Document:

Exhibit 4.1

 

[Face of Note]

 

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

	
CUSIP No. 87612E BG0
    	
PRINCIPAL AMOUNT: $           
    

ISIN US87612EBG08

Common Code No. 170614330

 

REGISTERED NO.

 

TARGET CORPORATION

 

3.900% Notes due 2047

 

TARGET CORPORATION, a corporation duly organized and existing under the laws of the State of Minnesota (hereinafter called the “Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of                   MILLION DOLLARS ($          ) on November 15, 2047 and to pay interest thereon from October 20, 2017 or from the most recent Interest Payment Date to which interest has been paid or duly provided for semi-annually on May 15 and November 15 of each year, commencing May 15, 2018, at the rate of 3.900% per annum, until the principal hereof is paid or made available for payment.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest next preceding such Interest Payment Date. The Regular Record Date for an Interest Payment Date shall be the date 15 calendar days prior to that Interest Payment Date (whether or not a Business Day).  As used herein, “Business Day” means a day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York, New York.

 

 

Any interest not punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

 

Payment of interest on this Security shall be made in immediately available funds at the office or agency of the Company maintained for that purpose in New York, New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the Company, payment of interest may be paid by check mailed to the Person entitled thereto at such Person’s last address as it appears in the Security Register or by wire transfer to such account as may have been designated by such Person in writing not less than 10 days prior to the date of such payment.  Payment of principal of and interest on this Security at Maturity shall be made against presentation of this Security at the office or agency of the Company maintained for that purpose in New York, New York.

 

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

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

 

	
DATED:
    	
 
    
	
 
    	
 
    
	
 
    	
TARGET CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[SEAL]
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Attest:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
TRUSTEE’S CERTIFICATE OF
    	
 
    
	
AUTHENTICATION
    	
 
    
	
This is one of the Securities of the
    	
 
    
	
series referred to in the
    	
 
    
	
within-mentioned Indenture.
    	
 
    
	
 
    	
 
    
	
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
    	
 
    
	
      as Trustee
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized Signatory
    	
 
    

 

 

[Reverse of Note]

 

TARGET CORPORATION

 

3.900% Notes due 2047

 

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture dated as of August 4, 2000 between the Company and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One Trust Company, N.A.), as trustee, as supplemented by the First Supplemental Indenture dated as of May 1, 2007, between the Company and The Bank of New York Trust Company, N.A., as trustee, and as further amended or supplemented from time to time (herein called the “Indenture”) (in its capacity as trustee, The Bank of New York Mellon Trust Company, N.A., being herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered.  This Security is one of the series designated on the face hereof, such series being limited in initial aggregate principal amount to $           ; provided, however, that the Company may, without the consent of the Holders of the Securities of this series, issue additional Securities with the same terms as the Securities of this series, and such additional Securities shall be considered part of the same series under the Indenture as the Securities of this series.

 

This Security is issuable only in registered form in denominations of $2,000 or any amount in excess thereof which is an integral multiple of $1,000.

 

The Securities of this series shall not be entitled to any sinking fund.

 

Optional Redemption

 

The Securities of this series are redeemable on at least 15 days’, but no more than 45 days’, prior written notice mailed (or otherwise delivered in accordance with the applicable procedures of DTC) to each Holder of the Securities to be redeemed, either in whole at any time or in part from time to time prior to May 15, 2047 (six months prior to the Stated Maturity of the Securities of this series, the “Par Call Date”), at a Redemption Price for the Securities to be redeemed on any Redemption Date equal to the greater of the following amounts:

 

· 100% of the principal amount of the Securities being redeemed on the Redemption Date; or

 

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· the sum of the present values of the Remaining Scheduled Payments of principal and interest that would have been

 

payable if the Securities being redeemed on that Redemption Date matured on the Par Call Date (excluding interest accrued to the Redemption Date), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate, plus 20 basis points;

 

plus, in each case, accrued and unpaid interest on the Securities being redeemed to, but excluding, the Redemption Date.

 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated yield to maturity of the Comparable Treasury Issue.  In determining this rate, the price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) shall be assumed to be equal to the Comparable Treasury Price for such Redemption Date.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

 

“Independent Investment Banker” means each of Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC or their respective successors as may be appointed from time to time by the Quotation Agent after consultation with the Company; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “primary treasury dealer”), another primary treasury dealer shall be substituted therefor by the Company.

 

“Comparable Treasury Price” means (A) the arithmetic average of the Reference Treasury Dealer Quotations for such Redemption Date after excluding the highest and lowest Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than three Reference Treasury Dealer Quotations, the arithmetic average of all Reference Treasury Dealer Quotations for such Redemption Date.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the arithmetic average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer by 3:30 p.m. on the third Business Day preceding such Redemption Date.

 

6

 

“Reference Treasury Dealer” means each of Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC or their respective successors and any other primary treasury dealer selected by the Quotation Agent after consultation with the Company.

 

“Remaining Scheduled Payments” means, with respect to any Security of this series, the remaining scheduled payments of the principal and interest thereon that would be due after the related Redemption Date but for such redemption; provided, however, that, if such Redemption Date is not an Interest Payment Date with respect to such Security, the amount of the next scheduled interest payment thereon shall be reduced by the amount of interest accrued thereon to such Redemption Date.

 

“Quotation Agent” means, for purposes of determining the Redemption Price, Deutsche Bank Securities Inc. or such other primary treasury dealer as may be selected by the Company.

 

In addition, the Company may redeem all or part of the Securities of this series, on at least 15 days’, but no more than 45 days’, prior written notice mailed (or otherwise delivered in accordance with the applicable procedures of DTC) to each Holder of the Securities to be redeemed, at any time or from time to time on and after the Par Call Date, at the Company’s option, at a Redemption Price equal to 100% of the principal amount of the Securities to be redeemed, plus accrued and unpaid interest on the Securities being redeemed to, but excluding, the Redemption Date.

 

A partial redemption of the Securities of this series may be effected by such method as the Trustee shall deem fair and appropriate and may provide for the selection for redemption of a portion of the principal amount of the Securities of this series equal to an authorized denomination.

 

For the avoidance of doubt, notice of any redemption shall be mailed (or otherwise delivered in accordance with the applicable procedures of DTC) at least 15 days but not more than 45 days before the Redemption Date to each Holder of the Securities of this series to be redeemed.

 

Unless the Company defaults in payment of the Redemption Price, on and after the Redemption Date interest shall cease to accrue on the Securities of this series or portions thereof called for redemption.

 

Change of Control Offer

 

If a Change of Control Triggering Event occurs, unless the Company has exercised its option to redeem the Securities of this series, the Company shall be required to make an offer (a “Change of Control Offer”) to each Holder of the Securities of this series to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that 

 

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Holder’s Securities on the terms set forth herein.  In a Change of Control Offer, the Company shall be required to offer the Change of Control Payment.  Within 30 days following any Change of Control Triggering Event or, at the Company’s option, prior to any Change of Control, but after public announcement of the transaction that constitutes or may constitute the Change of Control, a notice shall be mailed to Holders of the Securities of this series describing the transaction that constitutes or may constitute the Change of Control Triggering Event and offering to repurchase such Securities on the date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (a “Change of Control Payment Date”).  The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of Control Payment Date.

 

In order to accept the Change of Control Offer, the Holder must deliver to the Paying Agent, at least five Business Days prior to the Change of Control Payment Date, this Security together with the form entitled “Election Form” (which form is annexed hereto) duly completed, or a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange, or the Financial Industry Regulatory Authority or a commercial bank or trust company in the United States setting forth:

 

(i)                                     the name of the Holder of this Security;

 

(ii)                                  the principal amount of this Security;

 

(iii)                               the principal amount of this Security to be repurchased;

 

(iv)                              the certificate number or a description of the tenor and terms of this Security;

 

(v)                                 a statement that the Holder is accepting the Change of Control Offer; and

 

(vi)                              a guarantee that this Security, together with the form entitled “Election Form” duly completed, will be received by the Paying Agent at least five Business Days prior to the Change of Control Payment Date.

 

Any exercise by a Holder of its election to accept the Change of Control Offer shall be irrevocable. The Change of Control Offer may be accepted for less than the entire principal amount of this Security, but in that event the principal amount of this Security remaining outstanding after repurchase must be equal to $2,000 or an integral multiple of $1,000 in excess thereof.

 

On the Change of Control Payment Date, the Company shall, to the extent lawful:

 

(i)                                     accept for payment all Securities of this series or portions of such Securities properly tendered pursuant to the Change of Control Offer;

 

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(ii)                                  deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Securities of this series or portions of such Securities properly tendered; and

 

(iii)                               deliver or cause to be delivered to the Trustee the Securities of this series properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Securities of this series or portions of such Securities being repurchased.

 

The Company shall not be required to make a Change of Control Offer upon the occurrence of a Change of Control Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and the third party purchases all Securities of this series properly tendered and not withdrawn under its offer.  In addition, the Company shall not repurchase any Securities of this series if there has occurred and is continuing on the Change of Control Payment Date an Event of Default under the Indenture, other than a default in the payment of the Change of Control Payment upon a Change of Control Triggering Event.

 

The Company shall comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Securities of this series as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Securities of this series, the Company shall comply with those securities laws and regulations and shall not be deemed to have breached its obligations under the Change of Control Offer provisions of the Securities of this series by virtue of any such conflict.

 

For purposes of the Change of Control Offer provisions of the Securities of this series, the following terms are applicable:

 

“Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any person, other than the Company or a Subsidiary; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Company’s outstanding Voting Stock or other Voting Stock into which the Company’s Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; (3) the Company consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the Company’s outstanding Voting Stock or the Voting Stock of such other person is converted into or exchanged for cash, securities or other property, other than any such 

 

9

 

transaction where the shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; or (4) the adoption of a plan relating to the Company’s liquidation or dissolution. Notwithstanding the foregoing, a transaction shall not be deemed to involve a Change of Control under clause (2) above if (i) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company and (ii)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of the Company’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction no person (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.  The term “person,” as used in this definition, has the meaning given thereto in Section 13(d)(3) of the Exchange Act.

 

“Change of Control Payment” means a payment in cash equal to 101% of the aggregate principal amount of Securities of this series repurchased, plus accrued and unpaid interest, if any, on the Securities to the date of repurchase.

 

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event.

 

“Fitch” means Fitch Ratings, Inc., and its successors.

 

“Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company.

 

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or S&P ceases to rate the Securities of this series or fails to make a rating of such Securities publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by the Company (as certified by a resolution of the Company’s Board of Directors) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be.

 

“Rating Event” means the rating on the Securities of this series is lowered by at least two of the three Rating Agencies and the Securities of this series are rated below an Investment Grade Rating by at least two of the three Rating Agencies on any day during the period (which period shall be extended so long as the rating of the Securities of this series is under publicly announced consideration for a possible downgrade by any of the Rating Agencies) commencing 60 days prior to the first public notice of the occurrence of a Change 

 

10

 

of Control or the Company’s intention to effect a Change of Control and ending 60 days following consummation of such Change of Control.

 

“S&P” means Standard & Poor’s Rating Services, a division of S&P Global Inc., and its successors.

 

“Voting Stock” means, with respect to any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date, the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.

 

The provisions of Article Thirteen of the Indenture shall apply to the Change of Control Offer provisions of this Security except as and to the extent otherwise specified in this Security.  For purposes of the Indenture, a Change of Control Payment Date shall be deemed to be a Repayment Date.

 

Other Provisions

 

If an Event of Default with respect to Securities of this series as set forth in the Indenture shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 

The Indenture contains provisions for defeasance at any time of (i) the entire indebtedness on this Security and (ii) certain restrictive covenants and certain Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security.

 

Upon due presentment for registration of transfer of this Security at the office or  agency of the Company in New York, New York, a new Security or Securities of this series in authorized denominations for an equal aggregate principal amount shall be issued to the transferee in exchange herefor, as provided in the Indenture and subject to the limitations 

 

11

 

provided therein and to the limitations described below, without charge except for any tax or other governmental charge imposed in connection therewith.

 

This Security is exchangeable for definitive Securities in registered form only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for this Security or if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act and a successor depositary is not appointed within 90 days, (ii) the Company, in its sole discretion, determines that this Security shall be exchangeable for definitive Securities in registered form and notifies the Trustee thereof or (iii) an Event of Default with respect to the Securities represented hereby has occurred and is continuing.  If this Security is exchangeable pursuant to the preceding sentence, it shall be exchangeable for definitive Securities in registered form, bearing interest at the same rate, having the same date of issuance, redemption provisions, Stated Maturity and other terms and of authorized denominations aggregating a like amount.

 

This Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor of the Depositary or a nominee of such successor.  Except as provided above, owners of beneficial interests in this global Security shall not be entitled to receive physical delivery of Securities in definitive form and shall not be considered the Holders hereof for any purpose under the Indenture.

 

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed, except that in the event the Company deposits money or Government Obligations as provided in Section 401 or 403 of the Indenture, such payments shall be made only from proceeds of such money or Government Obligations.

 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

No recourse shall be had for the payment of the principal of or the interest on this Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for, and as a condition of, the issuance hereof, expressly waived and released.

 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless otherwise defined in this Security.

 

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ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	
TEN COM
    	
—
    	
as tenants in common
    
	
 
    	
 
    	
 
    
	
TEN ENT
    	
—
    	
as tenants by the entireties
    
	
 
    	
 
    	
 
    
	
JT TEN
    	
—
    	
as joint tenants with right
    
	
 
    	
 
    	
of survivorship and not
    
	
 
    	
 
    	
as tenants in common
    

 

	
UNIF GIFT MIN ACT —
    	
 
    	
Custodian
    	
 
    
	
 
    	
(Cust)
    	
 
    	
(Minor)
    

 

 

	
Under Uniform Gifts to Minors Act
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(State)
    	
 
    

 

Additional abbreviations may also be used though not in the above list.

 

FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

 

	
Please Insert Social Security or
    	
 
    
	
Other Identifying Number of Assignee
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    
	
 
    
	
 
    
	
(PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF   ASSIGNEE)
    

 

 

the within Security of TARGET CORPORATION and does hereby irrevocably constitute and appoint                    attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    

 

 

NOTICE:  The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

 

 

 

ELECTION FORM

 

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER

 

 

The undersigned hereby irrevocably requests and instructs the Company to repurchase the within Security (or the portion thereof specified below), pursuant to its terms, on the Change of Control Payment Date specified in the Change of Control Offer, for the Change of Control Payment specified in the within Security, to the undersigned,                                                                 , at                                                             (please print or typewrite name and address of the undersigned).

 

For this election to accept the Change of Control Offer to be effective, the Company must receive, at the address of the Paying Agent set forth below or at such other place or places of which the Company shall from time to time notify the Holder of the within Security, either (i) this Security with this “Election Form” form duly completed, or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange or the Financial Industry Regulatory Authority or a commercial bank or a trust company in the United States setting forth (a) the name of the Holder of the Security, (b) the principal amount of the Security, (c) the principal amount of the Security to be repurchased, (d) the certificate number or description of the tenor and terms of the Security, (e) a statement that the option to elect repurchase is being exercised, and (f) a guarantee stating that the Security to be repurchased, together with this “Election Form” duly completed will be received by the Paying Agent five Business Days prior to the Change of Control Payment Date.  The address of the Paying Agent is The Bank of New York Mellon Trust Company, N.A., c/o The Bank of New York, 101 Barclay Street, New York, New York 10286.

 

If less than the entire principal amount of the within Security is to be repurchased, specify the portion thereof (which principal amount must be $2,000 or an integral multiple of $1,000 in excess thereof) which the Holder elects to have repurchased:  $          .OPTION AGREEMENT

--Agreement # A-2017-0145

THIS OPTION AGREEMENT ("Agreement") dated as of September 27,  2017 ("Effective Date") is entered into by Trustees of Dartmouth College, hereinafter referred to as "Dartmouth", a non-profit educational and research institution with an address at 11 Rope Ferry Road, Hanover, NH 03755, and Qrons Inc. a Wyoming corporation with its principal address at 777 Brickell Avenue, Suite 500, Miami, Florida 33139 (hereinafter referred to as "Company"), the signatories to this Agreement collectively referred to as the "Parties" and individually as a "Party" hereto.

RECITALS

	
A.

	
WHEREAS, Dartmouth is the owner of certain patents and/or copyrights listed in Exhibit A ("Intellectual Property"); and,

	
B.

	
WHEREAS, Dartmouth has determined that the exploitation of the Intellectual Property is in the best interest of Dartmouth and is consistent with its educational and research missions and goals; and,

	
C.

	
WHEREAS, Dartmouth and Company recognize that further research is required to develop the Intellectual Property; and,

WHEREAS, Company desires a period of time in which to evaluate the Intellectual Property, potential products, and markets therefor, and in which to elect to negotiate a license agreement.

NOW, THEREFORE, in consideration of the foregoing, the provisions set forth herein and the mutual benefits to be derived herefrom, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, Company and Dartmouth agree as follows:

	
SECTION 1

	
Option Grant and Consideration

	
1.1

	
Dartmouth hereby grants to Company an exclusive option to negotiate as further described in Section 2 below, a worldwide, royalty‐bearing, exclusive license under the Intellectual Property in the following Field of Use: human and animal health (hereinafter the "Option Rights"). Such exclusive license would be sublicensable (without further rights of sublicense) by Company at Company's discretion.  The terms of this exclusive license will be mutually negotiated and agreed to by the Parties.  During the Option Period (defined below), Company shall have the right to evaluate the Intellectual Property by practicing the technologies claimed therein for research purposes only in said Field of Use and as further delineated in Sections 1.3 and 2 below.

	
1.2

	
In consideration of the Option Rights herein granted to Company by Dartmouth and as an indication of serious intent, Company shall pay an Option Fee of $* payable upon execution of this Agreement. Dartmouth may terminate this Agreement if this condition is not met.

	
1.3

	
In further consideration for the Option Rights granted to Company under this Section 1, Company agrees to deploy all commercially reasonable resources necessary to evaluate the Intellectual Property, potential products, and markets therefor.  Without limiting the generality of the foregoing, Company shall meet the following milestones in connection with research and development of the Intellectual Property:

	
1.

	
Company shall provide on no less than a quarterly basis written updates to Dartmouth and Professor Ke summarizing the results of Company's evaluation and plans for additional work.

	
2.

	
Upon exercise of Company's Option Rights pursuant to Section 2.3 below, Company shall provide Dartmouth with a commercialization plan for Dartmouth's Intellectual Property.

1

	
SECTION 2

	
Option Period and Exercise

	
2.1

	
The Option Period shall commence as of the Effective Date and expire 12 months thereafter, unless sooner terminated pursuant to Section 2.3, below ("Option Period").

	
2.2

	
The Parties may mutually agree to extend the Option Period, by executing a writing to that effect.

	
2.3

	
At any time prior to the expiration of the Option Period, Company may exercise its Option Rights to negotiate a license agreement by providing written notice to Dartmouth, whereupon the Parties shall promptly and in good faith endeavor to negotiate an exclusive license agreement in the Field of Use with respect to the Intellectual Property, which exclusive license agreement is intended to set forth commercially reasonable terms and conditions satisfactory to both Parties, but consistent with Section 2.4 below.  However, all negotiation rights under this Section shall expire upon the earlier to occur of the expiration or termination of this Agreement.

	
2.4

	
The license agreement to be negotiated in good faith shall incorporate terms that include

fixing the initial license payment by the Company to Dartmouth at $*, with subsequent annual renewal payments of $*, non-royalty-based sublicense income payments, and royalty payments ranging from *% to *% of product sales by the Company, its affiliates and sublicensees, in those products incorporating the Intellectual Property.

 

	
SECTION 3

	
Termination

	
3.1

	
This Agreement shall be terminated prior to the expiration of its term:

	
a)

	
Upon mutual written agreement of the Parties;

	
b)

	
If Company shall become bankrupt or insolvent and/or if Company shall be placed in the hands of a receiver, assignee, or trustee, whether by voluntary act of Company or otherwise;

	
c)

	
Upon forty-five (45) days written notice if either party shall breach or default on any obligation under this Agreement; provided such termination may be avoided if before the end of such period the breaching party notifies the non-breaching party that such breach has been cured and states the manner of such cure to the reasonable satisfaction of the non-breaching party;

	
d)

	
Upon forty-five (45) days written notice to Company if Company fails to comply with Section 1.3, provided that such termination may be avoided if before the end of such period Company is able to demonstrate to the reasonable satisfaction of Dartmouth that Company is making reasonable progress toward satisfying Section 1.3; or

	
e)

	
In the event Company exercises the Option Rights pursuant to Section 2 above, upon the earlier to occur of (i) execution of a license agreement granting rights to Company under any of the Intellectual Property, or (ii) mutually agreed termination of negotiating for an exclusive license agreement.

Upon termination under this Section 3.1, Company shall have sixty (60) days to complete any research in progress that makes use of the Intellectual Property.

	
SECTION 4

	
Intellectual Property Protection

	4.1	
During the Option Period, Company shall be responsible and liable for the reasonable fees and expenses related to the filing and prosecution of patents to protect the Intellectual Property.  Company and Dartmouth will cooperate in good faith to determine the appropriate timing and scope of any such Intellectual Property protection efforts; provided, however, that Dartmouth shall retain final decision-making authority pertaining to Dartmouth's Intellectual Property including the selection of patent counsel.  Company shall reimburse such fees and expenses within thirty (30) days of invoicing by Dartmouth, provided that total expenses during the option period in excess of $15,000 shall require the preapproval of Company.

2

	
SECTION 5

	
Disclaimer of Warranties; Liability Limitation; Indemnification

	
5.1

	
Disclaimer of Warranties.  Notwithstanding anything in this Agreement to the contrary, Dartmouth makes no representations or warranties of any kind, express or implied, concerning the Intellectual Property, including, but not limited to, representations and warranties as to non‐infringement, merchantability and fitness for any particular purpose.

	
5.2

	
Liability Limitation.  In no event shall either Party be liable for any incidental, direct, indirect, consequential, special or other economic damages, such as loss of anticipated business or profits, suffered in connection with this Agreement or the Intellectual Property, including, but not limited to, any use thereof by Company.

	
5.3

	
Indemnification.  Notwithstanding anything in this Agreement to the contrary, Company shall indemnify, hold harmless and defend Dartmouth (including, but not limited to, its trustees, officers, employees, agents and representatives) for, from and against any and all demands, claims, causes of action, damages, losses, liabilities, costs and expenses (including, but not limited to, reasonable attorneys' fees and court costs) of any nature whatsoever (including, but not limited to any property damage or loss, bodily injury or death, patent or copyright infringement, or product liability or defect) directly or indirectly arising as a result of or in connection with Company's, including its employees, agents and representatives: (i) breach of this Agreement, (ii) intentional or negligent acts or omissions, or (iii) use of the Intellectual Property, whether arising at law or in equity, and whether under contract, tort or strict liability principles.  Company's defense obligations hereunder shall be with attorneys approved by Dartmouth, which approval shall not be unreasonably withheld.

	
5.4

	
The provisions of this Section 5 shall survive any expiration or termination of the Option Period for this Agreement.

	
SECTION 6

	
Confidentiality

	
6.1

	
The Parties agree to maintain in confidence and not to disclose to any third party any Confidential Information received pursuant to this Agreement.  The Parties agree to ensure that its employees and legal counsel have access to Confidential Information only on a need-to-know basis and that they are obligated in writing to abide by their obligations hereunder.  The foregoing obligation shall not apply to:

	
a)

	
Information that is known to either Party prior to the time of disclosure, in each case, to the extent evidenced by written records promptly disclosed to the other Party upon receipt of the Confidential Information;

	
b)

	
Information disclosed to either Party by a third party that has a right to make such disclosure;

	
c)

	
Information that is independently developed by either Party's employees not having access to or knowledge of Confidential Information, in each case, to the extent evidenced by written records disclosed to the other Party;

	
d)

	
Information that becomes patented, published, or otherwise part of the public domain as a result of acts by either Party or a third person obtaining such information as a matter of right;

	
e)

	
Information that is required to be disclosed by order of a United States governmental authority or a court of competent jurisdiction, provided that either Party shall use its best efforts to obtain confidential treatment of such information by the agency or court.

	
6.2

	
Neither Party shall be obligated to accept or protect any Confidential Information from the other Party unless provided for in a separate agreement between the Parties.

	
6.3

	
The placement of a copyright notice on any Confidential Information shall not be construed to mean that such information has been published and will not release either Party from its obligation of confidentiality hereunder.

3

	
SECTION 7

	
Notices and Payment Instructions

	
7.1

	
Any notice or other communication of the Parties required or permitted to be given or made under this Agreement shall be in writing and be deemed effective upon receipt if delivered personally, by reputable courier, by facsimile with confirmation or electronic transmission with confirmation, or by certified or registered mail, postage prepaid, return receipt requested, addressed to the other Party as follows (or as changed by written notice pursuant to this Section 7):

If for Dartmouth:

Dartmouth Technology Transfer

11 Rope Ferry Road #6210

Hanover, NH 03755-1404

Attn:  Nila Bhakuni, Director

Phone:(603) 646-1418

Fax:(603) 646-3670

Email: Nila.D.Bhakuni@Dartmouth.edu

If for Company:

Qrons Inc.

c/o Jonah Meer

50 Battery Pl, #7F

New York, NY 10280

Phone:(786)-620-2140

Fax:(508)-629-0074

Email:  jmeer@qrons.com

 

Either party may change its official address upon written notice to the other party.

	7.2	
All fees, reimbursements, and other payments due to Dartmouth under this Agreement shall be paid in United States dollars and all checks shall be made payable to "Trustees of Dartmouth College," referencing Dartmouth's taxpayer identification number, 02-0222111, and sent to Dartmouth according to Section 7.1, OR by electronic transfer as follows:

Wire to:

Bank Name:Bank of America

Bank Address:63 South Main Street, Hanover, NH  03755

Name on Account: Dartmouth College

Beneficiary on Account: Trustees of Dartmouth College

Account Number: *

WIRE Routing Number: 0260-0959-3

or Swift Code (if foreign): BOFAUS3N

Reference: Nila Bhakuni, Technology Transfer Office, Agreement # A-2017-0145

4

	
SECTION 8

	
Additional Provisions

	
8.1

	
Legal Compliance.  Company shall comply with all prevailing laws, rules and regulations pertaining to the development, testing, manufacture, use, import or export of the Intellectual Property or technologies included therein.  Without limiting the foregoing, it is understood that Intellectual Property and the technologies included therein may be subject to United States export laws and regulations.  The transfer of certain technical data and commodities may require approval or a license from an agency of the United States Government and/or written assurances by Company that Company shall not export data or commodities to certain foreign countries without prior approval of such agency.  Dartmouth neither represents that such governmental approval or license is not required nor that, if required, such approval or license will issue.

	
8.2

	
Power and Authority; Due Authorization; No Conflict; Enforceability; Binding Effect.  Each Party represents and warrants to the other Party that (i) such Party has the power and authority to execute, deliver and perform its obligations under this Agreement, (ii) the execution, delivery and performance of this Agreement have been duly authorized by such Party and does not and shall not conflict with any agreement or instrument to which it is bound, (iii) this Agreement constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, and (iv) this Agreement, and the interests, rights, duties and obligations hereunder, shall be binding upon, and inure to the benefit of, the Parties and their respective successors and permitted assigns.

	
8.3

	
Entire Agreement; Further Assurances.  This Agreement, including Exhibit A attached hereto, constitutes the entire agreement between the Parties, and supersedes any prior or contemporaneous negotiations, understandings and agreements, with respect to the subject matter hereof.  Each Party shall execute and deliver such further documents and take such further actions as may be required or reasonably requested by the other Party to effectuate the purposes of this Agreement.

	
8.4

	
No Assignment; No Amendment; No Waiver.  This Agreement (i) may not be assigned or transferred, in whole or in part, by operation of law or otherwise, by either Party without the prior written consent of the other Party, and (ii) may not be amended or modified, by course of conduct or otherwise, except in a writing duly executed by each of the Parties. Any waiver of any provision of this Agreement shall be in writing duly executed by the waiving Party.  The failure or delay by either Party to seek redress for any breach or default under this Agreement, or to insist upon the strict performance of any provision of this Agreement, shall not constitute a waiver thereof or of any other provision of this Agreement, and such Party shall have all remedies provided herein and at law and in equity with respect to such act and any subsequent act constituting the same.

	
8.5

	
Force Majeure; Remedies Cumulative In the event either Party's performance under this Agreement is in any way prevented or delayed as a result of causes or conditions (other than financial incapacity to pay) beyond such Party's reasonable control, such Party shall be excused temporarily without liability with respect to such performance or nonperformance; provided, however, that such Party must diligently pursue reasonable and appropriate actions to remedy such cause or condition.  The rights and remedies provided in this Agreement are cumulative in nature and shall be in addition to any such other rights and remedies available at law and in equity.

	
8.6

	
Resolution of Disputes.  In the event of any dispute or disagreement between the Parties either in interpreting any provision of this Agreement or about the performance of either Party and upon the written request of either Party, each of the Parties will appoint a designated representative to attempt to resolve such dispute or disagreement.  The designated representatives will discuss the problem and negotiate in good faith in an effort to resolve the dispute without any formal proceedings.  The specific format of such discussion shall be left to the discretion of the designated representatives.  No litigation for the resolution of such dispute may be commenced until the designated representatives have met and either Party has concluded in good faith that amicable resolution through continued negotiation does not appear likely (unless either Party fails or refuses to appoint a designated representative and schedule a meeting of such representatives within thirty (30) days after a request to do so by the other Party).

	
8.7

	
Governing Law; Venue and Consent to Jurisdiction.  This Agreement, and all disputes arising in connection with this Agreement and the subject matter herein, will be governed by and construed in accordance with the laws of the State of New Hampshire, without giving effect to its conflict of laws principles, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted. Company agrees that it shall not bring any suit against Dartmouth, its trustees, officers, employees or agents with respect to this Agreement in any court other than a court of the State of New Hampshire in Grafton County or the United States Federal District Court for the State of New Hampshire in Concord, NH. Company consents to the jurisdiction of such courts in the event that Dartmouth shall bring any suit against Company with respect to this Agreement and Company expressly waives all claims and defenses of Forum Non Conveniens or inappropriate venue.

	
8.8

	
Severability.  In the event any provision of this Agreement is determined to be invalid or unenforceable, it is the desire and intention of the Parties that such invalidity or unenforceability not invalidate or render unenforceable the remainder of the Agreement and that such provision be reformed and construed in such a manner that it will, to the maximum extend practical, be deemed valid and enforceable, and the rights and obligations of the Parties shall be construed and enforced accordingly.

	
8.9

	
Construction of Agreement.  The Parties hereto acknowledge and agree that both Parties substantially participated in negotiating the provisions of this Agreement; therefore, both Parties agree that this Agreement shall not be construed more favorably toward one Party than the other Party, regardless of which Party primarily drafted the Agreement.  This Section and other headings in this Agreement are for convenience of reference only and shall not affect, expressly or by implication, the meaning or interpretation of any of the provisions hereof.

	
8.10

	
Third Party Beneficiaries.  Nothing in this Agreement, express or implied, is intended to confer any benefits, rights or remedies on any Entity, other than the Parties hereto and their successors and permitted assigns.

	
8.11

	
Counterparts. This Agreement may be executed in multiple counterparts (including via facsimile or electronically via PDF), each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

	8.12	
Disclosures. The Company shall be able to disclose the existence of this Agreement in its public filings and disclosures, on its website and in its presentations to investors and the scientific community. The Company will provide no less than seven (7) days advance written notice to Dartmouth of intended written disclosures (subject to shorter legally mandated time restrictions), to provide Dartmouth with ample time to reasonably object or modify the disclosures.

[Signature page follows.]

5

IN WITNESS WHEREOF the Parties, intending to be legally bound, have caused this Agreement to be executed and delivered by their duly authorized representatives and effective as of the Effective Date.

	
TRUSTEES OF DARTMOUTH COLLEGE

 

 

Signature:      /s/Nila Bhakuni  

Nila Bhakuni

Director

Technology Transfer

 

 

 

 

 

 

 

	 	
Qrons Inc.

 

 

Signature: /s/ Jonah Meer   

Jonah Meer

Chief Executive Officer

 

6

Exhibit A

 

Dartmouth Intellectual Property

I.     Dartmouth Patent(s) and patent applications

	
1.

	
The technology described in Dartmouth Invention 2017-1061 titled "Mechanically Interlocked Molecules-based Materials for 3D Printing" by Chenfeng Ke and Qianming Lin as disclosed to Dartmouth on May 10, 2017 and the following filings:

		A)	
US patent application to be filed shortly after execution of this Agreement

On an "as is" basis as of the Effective Date.

7

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