Document:

ex10-1.htm

Exhibit 10.1

 

 

CERTAIN MATERIAL (INDICATED BY TWO ASTERISKS) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

 

 

COLLABORATION AND OPTION LICENSE AGREEMENT
 

 

This Agreement is made and entered into by and between:

 

	
►
	
Variation Biotechnologies, Inc., a company organized and existing under the laws of Ontario, Canada, having its place of business located at 310 Hunt Club East, Ottawa, Ontario K1V 1C1, Canada, 

 

 

(hereinafter referred to as "“VBI”"),

and

 

	
►
	
Sanofi Vaccine Technologies S.A.S., a company organized and existing under the laws of France, registered under the number 410 512 206 R.C.S BOBIGNY, having offices located at 102 avenue Gaston Roussel 93230 ROMAINVILLE, France 

 

(hereinafter referred to as "SVT"),

 

Witnesseth :

 

Whereas VBI is a company having an expertise in the field of formulation, delivery and stabilization of vaccines. 

 

Whereas VBI has developed a new thermostable vaccines formulation technology: the Lipid Particle Vaccine (LPVTM) technology.

 

Whereas the Sanofi Pasteur group is the vaccine division of Sanofi which manufactures vaccines and other related immunological products for prevention and treatment of diseases in human beings and has extensive world-wide research, development, manufacturing and marketing operations in that field; and

 

Whereas, within the Sanofi Pasteur group, Sanofi Vaccine Technologies is an Affiliate in charge of providing services relating to the management, the monitoring and the exploitation of SVT’s transversal technology assets; and 

 

Whereas VBI has proof of concept data using the LPVTM technology with a variety of vaccines; and

 

 

 

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Whereas the Sanofi Pasteur group is currently developing a ** vaccine for **; and

 

Whereas SVT and VBI desire to collaborate for the purpose of evaluating VBI’s LPVTM technology to determine whether it is capable of improving the stability of this ** (the “Project Candidate Vaccine” as more fully defined in the definition section below); and 

 

Whereas if the Project Candidate Vaccine shows positive results, then SVT may wish to acquire, and VBI wishes to grant, a license for the commercial use of LPVTM technology for Sanofi Pasteur group’s vaccines on the terms and conditions herein.

 

NOW THEREFORE in consideration of the premises and the terms and conditions contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which is acknowledged), the Parties agree as follows: 

 

 

ARTICLE 1 - DEFINITIONS AND INTERPRETATION 

 

	
1.1.
	
Definitions : For the purposes of this Agreement the following words and phrases shall have the following meanings :

 

	 	
(a)
	
“Affiliate” means, with respect to any Party, (i) any legal entity of which the securities or other ownership interests representing fifty percent (50%) or more of the equity or fifty percent (50%) or more of the ordinary voting power or fifty percent (50%) or more of the general partnership interest are, at the time such determination is being made, owned, Controlled or held, directly or indirectly, by such legal entity, or (ii) any legal entity which, at the time such determination is being made, is Controlling or under common Control with, such Party. As used herein, the term "Control", whether used as a noun or verb, refers to the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of a legal entity, whether through the ownership of voting securities, by contract or otherwise. 

 

	 	
(b)
	
“Agreement” means this Agreement, all amendments and supplements to this Agreement and all schedules to this Agreement, including the following:

 

Schedule A -  Project Work Plan

Schedule B -   Principal Researchers

Schedule C -   VBI-Background Technology

Schedule D -  Option Notice

Schedule E-    Conditions for the License Agreements 

Schedule F-    Material Transmission Report

 

 

 

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(c)
	
“Background Technology” shall mean for either Party any and all information and materials of any type and in any tangible or intangible form, including without limitation inventions, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, show-how, skill, sequence, drawings, schema, experience, and other information or descriptions, that is necessary or useful for the performance of the Project and that is owned or controlled by such Party prior to the performance of the Project.

 

	 	
(d)
	
“Confidential Information” means any and all confidential information of any kind, including in particular (but not limited to) the Results, identified as such, disclosed by one Party, its Affiliates or Representatives (“Disclosing Party”) to the other Party, its Affiliates or Representatives (“Receiving Party”), directly or indirectly, whether disclosed orally, visually, in writing or in any tangible or electronic form or media, and including, but not limited to, research and development, technology, trade secrets, know-how, proprietary information (whether or not reduced to writing), inventions (whether or not patentable), patent applications, licenses, software, programs, prototypes, designs, analysis codes, discoveries, techniques, methods, ideas, concepts, data, engineering and manufacturing information, procedures, specifications, diagrams, drawings, schematics, and any and all other technical, commercial, scientific and other data, processes, documents or other information or physical object (including, without limitation, VBI LPV Technology, the SVT Materials and all derivatives thereof, intellectual property, marketing data, agreements between any Party and a Third-Party, license applications, and business plans and projections of the Parties), and including confidential information of any Third Party which is disclosed to a Party and is in turn disclosed to the other Party or learned by the other Party through visual or other inspection.

 

	 	
(e)
	
“Effective Date” means April 15th, 2015.

 

	 	
(f)
	
“Field” shall mean the ** vaccine for the ** using the VBI LPV Technology. 

 

	 	
(g)
	
“Improvements” means any improvement to the Background Technology which may arise from either Party after the Effective Date of this Agreement and the performance of the Project or developed by either Party outside the scope of this Agreement, including all patentable or non-patentable inventions, discoveries, technology and information of any type whatsoever, materials (including derivatives, replica, clones, etc.), methods, processes, technical information, knowledge, experience and know-how. 

 

	 	
(h)
	
“License Agreement” shall mean the non-exclusive license agreement that the Parties shall negotiate upon exercise by SVT of its Option (see Section 8.1) in accordance with the terms attached in Schedule E. 

 

 

 

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(i)
	
“Option(s)” shall have the meaning ascribed to it in Sections 8.1 and 8.2 (Grant of Option) of this Agreement.

 

	 	
(j)
	
“Option Notice” shall have the meaning ascribed to it in Section 8.4 (Exercise of Notice) of this Agreement.

 

	 	
(k)
	
“Option Period” shall have the meaning ascribed to it in Section 8.3 (Option Period) of this Agreement.

 

	 	
(l)
	
“Parties” means VBI and SVT and “Party” shall mean one of them.

 

	 	
(m)
	
“Principal Researcher” shall have the meaning ascribed to it in Section 3.3 of this Agreement

 

	 	
(n)
	
“Project” shall have the meaning ascribed to it in Section 3.1 hereto. The project comprises three (3) stages and is fully described in the Project Work Plan attached in Schedule A to this Agreement.

 

	 	
(o)
	
“Project Candidate Vaccine(s)” shall mean any conjugate produced by or on behalf of VBI based on VBI LPV Technology and Project Results using SVT’s Materials and provided to SVT hereunder for the purpose of the Step 3 of the Project. 

 

	 	
(p)
	
“Project Period” shall have the meaning ascribed to it in Section 3.2 hereto.

 

	 	
(q)
	
“Project Results” means any and all the patentable or non-patentable inventions, discoveries, derivatives, material, technology and information of any type whatsoever, methods, processes, technical information, results, data, knowledge, experience and know-how), including any and all tangible forms embodying or containing them, arising from the Project (as defined in this Agreement and its Schedule conceived and/or reduced to practice by VBI or SVT in the conduct of the Project, other than Improvements to the VBI LPV Technology.

 

	 	
(r)
	
“Project Work Plan” means the work plan for the Project, which shall include a detailed description of the work to be done, the timeline for key development steps, and projected budget requirements. An outline of the Project Work Plan is attached as Schedule A hereto. The Project Work Plan may be amended from time to time by the mutual agreement of the Parties. 

 

	 	
(s)
	
“Representatives” means, with respect to a Party to this Agreement, the respective officers, directors, employees, and agents of such Party and of such Party's Affiliates.

 

 

 

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(t)
	
“SVT’s Material” means any chemical or biological materials provided by SVT, or its Affiliates, to VBI for the production of the Project Candidate Vaccine, including without limitation **.

 

	 	
(u)
	
“VBI LPV Technology” means any Background Technology belonging to VBI and any Improvement thereof, including specifically its new thermostable vaccines formulation LPVTM technology designed to stabilize vaccine antigens and as described in Schedule A, including patents listed in Schedule C and as more specifically described in patents US 61/223,196 and US 61/256,912, US 61/289,556 and US 61/432,567. 

 

	 	
(v)
	
“Term” shall have the meaning ascribed to it in Section 13.1 (Term) of this Agreement.

 

	 	
(w)
	
“Third Party” means any person other than a Party or its Affiliates.

 

	 	
(x)
	
“Vaccine(s)” means any prophylactic and or therapeutic vaccine(s). 

  

	
1.2
	
Certain Rules of Interpretation in this Agreement and the Schedules :

 

	 	
(a)
	
The descriptive headings of Articles and Sections are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of the content of such Articles or Sections.

 

	 	
(b)
	
The use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such Person or Persons or circumstances as the context otherwise permits.

 

	 	
(c)
	
Whenever any payment is to be made or action to be taken under this Agreement is required to be made or taken on a day other than a business day, such payment shall be made or action taken on the next business day following such day in the jurisdiction of the Party to make such payment or do such act.

 

 

Article 2 – PURPOSE/Grant OF RIGHTS

 

SVT and VBI hereby agree to collaborate through the Project in order to allow SVT to evaluate the feasibility of using VBI LPV Technology for Vaccines in the Field;

 

During the Project Period and for 3 (three) months thereafter, VBI grants to SVT, and SVT accepts from VBI, an evaluation period and option to negotiate (as more fully detailed in Article 8 hereof) for a worldwide non-exclusive license with the right to sublicense (for activities conducted on the behalf of SVT) to use the VBI LPV Technology for the development of Vaccine(s) in the Field, and to evaluate whether to negotiate an Extended License (as more fully detailed and subject to the terms of Section 8.1 hereof), each on the terms set forth in Schedule E hereto;

 

During the Project Period, VBI hereby grants to SVT the right to use the VBI LPV Technology for research and evaluation purposes only.

 

 

 

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ARTICLE 3 - Project 

 

	
3.1
	
Project: SVT and VBI shall collaborate on research and development works relating to the Project Candidate Vaccine in a joint effort to achieve activities in order to assess, among others, the stability of the Project Candidate Vaccine in accordance with the Project Work Plan (the “Project”). 

 

The overall Project includes three (3) stages.

 

It is agreed that VBI shall not perform stage 2 at the end of stage 1, and stage 3 at the end of stage 2, unless VBI has received a written notification from SVT to proceed with the performance of such next stages. 

 

	
3.2
	
Project Period:

The Project shall commence on the Date of receipt by VBI of SVT’ Materials and continue for nine (9) months unless otherwise agreed in writing by the Parties (“Project Period”), it being understood that if the Project is delayed, the Project Period will be adjusted accordingly. 

 

Within the Project Period and after a decision is made by SVT to start stage 3, VBI will deliver to SVT the Project Candidate Vaccine accompanied by the list of the characteristics and in the quantities reported in Schedule A.

 

Within the 3rd stage of the Project, SVT and VBI will conduct in parallel assessments of the potency and stability of the Project Candidate Vaccine (the “Final Analysis”).

 

	
3.3
	
Principal Researchers:

The Project shall be conducted on a day-to-day basis under the supervision of a Principal Researcher appointed by SVT and a Principal Researcher appointed by VBI, as listed on Schedule B hereof. The Principal Researchers shall keep regular contact as needed for the Project including the sharing of up to date timelines of each Party’s work for the Project and the development of the Project Candidate Vaccine.

VBI hereby acknowledges and agrees that SVT will subcontract its tasks under the Project to its Affiliates.

 

	
3.4
	
Diligent efforts:

Each Party shall use its best reasonable efforts to complete expeditiously the Project within the Project Period. Should either Party be unable to complete its tasks under the Project within the associated Project Period, such Party shall inform the other in writing of such delay and shall indicate the time needed for achieving performance of related tasks under the Project.

 

 

 

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3.5
	
Subcontracting: The Project shall not be subcontracted, in whole or in part, by VBI without SVT's prior written consent, which shall not be unreasonably withheld. SVT shall have access to VBI’ suppliers lists and selection processes.

SVT will be allowed to subcontract any portion of the Project it has in charge, including to its Affiliates.

 

 

	
3.6
	
Standards and compliance:

Except for the final Analysis that will be conducted in parallel at SVT’s and VBI’s laboratories, the Project shall be conducted at the laboratories and facilities of VBI, in accordance and full compliance with:

 

	 	
i.
	
this Agreement and its Exhibit, 

 

	 	
ii.
	
in accordance with those policies, standards, procedures, conventions and techniques that are of a high, recognized and acceptable professional standard in the scientific community;

 

	 	
iii.
	
by maintaining all Research Records in accordance with usual scientific practices which shall, for greater certainty, include the dating of all documentation and the inclusion within such documentation of sufficient detail to permit another scientist to reproduce the work; 

 

	 	
iv.
	
in accordance with appropriate biosafety and containment conditions; and

 

	 	
v.
	
any and all applicable laws and regulations.

 

All personnel employed by VBI in the Project shall be suitably trained, experienced and competent for their respective functions. 

 

	
3.7
	
Reports: VBI shall, within a month after completion of each stage of the Project or termination of this Agreement for any reason, supply SVT with an intermediate report setting forth Results obtained in sufficient detail (including Raw Data, but excluding VBI Confidential Information on the VBI LPV Technology) to allow SVT to make its decision whether or not to exercise its Option under this Agreement. SVT shall within two (2) months after completion of stage 3 of the Project provide VBI with an intermediate report of the Final Analysis, all intermediate reports constituting the comprehensive final report (the “Final Report”).

 

	
3.8
	
Records: VBI shall ensure that VBI’s scientists, engineers and technicians prepare and maintain accurate and complete Project Records. VBI shall ensure that its scientists, engineers and technicians in charge of the Project shall sign date and endorse the Project Records.

 

 

 

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The Project Records shall be drafted in such a way to enable any scientist, engineer or technician to reproduce without any difficulties and thus further obtain the same results; provided, however, that VBI will have no obligation to provide SVT any confidential details of the VBI LPV Technology unless and until a License Agreement is executed.

 

Unless otherwise agreed, VBI will archive the Project Records for a period of fifteen (15) years. After that period of time VBI shall propose to SVT to transfer at the expenses of SVT, the Project Records, if and when VBI discontinues archiving such Project Records. 

 

VBI agrees that SVT may have access to such Project Records, even after termination or expiration of this Agreement for any reason whatsoever, after completion of the Project, for the purposes of exerting the rights SVT has under this Agreement.

 

 

ARTICLE 4 – TRANSFER AND USE OF MATERIALS IN THE PROJECT

 

	
4.1
	
Shipping and delivery of the SVT’s Material: 

As soon as reasonably practical after the Effective Date SVT agrees to ship (or have shipped by an Affiliate) the SVT’s Material to VBI.

 

SVT shall timely notify VBI of the date when the SVT’s Material will be delivered to VBI at VBI Delivery Site: 310 Hunt Club East, Ottawa, Ontario K1V 1C1, Canada. SVT or its designated Affiliate shall be in charge of the transportation and delivery of the SVT’s Material to VBI Delivery Site at SVT’s cost. VBI shall obtain all import licenses required for the transportation of the SVT’s Material to the VBI Delivery Site. Moreover, as soon as SVT’s Material are delivered to VBI Delivery Site, VBI will be responsible for verifying the conformity of the delivered SVT’s Material to the specifications mentioned in the Schedule A and for signing and returning for signature to SVT the Material Transmission Report (attached hereto as Schedule F).

 

	
4.2
	
Shipping and delivery of the Project Candidate Vaccine: 

No later than 30 days upon conclusion of Stage 2 of the Project, VBI agrees to ship the Project Candidate Vaccine to SVT.

 

VBI shall timely notify SVT of the estimated date when the Project Candidate Vaccine will be delivered to the Delivery Site: 

**

 

VBI shall organize transportation and delivery of the Project Candidate Vaccine(s) to such Delivery Site, at SVT’s cost. 

 

 

 

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4.3
	Use of SVT’s Material: SVT or its Affiliates are the owners or licensees of SVT’s Material. 

 

The SVT Material will only be used for the performance of the Project according to the Schedule A to this Agreement by VBI only, at the VBI Delivery Site, under suitable biosafety and containment conditions in accordance with good laboratory practices and adequate biosafety protections. Moreover VBI warrants that all VBI employees working on the Study have the necessary expertise, competencies and knowledge in order to use, manipulate and work on the SVT Material. VBI also warrants that the facilities where the SVT Material will be stored, accommodated, used or manipulated are approved and equipped to that effect. 

 

At the termination or expiration of this Agreement, VBI shall destroy (with notification evidencing such destruction) or return to SVT, upon SVT’s request and expense, any and all quantities of SVT Material in its possession at the time of termination or expiration.

 

	
4.4
	
Use of Project Candidate Vaccine: VBI shall make available to SVT the Project Candidate Vaccine in accordance with the Project Plan in such amounts and product specifications and at such times as shall be mutually agreed upon by the Parties for the Project purposes only. 

Project Candidate Vaccine shall be owned by SVT, in accordance with Article 7 below and may only be used by SVT as provided for in Section 7.2, unless otherwise specified in writing by the Parties. 

 

During the term of this Agreement, the Project Candidate Vaccine will only be used for the performance of the Project according to Schedule A by SVT and VBI under suitable biosafety and containment conditions in accordance with good Laboratory practices and adequate biosafety protections. 

 

 

Article 5 – Confidentiality  

 

(a) -      General

 

Subject to prior approval by SVT, such approval not to be unreasonably withheld, VBI may issue a press release announcing the entry into this Agreement.   Otherwise, except as expressly set forth in this Article 4, both Parties shall cause its Representatives to keep the Confidential Information confidential, and the Parties shall not disclose directly or indirectly, and shall cause its respective Representatives not to disclose directly or indirectly, any Confidential Information of the other Party to anyone outside such person, except that the foregoing restriction shall not apply to any information disclosed hereunder if such Confidential Information: 

 

	
(i)
	
is or hereafter becomes generally available to the trade or public other than by reason of any breach or default by Receiving Party or by any of its Representatives of the foregoing with respect to any confidentiality obligation under this Agreement or otherwise; 

 

 

 

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(ii)
	
was already known to or is independently developed by Receiving Party, as evidenced by written records; 

 

	
(iii)
	
is disclosed to Receiving Party or such Representative by a Third Party who has the right to disclose such information; 

 

	
(iv)
	
is required to be disclosed pursuant to a legal requirement, in which case the Receiving Party will undertake to limit the disclosure of proprietary information in consultation with the Disclosing Party;

  

(b) -     Use of Confidential Information

 

Both Parties agree that no Confidential Information of the other Party shall:

 

	
(i)
	
be used in its own business except as necessary to the fulfillment of its obligations under this Agreement;

 

	
(ii)
	
be disclosed, assigned, licensed, sublicensed, marketed, transferred or loaned, directly or indirectly to any Third Party, including any health authority throughout the world, other than to a Representative of a Party, except in accordance with the provisions of this Agreement;

 

	
(iii)
	
be used or exploited by a Party or any of its Representatives for its respective benefit or the benefit of any other relationships with Third Parties

 

	
(iv)
	
be used or disclosed by the Receiving Party to obtain any kind of intellectual property rights.

 

Without limiting the generality of the foregoing, each Party agrees that, it shall not (and shall not permit any of its Representatives) at any time use any Confidential Information of the other party in the conduct of its business, except as otherwise set forth in this Agreement, without the prior written consent of the other Party. 

 

The obligations set forth in this Article 4 shall extend to copies, if any, of Confidential Information made by, VBI and SVT or their Representatives and to documents prepared by such persons, which embody or contain Confidential Information of the Disclosing Party.

 

(c) -    Protection of Confidential Information

 

VBI and SVT shall each, as Receiving Party, deal with Confidential Information so as to protect it from disclosure with a degree of care not less than that used by it in dealing with its own information intended to remain exclusively within its knowledge and shall take reasonable steps to minimize the risk of disclosure of Confidential Information which shall include, without limitation, ensuring that only its Representatives who have a bona fide "need to know" such Confidential Information for purposes permitted or contemplated by this Agreement shall have access thereto. 

 

 

 

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VBI and SVT shall each notify all of its Representatives who have access to Confidential Information of its confidentiality and the care therefore required. Furthermore, VBI and SVT warrant that each of its Representative who is permitted to access to such Confidential Information in accordance with this Article 4 is already bound towards VBI or SVT by a confidentiality provision.

 

VBI and SVT agree to use password protected electronic documents during e-mail.

 

(d) -    Survival of Obligations

 

The obligations set forth in this Article 5 shall survive the termination or expiration of this Agreement for a period of ten (10) years thereafter. 

 

(e) –   Bilateral Confidentiality Agreement

 

As of the Effective Date, any Confidential Information exchanged by the Parties shall be covered by the provision of this Agreement, which shall not amend or affect the rights and obligations of the Parties, including their Affiliates, under a Confidentiality Disclosure Agreement executed on the 20th of December 2010 for the Confidential Information exchanged under such Confidentiality Disclosure Agreement.

 

 

Article 6 - Publication/communication 

 

	
6.1
	
General: Any scientific publications or communications relating in whole or in part to the Project or incorporating Project Results or the Project Candidate Vaccine (including, without limitation, posters) will be first allowed once the Option Right has been exercised by SVT or once a further agreement has been reached in writing by the Parties. No such publications or communications shall be published or even submitted unless being reviewed and approved in writing by the Parties. Any such proposed publication or communication shall not include any Party’s Confidential Information. A copy of any proposed publication or communication (including, in the case of any proposed oral communication, a transcript) shall be sent by each Party to the other at least sixty (60) days before the projected publication or communication in order to allow the interested Party to request deletion of any of its Confidential Information or to refuse such publication or communication. Each Party may also require delay(s) in publication or communication in order to have appropriate patent applications filed according to the provisions set forth in Sections 7.1.3. 

 

	
6.2
	
Authorship: Any and all scientific publications and communications relating to the Project or incorporating Project Results or the Project Candidate Vaccine shall mention all VBI and SVT scientists that may be considered as co-author and shall refer to VBI and SVT as participating in the Project. Each Party may refuse to be named as co-author.

 

 

 

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Article 7 - Intellectual Property  

 

The Parties agree that the inventorship will be determined in accordance with the U.S. intellectual property laws.

 

	
7.1
	
Background Technology: 

Each Party remains the sole owner of its Background Technology and all Improvements thereto.

 

More particularly VBI remains the sole owner of VBI LPV Technology and SVT remains the sole owner of SVT Technology.

 

SVT acknowledges and agrees that it shall have no rights, title, interest, or license in or to the VBI LPV Technology save only:

 

(a) as granted in Article 2 hereto for evaluation and research purposes only and in connection with its evaluation of the Project Results, the Project Candidate Vaccine and the VBI LPVTM Technology under this Agreement; and

 

(b) as may be granted to it under a License Agreement entered into under Section 8.

 

VBI acknowledges and agrees that VBI acquires no rights under this Agreement to use SVT Background Technology (and specifically SVT’s Material and SVT’s Confidential Information), except for the performance of this Agreement, and that VBI shall cease to use such SVT Technology at the end of the Project.

 

	
7.2
	
Project Candidate Vaccine

As between the parties, any and all Project Candidate Vaccine shall be solely owned by SVT, irrespective of the inventorship; provided, however, SVT shall not be allowed to use such Project Candidate Vaccine, nor to file any patent application claiming or disclosing a Project Candidate Vaccine, except as may reasonably be required in the performance of the Project and SVT’s evaluation of the Project Results and the VBI LPVTM Technology.

 

Should SVT exercises its Option rights and the Parties enter into any License Agreement (according to the Section 8 below): SVT may be allowed at its own expense, to file in its sole name, obtain, maintain, register and extend patent protection for the Project Candidate Vaccine (the “Project Candidate Patent”).

 

Should SVT not exercise its Option rights and the Parties do not enter into a definitive License Agreement, then the Project Candidate Vaccine will remain secret and confidential and SVT shall only be allowed to use such Project Candidate Vaccine for internal research purposes.

 

 

 

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7.3
	
Project Results

With regard to any other technology and inventions (other than those that are solely specific to the VBI LPV Technology, SVT's Materials or a Project Candidate Vaccine), all rights, title and interest in and to any technology or invention, whether or not patentable, and any patent applications and patents based thereon, made or conceived during the term of this Agreement (i) by employees or others acting solely on behalf of VBI or its Affiliates shall be owned solely by VBI or its Affiliates; (ii) by employees or others acting solely on behalf of SVT or its Affiliates shall be owned solely by SVT or its Affiliates; (iii) by employees, or other acting on behalf, of both VBI and SVT shall be jointly owned (“Joint Invention(s)”).

 

With respect to Joint Invention(s), the parties agree to the following:

	 	
●
	
SVT will be in charge of filing maintaining and prosecuting the patent applications related in the name of both parties (costs to be shared by both parties in a 50/50 basis);

	 	
●
	
SVT will notify VBI of each country where it intends to file a patent application one(1) month in advance of the filing deadline; if VBI is not interested in having a patent filed in that country, it will promptly inform SVT of that decision, and SVT will then be free to file such patent in that country at its own costs;

	 	
●
	
If VBI would like to file in some additional countries, then it will promptly notify SVT, and VBI will then be free to file in such additional countries at its own costs;

	 	
●
	
If SVT intends to abandon its rights in a country, it will have then to notify VBI one (1) month in advance, and VBI will then be free to further go on with the prosecution or maintenance at its own costs. Without any answer from VBI within one (1) month of notification, SVT will be free to abandon the patent or patent application. 

 

Maintenance and defense of patent rights claiming Joint Inventions will be handled in the License Agreement. Should SVT not exercise its Option, then the Parties agree to enter into a co-ownership agreement. However the Parties already agree and acknowledge that should SVT not exercise its Option, save for the Project Candidate Vaccine, each Party will be entitled to practice and sublicense joint know-how and Joint Inventions without restriction or consent of the other or an obligation to account to the other Party. 

 

 

Article 8 - Grant of Option

 

	
8.1
	
Option for non-exclusive license in the Field: Subject to the terms and conditions hereinafter set forth, VBI hereby grants to SVT an exclusive option (the “Option”) to negotiate and enter into a royalty bearing, worldwide, non-exclusive, sub-licensable license to use the VBI LPVTM Technology to research, develop, exploit, make, have made, use, import, sell, have Vaccines in the Field (the “License”). Moreover, in the case SVT exercises its Option right for the License, then VBI hereby agrees to grant to SVT an option to negotiate and enter into a royalty bearing, worldwide, non-exclusive, sub-licensable license to use the VBI LPVTM Technology to research, develop, exploit, make, have made, use, import, sell, have Vaccines for one or more additional targets outside the Field, at SVT’s discretion, but only to the extent that VBI does not have an internal program to develop Vaccines against the applicable target(s) or VBI is not restricted by licenses granted to Third Parties for such target(s) at the time such option is exercised, (the “Extended License(s)”). 

 

 

 

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8.2
	
Option Period: SVT’s right to exercise its Option for the License as described in Section 8.1 hereof will last until a period of time ending three (3) months after the conclusion of the Project Period, meaning the receipt of the Final Report (“the Option Period”).

 

Option for Extended License(s) may be exercised any time after the exercise by SVT of its Option right for the License or the term of the License Agreement entered into by the Parties.

 

	
8.3
	
Exercise of Option rights: The Option rights for the License or the Extended License(s) may be exercised by SVT by giving written notice to VBI of SVT’s interest in VBI LPVTM Technology in the Field or outside the Field, respectively (the “Option Notice”) in the form of Schedule D hereto. Upon receipt of such Option Notice by VBI, the Parties shall promptly negotiate in good faith with respect to the Field or any extended field, the terms of a definitive License Agreement consistent with the conditions herein and with such other terms and conditions customary to this type of transaction and including specifically conditions relating to the transfer of VBI LPV Technology to SVT and the associated reasonable technical assistance, necessary for SVT to develop and commercialize Vaccines using the VBI LPV Technology. The License Agreement shall be also consistent with the conditions/financial terms described on Schedule E. 

 

The Parties already acknowledge and agree that the royalty rate specified in Schedule E will be in consideration of the License grant as well as, in consideration of VBI contribution to the research efforts, in the case of VBI employees have the status of inventor in an invention relating to the Project Candidate Vaccine.

 

The Parties shall make best reasonable efforts to execute the License Agreement, within reasonable timelines after VBI’s receipt of the Option Notice. Any Extended License agreement outside the Field shall be negotiated in good faith, also in accordance with the terms set forth in Schedule E for the Field.

 

Upon exercise of the Option rights and execution of the License Agreement, the Parties shall also discuss in good faith the development plan to be worked jointly. The Parties agree that VBI will be consulted first for any formulation or process development work on the VBI LPVTM Technology that may be out-sourced from SVT. 

 

 

 

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Article 9 - Financial conditions

 

	
9.1
	
Upfront Access Fee: In consideration of the Option granted to SVT according to Section 8.1 and upon execution of this Agreement, SVT agrees to pay VBI an accrued amount of ** in partial acknowledgment of the past research and development costs incurred by VBI in its development efforts. 

 

All payments shall be paid by SVT to VBI, without deduction or deferment in respect of any claims whatsoever and of any taxes except any tax which SVT is required by law to deduct or withhold. If any laws require the withholding of amounts of income or other taxes or other amounts from such payments, prior to any payment by SVT to VBI in a year, SVT shall provide to VBI any forms required to attest VBI's fiscal domiciliation in order to allow SVT to claim application of the reduced rate of withholding tax provided for in any applicable fiscal convention. VBI shall promptly return such forms to SVT. In the event VBI fails to promptly return such forms duly filled and signed, SVT shall declare and pay withholding tax at the common law rate of the applicable corporate income tax, and such tax shall then be deducted from the corresponding payment by SVT to VBI. SVT shall pay withholding tax to the proper taxing authority. 

 

	
9.2
	
Project Costs: During the Project Period, VBI shall invoice SVT on a monthly basis for the Costs associated with research and development work performed relating to the Project and in accordance with the Project Work Plan, including internal and external expenses and costs associated with production of the Project Candidate Vaccine for the Project, such as biological materials (provided that it has first being approved by SVT), up to a maximum amount of ** as specific in Schedule A. For each stage of the Project, ** of the amounts payable for such stage will be payable upon commencement of work and ** will be payable upon delivery of a final report, whether or not SVT elects to advance the Project to the next stage. Any and all Costs paid or reimbursed by SVT pursuant to this Section 9.2 shall be subject to and consistent with the budget agreed upon by the Parties and duly justified. 

 

	
9.3
	
Payment terms: Payments will then be made within thirty (30) days as of issuance of VBI’s relevant and duly justified invoices by bank transfer to the following bank account:

 

Beneficiary’s financial institution / Institution financière du bénéficiaire

 

	 	
Name / Nom: 
	
**

	 	SWIFT: 	**

 

	 	
Branch name / Nom de la Caisse: 
	
**

 

Beneficiary / Bénéficiaire

Mandatory informations / informations obligatoires :

 

**

 

 

 

15/36

 

 

Institution      Branch/transit      Cda account /compte Cda 

 

	 	
Beneficiary name / Nom du bénéficiaire: 
	
Variation Biotechnologies Inc.

310 Hunt Club Road East

Ottawa, Ontario K1V 1C1

 

or to any other bank account designated in writing from time to time, to SVT, by VBI.

 

Original invoices shall reference the following:

 

	 	
●
	
Complete VBI Name, Address and Phone Number

	 	
●
	
Payment term /due date

	 	
●
	
Invoice date

	 	
●
	
Payment amount

	 	
●
	
Invoice number

	 	
●
	
sanofi pasteur contact name : Mrs. Yamina Benmansour 

	 	
●
	
Complete description of the object of the payment

	 	
●
	
Method of payment (Wire)

	 	
●
	
Reference of the Agreement

 

The invoices shall be addressed to the attention of SVT (with reference to the SVT contact name), at the following address:

 

Sanofi Vaccine Technologies

DSFF – Accords & Licences

102 avenue Gaston Roussel

93230 Romainville

France 

 

And it should be sent to:

 

Sanofi Vaccine Technologies

DSFF – Accords & Licences

Tri D3/405

20 Avenue Raymond Aron

92160 Antony

France 

 

 

Article 10 – Disclosure of VBI background technolOgy 

 

	
10.1
	
Disclosure of VBI LPV Technology: From time to time during the Project Period, VBI shall disclose to SVT the results obtained with the SVT’s Material using the VBI LPVTM Technology for manufacturing the Project Candidate Vaccine, including the related documentation, as it is necessary or appropriate to enable SVT to perform its obligations under the Project Work Plan. All such disclosures shall be deemed Confidential Information subject to the confidentiality provisions and use restrictions (including “need to know” restrictions) of Article 5. For clarity, VBI will have no obligation to disclose to SVT any confidential details of the VBI LPV Technology unless and until a License Agreement is signed.

 

 

 

16/36

 

 

	
10.2
	
No License. Notwithstanding anything to the contrary contained herein, including, without limitation, disclosure of the results obtained in the manufacture of the Project Candidate Vaccine using the VBI LPVTM Technology pursuant to Section 10.1, SVT shall not have a license to or rights in any of VBI LPVTM Technology, except as expressly set forth herein, in the License Agreement entered into upon exercise of SVT’s Option or in any Extended License agreement in accordance with Section 8. 

  

 

Article 11 - REPRESENTATION AND Warranties

 

	
11.1
	
Representations and Warranties by VBI: VBI represents and warrants to SVT, as of the Effective Date, and acknowledges that SVT is relying on such representations and warranties in entering into this Agreement, that:

 

	 	
(a)
	
VBI is a corporation and is validly existing and in good standing under the laws of its jurisdiction of incorporation;

 

	 	
(b)
	
VBI has all necessary corporate power and authority to execute, deliver and perform this Agreement and to carry out its obligations under this Agreement, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of VBI;

 

	 	
(c)
	
this Agreement has been duly authorized, executed and delivered by VBI and constitutes a legal, valid and binding obligation of VBI, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, moratorium or similar laws, or general equitable principles, whether considered in an action at law or in equity;

 

	 	
(d)
	
VBI is not a party to, bound or affected by or subject to any agreement, policy, funding arrangement or constraint of any kind, indenture, mortgage, lease, instrument, charter or by-law provision, obligation, statute, regulation, order, judgment, decree, license, permit or law which would be violated, contravened, breached by, or under which default would occur, or with notice or lapse of time or both would occur, as a result of the execution and delivery of this Agreement or the performance by VBI of any of its obligations provided for under this Agreement;

 

 

 

17/36

 

 

	 	
(e)
	
VBI has no commitments or agreements with any person or supplier (company) which interfere with or preclude the diligent and complete fulfillment of its obligations under this Agreement;

	 	 	 
	 	
(f)
	
there are:

 

	
 
	
(i)
	
no claims, litigation, causes of action, suits, arbitrations, investigations or other proceedings pending and./or, to the best of VBI’s knowledge, threatened, and/or are known to be contemplated, against VBI and/or any of its assets or properties before or by any court, governmental agency, authority or commission, mediator, arbitrator or self-regulatory body; and

 

	
 
	
(ii)
	
no judgments, consents, decrees, injunctions, or any other judicial or administrative mandates outstanding against VBI; 

 

respecting the transactions contemplated by this Agreement;

 

	 	
(g)
	
no consent, license, permit, approval, order or authorization of, or registration, declaration, qualification or filing with, any foreign, federal, state, provincial or local governmental authority or any person is required to be obtained or made in connection with the execution, delivery or performance by VBI of this Agreement;

 

	 	
(h)
	
in the fulfillment of its obligations under this Agreement, VBI is not knowingly violating, infringing or misappropriating any technology, including any intellectual property rights or any trade secrets of any third party;

 

	 	
(i)
	
VBI has the right to grant to SVT the licenses contemplated in this Agreement;

 

	 	
(j)
	
to the best of VBI’s knowledge, no third party has or shall acquire any right, title or interest in or to the Project; 

 

	 	
(k)
	
VBI has obtained or will obtain valid assignments from its employees for the Joint Inventions or in the case they have the status of inventor in a Project Candidate Patent; and

 

	 	
(l)
	
VBI has obtained valid assignments of all the intellectual property rights attached to VBI LPV Technology.

 

	
11.3
	
Representations and Warranties by SVT: SVT represents and warrants to VBI, as of the Effective Date, and acknowledges that VBI are relying on such representations and warranties in entering into this Agreement, that:

 

	 	
(a)
	
SVT is a corporation duly incorporated and validly existing under the laws of France;

 

 

 

18/36

 

 

	 	
(b)
	
SVT has all necessary corporate power and authority to enter into this Agreement and to carry out its obligations under this Agreement, and the execution, performance and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of SVT; 

 

	 	
(c)
	
this Agreement has been duly authorized, executed and delivered by SVT and constitutes a legal, valid and binding obligation of SVT enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, moratorium or similar laws, or general equitable principles, whether considered in an action at law or in equity;

 

	 	
(d)
	
SVT is not a party to, bound or affected by or subject to any agreement, policy, funding arrangement or constraint of any kind, indenture, mortgage, lease, instrument, charter or by-law provision, obligation, statute, regulation, order, judgment, decree, license, permit or law which would be violated, contravened, breached by, or under which default would occur, or with notice or lapse of time or both would occur, as a result of the execution and delivery of this Agreement or the performance by SVT of any of its obligations provided for under this Agreement;

 

	 	
(e)
	
SVT has no commitments or agreements with any person which interfere with or preclude the diligent and complete fulfillment of its obligations under this Agreement;

 

	 	
(f)
	
there are:

 

	
 
	
(i)
	
no claims, litigation, causes of action, suits, arbitrations, investigations or other proceedings pending or, to the best of SVT’s knowledge, threatened, or are known to be contemplated, against SVT or any of its assets or properties before or by any court, governmental agency, authority or commission, mediator, arbitrator or self-regulatory body; and

 

	
 
	
(ii)
	
no judgments, consents, decrees, injunctions, or any other judicial or administrative mandates outstanding against SVT; 

 

respecting the transactions contemplated by this Agreement;

 

	 	
(g)
	
no consent, license, permit, approval, order or authorization of, or registration, declaration, qualification or filing with, any foreign, federal, state, provincial or local governmental authority or any person is required to be obtained or made in connection with the execution, delivery or performance by SVT of this Agreement;

 

 

 

19/36

 

 

	 	
(h)
	
in the fulfillment of its obligations under this Agreement, SVT is not knowingly violating, infringing or misappropriating any technology, including any intellectual property rights or any trade secrets of any third party;

 

	 	
(i)
	
SVT has the right to grant to VBI the license or rights contemplated in this Agreement;

 

	 	
(j)
	
there is no other outstanding agreement covering the Project Results and, to the best of SVT’s knowledge, no third party has or shall acquire any right, title or interest in or to the Project or the Project Results; and 

 

	 	
(k)
	
SVT has obtained or will obtain valid assignments from its employees for the Joint Inventions or in the case they have the status of inventor in a Project Candidate Patent.

  

 

ARTICLE 12 - INDEMNIFICATION AND INSURANCE

 

	
12.1
	
Indemnification by SVT: SVT shall indemnify, defend and hold harmless VBI and its Affiliates and their respective officers, directors, employees, agents and representatives for any third party claim, demand or injury arising out of or relating to (a) the material breach by SVT of any of its obligations under this Agreement, or (b) the research, development or other use by SVT or any of its Affiliates of the Project Results or a Project Candidate Vaccine, provided, however, that such indemnity shall not extend to damages arising directly from the material breach by VBI of its obligations hereunder. 

 

	
12.2.
	
Indemnification by VBI: VBI shall indemnify, defend and hold harmless SVT and its Affiliates and their respective officers, directors, employees, agents and representatives for any third party claim, demand or injury arising out of or relating to (a) the material breach by VBI of any of its obligations under this Agreement, or (b) the research, development or use by VBI or any of its Affiliates of the Project Results, provided, however, that such indemnity shall not extend to damages arising directly from the material breach by SVT of its obligations hereunder.

  

	
12.3
	
Indemnification Procedures: Any person seeking indemnity pursuant to this section (the "Indemnified Party") shall notify the Party from whom indemnification is sought (the “Indemnifying Party”) in writing promptly upon becoming aware of any claim, threatened claim, damage, loss, suit, proceeding or liability ("Claim") to which such indemnification may apply. Failure to provide such notice shall constitute a waiver of the Indemnifying Party’s indemnity obligations hereunder if and to the extent the Indemnifying Party is materially damaged thereby. The Indemnifying Party shall have the right to assume and control the defense of the Claim at its own expense. If the right to assume and control the defense is exercised, the Indemnified Party shall have the right to participate in, but not control, such defense at its own expense and the Indemnify Party’s indemnity obligations shall be deemed not to include attorneys' fees and litigation expenses incurred by the Indemnified Party after the assumption of the defense by the Indemnifying Party. If the Indemnify Party does not assume the defense of the Claim, the Indemnified Party may defend the Claim; provided, that the Indemnified Party will not settle or compromise the Claim without consent of Indemnifying Party, which consent will not be unreasonably withheld. The Indemnified Party shall cooperate with Indemnifying Party and will make available to Indemnifying Party all pertinent information under the control of the Indemnified Party.

 

 

 

20/36

 

 

	
12.4
	
Waiver of Consequential or Punitive Damages: Notwithstanding anything to the contrary contained herein, in no event shall either party be liable to the other party for any special, incidental, consequential or punitive damages, including lost profits, whether any claim for such recovery is based upon theories of contract, negligence, or tort (including strict liability), and even if either party has knowledge of the possibility of the potential damage or loss. Each party hereby waives for itself and its successors and assigns any and all claims for any special, incidental, consequential or punitive damages, including lost profits.

 

	
12.5
	
Insurance: Each Party shall obtain and maintain comprehensive general liability insurance, including product liability insurance, with a reputable and financially secure insurance carrier(s), to cover its activities under this Agreement.

 

 

Article 13 - Term and Termination

 

	
13.1
	
Term. The term of this Agreement shall commence on the Effective Date and unless earlier terminated as provided in this Article 13 or mutually extended in writing, this Agreement shall continue in full force and effect until the expiration or termination of the Option or, in the event that the Option is timely exercised in accordance with Article 8 hereto, until a License Agreement is executed by the parties. 

 

	
13.2
	
Termination for Cause. Either Party may terminate this Agreement in its entirety or with respect to any Field in the event the other Party has materially breached or defaulted in the performance of any of its obligations hereunder, and such default has continued for ninety (90) days after written notice thereof was provided to the breaching Party by the non-breaching Party. Any termination shall become effective at the end of such ninety (90) day period unless the breaching Party has cured any such breach or default prior to the expiration of the ninety (90) day period.

 

	
13.3
	
Termination for Insolvency. If involuntary proceedings against a Party are instituted in bankruptcy under any insolvency law, or a receiver or custodian is appointed for such Party, or proceedings are instituted against such Party for corporate reorganization or the dissolution of such Party, which proceedings, if involuntary, shall not have been dismissed within sixty (60) days after the date of filing, or if such Party makes an assignment for the benefit of creditors, or substantially all of the assets of such Party are seized or attached and not released within sixty (60) days thereafter, the other Party may immediately terminate this Agreement effective upon notice of such termination.

 

 

 

21/36

 

 

	 	
13.4
	
Permissive Termination. 

 

13.4.1. During the Project Period: SVT may terminate this Agreement at any time with forty-five (45) days written notice to VBI. 

 

13.4.2. During the Option Period. SVT may terminate at any time. 

 

	 	
13.5
	
Effect of Termination, Expiration or Completion of Project

 

13.5.1     Accrued Rights and Obligations. Expiration or termination of this Agreement for any reason shall not release any Party hereto from any liability which, at the time of such termination or expiration, has already accrued to the other Party or which is attributable to a period prior to such termination, or expiration, nor preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement. If any termination occurs on account of Section 13.4 hereunder, SVT shall be obligated to pay VBI for any costs incurred, all rights granted from VBI to SVT on the Background Technology will revert back to VBI and the SVT portion of jointly owned rights on the Project Results will be assigned to VBI by SVT against a fair remuneration of SVT’s contribution to the Project Results, to be negotiated in good faith in a further agreement. 

It is understood and agreed that monetary damages may not be a sufficient remedy for any breach of this Agreement and that the non-breaching Party may be entitled to injunctive relief as a remedy for any such breach.

 

13.5.3     Return of Confidential Information. Upon any termination or expiration of this Agreement, VBI and SVT shall promptly return to the other Party all Confidential Information of the other; provided counsel of each Party may retain one (1) copy of such Confidential Information for archival purposes and for ensuring compliance with Article 6.

 

	
13.6 
	
Survival. Sections 4.1 and 14.3 and Articles 5, 6, 7, 12, 13 and 15 (together with related definitions) shall survive termination of this Agreement for any reason.

 

 

Article 14 - Miscellaneous

 

	
14.1
	
Independent Contractors. The relationship of the Parties hereto is that of independent contractors. The Parties hereto are not deemed to be agents, partners or joint venturers of the others for any purpose as a result of this Agreement or the transactions contemplated thereby.

 

	
14.2
	
Assignment. This Agreement shall not be assignable by either Party to any third party hereto without the written consent of the other Party which consent to a partial or entire assignment shall not be unreasonably withheld; except that either Party may assign this agreement, without such consent, to any Affiliate or to an entity that acquires all or substantially all of its business or assets to which this Agreement pertains, whether by merger, reorganization, acquisition, sale, or otherwise.

 

 

 

22/36

 

 

	
14.3
	
Notices. All notices, requests and other communications hereunder shall be in writing and shall be personally delivered or sent by telecopy or other electronic facsimile transmission or by registered or certified mail, return receipt requested, postage prepaid, in each case to the respective address specified below, or such other address as may be specified in writing to the other Parties hereto:

 

If to SVT:          

 

	
 
	
For SVT to:
	
Sanofi Vaccine Technologies

DSFF – Accords & Licences

102 avenue Gaston Roussel

93230 Romainville

France

 

 

	
 
	
With copy to :
	
Sanofi Pasteur S.A.

2 avenue Pont Pasteur, 

69737 Lyon Cedex 7, 

France

Attn: General Counsel

Telefax: 33/437377061

 

	
 
	
If to VBI:
	
Variation Biotechnologies, Inc.           

310 Hunt Club East

Ottawa, Ontario, K1V 1C1, Canada

Attention: President

 

	
 
	
With a copy to:
	
VBI Vaccines, Inc.

222 Third Street, Suite 2241

Cambridge, Massachusetts 02142, USA

Attention: Vice President, Business Development

 

 

 

23/36

 

 

	
14.4
	
Force Majeure. Neither Party shall lose any rights hereunder or be liable to the other Party for damages or losses (except for payment obligations) on account of failure of performance by the defaulting Party if the failure is occasioned by war, strike, fire, Act of God, earthquake, flood, lockout, embargo, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the nonperforming Party has exerted all reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall a party be required to settle any labor dispute or disturbance.

 

	
14.5
	
Injunctive Relief. Each Party acknowledges that limitations and restrictions on its possession and use of the other Party’s technology and Confidential Information hereunder are necessary and reasonable to protect the other Party, and expressly agrees that monetary damages would be inadequate to compensate such Party for any violation. The Parties agree that any such violation would cause irreparable injury to the other Party and agrees that without resorting to prior mediation or arbitration, and, in addition to any other remedies that may be available in law, in equity or otherwise, the injured Party shall be entitled to obtain temporary and permanent injunctive relief against any threatened violation of such limitations or restrictions or the continuation of any such violation in any court of competent jurisdiction, without the necessity of proving actual damages or the posting of any bond.

 

	
14.6
	
Compliance with Laws. Each Party shall furnish to the other Party any information requested or required by that Party during the term of this Agreement or any extensions hereof to enable that Party to comply with the requirements of any French, English or foreign federal, state and/or government agency.

 

	
14.7
	
Further Assurances. At any time or from time to time on and after the date of this Agreement, either Party shall at the request of the other Party hereto (i) deliver to the requesting Party any records, data or other documents consistent with the provisions of this Agreement, (ii) execute, and deliver or cause to be delivered, all such consents, documents or further instruments of transfer or license, and (iii) take or cause to be taken all such actions, as the requesting Party may reasonably deem necessary in order for the requesting Party to obtain the full benefits of this Agreement and the transactions contemplated hereby.

 

	
14.8
	
Severability. In the event that any provisions of this Agreement are determined to be invalid or unenforceable by a court of competent jurisdiction, the remainder of the Agreement shall remain in full force and effect without said provision. In such event, the Parties shall in good faith negotiate a substitute clause for any provision declared invalid or unenforceable, which shall most nearly approximate the intent of the Parties in entering this Agreement.

 

	
14.9
	
Complete Agreement. This Agreement, with its Schedules, constitutes the entire agreement, both written and oral, between the Parties with respect to the subject matter hereof, and that all prior agreements respecting the subject matter hereof, either written or oral, expressed or implied, including the MOU, are merged and canceled, and are null and void and of no effect. No amendment or change hereof or addition hereto shall be effective or binding on either of the Parties hereto unless reduced to writing and duly executed on behalf of both Parties.

 

 

 

24/36

 

 

	
14.10
	
Waiver. It is agreed that no waiver by either Party hereto of any breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent and/or similar breach or default.

 

	
14.11
	
Use of Name. Neither Party shall use the name or trademarks of the other Party in any advertisements or sales materials without the prior written consent of such other Party.

 

	
14.12
	
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and which together shall constitute one instrument.

 

 

Article 15 – GOVERNING Law 

 

Except for inventorship which shall be governed by, interpreted and enforced by US Patent Law, this Agreement is construed and shall be governed by, interpreted and enforced in accordance with the laws of the State of New York, USA. 

 

 

	
For Sanofi Vaccine Technologies 
	
For Variation Biotechnologies, Inc.

	  	  
	  	  
	  	  
	
/s/ Jacques Volckmann
	
/s/ Jeff Baxter

	
Jacques Volckmann 
	
Jeff Baxter

  

 

 

25/36

 

 

List of Schedules

 

      

	 	Schedule A -	Project Plan
	 	
Schedule B -
	
Principal Researchers

	 	
Schedule C -
	
VBI-Background Technology

	 	
Schedule D -
	
Option Notice

	 	
Schedule E-
	
Conditions for the License Agreement 

	 	
Schedule F-
	
Material Transmission Report

 

 

 

 

26/36

 

 

Schedule A

 

 

-  Project Plan  -

 

Introduction

 

Vaccine stability is a critical attribute in the development of new vaccines. Most currently marketed vaccines need to be preserved at 2-8°C or frozen throughout the distribution channels and ultimately storage at doctor’s offices. Maintenance of this cold chain is expensive, and any failures leading to abnormally high or low temperatures result in ineffective or, worse, unsafe vaccines. In addition, other vaccines such as live-attenuated vaccines, may lack sufficient stability to maintain efficacious titers throughout the manufacturing process, even if ultimately stored at 2-8°C in a lyophilized state. 

In 2010, VBI started developing a proprietary approach to vaccine formulation named Lipid Particle Vaccine (LPVTM) technology, that can stabilize labile vaccine antigens. VBI’s proprietary excipients & formulation process stabilize vaccine antigens, thereby protecting the vaccine from both excessive heat and freezing. The technology is lipid-based and protected by multiple process and composition of matter patents. 

 

VBI has proof of concept data using the LPVTM technology with a variety of vaccines covering multiple antigen classes including: recombinant/subunit proteins, whole-killed viruses, and live-attenuated vaccine antigens. Results vary based on the nature of the vaccine antigen, but in all cases VBI has been able to significantly improve antigen stability.

 

**

 

Sanofi Vaccine Technologies, within the Sanofi Pasteur group, wishes to evaluate VBI’s LPVTM technology to determine whether it is capable of improving the stability of this ** VBI will provide formulation expertise and access to LPVTM formulated ** Sanofi Vaccine Technologies will provide VBI with ** 

 

Insight Into Technology

 

**

 

 

 

 

27/36

 

 
Schedule B
 

 

- Principal Researchers  -

 

 

	
For VBI
	
For SVT

	
 

Marc Kirchmeier, PhD

Vice President, CMC & Formulations

VBI Vaccines Inc

Ph: 617 528 8222

Email: mkirchmeier@vbivaccines.com

 
	
 

**

 

 

 

 

 

28/36

 

  

Schedule C

 

- VBI LPV Technology -

 

 

VBI Lipid Particle Vaccine IP Portfolio Table

(August 19th, 2014)

 

VBI Vaccines LPV Patent Summary Table

 

 

	
VARIATION OWNED FORMULATION PROCESS PATENT APPLICATIONS (Published)

	
Inventors:

David Evander Anderson and Andrei Ogrel
	
Owner: Variation Biotechnologies Inc.

	
Patent Family: 

Methods for Preparing Liposomes and Formulation Produced Therefrom 

 
	
Priority Date(s): 

July 6, Oct. 30th, 2009

VBI-009-1/VBI-009-2 

US 61/223,196 and US 61/256,912

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US10/041078

 

WO 11/005769

(publish 13/01/11)
	
Choate

(0041)
	
06/07/10
	
VBI-009PC
	
● National Phase

	
Canada
	
2,767,392
	
BLG
	
06/07/10
	
VBI-009CA
	
● Pending – Examination to be requested 06/07/15

	
United States
	
13/377,365
	
Choate
	
06/07/10
	
VBI-009US
	
● Pending – 1st Office Action Response due 06/09/14

	
Europe
	
10797727.4
	
BLG
	
06/07/10
	
VBI-009EP
	
● Pending – 

Response filed to Extended European Search Report

	
Japan
	
2012-519672
	
BLG
	
06/07/10
	
VBI-009JP
	
● Pending

	
China
	
201080039405.6
	
BLG
	
06/07/10
	
VBI-009CN
	
● Pending – 1st & 2nd

Office Action Response filed

	
Australia
	
2010270722
	
BLG
	
06/07/10
	
VBI-009AU
	
● Pending

	
Brazil
	
112012 0008269
	
BLG
	
06/07/10
	
VBI-009BR
	
● Pending

	
Israel
	
217375
	
BLG
	
06/07/10
	
VBI-009IL
	
● Pending – Response filed to Examination Notice

 

 

 

29/36

 

 

 

	
India
	
1069/DELNP/2012
	
BLG
	
06/07/10
	
VBI-009IN
	
● Pending

	
Mexico
	
MX/A/2012/000372
	
BLG
	
06/07/10
	
VBI-009MX
	
● Pending – 1st Office Action Response filed 24/06/14

	
Inventors:

David Evander Anderson, Francisco Diaz-Mitoma and Thanh Le
	
Owner: Variation Biotechnologies Inc.

	
Patent Family: 

Methods for Preparing Liposomes and Formulation Produced Therefrom
	
Priority Date(s): 

July 6, Oct. 30th, 2009

VBI-010-1/VBI-010-2

US 61/223,192 and 

US 61/256, 909

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US10/041081

 

WO 11/005772

(publish 13/01/11)
	
Choate

(0043)
	
06/07/10
	
VBI-010PC
	
● National Phase

	
Canada
	
2,803,282
	
BLG
	
06/07/10
	
VBI-010CA
	
● Pending – 

Examination to be Requested 06/07/15

	
United States
	
13/377,371
	
Choate
	
06/07/10
	
VBI-010US
	
● Pending – 1st Office

Action Response filed 30/06/14

 

	
VARIATION OWNED THERMOSTABLE FORMULATION PATENT APPLICATIONS (published)

	
Inventors:

David Evander Anderson
	
Owner: Variation Biotechnologies Inc.

	
Patent Family: 

Compositions and Methods for Treating Influenza
	
Priority Date: 

December 23, 2009

VBI-015-1

61/289,556

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US10/62079
	
Choate (0049)
	
23/12/10
	
VBI-015PC
	
● PCT withdrawn prior to publication

	
Inventors:

David Evander Anderson, Jeff Baxter, Andrei Ogrel and Ron Boch
	
Owner: Variation Biotechnologies Inc.

	
Patent Family: 

Compositions and Methods for Treating Influenza
	
Priority Date(s): 

July 6, 2010 & Jan. 10, 2011

VBI-015-2/ VBI-015-4

US 61/361,898 and

US 61/431,218

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US11/43094

 

WO 12/006367

(publish 12/01/12)
	
Choate

(0073)
	
06/07/11
	
VBI-015PC1
	
● National Phase

	
Canada
	
2,840,079
	
BLG
	
06/07/11
	
VBI-015CA
	
● Pending –

Examination to be Requested 06/07/16

 

 

 

 

30/36

 

 

	
United States
	
13/808,155
	
Choate
	
06/07/11
	
VBI-015US
	
● Pending – 1st Office Action response filed

	
Europe
	
11804305.8
	
BLG
	
06/07/11
	
VBI-015EP
	
● Pending

	
Japan
	
2013-518810
	
BLG
	
06/07/11
	
VBI-015JP
	
● Pending –

Examination Requested 05/07/14

	
China
	
201180042971.7
	
BLG
	
06/07/11
	
VBI-015CN
	
● Pending

	
Australia
	
2011276223
	
BLG
	
06/07/11
	
VBI-015AU
	
● Pending – 1st Office Action Response due 14/01/15

	
Brazil
	
1120130003944
	
BLG
	
06/07/11
	
VBI-015BR
	
● Pending –

Examination Requested 05/07/14

	
Israel
	
224022
	
BLG
	
06/07/11
	
VBI-015IL
	
● Pending

	
India
	
1077/DELNP/2013
	
BLG
	
06/07/11
	
VBI-015IN
	
● Pending –

Examination Requested 05/07/14

	
Mexico
	
MX/A/2012/015232
	
BLG
	
06/07/11
	
VBI-015MX
	
● Pending

	
Inventors:

David Evander Anderson, Jeff Baxter, Andrei Ogrel and Ron Boch
	
Owner: Variation Biotechnologies Inc.

	
Patent Family: 

Compositions and Methods for Treating Influenza
	
Priority Date(s): 

July 6, 2010 & Jan. 10, 2011 

VBI-015-3/VBI-015-5

US 61/361,899 and

US 61/431,278

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US11/43095

 

WO 12/006368

(publish 12/01/12)
	
Choate

(0074)
	
06/07/11
	
VBI-015PC2
	
● Not converted at National Phase

 

 

	
Inventors:

David Evander Anderson, Tanvir Ahmed, Jasminka Bozic and Marc Kirchmeier
	
Owner: Variation Biotechnologies Inc.

	
Patent Family: 

Compositions and Methods for Treating Viral Infections
	
Priority Date: 

January 13, 2011 VBI-023-1

61/432,567

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US12/21388

 

WO 12/097346

(Publish 19/07/12)
	
Choate

(0080)
	
13/01/12
	
VBI-023PC
	
● National Phase

	
Canada
	
NA
	
BLG
	
13/01/12
	
VBI-023CA
	
● Reinstate NPE late entry 13/07/14

	
United States
	
13/979,322
	
BLG
	
13/01/12
	
VBI-023US
	
● Pending – Preliminary Amendment filed

 

 

 

 

31/36

 

 

	
Europe
	
12734104.8
	
BLG
	
13/01/12
	
VBI-023EP
	
● Pending – Claim Amendments filed

	
China
	
201280008709.5
	
BLG
	
13/01/12
	
VBI-023CN
	
● Pending 

	
Brazil
	
1120130179392
	
BLG
	
13/01/12
	
VBI-023BR
	
● Pending –

Examination to be Requested 12/01/15

	
India
	
7052/DELNP/2013
	
BLG
	
13/01/12
	
VBI-023IN
	
● Pending – 

Examination to be Requested 12/01/15

	
Mexico
	
MX/A/2013/008106
	
BLG
	
13/01/12
	
VBI-023MX
	
● Pending

	
Inventors:

David Evander Anderson, Yvonne Perrie, Jit Wilkhu and Marc Kirchmeier
	
Owner: Variation Biotechnologies Inc.

	
Patent Family: 

Methods for Preparing Vesicles and Formulations Produced Therefrom
	
Priority Date: 

January 13, 2011

VBI-024-1

61/432,569

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US12/21389

 

WO 12/097347

(Publish 19/07/12)
	
Choate

(0081)
	
13/01/12
	
VBI-024PC
	
● National Phase

	
Canada
	
NA
	
BLG
	
13/01/12
	
VBI-024CA
	
● Reinstate NPE late entry 13/07/14

	
United States
	
13/979,317
	
BLG
	
13/01/12
	
VBI-024US
	
● Pending – Preliminary Amendment filed

	
Europe
	
12733900.0
	
BLG
	
13/01/12
	
VBI-024EP
	
● Pending – Claim Amendments filed

	
China
	
201280008692.3
	
BLG
	
13/01/12
	
VBI-024CN
	
● Pending 

	
Australia
	
2012205315
	
BLG
	
13/01/12
	
VBI-024AU
	
● Pending – 

Examination to be Requested 12/01/17

	
Brazil
	
1120130180749
	
BLG
	
13/01/12
	
VBI-024BR
	
● Pending –

Examination to be Requested 12/01/15

	
India
	
7053/DELNP/2013
	
BLG
	
13/01/12
	
VBI-024IN
	
● Pending –

Examination to be Requested 12/01/15

	
Mexico
	
MX/A/2013/008104
	
BLG
	
13/01/12
	
VBI-024MX
	
● Pending

 

 

 

32/36

 

 

	
Inventors:

David Evander Anderson
	
Owner: Variation Biotechnologies Inc.

	
Patent Family:

Compositions and Methods for Treating Viral Infections
	
Priority Date: 

January 12, 2012

VBI-026-1

61/585,971

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US13/21277

PCT/IB13/000453

 

WO 13/104995

(publish 18/07/13)
	
Choate

(0091)

BLG
	
12/01/13
	
VBI-026PC
	
● Pending – NPE (30 months) due 11/07/14 

● Assignment filed

	
Inventors:

Marc Kirchmeier
	
Owner: Variation Biotechnologies Inc.

	
Patent Family:

Methods and Compositions for Therapeutic Agents
	
Priority Date: 

January 27, 2012

VBI-027-1

61/591,837

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status or Patent No.

	
PCT
	
PCT/US13/23079

PCT/IB13/000454

 

WO 13/111012

(publish 01/08/13)
	
Choate

(0092)

BLG
	
25/01/13
	
VBI-027PC
	
● Pending – NPE (30 months) due 26/07/14

● Assignment filed

 

 

VBI Vaccines LPV Trademark Summary Table

 

	
Trademark Family: 

Lipid Particle VaccineTM 
	
Priority Date: 

May 20, 2011

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status 

	
Canada
	
S.N. 1,528,640
	
BLG
	
20/05/11
	
TM 103841-1 CA
	
● Pending

	
Trademark Family: 

LPVTM
	
Priority Date: 

May 20, 2011

	
Country 
	
Number
	
Agent
	
Filing Date
	
Reference No.
	
Status 

	
Canada
	
S.N. 1,528,635
	
BLG
	
20/05/11
	
TM 103842-1 CA
	
● Pending

 

 

 

33/36

 

 

Schedule D

 

- Option Notice-

 

 

To be send by SVT to VBI 

 

DATE

 

RE : Option Exercise Notice 

 

 

 

Dear Sirs/Madams,

 

 

We refer to the Collaboration Agreement with Option to enter into a License Agreement dated as of [date] (hereafter “the Agreement”).

 

The purpose of this letter is to officially inform you that SVThereby wishes to exercise its rights in accordance with Article 8 of the Agreement its Option as followings:

 

	 	
●
	
Non-exclusive Field of Use :

 

 

We wish to commence negotiations for the License Agreement relating to [field] promptly. Our representatives for this purpose shall be as follows:

 

[name]

ex10-1.htm

[phone number]

[fax number].

 

Please have your representative contact ours promptly and alert us in writing as to the present availability of non-exclusive rights within the Field.

 

Your sincerely, 

 

 

 

 

34/36

 

 
Schedule E
 

 

 

	
Deal terms (000’s US Dollars)

 
	
**
	
Additional targets

	
 

Upfront Technology Access Fee 
	
 

**
	
 

**

 

	
 

Feasibility Study Funding 
	
 

**
	
 

**

 

	
 

Option Exercise Fee 

(successful feasibility is trigger) 

 
	
 

**
	
 

**

	
 

Phase II Start 
	
**
	
 

**

 

	
 

Phase III Start 
	
 

**
	
 

**

 

	
 

BLA Filing 
	
 

**
	
 

**

 

	
 

Royalty Rate 
	
 

**
	
 

**

 

 

 

 

35/36

 

 
Schedule F

 

 

MATERIAL TRANSMISSION REPORT

to the Collaboration and Option License Agreement dated [to be completed], 2014 (“Agreement”)

 

[Place]                                                    [DATE]

 

 

Sanofi Vaccine Technologies S.A.S., a company organized and existing under the laws of France, registered under the number 410 512 206 R.C.S BOBIGNY, having offices located at 102 avenue Gaston Roussel 93230 ROMAINVILLE, France 

 

(“SVT”)

 

AND

 

VBI, Inc., a [legal form to be completed] organized and existing under the laws of [to be completed], having its registered head office at [to be completed], hereafter referred to as “VBI”

(“VBI”)

 

Together referred to as the “Parties”, hereby confirm the following:

 

 

1.     SVT has completely fulfilled its obligations by transferring the SVT’s Materials in accordance with the Agreement in due time and in full volume.

 

2.     VBI has accepted the SVT’s Materials delivered by SVT in order to perform the Project (as defined in the Agreement).

 

3.      This Material Transmission Report is executed in two counterparts having equal legal force, by one counterpart to each of the Parties.

 

	
SVT 
	
VBI 

	  	  
	
Per:________________________________
	
Per:___________________________________

	  	  
	  	  

 

 

 

 36/36exh_102.htm

Exhibit 10.2

 

Employment Agreement

This Employment Agreement (this “Agreement”) is entered into effective as of April 27, 2015 by and between Eagle Bancorp Montana, Inc., a Delaware corporation, Opportunity Bank of Montana, a Montana-chartered bank and wholly owned subsidiary of Eagle Bancorp Montana, Inc., and Peter J. Johnson, an executive of Eagle Bancorp Montana, Inc. and Opportunity Bank of Montana (the “Executive”).  Eagle Bancorp Montana, Inc. and Opportunity Bank are sometimes referred to in this Agreement individually or together as the “Employer.”

Whereas, the Executive possesses unique skills, knowledge, and experience relating to the Employer’s business, and the Executive has made and is expected to continue to make major contributions to the profitability, growth, and financial strength of the Employer and affiliates,

Whereas, the Executive and the Employer intend that this Agreement set forth the terms and conditions of the Executive’s employment,

Whereas, as of the date of this Agreement none of the conditions or events included in the definition of the term “golden parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 C.F.R. 359.1(f)(1)(ii)] exists or, to the Employer’s best knowledge, is contemplated insofar as the Employer or any affiliates are concerned.

Now Therefore, in consideration of these premises, the mutual covenants contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.

Article 1

Employment

1.1           Employment.  The Employer hereby employs the Executive to serve as President and Chief Executive Officer.  The Executive shall serve under the direction of the Employer’s board of directors and in accordance with the Employer’s Articles of Incorporation and Bylaws, as each may be amended or restated from time to time.  The Executive shall report directly to the board of directors.  The Executive shall serve the Employer faithfully, diligently, competently, and to the best of the Executive’s ability.  The Executive shall exclusively devote full working time, energy, and attention to the business of the Employer and to the promotion of the Employer’s interests throughout the term of this Agreement.  Nothing in this section 1.1 shall prevent the Executive from managing personal investments and affairs, provided that doing so does not interfere with the proper performance of the Executive’s duties and responsibilities under this Agreement.

1.2           Term.  The initial term of employment shall be a period of three years, commencing on the effective date first written above.  On the first anniversary of the effective date and on each anniversary thereafter, the Executive’s employment shall be extended automatically for one additional year unless the Employer’s board of directors determines that the term shall not be extended.  If the board of directors determines not to extend the term, it shall notify the Executive in writing at least 30 days in advance.  If the board decides not to extend the term of employment, this Agreement shall nevertheless remain in force until the employment term expires.  The board’s decision not to extend the term of employment shall not – by itself – give the Executive any rights under this Agreement to claim an adverse change in position, compensation, or circumstances or otherwise to claim entitlement to severance benefits under Articles 4 or 5 of this Agreement.  References herein to the term of employment mean the initial term, as the same may be extended.

  

1

  

Article 2

Compensation

2.1           Base Salary.  The Employer shall pay or cause to be paid to the Executive a salary at the annual rate of not less than $246,000, payable in installments in accordance with the Employer’s regular pay practices.  The Executive’s salary shall be reviewed annually by the Employer’s board of directors or by the board committee having jurisdiction over executive compensation.  In the discretion of the board or the committee having jurisdiction over executive compensation the Executive’s salary may be increased to account for increases in the cost of living, but cost-of-living increases, if any, shall not occur more frequently than annually.  The Executive’s salary shall not be reduced.  The Executive’s salary, as it may be increased from time to time, is referred to in this Agreement as the “Base Salary.”

2.2           Benefit Plans and Perquisites.  (a)  The Executive shall be entitled throughout the term of this Agreement to participate in any and all officer or employee compensation, bonus, incentive, and benefit plans in effect from time to time, including without limitation plans providing pension, medical, dental, disability, and group life benefits, including the Employer’s 401(k) Plan, and to receive any and all other fringe benefits provided from time to time, provided that the Executive satisfies the eligibility requirements for any such plans or benefits.

(b)           Reimbursement of business expenses.  Subject to guidelines issued from time to time by the Employer and upon submission of documentation to support expense reimbursement in conformity with applicable requirements of federal income tax laws and regulations, the Executive shall be entitled to reimbursement for all reasonable business expenses incurred performing the obligations under this Agreement, including but not limited to all reasonable business travel and entertainment expenses incurred while acting at the request of or in the service of the Employer, and reasonable expenses for attendance at annual and other periodic meetings of trade associations.

(c)           Vacation.  The Executive shall be entitled to paid annual vacation and sick leave in accordance with the policies established from time to time by the Employer.

(d)           Club dues.  The Employer will pay or cause to be paid on the Executive’s behalf annual membership dues and expenses for a country club approved by the Employer.

Article 3

Employment Termination

3.1           Termination Because of Death or Disability.  (a)  Death.  If the Executive dies in active service to the Employer the Executive’s estate shall receive any sums due to the Executive as Base Salary and reimbursement of expenses through the end of the month in which death occurred, and any bonus earned or accrued through the date of death, including any unvested amounts awarded for previous years.

 

  

2

  

(b)           Disability.  By delivery of written notice 30 days in advance to the Executive, the Employer may terminate the Executive’s employment if the Executive is disabled.  For purposes of this Agreement the Executive shall be considered “disabled” if an independent physician selected by the Employer and reasonably acceptable to the Executive or the Executive’s legal representative determines that, because of illness or accident, the Executive is unable to perform the Executive’s duties and will be unable to perform the Executive’s duties for a period of 90 consecutive days.  The Executive shall not be considered disabled, however, if the Executive returns to work on a full-time basis within 30 days after the Employer gives notice of termination due to disability.  If the Executive is terminated by either Employer because of disability the Executive’s employment with the other Employer shall also terminate at the same time.  If the Executive’s employment terminates because of disability, the Executive shall receive any unpaid bonus or incentive compensation due to the Executive for the calendar year preceding the calendar year in which the termination became effective, any payments the Executive is eligible to receive under any disability insurance program in which the Executive participates, and such other benefits to which the Executive may be entitled under the Employer’s benefit plans, policies, and agreements, or the provisions of this Agreement.  The Executive shall be paid 3/4 of Executive’s monthly base salary and receive continued life, medical, and disability coverage in existence at the time of termination for disability until the first to occur of the following:  Executive returns to work, finds other full-time employment, attains age 65, dies, or the Agreement expires, provided the disability benefits will be paid for no less than one year if the remaining contract term is less than one year.

3.2           Involuntary Termination by the Employer.  (a)  With cause.  The Employer may terminate the Executive’s employment with Cause.  If the Executive’s employment terminates with Cause the Executive shall receive the Base Salary and expense reimbursement to which the Executive is entitled through the date on which termination becomes effective and any other benefits to which the Executive may be entitled under the Employer’s benefit plans and policies.  If either Eagle Bancorp Montana, Inc. or Opportunity Bank terminates the Executive involuntarily with Cause the Executive’s employment with the other shall be deemed to have terminated with Cause at the same time.  For purposes of this Agreement “Cause” means any of the following –

1)           fraud, embezzlement, or theft by the Executive in the course of employment, or

2)           intentional violation of any law or significant policy of the Employer that, in the Employer’s sole judgment, has an adverse effect on the Employer, regardless of whether the violation leads to criminal prosecution or conviction.  For purposes of this Agreement applicable laws include any statute, rule, regulatory order, statement of policy, or final cease-and-desist order of any governmental agency or body having regulatory authority over the Employer.  No act or failure to act on the Executive’s part shall be considered intentional if it was due primarily to an error in judgment or negligence.  An act or failure to act on the Executive’s part shall be considered intentional if it is not in good faith and if it is without a reasonable belief that the action or failure to act is in the Employer’s best interests, or

3)           gross negligence in the performance of duties or intentional failure to perform stated duties after written notice, or

4)           intentional wrongful damage to the business or property of the Employer, including without limitation the Employer’s reputation, which in the Employer’s sole judgment causes material harm to the Employer, or

  

3

  

5)           a breach of fiduciary duty or misconduct involving dishonesty, in either case whether in the Executive’s capacity as an officer or as a director, or

6)           removal of the Executive from office or permanent prohibition of the Executive from participating in the Opportunity Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

7)           conviction of the Executive for or plea of no contest to a felony or conviction of or plea of no contest to a misdemeanor involving moral turpitude, or the actual incarceration of the Executive for 45 consecutive days or more, or

8)           the occurrence of any event that results in the Executive being excluded from coverage, or having coverage limited for the Executive as compared to other executives of the Employer, under the Employer’s blanket bond or other fidelity or insurance policy covering its directors, officers, or employees.

(b)           Without cause.  With written notice to the Executive 90 days in advance, the Employer may terminate the Executive’s employment without Cause.  Termination shall take effect at the end of the 90-day period.  If either Eagle Bancorp Montana, Inc. or Opportunity Bank terminates the Executive without Cause, the Executive’s employment with the other shall terminate at the same time.  If the Executive’s employment terminates involuntarily but without Cause under section 3.2 the Executive shall be entitled to the benefits specified in Article 4 of this Agreement.

3.3           Voluntary Termination by the Executive.  (a)  Without good reason.  If the Executive terminates employment voluntarily but without Good Reason the Executive shall receive the Base Salary and expense reimbursement to which the Executive is entitled through the date on which termination becomes effective and any other benefits to which the Executive may be entitled under the Employer’s benefit plans and policies.  If the Executive’s employment with either of Eagle Bancorp Montana, Inc. or Opportunity Bank terminates voluntarily but without Good Reason the Executive’s employment with the other shall be deemed to have terminated voluntarily but without Good Reason at the same time.

(b)           With good reason.  With advance written notice to the Employer as provided in clause (y) below, the Executive may terminate employment with Good Reason.  If the Executive’s employment with either of Eagle Bancorp Montana, Inc. or Opportunity Bank terminates voluntarily but with Good Reason the Executive’s employment with the other shall terminate at the same time.  If the Executive’s employment terminates voluntarily but with Good Reason the Executive shall be entitled to the benefits specified in Article 4 of this Agreement.  For purposes of this Agreement a voluntary termination by the Executive shall be considered a voluntary termination with Good Reason if the conditions of the safe-harbor definition of good reason contained in Internal Revenue Code section 409A are satisfied, as the same may be amended from time to time.  References in this Agreement to section 409A of the Internal Revenue Code of 1986 include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Code section 409A.  For purposes of clarification and without intending to affect the foregoing reference to section 409A for the definition of Good Reason, as of the effective date of this Agreement the safe-harbor definition of separation from service for good reason in Rule 1.409A-1(n)(2)(ii) provides that a termination would be a voluntary termination with Good Reason if the conditions stated in both clauses (x) and (y) are satisfied –

  

4

  

(x)           a voluntary termination by the Executive is considered a voluntary termination with Good Reason if any of the following occur without the Executive’s advance written consent, and the term Good Reason means the occurrence of any of the following without the Executive’s advance written consent –

1)           a material diminution of the Executive’s Base Salary,

2)           a material diminution of the Executive’s authority, duties, or responsibilities,

3)           a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report, including a requirement that the Executive report to a corporate officer or employee instead of reporting directly to the board of directors,

4)           a material diminution in the budget over which the Executive retains authority,

5)           a material change in the geographic location at which the Executive must perform services for the Employer, or

6)           any other action or inaction that constitutes a material breach by the Employer of this Agreement.

(y)           the Executive must give notice to the Employer of the existence of one or more of the conditions described in clause (x) within 90 days after the initial existence of the condition, and the Employer shall have 30 days thereafter to remedy the condition.  In addition, the Executive’s voluntary termination because of the existence of one or more of the conditions described in clause (x) must occur within 24 months after the initial existence of the condition.

Article 4

Severance Compensation

4.1           Cash Severance after Termination Without Cause or Termination with Good Reason.  If the Executive’s employment terminates involuntarily but without Cause or voluntarily but with Good Reason, on the first day of the seventh month after the month in which the Executive’s employment terminates the Employer shall pay to the Executive in a single lump sum cash in an amount equal to the Executive’s Base Salary for the unexpired term of this Agreement, without discount for the time value of money.  The Employer and the Executive acknowledge and agree that the benefit under this section 4.1 shall not be payable if benefits are payable or shall have been paid to the Executive under Article 5 of this Agreement.

4.2           Post-Termination Insurance Coverage.  (a)  If the Employer terminates the Executive’s employment involuntarily but without Cause or if the Executive voluntarily terminates employment with Good Reason, the Employer shall continue or cause to be continued at the Employer’s expense and on behalf of the Executive and the Executive’s dependents a medical and dental insurance coverage benefit consisting of reimbursement by the Employer of a portion of the Executive’s cost to continue medical insurance coverage under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) [Pub. L. 99-272, 100 Stat. 82].  Regardless of whether it is sufficient to reimburse the Executive’s entire monthly cost for continued medical insurance coverage under COBRA, the amount of the Employer’s reimbursement under this section 4.2 shall be equal to the monthly medical insurance premium cost incurred by the Employer on account of the 

 

  

5

  

 

Executive’s participation in the Employer’s medical and dental insurance plan in the month immediately before the month in which the Executive’s employment terminated.  If providing the medical and dental insurance coverage reimbursement benefit under this section 4.2(a) would result in the Employer or any of its affiliates breaching the terms of any insurance policy with an applicable insurer or incurring any penalty or additional tax for failing to comply with any applicable law, instead of receiving the medical and dental insurance coverage reimbursement benefit the Executive shall be entitled to elect continuation coverage under COBRA section 4980B(f) and, beginning with the first payroll period after the first day of the seventh month after the month in which the Executive’s employment terminates, the Employer shall pay to the Executive a monthly cash amount equal to the monthly premium amount the Employer would have paid for the Executive’s medical and dental coverage reimbursement under this section 4.2(a) had the Executive remained actively employed, less any applicable tax withholdings (each such payment, an “Employer Payment”).  The first Employer Payment shall include the amount that the Executive would have received in the seven-month period after the date of employment termination had the Executive otherwise received the Employer Payments during the seven-month period.  Any benefit provided by the Employer in accordance with the preceding sentences after employment termination shall not count toward the medical and dental plan’s obligation to provide continuation coverage under COBRA or any applicable provision of the Employer’s health plans that provide for continuing coverage for the Executive, and the last day of the post-termination period in which the Executive is entitled to the benefit under this section 4.2(a) shall be deemed to be the date of the Executive’s “qualifying event” for purposes of COBRA, provided that if application of this sentence would result in the Employer or any of its affiliates incurring any penalty or additional tax for failing to comply with any applicable law, this section 4.2(a) shall be applied without giving effect to this sentence.

(b)           The Employer’s obligation to pay benefits under this section 4.2 shall terminate on the first to occur of (w) the date the Executive becomes eligible for medical and dental coverage under another medical insurance plan, provided by another employer, (x) the Executive’s attainment of age 65, (y) the Executive’s death, or (z) the end of the term that remains under this Agreement when the Executive’s employment terminates.  Termination of the benefit under this section 4.2 shall not, however, relieve the Employer of its obligation to make a reimbursement payment due but not yet paid to the Executive.  This section 4.2 shall not be interpreted to limit any benefits to which the Executive or the Executive’s dependents or beneficiaries may be entitled under any of the Employer’s employee benefit plans, agreements, programs, or practices after the Executive’s employment termination, including without limitation retiree medical benefits.

Article 5

Change in Control

5.1           Change in Control Benefits.  If a Change in Control occurs during the term of this Agreement the Employer shall make or cause to be made a lump-sum payment to the Executive in an amount in cash equal to three times the Executive’s annual compensation.  For this purpose annual compensation means (x) the Executive’s Base Salary when the Change in Control occurs plus (y) the cash bonus or cash incentive compensation for the calendar year immediately before the calendar year in which the Change in Control occurs, regardless of when the bonus or incentive compensation is paid and regardless of whether it is subject in whole or in part to deferral, vesting, or a potential repayment obligation.  Annual compensation shall be calculated without regard to any deferrals under qualified or nonqualified plans, but annual compensation shall not include interest or other earnings credited to the Executive under qualified or nonqualified plans or any compensation paid for service as a director.  The amount payable to the Executive hereunder shall not be reduced to account for the time value of money or discounted to present value.  The payment required under this section 5.1 is payable on the date the Change in Control occurs.  If the Executive receives payment under this section 5.1 the Executive shall not be entitled to an additional severance benefit under section 4.1 of this Agreement after employment termination.  The Executive shall be entitled to benefits under this section 5.1 on no more than one occasion during the term of this Agreement.

  

6

  

5.2           Change in Control Defined.  For purposes of this Agreement the term “Change in Control” means a change in control as defined in Internal Revenue Code section 409A, as the same may be amended from time to time.  For purposes of clarification and without intending to affect the foregoing reference to section 409A for the definition of Change in Control, as of the effective date of this Agreement a Change in Control as defined in Rule 1.409A-3(i)(5) would include the following –

(a)           Change in ownership: a change in ownership of the Employer occurs on the date any one person or group accumulates ownership of Eagle Bancorp Montana, Inc. stock constituting more than 50% of the total fair market value or total voting power of Eagle Bancorp Montana, Inc. stock, or

(b)           Change in effective control: (x) any one person or more than one person acting as a group acquires within a 12-month period ownership of Eagle Bancorp Montana, Inc. stock possessing 30% or more of the total voting power of Eagle Bancorp Montana, Inc. stock, or (y) a majority of Eagle Bancorp Montana, Inc.'s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed in advance by a majority of Eagle Bancorp Montana, Inc.'s board of directors, or

(c)           Change in ownership of a substantial portion of assets: a change in ownership of a substantial portion of Eagle Bancorp Montana, Inc.’s assets occurs if in a 12-month period any one person or more than one person acting as a group acquires from Eagle Bancorp Montana, Inc. assets having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of Eagle Bancorp Montana, Inc.'s assets immediately before the acquisition or acquisitions.  For this purpose, gross fair market value means the value of Eagle Bancorp Montana, Inc.'s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

5.3           Excise Tax Under Internal Revenue Code Sections 280G and 4999.  (a)  Partial Reimbursement of Excise Tax.  If a Change in Control occurs the Executive may become entitled to acceleration of benefits under this Agreement or under any other plan or agreement of or with the Employer, including accelerated vesting of stock options, accelerated vesting of restricted stock, and acceleration of benefits under any other benefit, compensation, or incentive plan or arrangement with the Employer (collectively, the “Total Benefits”). If a Change in Control occurs, the Employer shall cause the certified public accounting firm retained by the Employer as of the date immediately before the Change in Control (the “Accounting Firm”) to calculate the Total Benefits and any excise tax payable by the Executive under sections 280G and 4999 based upon the Total Benefits.  If the Accounting Firm determines that an excise tax is payable, at the same time the Employer pays the Change in Control benefit under section 5.1 of this Agreement, and not before, the Employer shall also pay to the Executive an amount in cash equal to the excise tax calculated by the Accounting Firm (the “Excise Tax”).  The Executive acknowledges and agrees that this section 5.3 provides for partial reimbursement only of the final excise tax that may be payable, and that additional unreimbursed excise taxes may be payable by the Executive after taking into account the reimbursement payment provided under this section 5.3.  The partial reimbursement of the excise tax under this section 5.3 shall be made in addition to the amount set forth in section 5.1.

  

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(b)           Calculating the Excise Tax.  For purposes of determining whether any of the Total Benefits are subject to the Excise Tax and for purposes of determining the amount of the Excise Tax,

1)           Determination of “Parachute Payments” Subject to the Excise Tax: any other payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive’s employment termination (whether under the terms of this Agreement or any other agreement, stock option plan, restricted stock award agreement, or any other benefit plan or arrangement with the Employer, any person whose actions result in a Change in Control or any person affiliated with the Employer or such person) shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of the Internal Revenue Code, and all “excess parachute payments” within the meaning of section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of the Accounting Firm such other payments or benefits do not constitute (in whole or in part) parachute payments, or such excess parachute payments represent (in whole or in part) reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4) of the Internal Revenue Code, in excess of the “base amount,” as defined in section 280G(b)(3) of the Internal Revenue Code, or are otherwise not subject to the Excise Tax,

2)           Calculation of Benefits Subject to Excise Tax: the amount of the Total Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of (x) the total amount of the Total Benefits reduced by the amount of Total Benefits that in the opinion of the Accounting Firm are not parachute payments, or (y) the amount of excess parachute payments within the meaning of section 280G(b)(1) (after applying clause (1), above), and

3)           Value of Noncash Benefits and Deferred Payments: the value of any noncash benefits or any deferred payment or benefit shall be determined by the Accounting Firm in accordance with the principles of sections 280G(d)(3) and (4) of the Internal Revenue Code.

(c)           Assumed Marginal Income Tax Rate.  For purposes of determining the amount of the partial Excise Tax reimbursement payment to be made under this section 5.3, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the partial Excise Tax reimbursement under this section 5.3 is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence, net of the reduction in federal income taxes that can be obtained from deduction of state and local taxes (calculated by assuming that any reduction under section 68 of the Internal Revenue Code in the amount of itemized deductions allowable to the Executive applies first to reduce the amount of state and local income taxes that would otherwise be deductible by the Executive, and applicable federal FICA and Medicare withholding taxes).

(d)           Accounting Firm’s Determinations Are Final and Binding.  All determinations made by the Accounting Firm under this section 5.3 shall be final and binding on the Employer and the Executive.  All determinations required to be made under this section 5.3 – including the assumptions used to calculate Total Benefits and the Excise Tax – shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Employer and the Executive.

  

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Article 6

Confidentiality and Creative Work

6.1           Non-disclosure.  The Executive covenants and agrees not to reveal to any person, firm, or corporation any confidential information of any nature concerning the Employer or its business, or anything connected therewith.  As used in this Article 6, the term “confidential information” means all of the Employer’s and affiliates’ confidential and proprietary information and trade secrets in existence on the date hereof or existing at any time during the term of this Agreement, including but not limited to –

(a)           the whole or any portion or phase of any business plans, financial information, purchasing data, supplier data, accounting data, or other financial information,

(b)           the whole or any portion or phase of any research and development information, design procedures, algorithms or processes, or other technical information,

(c)           the whole or any portion or phase of any marketing or sales information, sales records, customer lists, customer information, employee lists, employee information, financial products and services, financial products and services pricing, financial information and projections, or other sales information, and

(d)           trade secrets, as defined from time to time by the laws of the State of Montana.

However, confidential information excludes information that – as of the date hereof or at any time after the date hereof – is published or disseminated without obligation of confidence or that becomes a part of the public domain (x) by or through action of the Employer, or (y) otherwise than by or at the direction of the Executive.  This section 6.1 does not prohibit disclosure required by an order of a court having jurisdiction or a subpoena from an appropriate governmental agency or disclosure made by the Executive in the ordinary course of business and within the scope of the Executive’s authority.

6.2           Return of Materials.  The Executive agrees to deliver or return to the Employer upon termination, upon expiration of this Agreement, or as soon thereafter as possible, all written information and any other similar items furnished by the Employer or prepared by the Executive in connection with the Executive’s services hereunder.  The Executive will retain no copies thereof after termination of this Agreement or termination of the Executive’s employment.

6.3           Injunctive Relief.  The Executive hereby acknowledges that the enforcement of this Article 6 is necessary to ensure the preservation, protection, and continuity of the business, trade secrets, and goodwill of the Employer, and that the restrictions set forth in Article 6 are reasonable in terms of time, scope, territory, and in all other respects.  The Executive acknowledges that it is impossible to measure in money the damages that will accrue to the Employer if the Executive fails to observe the obligations imposed by Article 6.  Accordingly, if the Employer institutes an action to enforce the provisions hereof, the Executive hereby waives the claim or defense that an adequate remedy at law is available to the Employer and the Executive agrees not to urge in any such action the claim or defense that an adequate remedy at law exists.  If there is a breach or threatened breach by the Executive of the provisions of Article 6, the Employer shall be entitled to an injunction without bond to restrain the breach or threatened breach, and the prevailing party in any the proceeding shall be entitled to reimbursement for all costs and expenses, including reasonable attorneys’ fees.  The existence of any claim or cause of action by the Executive against the Employer shall not constitute and shall not be asserted as a defense by the Executive to enforcement of Article 6.

  

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6.4           Affiliates’ Confidential Information is Covered.  For purposes of this Agreement the term “affiliate” includes the Employer and any entity that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with the Employer.

6.5           Survival of Obligations.  The Executive’s obligations under Article 6 shall survive employment termination regardless of the manner in which termination occurs and shall be binding upon the Executive’s heirs, executors, and administrators.

Article 7

Competition After Employment Termination

7.1           Covenant Not to Solicit.  For one year after the Executive’s employment terminates involuntarily with or without Cause or voluntarily with or without Good Reason the Executive (x) shall not solicit or attempt to solicit and shall not encourage or induce in any way any employee, joint venturer, or business partner of the Employer to terminate an employment or contractual relationship with the Employer and (y) shall not hire any person then employed by the Employer or employed by the Employer at any time during the two-year period before the Executive’s employment termination.  The parties agree that the Executive shall not be considered to be in violation of clause (y) if the Executive does not have managerial, executive, or supervisory responsibilities with a subsequent employer that hires a person formerly employed by the Employer, provided the Executive does not actually make the hiring decision and provided the person does not report to or work in the same area of operations as the Executive.

7.2           Covenant Not to Compete.  (a)  Without advance written consent of the Employer, the Executive covenants and agrees not to compete directly or indirectly with the Employer for one year after the Executive’s employment terminates involuntarily with or without Cause or voluntarily with or without Good Reason, plus any period during which the Executive is in violation of this covenant not to compete and any period during which the Employer seeks by litigation to enforce this covenant not to compete.  For purposes of this section –

(1)           the term “compete” means

	
  

	
(a)

	
providing financial products or services on behalf of any financial institution for any person residing in the territory,

	
  

	
(b)

	
assisting (other than through the performance of ministerial or clerical duties) any financial institution in providing financial products or services to any person residing in the territory, or

	
  

	
(c)

	
inducing or attempting to induce any person who was a customer of the Employer at the date of the Executive’s employment termination to seek financial products or services from another financial institution.

(2)           the phrase “compete directly or indirectly” means –

  

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(a)

	
acting as a consultant, officer, director, independent contractor, incorporator, organizer, or employee of any financial institution in competition with the Employer in the territory, or

	
  

	
(b)

	
ownership of more than 2% of the voting shares of any financial institution in competition with the Employer in the territory, or

	
  

	
(c)

	
communicating to such financial institution the names or addresses or any financial information concerning any person who was a customer of the Employer at the Executive’s employment termination.

	
  

	
(3)

	
the term “customer” means any person to whom the Employer is providing financial products or services on the date of the Executive’s employment termination.

	
  

	
(4)

	
the term “financial institution” means any bank, savings association, or bank or savings association holding company, or any other entity, including a financial institution in organization, the business of which is or will be engaging in activities that are financial in nature or incidental to such financial activities as described in section 4(k) of the Bank Holding Company Act of 1956, other than the Employer or its affiliated corporations.

	
  

	
(5)

	
“financial product or service” means any product or service that a financial institution or a financial holding company could offer by engaging in any activity that is financial in nature or incidental to such a financial activity under section 4(k) of the Bank Holding Company Act of 1956 and that is offered by the Employer or an affiliate on the date of the Executive’s employment termination, including but not limited to banking activities and activities that are closely related to and a proper incident to banking.

	
  

	
(6)

	
the term “person” means any individual or individuals, corporation, partnership, fiduciary or association.

	
  

	
(7)

	
the term “territory” means any city, town or county in which Opportunity Bank has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of such employment termination.

(b)           If any provision of this section or any word, phrase, clause, sentence or other portion thereof (including without limitation the geographical and temporal restrictions contained therein) is held to be unenforceable or invalid for any reason, the unenforceable or invalid provision or portion shall be modified or deleted so that the provision, as modified, is legal and enforceable to the fullest extent permitted under applicable law.

7.3           No Disparagement.  The Executive promises and agrees that for as long as the covenant against competition in section 7.2 applies the Executive shall not cause statements to be made, whether written or oral, that reflect negatively on the business reputation of the Employer.  Likewise, the Employer promises and agrees that the Employer shall not cause statements to be made, whether written or oral, that reflect negatively on the reputation of the Executive.

  

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7.4           Remedies.  Because of the unique character of the services to be rendered by the Executive hereunder, the Executive understands that the Employer would not have an adequate remedy at law for the material breach or threatened breach by the Executive of any one or more of the Executive’s covenants set forth in this Article 7.  Accordingly, the Executive agrees that the Employer’s remedies for a material breach or threatened breach of this Article 7 include but are not limited to (x) forfeiture of any money representing accrued salary, contingent payments, or other fringe benefits due and payable to the Executive, (y) forfeiture of any severance benefits under sections 4.1, 4.2, or 5.1 of this Agreement, and (z) a suit in equity by the Employer to enjoin the Executive from the breach or threatened breach of such covenants.  The Executive hereby waives the claim or defense that an adequate remedy at law is available to the Employer and the Executive agrees not to urge in any such action the claim or defense that an adequate remedy at law exists.  Nothing herein shall be construed to prohibit the Employer from pursuing any other remedies for the breach or threatened breach.  The Executive specifically acknowledges the receipt of adequate consideration for the covenants contained in Article 7.  The Executive acknowledges and agrees that the Executive has experience and capabilities sufficient to enable the Executive after employment termination to obtain employment that does not violate the covenants in this Article 7 and that the Employer’s remedies under Article 7 will not prevent the Executive from earning a livelihood.

7.5           Article 7 Survives Termination.  The rights and obligations set forth in this Article 7 shall survive termination of this Agreement, but if a Change in Control occurs before the Executive’s employment terminates Article 7 shall become void when the Change in Control occurs.

Article 8

Miscellaneous

8.1           Successors and Assigns.  (a)  This Agreement is binding on successors.  This Agreement shall be binding upon the Employer and any successor to the Employer, including any persons acquiring directly or indirectly all or substantially all of the business or assets of the Employer by purchase, merger, consolidation, reorganization, or otherwise.  But this Agreement and the Employer’s obligations under this Agreement are not otherwise assignable, transferable, or delegable by the Employer.  By agreement in form and substance satisfactory to the Executive, the Employer shall require any successor to all or substantially all of the business or assets of the Employer expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Employer would be required to perform had no succession occurred.

(b)           This Agreement is enforceable by the Executive’s heirs.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, and legatees.

(c)           This Agreement is personal and is not assignable.  This Agreement is personal.  Without written consent of the other parties, no party shall assign, transfer, or delegate this Agreement or any rights or obligations under this Agreement except as expressly provided herein.  Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder is not assignable or transferable, whether by pledge, creation of a security interest, or otherwise, except for a transfer by the Executive’s will or by the laws of descent and distribution.  If the Executive attempts an assignment or transfer that is contrary to this section 8.1, the Employer shall have no liability to pay any amount to the assignee or transferee.

  

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8.2           Governing Law, Jurisdiction and Forum.  This Agreement shall be construed under and governed by the internal laws of the State of Montana, without giving effect to any conflict of laws provision or rule (whether of the State of Montana or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Montana.  By entering into this Agreement the Executive acknowledges that the Executive is subject to the jurisdiction of both the federal and state courts in the State of Montana.  Any actions or proceedings instituted under this Agreement shall be brought and tried solely in courts located in Lewis and Clark County, Montana or in the federal court having jurisdiction in Helena, Montana and that service on each party shall be valid if served by certified mail, return receipt requested or hand delivery.  The Executive expressly waives the right to have any such actions or proceedings brought or tried elsewhere.  If a dispute concerning this Agreement arises, before commencing any action in any federal or state court the parties shall use their best efforts to resolve the dispute by arbitration or mediation, with one or more arbitrators or mediators mutually selected by the parties (or by three arbitrators or mediators, one selected by the Employer, one selected by the Executive, and the third selected by the two chosen by the Employer and the Executive).

8.3           Entire Agreement.  This Agreement sets forth the entire agreement of the parties concerning the employment of the Executive.  Any oral or written statements, representations, agreements, or understandings made or entered into prior to or contemporaneously with the execution of this Agreement are hereby rescinded, revoked, and rendered null and void.  The Employer and the Executive acknowledge and agree that the Executive’s October 1, 2013 Executive Employment Agreement with American Federal Savings Bank is superseded by this Agreement and is void and of no further force or effect.

8.4           Notices.  Any notice under this Agreement shall be deemed to have been effectively made or given if in writing and personally delivered, delivered by mail properly addressed in a sealed envelope, postage prepaid by certified or registered mail, delivered by a reputable overnight delivery service, or sent by facsimile.  Unless otherwise changed by notice, notice shall be properly addressed to the Executive if addressed to the address of the Executive on the books and records of the Employer at the time of the delivery of such notice, and properly addressed to the Employer if addressed to Eagle Bancorp Montana, Inc., 1400 Prospect Avenue, Helena, Montana 59601, Attention: Corporate Secretary.

8.5           Severability.  If there is a conflict between any provision of this Agreement and any statute, regulation, or judicial precedent, the latter shall prevail, but the affected provisions of this Agreement shall be curtailed and limited solely to the extent necessary to bring them within the requirements of law.  If any provision of this Agreement is held by a court of competent jurisdiction to be indefinite, invalid, void or voidable, or otherwise unenforceable, the remainder of this Agreement shall continue in full force and effect unless that would clearly be contrary to the intentions of the parties or would result in an injustice.

8.6           Captions and Counterparts.  The captions in this Agreement are solely for convenience.  The captions do not define, limit, or describe the scope or intent of this Agreement.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

  

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8.7           Amendment and Waiver.  This Agreement may not be amended, released, discharged, abandoned, changed, or modified except by an instrument in writing signed by each of the parties hereto.  The failure of any party hereto to enforce at any time any of the provisions of this Agreement shall not be construed to be a waiver of any such provision or affect the validity of this Agreement or any part thereof or the right of any party thereafter to enforce each and every such provision.  No waiver or any breach of this Agreement shall be held to be a waiver of any other or subsequent breach.

8.8           Payment of Legal Fees.  The Employer is aware that after a Change in Control management could cause or attempt to cause the Employer to refuse to comply with its obligations under this Agreement, or could institute or cause or attempt to cause the Employer to institute litigation seeking to have this Agreement declared unenforceable, or could take or attempt to take other action to deny Executive the benefits intended under this Agreement.  In these circumstances the purpose of this Agreement would be frustrated.  Accordingly, the Employer intends that the Executive not be required to incur the expenses associated with the enforcement of rights under this Agreement, whether by litigation or other legal action, because the cost and expense thereof would substantially detract from the benefits intended to be granted to the Executive hereunder.  The Employer intends that the Executive not be forced to negotiate settlement of rights under this Agreement under threat of incurring expenses.  If after a Change in Control occurs it appears to the Executive that (x) the Employer has failed to comply with any of its obligations under this Agreement or (y) the Employer or any other person has taken any action to declare this Agreement void or unenforceable, or instituted any litigation or other legal action designed to deny, diminish, or to recover from the Executive the benefits intended to be provided to the Executive hereunder, the Employer hereby irrevocably authorizes the Executive from time to time to retain counsel of the Executive’s choice, at the Employer’s expense as provided in this section 8.8, to represent the Executive in the initiation or defense of any litigation or other legal action, whether by or against the Employer or any director, officer, stockholder, or other person affiliated with the Employer, in any jurisdiction.  Despite any existing or previous attorney-client relationship between the Employer and any counsel chosen by the Executive under this section 8.8, the Employer hereby irrevocably consents to the Executive entering into an attorney-client relationship with that counsel, and the Employer and the Executive agree that a confidential relationship shall exist between the Executive and that counsel.  The fees and expenses of counsel selected from time to time by the Executive as provided in this section shall be paid or reimbursed to the Executive by the Employer on a regular, periodic basis upon presentation by the Executive of a statement or statements prepared by counsel in accordance with counsel’s customary practices, up to a maximum aggregate amount of $500,000, whether suit be brought or not, and regardless of whether incurred in trial, bankruptcy, or appellate proceedings.  The Employer’s obligation to pay the Executive’s legal fees under this section 8.8 operates separately from and in addition to any legal fee reimbursement obligation the Employer may have with the Executive under any separate severance or other agreement.  Despite anything in this section 8.8 to the contrary however, the Employer shall not be required to pay or reimburse the Executive’s legal expenses if doing so would violate section 18(k) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the Federal Deposit Insurance Corporation [12 C.F.R. 359.3].

8.9           FDIC Part 359 Limitations.  Despite any contrary provision within this Agreement, any payment obligation on the part of the Employer to the Executive under this Agreement or otherwise shall be subject to and conditional on compliance by the Employer with 12 U.S.C. 1828 and FDIC Regulation 12 C.F.R. Part 359, Golden Parachute Indemnification Payments, and any other regulations or guidance promulgated thereunder.

  

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8.10           Consultation with Counsel and Interpretation of this Agreement.  The Executive has had the assistance of counsel of the Executive’s choosing in the negotiation of this Agreement or the Executive has chosen not to have the assistance of counsel.  Both parties hereto having participated in the negotiation and drafting of this Agreement, they hereby agree that there shall not be strict interpretation against either party in any review of this Agreement in which interpretation of the Agreement is an issue.

8.11           Compliance with Internal Revenue Code Section 409A.  The Employer and the Executive intend that their exercise of authority or discretion under this Agreement shall comply with section 409A of the Internal Revenue Code of 1986.  If when the Executive’s employment terminates the Executive is a specified employee, as defined in section 409A of the Internal Revenue Code of 1986, and if any payments under this Agreement, including Articles 4 or 5, will result in additional tax or interest to the Executive because of section 409A, then despite any provision of this Agreement to the contrary the Executive shall not be entitled to the payments until the earliest of (x) the date that is at least six months after termination of the Executive’s employment for reasons other than the Executive’s death, (y) the date of the Executive’s death, or (z) any earlier date that does not result in additional tax or interest to the Executive under section 409A.  As promptly as possible after the end of the period during which payments are delayed under this provision, the entire amount of the delayed payments shall be paid to the Executive in a single lump sum.  If any provision of this Agreement does not satisfy the requirements of section 409A, the provision shall be applied in a manner consistent with those requirements despite any contrary provision of this Agreement.  If any provision of this Agreement would subject the Executive to additional tax or interest under section 409A, the Employer shall reform the provision.  However, the Employer shall maintain to the maximum extent practicable the original intent of the applicable provision without subjecting the Executive to additional tax or interest, and the Employer shall not be required to incur any additional compensation expense as a result of the reformed provision.  References in this Agreement to section 409A of the Internal Revenue Code of 1986 include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Code section 409A.

In Witness Whereof, the parties have executed this Employment Agreement as of the date first written above.

 

 

	Executive 	Employer
	 	Opportunity Bank	 
	 	 	 	 
	/s/ Peter J. Johnson	By:	/s/ Larry A. Dreyer	 
	Peter J. Johnson	Its:	 Chairman of the Board	 
	 	 	 	 
	 	Employer	 
	 	Eagle Bancorp Montana, Inc.	 
	 	 	 	 
	 	By:	/s/ Larry A. Dreyer	 
	 	Its:	Chairman of the Board

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