, assignee or subcontractor, as the case may be, to make, have made, use, market, sell or distribute Licensed Products; (d) a purchaser or potential purchaser of Licensed Products for the purpose and only to the extent necessary to generate Net Sales or a purchaser or potential purchaser all or substantially all of Company's assets; and (e) an investor or lender or prospective investor in or lender to the Company; provided, however, that, prior to any such disclosure, Company shall obtain a confidentiality agreement (substantially similar in form and content to the provisions of this Section 6) from the party to which such disclosures are to be made.

	
 

	  
	
7.

	
Representations and Disclaimer

	 	 
	
7.1

	
FHCRC represents that (i) to the best of its knowledge, it is the owner of all right, title and interest in and to the Materials, free of any liens, licenses, encumbrances, restrictions and other legal or equitable claims other than any rights of the federal government under federal funding guidelines ; (ii) has the lawful right and authority to enter into this Agreement; (iii) to the best of its knowledge, the performance of its obligations under this Agreement will not conflict with or result in a breach of any agreements, contracts or other arrangements to which FHCRC is a party.

	  	  
	
7.2

	
Company represents that (1) Company has the lawful right and authority to enter into this Agreement; (2) Company will maintain and utilize its commercially reasonable resources and personnel to perform Company's obligations under this Agreement in accordance with its terms; (3) to the best of its knowledge, the performance of its obligations under this Agreement will not conflict with or result in a breach of any agreements, contracts or other arrangements to which Company is a party.

	  	  
	
7.3

	
All information, materials and property, whether tangible or intangible, which may be delivered hereunder to Company, will be delivered on an “as is, where is” basis without any express or implied warranty except as expressly set forth in Section 7.1 above. FHCRC HEREBY DISCLAIMS ANY AND ALL REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY IMPLIED WARRANTIES ARISING FROM ANY COURSE OF DEALING, USAGE, OR TRADE PRACTICE. FHCRC MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AS TO THE USE OF THE LICENSED MATERIALS OR LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS. FHCRC ASSUMES NO RESPONSIBILITY WITH RESPECT TO THE EXPLOITATION OR COMMERCIALIZATION OF THE MATERIALS, LICENSED PRODUCTS OR THE MANUFACTURE, USE, SALE, LEASE OR DISTRIBUTION OF ANY METHODS, PROCESSES, APPARATUS, DEVICES, SYSTEMS, PRODUCTS, ARTICLES, AND/OR APPLIANCES DERIVED FROM OR USING THE LICENSED PRODUCTS BY COMPANY, ITS AFFILIATES OR SUBLICENSEES. FURTHER, NO PARTY WILL BE LIABLE FOR LOSS OF PROFITS, LOSS OF USE, OR ANY OTHER INCIDENTAL, CONSEQUENTIAL, OR EXEMPLARY DAMAGES EVEN IF FHCRC HAS BEEN ADVISED OF THE POSSIBILITY THEREOF.

 

  

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8.

	
Records, Reports, and Payments

	  	  
	
8.1

	
Company will keep and maintain and will require any and all of its Affiliates and sublicensees to keep and maintain complete, accurate, and correct records and books relating to the sale or lease of the Licensed Products sufficient to determine the royalties payable to FHCRC for five (5) years following the end of the calendar year to which such records and books pertain.

	  	  
	
8.2

	
Company will render to FHCRC calendar quarter reports for each calendar quarter during the term of this Agreement, provided a sale of Licensed Products has taken place. Within sixty (60) days following the end of each such calendar quarter (e.g. December 31, March 31, June 30, September 30), Company will provide to FHCRC a written report setting forth the following information with respect to the immediately preceding calendar quarter:

 

	  	  	
(a)

	
accounting for all Licensed Products sold, distributed, used or leased;

	  	  	  	  
	  	  	
(b)

	
gross sales of Licensed Products;

	  	  	  	  
	  	  	
(c)

	
any applicable deductions, allowances, and charges as provided in Section 1.10 of this Agreement;

	  	  	  	  
	  	  	
(d)

	
total Net Sales;

	  	  	  	  
	  	  	
(e)

	
total of all milestone payments due and payable to FHCRC; and

	  	  	  	  
	  	  	
(f)

	
total royalties, milestone payments and other payments under this Agreement then due.

	  	  	  	  
	  	
8.2.1

	
Prior to the first commercial sales or leases of any Licensed Product, Company shall provide to FHCRC a statement to that effect annually, within sixty (60) days of the end of each calendar year. After such first commercial sale, unless otherwise expressly provided for in this Agreement, Company will pay to FHCRC with each such report according to Section 8.2 and on the date each such report is due the total amount of royalty and any and all other amounts due and payable to FHCRC pursuant to this Agreement for each such calendar quarter period.

 

  

9

  

 

	  	
8.2.2

	
Company will be responsible for providing such reports in a timely manner to FHCRC on behalf of Company, its Affiliates and its sublicencees. Any amounts from Affiliates or sublicensees shall be supported by reports from the Affiliates and the sublicensees. Company shall require any Affiliate or sublicensee to prepare and render an appropriate report on behalf of the respective Affiliate or sublicensee.

 

	
8.3

	
The books and records of account relating to sales of Licensed Products kept by Company, its Affiliates or sublicensees, shall be made available upon reasonable notice, during normal business hours for examination by one or more auditors mutually agreed upon by the Parties, such auditor(s) to be independent of either party. The auditor(s) will be permitted to enter upon the premises of Company or the respective Affiliate or sublicensee, and, at FHCRC' expense, make and retain (subject to the confidentiality obligations of this Agreement) copies of any and all parts of said books and records of account, including invoices that are relevant to any report required to be rendered by Company or its Affiliates or sublicensees. Any amount found to have been owed but not paid will be paid promptly to FHCRC with interest at the rate equal to the prime rate in effect at the Chase Manhattan Bank (N.A.) on the due date with the addition of two percent (2%) per year. In the event any such audit shows that Company has underpaid its royalty obligation hereunder by the lesser of (i) more than ten percent (10%), or (ii) Thirty Thousand dollars ($30,000US), during any calendar quarter, Company will reimburse FHCRC for the out-of-pocket expense for such audit. FHCRC together shall conduct no more than one (1) audit per calendar year. In the event any such audit shows that the Company has overpaid its royalty obligation hereunder, such overpayment shall be credited against future royalty payments.

	  	  
	
8.4

	
Royalty or other payments will be paid in United States dollars to FHCRC in Seattle, Washington or at such place as FHCRC may reasonably designate consistent with the laws and regulations controlling in any foreign country. Any withholding taxes which Company is required by law to withhold on remittance of the royalty payments will be deducted from the royalty paid. Company will furnish FHCRC through FHCRC with original copies of all official receipts for such taxes and assist FHCRC, at FHCRC' s expense, to recover any such taxes which FHCRC may be entitled to recover. If any royalties hereunder are based on Net Sales converted from foreign currency, such conversion will be made by using the average exchange rate at a first-class foreign exchange bank for the calendar quarter period to which such royalty payments relate.

	  	  
	
9.

	
intentionally left blank

	  	  
	
10.

	
Termination

	  	  
	
10.1

	
If Company becomes bankrupt or insolvent, or files a petition in bankruptcy, or if the business of Company is placed in the hands of a receiver, assignee or trustee for the benefit of creditors, whether by the voluntary act of Company or otherwise, this Agreement will automatically terminate immediately without any notice whatsoever to Company.

 

  

10

  

 

	
10.2

	
If Company at any time defaults in any payment due to FHCRC, fails to provide any report due under this Agreement or makes any materially false report to FHCRC or commits a material breach of any covenant or undertaking set forth herein, including without limitation a breach of its obligations of Commercially Reasonable Efforts pursuant to Article 5 of this Agreement, FHCRC will have the right, in addition to all other remedies available, to terminate the license under this Agreement and revoke any and all licenses herein granted, by giving Company ninety (90) days prior written notice of the intended termination followed by an official notice of termination which will effect termination of this Agreement, provided, however, that if Company will have cured such breach within such ninety (90) day period, then this Agreement will remain in effect and the rights and licenses herein granted will be in force as if no breach had occurred on the part of Company. If there is a payment default that is disputed in good faith by the Company, the Company will not be deemed in default under this Section, provided it pays (a) any amount not in dispute when due and (b) any balance determined to be due together with interest on that amount at the rate specified in Section 8.3 upon resolution of the dispute by agreement, legally binding judgment or other resolution that is legally binding on the parties. In the event of termination under this Section, Company will continue to be obligated to pay to FHCRC any and all license fees, royalties, milestone payments, or other payments payable at the time of termination pursuant to this Section 10.

	  	  
	
10.3

	
Both parties shall have the right, in addition to all other remedies available, to terminate this Agreement upon a material breach by the other party of any material covenant or undertaking set forth herein that remains uncured ninety (90) days following written notice thereof.

	  	  
	
10.4

	
Company will have the right to terminate the license under this Agreement with or without cause at any time on ninety (90) days written notice to FHCRC delivered to FHCRC.

	
10.5

	
Upon termination of this Agreement for any reason other than a material breach, nothing herein will be construed to release either party from any obligation accrued prior to the effective date of such termination.

	  	  
	
10.6

	
Subject to Section 10.4 above, upon termination of this Agreement for any reason, any and all rights granted herein to Company by FHCRC will immediately revert to FHCRC and neither party will make any further use of the Confidential Information of the other party.

	  	  
	
10.7

	
Except in case of FHCRC's termination of this Agreement in accordance with Section 10.3, following termination of this Agreement by FHCRC, Company, its Affiliates and sublicenses may for a period of six (6) months after the effective date of such termination dispose of their existing inventory of Licensed Product on hand as of the effective date of termination. At the end of such six (6) months period the right to dispose of such Licensed Product shall cease. During this six (6) months period, Company's responsibilities and obligations to FHCRC under this Agreement will remain in full force and effect, including but not limited to Company's obligation of indemnification, insurance, and payment of royalties and fees on Licensed Products.

	  	  
	  	  
	
11.

	
Legal Action

	  	  
	
11.1

	
Legal Action. In the event any legal action is commenced against Company involving Materials or a Licensed Product or otherwise relating to this Agreement, whether or not FHCRC is named as a party to the legal action, Company shall keep FHCRC or its attorney nominee fully advised of the progress of the legal action and shall reimburse FHCRC for its reasonable legal costs (including attorney's fees) incurred as a result of FHCRC's monitoring of such action, FHCRC's being named a party to any such legal action, or when FHCRC's employees or agents are called as witnesses therein or asked to testify for or consult with Company in connection therewith. FHCRC agrees to cooperate with Company, to the extent reasonably possible and at Company's expenses, in any legal action brought pursuant to this Article 11.

 

  

11

  

 

	
12.

	
Indemnification and Insurance

	  	  
	
12.1

	
Company, its Affiliates and any of their sublicensees will, at all times during the term of this Agreement and thereafter, indemnify, hold harmless, and defend the FHCRC, its trustees, officers, directors, employees, agents, and affiliates from and against any and all claims, losses, damages, and/or liability of whatsoever kind or nature, as well as all costs and expenses, including legal expenses and reasonable attorneys' and expert fees, which arise or may arise at any time out of or in connection with any activity of Company involving the Licensed Products, including without limitation the manufacture, use, sale, lease, commercialization, licensing or distribution of any application derived from or using the Licensed Products, except to the extent such claims, losses, damages and/or liability is caused by the gross negligence or willful conduct of FHCRC or the indemnified party.

	  	  
	
12.2

	
Company and any of Affiliates and their sublicensees will carry liability insurance at their own expense, reasonably adequate in accordance with industry custom and practice to assure its obligations to FHCRC under Section 12.1 of this Agreement. Company will provide satisfactory evidence of such insurance coverage to FHCRC upon the request of FHCRC.

	 	 
	
13.

	
Assignment

	  	  
	
13.1

	
Company may assign or otherwise transfer this Agreement and the license granted hereby and the rights acquired by it to and only to an Affiliate or to the assignee or transferee of Company's entire business or of that part of Company's business to which the license granted hereby relates; provided, however, that such Affiliate or assignee or transferee agrees in writing to be bound by the terms and conditions of this Agreement. Except for an assignment or a transfers set forth in the preceding sentence, Company will give FHCRC thirty (30) days prior notice of such assignment and transfer and if FHCRC raises no reasonable objection in writing to such assignment or transfer within fifteen (15) days after FHCRC receives such notice, then FHCRC will be deemed to have approved such assignment or transfer so long as the assignee or transferee agrees in writing to be bound by the terms and conditions of this Agreement. If the assignee or transferee does not agree in writing to be bound by the terms and conditions of this Agreement within fifteen (15) days of any such request by FHCRC, then FHCRC will have the right to terminate this Agreement by providing written notice of termination to such transferee or assignee,

 

  

12

  

 

	
13.2

	
FHCRC may assign or otherwise transfer this Agreement to an Affiliate, without prior approval by Company provided that such assignee or transferee is bound by the terms of this Agreement.

	  	  
	
14.

	
Non-Use of Names

	  	  
	  	
Neither party will use the names of the other party, nor any adaptation thereof, in any advertising, promotional or sales activities without prior written consent obtained from the other party in each separate case.

	  	  
	
15.

	
Export Controls

	  	  
	  	
It is understood that FHCRC is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities or materials that may require a license from the applicable agency of the United States Government or may require written assurances by Company that Company will not export data or other items commodities to certain foreign countries without prior approval of such agency. FHCRC neither represents that a license will not be required nor that, if required, it will be issued.

	  	  
	
16.

	
Survival

	  	  
	  	
Sections 1, 6, 7, 8.1, 8.2, 8.3, 8.4, 10.9, 11.3, 11.5, 11.6, 11.7, 12, 14, 16, 17 and 18 of this Agreement shall survive termination or expiration of this Agreement.

	  	  
	
17.

	
Payments, Notices and Other Communications

	  	  
	  	
Any payment, notice, or other communication pursuant to this Agreement will be sufficiently made or given on the date of mailing if sent to such party by certified first class mail or overnight express mail by recognized national carrier, postage prepaid, addressed to it at its address below or at a substitute address as it will designate by written notice given to the other party:

 

	
FHCRC:

	
Vice President, Industry Relations and Technology Transfer

	  	
Fred Hutchinson Cancer Research Center

1100 Fairview Avenue N., J5-110

Seattle, Washington 98108, USA

	  	  
	
Company:

	
President and Chief Executive Officer

	  	
Actinium Pharmaceuticals, Inc.

	  	
391 Lafayette Street

	  	
Newark , NJ07105 USA

 

  

13

  

 

	
18.

	
Miscellaneous Provisions

	 	 
	
18.1

	
This Agreement will be construed, governed, interpreted, and applied in accordance with the laws of the State of Washington, U.S.A. without regard to conflicts-of-law rules and without giving effect to the United Nations Convention on contracts for the International Sale of Goods. Notwithstanding the foregoing, any questions affecting the construction and effect of any patent will be determined by the law of the country in which the patent was granted.

	  	  
	
18.2

	
The parties hereto acknowledge that this Agreement (including the Exhibits hereto) together with the Sponsored Research Agreement set forth the entire agreement and understanding of the parties hereto as to the subject matter hereof, and supersedes and cancels any and all prior agreements between the parties relating to the subject matter except that the mutual non-disclosure Agreement between Company and FHCRC with an effective date of November 21, 2011 shall control the applicable transaction and events until the effective date of this Agreement. This Agreement will not be subject to any change or modification except by the execution of a written instrument subscribed to by the parties hereto.

	  	  
	
18.3

	
The provisions of this Agreement are severable, and in the event that any provision of this Agreement will be determined to be invalid or unenforceable under any controlling body of law, such invalidity or unenforceability will not in any way affect the validity or enforceability of the remaining provisions hereof.

	  	  
	
18.4

	
Company must mark the Licensed Products made, used, shipped to or sold in the United States with all applicable United States patent numbers. All Licensed Products made, used, shipped to or sold in other countries will be marked in such a manner as to conform with the patent laws and practice of the country of manufacture, use, shipment or sale.

	  	  
	
18.5

	
The failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement will not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other party.

	  	  
	
18.6

	
Except as otherwise specifically provided in Section 13 of this Agreement, neither this Agreement nor any of the licenses or rights herein granted will be assignable or otherwise transferable by Company without the prior written permission of FHCRC, provided that Company shall have the right to sublicense its rights pursuant to Sections 2 and 4 of this Agreement.

	  	  
	
18.7

	
This Agreement will be binding and enure to the benefit of the parties hereto and their respective affiliates, and permitted successors and assigns.

	  	  
	
18.8

	
The representations, warranties, covenants, and undertakings contained in this Agreement are for the sole benefit of the parties hereto and their permitted successors and assigns and such representations, warranties, covenants, and undertakings will not be construed, unless expressly set forth in this Agreement, as conferring any rights on any other party.

 

  

14

  

 

	
18.9

	
Nothing contained in this Agreement will be deemed to place the parties hereto in a partnership, joint venture or agency relationship and neither party will have the right or authority to obligate or bind the other party in any manner.

	  	  
	
18.10

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

	  	  
	
18.11

	
In the event of any dispute between the parties that arises from this Agreement, the prevailing party in any legal action that is brought to resolve such dispute will be entitled to recover its attorneys' fees and costs from the other party.

	  	  
	
18.12

	
This Agreement shall be construed as if drafted by both parties in concert, and no ambiguity shall be construed against the particular party drafting the ambiguous language.

 

  

15

  

 

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals and duly executed this License Agreement as of the day and year first set forth above.

 

	Fred Hutchinson Cancer Research Center	 	 	Actinium Pharmaceuticals, Inc.	 
	 	 	 	 	 	 	 
	BY:	
/s/ Ulrich IViueller

	 	 	
BY:

	/s/ Dragan Cicic	 
	NAME:  	Ulrich IViueller, Ph.D.	 	 	NAME:  	DRAGAN CICIC	 
	TITLE:	Vice President, Industry Relations

And Clinical Research Support	 	 	TITLE:	President And CEO	 
	 	 	 	 	 	 	 
	DATE: June 11, 2012	 	 	DATE: June 14, 2012	 

 

  

16

  

 

List of Exhibits 

 

	
Exhibit A 

	 	 
	 	 	 
	
Exhibit B 

	 	 
	 	 	 
	
Exhibit C

	 	 

 

  

17

  

 

EXHIBIT A

 

CLINICAL DEVELOPMENT PLAN

 

API's goal is to progress the BC8-I-131 program into a pivotal clinical trial as soon as possible. The initial development plan is envisioned as a Pivotal Phase II clinical trial.

 

This approach was considered the best and most likely in the discussion with leading transplanters. The trial would be a non-randomized single arm trial in advanced active AML patients (refractory and in florid relapse). All enrolled patients would receive reduced intensity external total body irradiation (TBI) plus fludarabine and BC8-I-131 at the MTD established in the earlier reference trial. There will be no control arm based on the input from hematologists and transplanters that these patients will not qualify for either myeloablative regimen (age, concomitant conditions) or reduced intensity myeloconditioning (futile) and all other alternatives are futile, therefore the patients will drop out of the trial if they are randomized to control arm.

 

The assumption is that FDA would require at least 40-60 patients to be treated in this single arm trial if they were to agree to it. If the expected improvement in survival is assessed to be 50% instead of two to three times the improvement, trial size may be 120 patients. Descriptive statistics with reference to historic controls would be the outcome. FDA may be less likely to allow this approach, given their recent positions on non-randomized trials, even in cancer.

 

If allowed, this study would take —2 years until submission and cost $ 9.9 MM if the trial size is 60 patients and 2.5 years at the cost of $ 13.9 MM for 120 patients.

 

Assumptions:

 

Patient population: ref/rel AML with active disease, patients not eligible for myeloablative HSCT

(patients over 50)

Trial design: single arm with historical controls, one year follow-up

Primary end-point: 1 year survival

Trial size: 60 patients

Number of centers: 5 - 7

Accrual per month per center: 1 patient

 

An IND submission for a pivotal trial requires that a number of tasks be completed or be in process. Most of them are independent of the protocol, i.e. will have to be done in exactly the same way regardless of the protocol design that will be finally accepted by the FDA (integrated safety and efficacy databases creation, all manufacturing tasks). During that process, i.e. during Q3 2012, API will approach the FDA and propose a single arm ref/rel AML trial as outlined above. Simultaneously, API will continue to work with the leading clinicians to explore pathways to a randomized trial in both ref/rel AML and HR MDS trial and if the FDA turns down a single arm design, API will submit an IND with a randomized trial protocol.

 

Given that adequate clinical supplies for study initiation are not slated to be available until the end of 2012, and preparations for the protocol and briefing document for the ref/rel AML trial were to begin in June, the meeting should occur in Q 3. If FDA does not accept the single arm AML trial approach, subsequent to the meeting the HR MDS randomized trial protocol would be submitted with a request for a T-Con with FDA, or alternatively a rel/ref AML randomized protocol, if it is possible to design it in a way acceptable to investigators. This should be scheduled during Q4 which would allow for

 

  

18

  

 

IND submission late Q4/early Q1 and trial initiation 30 days later. The total impact of the Ref/rel AML approach first would be 90-120 days, but most of this time will occur before CMC information needed for ND submission is available.

 

Manufacturing of BC8 antibody is currently taking place at FHCRC using a small batch method, but still adequate for transfer to other facilities (80L fill). It is a GMP compliant manufacturing facility, but is missing certain additional attributes FDA would like to see on BLA inspection. The plan will be to use BC8 manufactured at FHCRC for initial material, while we transfer the process to another cGMP facility. Initially, we will need to characterize material manufactured at FHCRC, and follow it for stability as well as use it in some comparability testing. This will constitute initial clinical supply as well. As we transfer the process to another facility, we will also qualify new reference material that will become the standard reference material (SRM). The FDA requested that FHCRC develop SRM two years ago, and FHCRC agreed to that but has not developed it so far, so the characterization of the FHCRC materials described above will have to move quickly.

 

Manufacturing of the final drug construct BC8-I-131 is currently taking place at the University of Washington. The process is in need of bringing up to commercial standards.

 

In order to develop larger scale manufacturing that would easily facilitate a multicenter trial, API proposes the following development plan:

 

	
-

	
Order two “regular size” (80L) batches of the BC8 to be manufactured at FHCRC. Due to the continuous manufacturing schedule at FHCRC, it is estimated that the first new batch for API studies would be available in November 2012. The first batch would allow for treatment of approximately 20 patients.

	
-

	
A second batch would need to be manufactured early in 2013 to ensure sufficient mAb supplies for approximately 6 months, i.e. until late 2013.

	
-

	
At the same time, API would undertake process transfer, scale up, manufacturing, QA/QC, bioequivalence and accelerated stability studies of a larger batch of the mAb (approximately 125 - 200 patient doses), to be ready to use by the end of March 2013

	
-

	
In the interim, existing dose material in the form of the BC8-1-131 construct, will be part of a stability/ shipping protocol and will undergo analytical testing to assure it remains potent under expected prep, ship and handling situations.

	
-

	
In parallel, API would have process development conducted en route to develop a GMP­compliant centralized manufacturing process of the final construct (BC8-I-131) at a CMO. API continues discussions with potential contract manufacturers, three of which have been identified and one provided a quote.

 

The timing, order and form of all the steps outlined above will depend and may be significantly influenced by the Company funding, regulatory requirements and feedback, FHCRC collaboration, manufacturing issues that may arise and other factors commonly affecting development of new drugs.

 

  

19

  

 

EXHIBIT B

 

Materials to be delivered to Company

 

FHCRC will deliver to Company all available quantities of BC8 MAb except for those currently committed to the conduct of internal research, including clinical research, at FHCRC, and will undertake to cooperate with Company in the transfer of the MCB and the Working Cell Bank (“WCB”) related there to (except for such portion of the WCB as is reasonably required by FHCRC to produce antibody for its own use) and to the facilities listed below. FHCRC will transfer all relevant INDs and Drug Master Files to Company. MAb, MCB and WCB shall be shipped in liquid nitrogen to the following sites: 1) 1/3rd of materials to BioReliance Corporation, 4920 Broschart Road, Rockville, MD 20850; and, 2) 2/3rds to ThermoFisher Scientific, 81 Wyman Street, Waltham, MA 02454. Included in the transfers will be manufacturing and characterization records for the MCB and WCB.

 

  

20

  

 

EXHIBIT C

 

RESEARCH WORK PLAN

 

Detailed research work plan will be determined by Sponsored Research Agreement and modified as needed and agreed to by both parties. Initial general direction of the research is further development of radioimmunotherapy for bone marrow conditioning/ablation prior to hematopoetic stem cell transplantation or bone marrow transplantation. The targeting agent during the first stage of development will be the BC8 monoclonal antibody.

 

The following lines of development will be initially pursued:

 

	
-

	
Radiolabeling of BC8 with actinium 225, including in vitro and in vivo experiments and development of supporting regulatory documentation that may lead to clinical trials

	
-

	
Development of high affinity engineered nanoparticles technology as means of binding alpha particle emitters to monoclonal antibodies

	
-

	
Development of pretargeted radioimmunotherapy technology (PRIT) (streptavidin/biotin system)

 

The sequence of execution and details of this Research Work Plan will be determined in separate Sponsored Research Agreement.

 

 

 21f8k122812a1ex10xx_cactus.htm

Exhibit 10.20

2012 UNIT INVESTOR RIGHTS AGREEMENT

BY AND AMONG

ACTINIUM PHARMACEUTICALS, INC.

 

AND

THE INVESTORS PARTY HERETO

October __, 2012

 

  

1

  

2012 UNIT INVESTOR RIGHTS AGREEMENT

 

THIS 2012 UNIT INVESTOR RIGHTS AGREEMENT (the “Agreement”) is entered into as of October__, 2012, by and among Actinium Pharmaceuticals, Inc., a Delaware corporation (the “Company”), the persons identified on Exhibit A hereto (the “Investors”), and the Placement Agent (defined below).

 

BACKGROUND

 

WHEREAS, the Investors are purchasing or otherwise acquiring Units (as defined herein) pursuant to the form of Unit Purchase Agreement (the “Purchase Agreement”) attached as an exhibit to the Private Placement Memorandum (as defined herein);

 

WHEREAS, as a condition of entering into the Purchase Agreement, the Investors and the Placement Agent have requested that the Company agree to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and in the Purchase Agreement, the parties, intending to be legally bound, mutually agree as follows:

 

Section 1GENERAL

 

1.1 Definitions.  As used in this Agreement the following terms shall have the following respective meanings:

 

 “Affiliate” means, with respect to any Person, any other Person who is an “affiliate” of such Person within the meaning of Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

 

“Common Stock” means the shares of the Common Stock, $0.01 par value per share, of the Company.

 

“Counterpart” means a counterpart signature page to this Agreement in substantially the same form as Exhibit B attached to this Agreement.

 

“Designated Holder” shall have the meaning set forth in the Registration Rights Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any rules or regulations promulgated thereunder, all as the same is in effect from time to time.

 

“Form S-3” means such form under the Securities Act as in effect on the date hereof or any successor form under the Securities Act that permits significant incorporation by reference of the Company’s subsequent public filings under the Exchange Act

 

“Holder” means any Investor or the Placement Agent owning of record any Registrable Securities and any assignee of record of such Registrable Securities.

 

“Indemnifiable Losses” means shall mean all losses, liabilities, obligations, claims, demands, damages, penalties, settlements, causes of action, costs and expenses, including, without limitation, the actual reasonable costs paid in connection with an Indemnitee’s investigation and evaluation of any claim or right asserted against such Indemnitee Party and all reasonable attorneys’, experts’ and accountants’ fees, expenses and disbursements and court costs including, without limitation, those incurred in connection with the Indemnitee’s enforcement of this Agreement and the indemnification provisions of Section 7 of this Agreement

 

  

2

  

 

 “Registrable Securities then outstanding” means and shall be determined by the number of shares of Common Stock of the Company outstanding which are Registrable Securities plus the number of shares of Common Stock (or common stock of Pubco) issuable pursuant to outstanding securities that are then exercisable for or convertible into securities which are Registrable Securities.

 

“Rule 144” means Rule 144 under the Securities Act.

 

“Offering” means the offering of Units pursuant to the Private Placement Memorandum (defined below).

 

“Order of Cutbacks” has the meaning set forth in Section 2.2(b).

 

“Placement Agent” means Laidlaw & Company (UK) Ltd.

 

“Person” means any natural person, corporation, general partnership, limited partnership, limited liability partnership, limited liability company, proprietorship, joint venture, trust, association, union, entity or other form of business organization or any governmental or regulatory authority whatsoever.

 

“Private Placement Memorandum” means that certain Confidential Private Placement Memorandum dated October 1, 2012 describing the offering of Units.

 

“Pubco” has the meaning set forth in Section 2.1 hereof.

 

“Register,” “registered,” and “registration” each refers to a resale registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

 

“Registrable Securities” means the following shares of the Company’s Common Stock (referred to herein collectively as the “Stock”):  (i) all shares of Common Stock issued as part of the Units, or all shares of common stock of Pubco issued pursuant to the Reverse Merger in exchange for the Common Stock issued as part of the Units, (ii) all shares of Common Stock issuable upon exercise of the Investor Warrants (as defined in the Private Placement Memorandum), or all shares of common stock of Pubco issuable upon exercise of the warrants issued pursuant to the Reverse Merger in exchange for such Investor Warrants, and (iii) all shares of Common Stock issuable upon exercise of the Laidlaw Warrant, or all shares of common stock of Pubco issuable upon exercise of the warrant issued by Pubco to the Placement Agent pursuant to the Reverse Merger in exchange for the Laidlaw Warrant, excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which an Investor’s rights under this Agreement are not assigned; provided, however, that Registrable Securities shall not include any securities (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, (B) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(l) thereof so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale, or (C) if the Investor thereof is no longer entitled to exercise any right provided in this Agreement.

 

  

3

  

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated June 30, 2000 and amended by Amendment No. 1 dated September 29, 2011, between the Company and certain of its stockholders (other than the Holders).

 

“Registration Rights Security” shall have the meaning set forth Section 2.1(c).

 

“Reverse Merger” has the meaning set forth in Section 2.1(a).

 

"Rule 415" means Rule 415 under the Securities Act.

 

“SEC” or “Commission” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and any rules or regulations promulgated thereunder, all as the same is in effect from time to time.

 

 “Subsidiaries” means any Person of which a Company, directly or indirectly, through one or more intermediaries owns or controls at the time at least fifty percent (50%) of the outstanding voting equity or similar interests or the right to receive at least fifty percent (50%) of the profits or earnings or aggregate equity value.

 

“Transaction Documents” has the meaning ascribed to it in the Purchase Agreement.

 

“Units” means the units of the Company’s securities as described in the Private Placement Memorandum.

 

Section 2REGISTRATION OF REGISTRABLE SECURITIES

 

2.1. Company Obligation of Reverse Merger and Registration.

 

(a)  Within thirty (30) business days following the date of the closing of the sale of the first $5,000,000 in Units (the “Minimum Offering Amount”) under the Offering (the “Minimum Offering Closing Date”), the Company agrees to effect a reverse merger transaction (whether by statutory merger or share exchange) between the Company and a shell company that is current in its reports filed with the SEC under the Exchange Act and whose securities are quoted in the over-the-counter market in the United States (“Pubco”), whereby the Company will become a wholly-owned subsidiary of Pubco and holders of the Company’s  equity or equity-linked securities will receive securities of Pubco in exchange for their securities of the Company (the “Reverse Merger”).  Immediately prior to the Reverse Merger, Pubco will have no or nominal assets or operations, no material actual liabilities or contingent liabilities, and will be eligible to have its securities traded electronically through the Depository Trust Company (DTC).  The Reverse Merger shall be subject to such other terms and conditions as are reasonably satisfactory to the Placement Agent and the Company.

(b)  In the event that the Company does not fulfill its obligation to consummate the Reverse Merger within thirty (30) business days following the Minimum Offering Closing Date (the “Reverse Merger Deadline”), or otherwise cause its securities (or the securities of a successor of the Company) to become publicly traded within thirty (30) business days following the Reverse Merger Deadline, then upon written demand of the Placement Agent, the Company shall (i) effect the return of any funds then held in the escrow account for the Offering to the investors who deposited such funds in escrow, and (ii) issue to the Placement Agent and any investors whose subscriptions in the Offering have previously closed, on a pro rata basis, warrants to purchase a number of shares of Common Stock equal to five percent (5%) of the outstanding Common Stock of the Company on a fully diluted basis, exercisable for a period of five (5) years from their date of issuance at a price of $0.55 per share and otherwise identical terms as the B Warrants (as defined in the Private Placement Memorandum).  Such warrant issuance by the Company shall be in full satisfaction of its obligations to the Placement Agent and such prior investors in the Offering with respect to the delinquency of the Reverse Merger.  So long as the  Placement Agent has not made such written demand, then the Placement Agent and the Company may continue to solicit and close subscriptions under the Offering notwithstanding the delinquency of the Reverse Merger, provided that the Placement Agent shall retain the right to make such written demand at any time prior to the termination of the Offering and upon such demand such warrant issuance shall be allocated pro rata among all investors who invest in the Offering prior to the consummation of the Reverse Merger.

 

  

4

  

(c)  The Company shall cause Pubco to file with the SEC within forty-five (45) days of the date of the final closing of the Offering (the “Filing Deadline”), a registration statement registering for resale all Registrable Securities and any securities defined as “Registrable Securities” under the Registration Rights Agreement (the “Registration Rights Securities”) requested to be registered by a Designated Holder (the “Registration Statement”).  The holders of any Registrable Securities removed from the Registration Statement as a result of a Rule 415 or other comment from the SEC shall have “piggyback” registration rights for such Registrable Securities with respect to any registration statement filed by Pubco following the effectiveness of the Registration Statement which would permit the inclusion of such Registrable Securities that were removed from the Registration Statement, provided that any such removal shall be applied in the Order of Cutbacks.  In no event shall any Registration Rights Securities be removed from the Registration Statement unless all Registrable Securities hereunder have also been removed.  The Company shall cause Pubco to use its reasonable best efforts to have the Registration Statement declared effective within thirty (30) days of being notified by the SEC that the Registration Statement will not be reviewed by the SEC (and in such case of no SEC review, not later than sixty (60) days after the Filing Deadline) or within 180 days after the Filing Deadline in the event the SEC provides written comments to the Registration Statement (the “Effectiveness Deadline”).

(d)  If the Registration Statement is not filed on or before the Filing Deadline or not declared effective on or before the Effectiveness Deadline, Pubco or, if the Reverse Merger has not then been consummated, the Company, shall pay to each Holder an amount in cash equal to one-percent (1.0%) of such Holder’s investment amount in the Offering on every thirty (30) day anniversary of such Filing Deadline or Effectiveness Deadline failure until such failure is cured.  The payment amount shall be prorated for partial thirty (30) day periods. The maximum aggregate amount of payments to be made by Pubco or the Company as the result of such failures, whether by reason of a Filing Deadline failure, Effectiveness Deadline failure or any combination thereof, shall be an amount equal to six percent (6%) of each Holder’s investment amount.  Notwithstanding the foregoing, no payments shall be owed with respect to any period during which all of the Holder’s Registrable Securities may be sold by such Holder under Rule 144.  Moreover, no such payments shall be due and payable with respect to any Registrable Securities if Pubco is unable to register due to limits imposed by the SEC’s interpretation of Rule 415, provided that any such limitation is applied in the Order of Cutbacks.

(e)  The Company shall maintain, or shall cause Pubco to maintain, the Registration Statement effective for one (1) year from the date it is declared effective by the SEC or until Rule 144 of the Securities Act is available to Holders with respect to all of their Registrable Securities, whichever is earlier (the “Effectiveness Period”).

 

  

5

  

2.2.  Piggyback Registration Rights.

 (a)  If the Registration Statement is not filed on or before the Filing Deadline or not declared effective on or before the Effectiveness Deadline, then if at any time or from time to time the Company or Pubco shall determine to register any of its equity securities for its own account in a direct public offering or an underwritten public offering, or for the account of selling security holders in a resale registration (a “Resale Registration”), the Company will, or shall cause Pubco to:

(i)           prior to the filing of such registration give to the Holders written notice thereof; and

(ii)           include in such registration (and any related qualification under blue sky laws or other compliance), and underwriting, if any, all the Registrable Securities (subject to Rule 415 related cutbacks applied in the Order of Cutbacks ) specified in a written request or requests made within thirty (30) days after receipt of such written notice from the Company by any Holder.

 

(b)  The right of any Holder to registration in an underwritten offering pursuant to this Section 2.2 shall be conditioned upon such Holder’s participation in any underwritten offering and the inclusion of Registrable Securities in any underwriting to the extent provided herein.  If any Holder requests pursuant to Section 2.2(a)(ii) above to distribute its securities through an underwritten offering, such Holder shall (together with the Company and any other stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company.  Notwithstanding any other provision of this Section 2, in the case of an underwritten offering, if the Company or Pubco or the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten or registered, the managing underwriter may limit the Registrable Securities to be included in such registration.  The Company shall so advise the Holders and the other stockholders distributing their securities through such offering pursuant to piggyback registration rights, and the number of shares of Registrable Securities and other securities that may be included in the registration and underwriting shall be allocated among the holders (i) of Common Stock equivalents of Series E Preferred Shares (or shares of common stock of Pubco issued upon the Reverse Merger to the former holders of Series E Preferred Shares following the automatic conversion thereof immediately prior to the Reverse Merger),  and (ii) only after all Common Stock equivalents of Series E Preferred Shares (or all shares of common stock of Pubco issued upon the Reverse Merger to the former holders of Series E Preferred Shares following the automatic conversion thereof immediately prior to the Reverse Merger)  have been registered, on a pro rata basis among the Holders and holders of Common Stock equivalents of Series D Preferred Shares, Series C Preferred Shares, Series B Preferred Shares and Series A Preferred Shares (or holders  of shares of common stock of Pubco issued to the former holders of such preferred shares following the automatic conversion thereof immediately prior to the Reverse Merger) and the Designated Holders of Registration Rights Securities (or all shares of common stock of Pubco issued upon the Reverse Merger to the former Designated Holders in exchange for Registration Rights Securities, and, finally, if any allocation remains available for registration after the foregoing, (iii) on a pro rata basis among any other participating securities holders.  In the event the Company or the managing underwriter does determine that marketing factors require a limitation of the number of shares to be underwritten (the “Cutback”), such Cutback shall be applied first to reduce, pro rata, holders of Common Stock and common stock equivalents other than preferred stock and Registration Rights Securities (or holders of common stock and common stock equivalents of Pubco who received such common stock and common stock equivalents in exchange for Common Stock and Common Stock equivalents other than preferred stock and Registration Rights Securities pursuant to the Reverse Merger) excluding the Holders, next, pro rata, to reduce the Holders, the Designated Holders  and any other holders of Common Stock equivalents of Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares, and Series D Preferred Shares  (or holders  of shares of common stock of Pubco issued to the former holders of such preferred shares following the automatic conversion thereof immediately prior to the Reverse Merger) , all before it shall be applied pro rata to reduce holders of common stock equivalents of Series E Preferred Shares (or holders  of shares of common stock of Pubco issued to the former holders of such Series E Preferred Shares following the automatic conversion thereof immediately prior to the Reverse Merger) (the foregoing order of cutbacks being referred to herein as the “Order of Cutbacks”).  [Note to 2012 Unit Investors:  The order of cutbacks is subject to modification to improve registration priority of 2012 Unit Investors with respect to cutbacks if the company is able to procure necessary amendments to existing Registration Rights Agreements prior to initial closing under Purchase Agreement]  To facilitate the allocation of shares in accordance with the above provisions, the Company, Pubco or the underwriters may round the number of shares allocated to each Holder or other securities holder to the nearest 100 shares.  If any Holder or other securities holder disapproves of the terms of any such underwriting, he or she may elect to withdraw therefrom by written notice to the Company or Pubco and the managing underwriter.  Any securities excluded or withdrawn from such underwritten offering shall be withdrawn from such registration, and shall not be transferred in a public distribution without the prior written consent of the managing underwriter prior to one-hundred eighty (180) days after the effective date of the registration statement relating thereto.

 

  

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 (c)  The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2 prior to the effectiveness of such registration, whether or not any Holder has elected to include securities in such registration.

 

Section 3.  UNDERWRITTEN PUBLIC OFFERING.

 

The Company shall not cause, and shall ensure that Pubco does not cause, the registration under the Securities Act of any other shares of its common stock to become effective (other than registration of an employee stock plan, or registration in connection with any Securities Act Rule 145 or similar transaction) during the Effectiveness Period of a registration requested hereunder for an underwritten public offering if, in the judgment of the underwriter or underwriters, marketing factors would materially adversely affect the price of the Registrable Securities subject to such underwritten registration.

 

Section 4.  OBLIGATIONS OF COMPANY

 

In addition to the obligations of the Company set forth in Section 2.1, and in no way in limitation of such obligations, whenever the Company or Pubco is required by the provisions of this Agreement to effect the registration of the Registrable Securities, the Company shall, or shall cause Pubco to:  (i) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to make and to keep such registration statement effective during the Effectiveness Period, (ii) comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities proposed to be registered in such registration statement for the Effectiveness Period; (iii) furnish to any Holder such number of copies of any prospectus (including any preliminary prospectus and any amended or supplemented prospectus), in conformity with the requirements of the Securities Act, as such Holder may reasonably request in order to effect the offering and sale of the Registrable Securities to be offered and sold; (iv) use its best efforts to register or qualify the Registrable Securities covered by such registration statement under the securities or blue sky laws of such states as the Holders shall reasonably request, maintain any such registration or qualification current for the Effectiveness Period, and take any and all other actions either necessary or reasonably advisable to enable Holders to consummate the public sale or other disposition of the Registrable Securities in jurisdictions where such Holders desire to effect such sales or other disposition; (v) take all such other actions either necessary or reasonably desirable to permit the Registrable Securities held by a Holder to be registered and disposed of in accordance with the method of disposition described herein; (vi) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering; (vii) notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, such obligation to continue for the Effectiveness Period; (viii) cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company or Pubco are then listed; (ix) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration; and (x) use its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to Section 3, if such securities are being sold through underwriters, or if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (A) an opinion, dated such date as such registration statement becomes effective, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters and to the Holders requesting registration of Registrable Securities and (B) a letter dated such date as such registration statement becomes effective, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to the Holders of a majority of the Registrable Securities being registered, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.  Notwithstanding the foregoing, the Company shall not be required to register or to qualify an offering of the Registrable Securities under the laws of a state if as a condition to so doing the Company is required to qualify to do business or to file a general consent to service of process in any such state or jurisdiction, unless the Company is already subject to service in such jurisdiction.

 

  

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SECTION 5 EXPENSES OF REGISTRATION AND RESTRICTIVE LEGEND REMOVAL

 

(a)           The Company or Pubco shall pay all of the fees and expenses (exclusive of underwriting discounts and commission and stock transfer taxes) incurred by the Company or Pubco in complying with Sections 2, 3 and 4 hereof in connection with any registration statement that is initiated pursuant to this Agreement, including, without limitation, all SEC and blue sky registration and filing fees, printing expenses, transfer agent and registrar fees, the fees and disbursements of the Company’s outside counsel, the reasonable fees and disbursements of one special counsel to the Holders (not to exceed $20,000), and the expense of any special audits (not to exceed $20,000) incident to or required by any such registration (the “Registration Expenses”).  If a registration proceeding is begun upon the request of Holders pursuant to Sections 3 or 4 but such request is subsequently withdrawn, then the Holders of Registrable Securities to have been registered may either:  (i) bear all Registration Expenses of such proceeding, pro rata on the basis of the number of shares to have been registered, in which case the Company shall be deemed not to have effected a registration pursuant to Sections 3 or 4, as applicable, of this Agreement; or (ii) require the Company to bear all Registration Expenses of such proceeding, in which case the Company shall be deemed to have effected a registration pursuant to Section 3 or 4, as applicable, of this Agreement.  Notwithstanding the foregoing, however, if at the time of the withdrawal, the Holders have learned of a material adverse change in the condition, business or prospects of the Company from that known to the Holders at the time of their request, then the Holders shall not be required to pay any of said Registration Expenses.  In such case, the Company shall be deemed not to have effected a registration pursuant to Sections 3 or 4, as applicable, of this Agreement.  Any underwriting discounts, fees and disbursements of any additional counsel to the Holders, selling commissions and stock transfer taxes applicable to the Registrable Securities registered on behalf of Holders shall be borne by the Holders of the Registrable Securities included in such registration.  The expenses of any legal services or special audit required in connection with any registration, qualification or compliance pursuant to Section 3 or 4 in excess of twenty thousand dollars ($20,000) shall be borne pro rata by the Holders of Registrable Securities proposing to distribute such shares of Registrable Securities in such registration.

 

  

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(b)           Notwithstanding anything herein to the contrary, at the request of any Holder, the Company shall employ its counsel at the Company’s expense to prepare any and all legal opinions necessary for the prompt removal of restrictive legends from certificates representing Registrable Securities as, when and to the extent such legends may be removed in compliance with the Securities Act and/or Rule 144.

 

SECTION 6 INDEMNIFICATION

 

6.1. The Company.  To the extent permitted by law, the Company will, and shall cause Pubco to, indemnify Holders and each person controlling Holders within the meaning of Section 15 of the Securities Act, and each underwriter if any, of the Company’s  or Pubco’s securities, with respect to any registration, qualification or compliance which has been effected pursuant to this Agreement, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company or Pubco of any rule or regulation promulgated under the Securities Act or Exchange Act or state securities law applicable to the Company or Pubco in connection with any such registration, qualification or compliance, and the Company or Pubco will reimburse Holders and each person controlling Holders, and each underwriter, if any, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that neither the Company nor Pubco will be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information expressly furnished to the Company or Pubco by such Holder or controlling person or underwriter seeking indemnification for use in connection with such registration by any such Holder, underwriter or controlling person.

 

6.2. Holders.  To the extent permitted by law, each Holder shall, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected (the “Indemnifying Holder”), indemnify the Company and Pubco, each of their respective directors and officers and each person who controls the Company and Pubco within the meaning of Section 15 of the Securities Act, and each underwriter, if any, of the Company’s or Pubco’s securities with respect to any registration, qualification or compliance which has been effected pursuant to this Agreement, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), arising out of or based on any untrue statement (or alleged untrue statement) of a material fact made in reliance upon and in conformity with written information furnished to the Company or Pubco by such Indemnifying Holder contained in any such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by such Indemnifying Holder of any rule or regulation promulgated under the Securities Act applicable to such Indemnifying Holder in connection with any such registration, qualification or compliance, and the Indemnifying Holder will reimburse the Company or Pubco, such directors and officers and each person controlling Company and each underwriter, if any, for any legal or any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, in reliance upon and in conformity with written information furnished to the Company by such Indemnifying Holder, provided that in no event shall any indemnity under this Section 6.2 exceed the net proceeds of the offering received by such Indemnifying Holder; provided, further, that the indemnity agreement contained in this Section 6.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnifying Holder (which consent shall not be unreasonably withheld); provided further, however, that the indemnity agreement contained in this Section 6.2 with respect to any preliminary prospectus shall not inure to the benefit of any Holder or underwriter, or any person controlling such Holder or underwriter, from whom the person asserting any such losses, claims, damages or liabilities purchased shares in the offering, if a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Holder or underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the shares to such person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability.

 

  

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6.3. Defense of Claims.  Each party entitled to indemnification under this Section 6 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense; provided, however, that the Indemnifying Party shall pay such expense if representation of the Indemnified Party by counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such proceeding, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 6 unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action.  No Indemnifying Party, in the defense of any such claim or litigation shall, except with the written consent of each Indemnified Party which consent shall not be unreasonably withheld, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.  No Indemnifying Party shall be required to indemnify any Indemnified Party with respect to any settlement entered into without the Indemnifying Party’s prior written consent.

 

6.4. Contribution.  If the indemnification provided for in this Section 6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other, in connection with the violations that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations.  The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder exceed the net proceeds from the offering received by such Holder.

 

  

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6.5. Conflict; Survival.  Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.  The obligations of the Company and Holders under Section 6 shall survive the completion of any offering of Registrable Securities in a registration statement.

 

SECTION 7 RULE 144 REPORTING

 

With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, the Company agrees to, and agrees to cause Pubco to:

 

(a) Make and keep public information available, as those terms are understood and defined in Rule 144, at all times in accordance with the requirements of the Exchange Act from and after the effective date of the Reverse Merger;

 

(b) File with the SEC in a timely manner all reports and other documents required of the Company or Pubco under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements; and

 

(c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request a written statement by the Company or Pubco as to its compliance with the current public information requirements of said Rule 144 and of the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company or Pubco, and such other reports and documents of the Company or Pubco, and such other reports and documents so filed as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any such securities without registration; and

 

(d) Take such action, including the voluntary registration of its common stock under Section 12 of the Exchange Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of its securities to the general public is declared effective.

 

SECTION 8 STANDOFF AGREEMENT

 

Upon the effectiveness of any registration statement for the underwritten public offering of equity securities of the Company or Pubco, if requested by the Company or Pubco and the managing underwriter, each Holder agrees not to offer to sell or sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company or Pubco held by the Holder at any time during such period (other than those unregistered shares which are sold under Rule 144, if any), directly or indirectly, without the prior written consent of the Company, Pubco or the underwriters for such period of time following the effective date of the registration statement(not to exceed one-hundred eighty (180) days) as may be requested by the Company, Pubco and the managing underwriter, provided that the foregoing obligations shall apply only if all directors and executive officers of the Company and all other stockholders holding securities that, on an as converted or fully exercised basis, equate to greater than five percent (5%) of the issued and outstanding shares of Common Stock (or common stock of Pubco, as the case may be) and all other persons with registration rights (whether or not pursuant to this Agreement), enter into similar agreements.  This Section 8 shall not apply to a registration relating solely to employee benefit plans, or to a registration relating solely to a transaction pursuant to Rule 145 under the Securities Act.  In order to enforce the foregoing, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the share or securities of every other person subject to the foregoing restrictions) until the end of such period.

 

  

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From and after the date of this Agreement, the Company shall not, without the prior written consent of at least a majority of the outstanding Registrable Securities (the “Required Vote”), grant to future investors any registration rights on parity with or more favorable than the registration rights granted to the Holders hereunder.

 

SECTION 9  INDEMNIFICATION

 

The Company shall, and shall cause Pubco to, indemnify and hold harmless each Holder, each of their respective direct and indirect subsidiaries and Affiliates, and each of the respective partners, members, stockholders, equity holders, officers, directors, trustees and other fiduciaries, employees, agents, and representatives of any of the foregoing (collectively, referred to as the  “Indemnitees” and individually as a “Indemnitee”) from and against any and all Indemnifiable Losses resulting from, relating to or arising out of any claim or claims made against such Indemnitee in connection with any threatened, pending or completed action, suit, arbitration, investigation or other proceeding arising out of, or relating to the any Indemnitee’s performance of its obligations or the exercise of any Indemnitee’s rights in accordance with the terms of this Agreement, including actions taken in their capacity as directors or stockholders of the Company or Pubco; provided, however, that the Company and Pubco shall not be obligated to indemnify or hold harmless any Indemnitee under this Section 9 against any Indemnifiable Losses resulting from or arising out of any such action or claim if it has been adjudicated by a final and non-appealable determination of a court or other trier of fact of competent jurisdiction that such Indemnifiable Losses were the result of (a) a breach of such Indemnitee’s fiduciary duty to the Company, (b) any action or omission made by the Indemnitee in bad faith, (c) any criminal action on the part of such Indemnitee or (d) such Indemnitee’s willful misconduct.

 

The Company or Pubco shall reimburse, promptly following request therefor, all reasonable expenses incurred by an Indemnitee in connection with any threatened, pending or completed action, suit, arbitration, investigation or other proceeding arising out of, or relating to, the Indemnitees’ actions in connection with any transaction undertaken in connection with this Agreement.

 

SECTION 10 CONFIDENTIALITY OF RECORDS

 

Each Holder agrees that it will keep confidential and not disclose, divulge or use for any purpose other than to evaluate and monitor its investment in the Company any confidential or proprietary information (“Confidential Information”) which such party obtains from the Company pursuant to financial statements, reports and other information submitted by the Company to such party pursuant to this Agreement or the Purchase Agreement; provided, however, that the Investors may disclose Confidential Information (a) to their respective general partners, limited partners, members, stockholders, equity holders, Affiliates and any of the directors, officers and other representatives of any of the foregoing in accordance with their respective normal reporting practices, and to their respective attorneys, accountants, consultants and other professionals under an obligation of confidentiality and (b) to any prospective purchaser of any securities of the Company so long as such prospective purchaser is obligated not to disclose, divulge or use such Confidential Information to the same extent as the disclosing Investor.  Each Holder shall use the same level of care with the Confidential Information that it uses with its own confidential information.  “Confidential Information” shall not include the following:  (i) information that is now in, or hereafter enters, the public domain through no fault of the Holder; (ii) information that previously was known by the Holder independently of the Company; (iii) information that is independently developed by the Holder without reference to Confidential Information; (iv) information that is disclosed with the written approval of the Company; or (v) information that is received from a third party without a duty of confidentiality.  Notwithstanding the foregoing, no Holder shall be prohibited from disclosing Confidential Information that is required to be disclosed pursuant to any legal process or subpoena from any court, arbitrator, governmental body, official or authority or by applicable law; provided that the disclosing Holder takes reasonable steps to minimize the extent of such disclosure and provides the Company with reasonably prompt notice after becoming required to disclose such Confidential Information to afford the Company an opportunity to intervene and oppose such disclosure.  This provision shall survive any termination of this Agreement.  Notwithstanding anything herein to the contrary, this provision shall expire and become null and void and of no further force or effect upon the filing by Pubco of the so-called “super 8-K” under the Exchange Act following the closing of the Reverse Merger.

 

  

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SECTION 11 MISCELLANEOUS

 

11.1               Governing Law.

 

This Agreement shall be governed by and construed under the laws of the State of New York, notwithstanding the conflicts of laws principles of the State of New York or any other jurisdiction.  No suit, action or proceeding with respect to this Agreement may be brought in any court or before any similar authority other than in a court of competent jurisdiction in the State of New York and the parties hereby submit to the exclusive jurisdiction of such courts for the purpose of such suit, proceeding or judgment.  Each of the parties hereto hereby irrevocably waives any right which it may have had to bring such an action in any other court, domestic or foreign, or before any similar domestic or foreign authority and agrees not to claim or plead the same.  Each of the parties hereto hereby irrevocably and unconditionally waives trial by jury in any legal action or proceeding in relation to this Agreement and for any counterclaim therein. 

 

11.2           Survival.

 

The representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby.  All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company or Pubco, or their respective Subsidiaries or the Investors pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company, Pubco or their respective Subsidiaries or the Investors, as applicable, hereunder solely as of the date of such certificate or instrument.

 

11.3               Successors and Assigns.

 

Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors and permitted assigns of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of Common Stock issued or issuable in the Offering from time to time; provided, however, that each such successor and permitted assign the transferee has agreed in writing to be bound by the terms of this Agreement as if such successor and permitted assign were an original Holder by executing the Counterpart.

 

  

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11.4               Entire Agreement.

 

This Agreement constitutes the full and entire understanding and agreement between the parties hereto with regard to the subject matter hereof and thereof and no party hereto shall be liable or bound to any other party hereto in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein, with respect to the subject matter hereof.

 

11.5               Severability.

 

If any provision of the Agreement is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

11.6               Amendment and Waiver.

 

Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company or Pubco and the Holders of a majority of the Registrable Securities then outstanding and any amendment or waiver so made shall be binding upon each Holder and the Company.  In addition, any provision of this Agreement and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) by any party so waiving in writing, such waiver to be enforceable solely against such party.

 

112.7               Delays or Omissions.

 

No delay or omission to exercise any right, power, or remedy accruing to any party hereto, upon any breach, default or noncompliance of any party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring.  Any waiver, permit, consent, or approval of any kind or character on part of any party hereto of any breach, default or noncompliance under the Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement, by law, or otherwise afforded to the parties hereto, shall be cumulative and not alternative.

 

11.8               Notices.

 

All notices, requests, demands and other communications given or made in accordance with the provisions of this Agreement shall be addressed (i) if to a Holder, at such Holder’s address, fax number or email address furnished on the signature pages hereof or such Holder’s Counterpart hereto or as otherwise furnished to the Company or Pubco by the Holder in writing, or (ii) if to the Company or Pubco, to the attention of the President at such address, fax number or email address furnished on the signature page below or as otherwise furnished by the Company or Pubco in writing, and shall be made or sent by a personal delivery or overnight courier, by registered, certified or first class mail, postage prepaid, or by facsimile or electronic mail with confirmation of receipt, and shall be deemed to be given on the date of delivery when made by personal delivery or overnight courier, 48 hours after being deposited in the U.S. mail, or upon confirmation of receipt when sent by facsimile or electronic mail.  Any party may, by written notice to the other, alter its address, number or respondent, and such notice shall be considered to have been given three (3) days after the overnight delivery, airmailing, faxing or sending via e-mail thereof.

 

  

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11.9               Titles and Subtitles.

 

The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

 

12.10               Counterparts; Execution by Facsimile Signature.

 

This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.  This Agreement may be executed by facsimile signature(s) which shall be binding on the party delivering same, to be followed by delivery of originally executed signature pages.

 

 

[SIGNATURES ON FOLLOWING PAGES]

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this 2012 Unit Investor Rights Agreement as of the date set forth in the first paragraph hereof.

 

	
COMPANY:

	  
	  	  
	
ACTINIUM PHARMACEUTICALS, INC.

	  
	
 

 

By:_____________________________

Name: Jack V. Talley   Title: President and Chief Executive Officer

 

Address:

 

Tel: (    )

Fax: (    )

email: jtalley@actiniumpharmaceuticals.com

	  

 

	
PLACEMENT AGENT:

 

LAIDLAW & COMPANY (UK) LTD.

 

BY:_____________________________

NAME:

TITLE:

 

ADDRESS:

 

TEL:

FAX:

EMAIL:

 

[Signature Page to 2012 Unit Investor Rights Agreement]

 

  

16

  

 

IN WITNESS WHEREOF, the parties hereto have executed this 2012 Unit Investor Rights Agreement as of the date set forth in the first paragraph hereof.

 

	
ACTINIUM HOLDINGS LIMITED

 

By:_____________________________

Name:

Title:

 

Address:

Actinium Holdings Limited

c/o Michael Sheffery, Ph.D

OrbiMed Advisors LLC

767 Third Avenue, 30th Floor

New York, NY 10017

 

with a copy to:

 

Shalom Leaf, Esq.

Shalom Leaf, PC

600 Madison Avenue, 22nd Floor

New York, NY 10022

	
 

LAIDLAW & COMPANY (UK) LTD.

 

BY:_____________________________

NAME:

TITLE:

 

ADDRESS:

 

TEL:

FAX:

EMAIL:

 

The Investors listed on Exhibit A to the Agreement have executed a Subscription Agreement with the Company which provides, among other things, that by executing the Subscription Agreement each Investor is deemed to have executed the 2012 UNIT INVESTOR RIGHTS AGREEMENT in all respects and is bound to the terms and conditions thereof as set forth in such Subscription Agreement.

 

[Signature Page to 2012 Common Stock Investor Rights Agreement]

 

  

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Exhibit A

List of Investors

 

  

18

  

 

Exhibit B

Counterpart Signature Page

 

to

 

2012 Unit Investor Rights Agreement dated October __, 2012

 

for

 

Actinium Pharmaceuticals, Inc.

 

The undersigned hereby acknowledges receipt of a copy of that certain 2012 Unit Investor Rights Agreement, dated October __, 2012, among Actinium Pharmaceuticals, Inc., a Delaware corporation, Laidlaw & Company (UK) Ltd. and the Investors referred to therein and the undersigned (as hereafter amended from time to time, the “Investor Rights Agreement”), and hereby certifies to the other parties thereto that it has read and fully understands the Investor Rights Agreement, that it has had an opportunity to review and discuss the terms and conditions of the Investor Rights Agreement with its legal counsel and other advisors, and that it agrees to be bound by the terms and conditions of the Investor Agreement as if it were an original signatory thereto.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on this ____ day of ____________, 20__.

 

INVESTOR:

 

The Investors listed on Exhibit A to the Agreement have executed a Subsjcription Agreement with the Company which provides, among other things, that by executing the Subscription Agreement each Investor is deemed to have executed the 2012 UNIT INVESTOR RIGHTS AGREEMENT in all respects and is bound to the terms and conditions thereof as set forth in such Subscription Agreement.

 

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