Document:

Exhibit 10.17

 

[*] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

EXCLUSIVE
LICENSE AGREEMENT

 

University
of Virginia Licensing & Ventures Group and 22nd Century Limited, LLC

 

This Exclusive
License Agreement (hereinafter “Agreement”) is made as of the 14th day of December, 2016 (“Effective Date”),
by and between the University of Virginia Patent Foundation d/b/a University of Virginia Licensing & Ventures Group, a Virginia
non-profit corporation, having a principal place of business at 722 Preston Avenue, Suite 107, Charlottesville, VA 22903 (“UVA
LVG”), and 22nd Century Limited, LLC, a for-profit Delaware limited liability company with its principal place of business
at 9530 Main Street, Clarence, New York 14031 (“Licensee”).

 

WITNESSETH

 

whereas,
The Rector and Visitors of the University of Virginia (“University”) and Licensee
are parties to that certain Research Funding Agreement effective November 10, 2011, and that certain Research and Funding Agreement
dated as of December 1, 2016 (collectively, the “Research Agreement”) pursuant to which University has conducted and
will continue to conduct research on behalf of and at the cost of Licensee, as the sponsor under the Research Agreement, that
is directed to modification of flue-cured tobacco and will be conducting research focused on the development of biological platforms
and differentiated plants and cannabinoid expression and profiles for research and production in industrial hemp and medical marijuana
(the “Research”);

 

WHEREAS,
University has assigned to UVA LVG any and all of University’s rights in and to any and all plants, biological materials,
technology and associated intellectual property resulting from the Research, including without limitation University’s joint
ownership rights in the Licensed Technology and IP Rights.

 

WHEREAS,
Licensee and UVA LVG are joint owners of the Licensed Technology and IP Rights;

 

WHEREAS,
Licensee desires to obtain exclusive rights in and to any and all plants, biological materials, technology and associated intellectual
property resulting from the Research, including without limitation the Licensed Technology and IP Rights;

 

whereas,
UVA LVG is willing to grant an exclusive license to all the results and technology arising from
the Research to Licensee in accordance with the terms of this Agreement;

 

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

 

    Page 1 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		1.	DEFINITIONS

 

As used
in this Agreement:

 

1.1           
“Affiliate” means any corporation or non-corporate business entity which controls, is controlled by, or is
under common control with a party to this Agreement. A corporation or non-corporate business entity shall be regarded as in control
of another corporation if it owns, or directly or indirectly controls, at least fifty (50%) percent of the voting stock of the
other corporation, or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and
policies of such entity.

 

1.2           
“Field of Use” means any and all uses of Licensed Technology in any and all fields.

 

1.3           
“IP Costs” means expenditures to obtain or maintain Licensed Patents or other IP Rights. IP Costs include,
without limitation, expenditures related to administrative proceedings concerning the validity or invalidity of patent protection
for the Licensed Technology, including proceedings pursuant to 35 U.S.C. §§ 131-135, 251-256, 302-306, or 311-329.

 

1.4           
“IP Rights” means any and all intellectual property rights of UVA and UVA LVG, such as patents, plant variety
rights, copyrights, trade secrets or know-how, included in the Licensed Technology or covering Licensed Products.

 

1.5           
“Licensed Know-How” means any and all information or knowledge of UVA and UVA LVG, including but not limited
to test results, data, research methodologies and transformation processes, (i) related to any Sponsor Biological Materials or
Licensed TBM, (ii) arising or resulting from the Research or developed or created under the Research Agreement, including without
limitation developed or created using any funding or other items provided at any time by or at the direction of Licensee pursuant
to the Research Agreement, (iii) developed or created with the use of any confidential information, equipment, materials or resources
of Licensee, (iv) included in a “Research Deliverable” (as defined in the Research Agreement), or (v) created by or
derived from the activities of the inventors of the Licensed Patents under the Research Agreement that is useful for the commercialization
of Licensed Products, including Confidential Information, publicly available information, and information not readily reducible
to tangible form prior to specific inquiry by Licensee.

 

1.6           
“Licensed Patents” means any and all (i) patent applications in and to any and all inventions conceived, reduced
to practice or developed by UVA, either solely or jointly with another or others, in the performance of the Research Agreement,
(ii) any and all patent applications now or hereafter filed with respect to “Research IP” (as defined in the Research
Agreement), (iii) any and all applications claiming the benefit of the filing date or claiming priority, directly or indirectly,
from any of the foregoing patent applications, including without limitation any and all substitutions, extensions, divisionals,
continuations, continuations-in-part, international, regional and national applications and foreign corresponding or counterparts
of such patent applications, and (iv) any and all patents which issue from any of the foregoing patent applications anywhere in
the world, including without limitation reexamined and reissued patents.

 

    Page 2 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

1.7           
“Licensed Products” means any product or service that is covered by, incorporates, or uses, wholly or in part,
any Licensed Technology.

 

1.8           
“Licensed PVR” means any and all UVA or UVA LVG Plant Variety Rights covering any Licensed TBM.

 

1.9           
“Licensed TBM” means any and all Tangible Biological Materials (i) derived or propagated from any Sponsor Biological
Materials, (ii) arising or resulting from the Research or developed, grown or created under the Research Agreement, including
without limitation developed, grown or created using any funding or other items provided at any time by or at the direction of
Licensee pursuant to the Research Agreement, (iii) developed, grown or created with the use of any confidential information, equipment,
materials or resources of Licensee, or (iv) provided or referenced in a “Research Deliverable” (as defined in the
Research Agreement).

 

1.10        
“Licensed Technology” means, collectively, (i) the Licensed Patents, (ii) the Licensed PVR, (iii) the Licensed
TBM, and (iv) the Licensed Know-How. The Licensed Technology is provided “as is.”

 

1.11        
“Net Sales” means the [*], less the total of all:

 

		1.11.1	[*];

 

		1.11.2	[*];

 

		1.11.3	[*];

 

		1.11.4	[*]; and

 

		1.11.5	[*].

 

No [*].

 

1.12        
 “Plant Variety Rights” or “PVR” means intellectual property in the form of rights applied for
or granted/issued under applicable law to the breeder of a new variety of plant that give the breeder control over the propagating
material or harvested material of a plant variety or the use thereof (such as for example, “Plant Patent,” “Plant
Variety Protection,” “PVP Certificates,” “Plant Variety Right Certificates,” and “Plant Breeders’
Rights Certificates,” and any other rights granted by a member state of the International Union for the Protection of New
Varieties of Plants (UPOV) to comply with the International Convention for the Protection of New Varieties of Plants (UPOV Convention).

 

1.13        
“Practical Application” means to manufacture in the case of a composition or product, to practice in the case
of a process or method, or to operate in the case of a machine or system; and in each case, under such conditions as to establish
that the Licensed Technology is being utilized and that its benefits are, to the extent permitted by law or government regulations,
available to the public on reasonable terms.

 

1.14        
“Revenue” means [*].

 

1.15        
“Royalties” means [*].

 

1.16        
“Sale,” “Sold” and “Sell” means and include, without limitation, sales, leases, licenses,
rentals, provision of services with, and other transfers of Licensed Product(s).

 

    Page 3 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

1.17        
“Sublicensee” means any third party to whom Licensee has granted a Sublicense.

 

1.18        
“Sublicense” means an agreement in which Licensee:

 

		1.18.1	grants or otherwise transfers any
                                         of the rights granted hereunder;

 

		1.18.2	agrees not to assert the IP Rights
                                         or agrees not to sue, prevent or seek a legal remedy for the practice of same;

 

		1.18.3	assigns or otherwise transfers this
                                         Agreement other than as permitted under the Assignment Section hereinbelow; or

 

		1.18.4	is under an obligation to do any
                                         of the foregoing, or to forbear from offering or doing any of the foregoing with any
                                         other entity, including licenses, option agreements, right of first refusal agreements,
                                         standstill agreements, settlement agreements or other agreements.

 

1.19        
“Sublicensing Revenue” means [*].

 

1.20        
“Sponsor Biological Materials” means any and all Tangible Biological Materials provided to UVA or caused to
be provided to UVA by or through Licensee, including without limitation all Tangible Biological Materials provided to UVA by third
parties at the direction of Licensee or pursuant to an agreement with Licensee.

 

1.21        
“Tangible Biological Materials” means [*].

 

1.22        
“UVA” means the Commonwealth of Virginia and the Rector and Visitors of the University of Virginia, its governors,
trustees, officers, agents, employees, faculty, staff and students.

 

1.23        
“Valid Claim” means a subsisting claim contained in an issued and unexpired patent that has not been held unenforceable,
unpatentable or invalid by a court or other governmental agency of competent jurisdiction in a decision that is unappealable or
not appealed within the time allowed and which is not invalid or unenforceable through abandonment or the like.

 

		2.	LICENSE

 

2.1           
UVA LVG hereby grants to Licensee and Licensee hereby accepts an exclusive, worldwide right and license to
use and commercialize the Licensed Technology and IP Rights, including without limitation the exclusive right to make, grow, have
made, have grown, use, import, offer for sale, and sell Licensed Products in the Field of Use.

 

2.2           
Licensee may Sublicense any or all of the rights licensed hereunder to Affiliates provided that UVA LVG is notified in
writing of each such Sublicense. Any act or omission of any Sublicensed Affiliate shall be deemed an act or omission of Licensee.
UVA LVG and UVA may not contact or solicit any Sublicensee of Licensee.

 

2.3           
Licensee shall have the right to Sublicense any or all of the rights licensed hereunder to non-affiliated third parties,
provided that:

 

    Page 4 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		2.3.1	Each Sublicense obligates the Sublicensee
                                         to not violate the terms of this Agreement;

 

		2.3.2	Licensee does not receive and does
                                         not agree to receive anything of value other than cash in consideration for a Sublicense,
                                         unless expressly agreed in writing by UVA LVG after review of the proposed transaction
                                         as a whole, and in which case such value will be subject to the Sublicensing Revenues
                                         provisions set forth below;

 

		2.3.3	Each Sublicense is otherwise consistent
                                         with the terms and conditions of this Agreement;

 

		2.3.4	A copy of each Sublicense is provided
                                         to UVA LVG promptly following its execution, together with a written statement disclosing
                                         any and all prior and contemporaneous contractual relationships between Licensee and
                                         the Sublicensee; and

 

		2.3.5	Licensee represents and warrants
                                         that no such other contractual relationships contain consideration due to Licensee reasonably
                                         attributable to the sublicensed rights. Licensee agrees to be fully responsible for the
                                         performance of its Sublicensees hereunder.

 

2.4           
Notwithstanding any other provision of this Agreement, UVA and UVA LVG will not, by action or inaction, cause or allow
any Licensed TBM and/or any other Licensed Products (“Restricted Materials”) to be disclosed, given, made available,
distributed, conveyed or transferred by any means (collectively, “Transferred”) to any third party. No exceptions
are permitted to this restriction, except only by the prior written consent of Licensee. UVA and UVA LVG will not abandon control
of any of the Restricted Materials. In the event UVA or UVA LVG desires to abandon control of any of the Restricted Materials,
then UVA shall deliver all such Restricted Materials to Licensee promptly after UVA receives written authorization from Licensee.
In the event UVA or UVA LVG relinquishes control of any part of any location containing Restricted Materials, UVA or UVA LVG will
inform Licensee in writing at least thirty (30) days in advance of such relinquishment and, unless Licensee requests otherwise
in writing, UVA and UVA LVG will destroy the Restricted Materials located in such location before a third party acquires possession
or control of such location.

 

2.5           
All rights granted to Licensee by UVA LVG hereunder are subject to a reservation of non-commercial, academic rights by
UVA LVG on behalf of itself and UVA to use and practice the Licensed Know-How and Licensed Patents solely for internal, non-commercial,
educational, research, teaching, training, and other scholarly purposes, including but not limited to sponsored non-commercial,
educational research and collaborations, as well as UVA may use and practice the Licensed Know-How (but not the Licensed Patents)
in sponsored research and collaborations with for-profit entities, but in all events and in all cases under this Section 2.5 excluding
without limitation any sharing, teaching or other communication or transmission of any information, consideration and/or tangible
and intangible items supplied by or at the direction of Sponsor and any Tangible Biological Materials. Further, UVA and the inventors
of the Licensed Technology retain the right to publish any information related to or constituting the Licensed Technology to the
extent permitted in the Research Agreement.

 

    Page 5 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

2.6           
This Agreement does not restrict UVA’s right and/or ability to conduct further internal, non-commercial, academic
research and development in the Field of Use or other fields to the extent expressly provided in Section 2.5 of this Agreement,
but UVA, UVA LVG and any of their respective Affiliates shall not be permitted to grant to any person or entity other than Licensee
any commercial rights in any Licensed Technology in connection with such further research and/or development activities.

 

2.7           
All Licensed Products shall be manufactured and sold by Licensee in compliance with all applicable governmental laws, rules
and regulations. Licensee shall keep UVA LVG fully informed of, and shall move expeditiously to resolve, any investigation, inquiry
or complaint by a governmental body related to Licensed Products.

 

2.8           
The Licensed Technology was not and will not be developed with any funds of the United States federal government.

 

2.9           
Licensee agrees to submit, on request of UVA LVG but no more frequently than annually, reports on the utilization of the
Licensed Technology or on efforts at obtaining such utilization that are being made by Licensee. Such reports shall include information
regarding the status of development, date of first commercial sale or use, and gross royalties paid by Licensee.

 

2.10        
UVA and UVA LVG will provide to Licensee, at no charge and without restriction or limitation of any kind except as expressly
provided in this Agreement, quantities of all Licensed TBM and/or Licensed Products produced, or in the future developed, by UVA
or UVA LVG as requested from time to time by Licensee, subject only to the availability of the quantities requested by Licensee
from UVA.

 

2.11        
UVA LVG shall cause UVA to comply with all obligations of UVA under this Agreement and UVA LVG will be responsible for
UVA’s satisfaction of any and all obligations set forth in this Agreement.

 

2.12        
UVA LVG hereby acknowledges Licensee’s joint ownership of the Licensed Technology and IP Rights and that Licensee
has an equal, undivided interest in and to such Licensed Technology and IP Rights, without any obligation of accounting to UVA
LVG or UVA except as expressly provided in this Agreement. As provided above, UVA LVG hereby grants and assigns to Licensee such
joint ownership rights in any and all Licensed Technology and IP Rights, and UVA LVG shall take all action and shall execute,
and shall cause UVA to execute, such agreements and documents as may be necessary or advisable under law to effectuate the intent
of this Section 2.12, including without limitation all documents deemed necessary by Licensee to reflect such joint ownership.

 

		3.	DUE
                                         DILIGENCE

 

3.1           
Licensee shall use its reasonable commercial efforts to achieve expeditious Practical Application and to disseminate Licensed
Products in commercial markets as soon as reasonably possible as determined by Licensee and, thereafter, to maintain their reasonable
availability in commercial markets for public use as determined by Licensee.

 

    Page 6 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		4.	CONSIDERATION

 

4.1           
Royalties payable by Licensee to UVA LVG on Net Sales shall be as follows:

 

	LEVEL
    OF LICENSED PRODUCTS IP COVERAGE	ROYALTY
    PERCENT
	[*]	[*]%
	[*]	[*]%
	[*]	[*]%

 

4.2           
Sales by Sublicensees shall be subject to Royalties payable to UVA LVG as provided in Section 4.1. Within sixty (60) days
of the end of each calendar quarterly period during the Term of this Agreement, License shall pay to UVA LVG [*] of any Sublicensing
Revenue not subject to Royalties under Section 4.1 received during the preceding calendar quarter.

 

4.3           
In the event Licensee or any of its Affiliates license additional intellectual property from one or more third-parties
in order to develop, produce, grow, offer, sell and/or otherwise commercialize a Licensed Product, then all amounts due under
this Agreement from Licensee to UVA LVG shall be reduced by the amount that Licensee and/or its Affiliates are required to pay
to such third-parties; [*].

 

		5.	ROYALTY
                                         REPORTS AND PAYMENT

 

5.1           
Licensee shall report Revenues, Net Sales and Sublicensing Revenues received for each calendar quarter in a royalty report
(“Royalty Report”), and make payment for Royalties received during each calendar quarter and payments due on Sublicensing
Revenue received during each calendar quarter, to UVA LVG within sixty (60) days of end of each quarter. Each Royalty Report shall
be in the format set forth Attachment B.

 

5.2           
Royalties shall be paid by Licensee’s check sent in accordance with Section 22 entitled “Notices”.

 

5.3           
All overdue payments shall be subject to interest at a rate of [*]. Interest payments shall be in addition to, not instead
of, any other rights or remedies available to UVA LVG (including termination).

 

		6.	PROGRESS
                                         REPORTS AND AUDITS

 

6.1           
Beginning with the calendar year 2020, within ninety (90) days after the end of each calendar year during the Term, Licensee
shall provide to UVA LVG a written annual progress report (“Progress Report”) for that most recently completed calendar
year. For each Licensed Product, the Progress Report shall describe Licensee’s progress with respect to research and development,
manufacturing, sublicensing, marketing and sales during that prior calendar year ending December 31.

 

    Page 7 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

6.2           
Licensee shall maintain accurate books and records with respect to Revenues, Net Sales, Royalties, Sublicensing Revenues
and royalties paid thereon, and related information.

 

6.3           
Licensee shall make its books and records with respect to Revenues, Net Sales, Royalties, Sublicensing Revenues and royalties
paid thereon, available for inspection or audit by UVA LVG or a representative of UVA LVG's reasonably satisfactory to Licensee
subsequent to the date that is ninety (90) days after the end of the calendar year with respect to which UVA LVG desires to conduct
any such audit, with any audit being conducted at the place where such books and records are regularly kept and maintained by
Licensee. UVA LVG shall give Licensee at least sixty (60) days prior written notice of any desired annual audit by UVA LVG, after
which Licensee and UVA LVG will mutually agree on the actual date of the audit. Licensee agrees to fully cooperate in any such
inspection or audit, provided that UVA LVG and its representative(s) agree to protect the confidentiality of the information reviewed
in such inspection or audit, including without limitation the customers of Licensee and its Sublicensees, which information shall
only be reviewed for purposes of confirming the accuracy of the payment amounts made by Licensee to UVA LVG under this Agreement.
In the event [*].

 

		7.	IP
                                         COSTS AND PROSECUTION

 

7.1           
Licensee shall be responsible for and shall control all intellectual property filings with legal counsel selected by Licensee.
Licensee shall bear all IP Costs incurred by Licensee subsequent to the Effective Date. UVA LVG has not incurred any IP Costs
prior to the Effective Date and UVA LVG shall not incur any IP Costs after the Effective Date unless UVA LVG is requested to do
so in writing by Licensee, in which case UVA LVG shall send invoices or other written notice to Licensee for such IP Costs. Reimbursement
payments shall be due and payable within thirty (30) days of receipt by Licensee of each such invoice or notice.

 

7.2           
Licensee shall be solely responsible for and shall control all prosecution and maintenance of the Licensed Patents or other
IP Rights in any country selected by Licensee. UVA LVG will be given reasonable opportunities to advise Licensee in the filing,
prosecution, and maintenance of the Licensed Patents and/or Licensed PVR and UVA and UVA LVG will cooperate fully with Licensee
in such filing, prosecution, and maintenance. At UVA LVG’s request, Licensee will instruct patent counsel to provide copies
of prosecution documents relating to Licensed Patents and/or Licensed PVR so that UVA LVG may have the opportunity to offer comments
and remarks thereon, such comments and remarks to be given due consideration by UVA LVG. However, notwithstanding anything to
the contrary in this Agreement, all final decisions with respect to the filing, prosecution, and maintenance of Licensed Patents
and/or Licensed PVR are reserved solely to Licensee.

 

7.3           
UVA LVG shall not pursue any Licensed Patent or other IP Rights in any jurisdiction without Licensee’s prior written
request to do so. If Licensee does not reimburse UVA LVG for IP Costs incurred by UVA LVG after written authorization from Licensee
for UVA LVG to incur such IP Costs, then in such event UVA LVG shall give written notice to Licensee that UVA LVG has not received
the reimbursement of IP Costs in a timely manner after which Licensee shall have thirty (30) days after Licensee’s receipt
of such notice to reimburse such IP Costs to UVA LVG. If payment has still not made within such thirty (30) day period, such Licensed
Patent or IP Rights obtained by UVA LVG in such country shall be excluded from the license rights granted to Licensee in Section
2.1 of this Agreement.

 

    Page 8 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

7.4           
UVA LVG shall send invoices or other written notice to Licensee for IP Costs subject to reimbursement under Sections 7.1
and 7.3. Reimbursement payments shall be due and payable within thirty (30) days of receipt by Licensee of each such invoice or
notice, such to the late notice and cure rights contained in Section 7.3.

 

		8.	INTELLECTUAL
                                         PROPERTY

 

8.1           
UVA LVG has been assigned any and all of University’s rights in and to any and all plants, biological materials,
technology and associated intellectual property resulting from the Research, including without limitation University’s joint
ownership rights in the Licensed Technology and IP Rights, and UVA LVG shall take all actions and measures necessary to assure
and document such assignment. UVA LVG shall take all actions and measures necessary to assure that UVA LVG has the full right
to grant the exclusive license provided in this Agreement and to meet its obligations under this Agreement. Other than the license
provided to Licensee in this Agreement, UVA LVG shall not offer, sell, transfer, pledge, license, encumber or otherwise convey
any rights of UVA or UVA LVG in any of the Licensed Patents and other IP Rights to the Licensed Technology.

 

8.2           
UVA LVG and Licensee shall not contest the validity of the Licensed Patents or other IP Rights.

 

8.3           
If, notwithstanding Section 8.2, either UVG LVG or Licensee brings a judicial or administrative action to invalidate, contest
enforceability, or prevent issuance of any Patent, or other IP Right (a “Challenge Action”), then (i) in the event
Licensee brings the Challenge Action, then during the Challenge Action Licensee will pay Royalties to UVA LVG at [*] the Royalty
rates set forth each of in Sections 4.1 and 4.2, and in the further event that a Challenge Action brought by Licensee determines
that any claim of a Patent or other IP Right is valid, Licensee will thereafter pay Royalties at [*] the Royalty rates set forth
in Sections 4.1 and 4.2 for a period of [*] thereafter; and (ii) in the event UVA LVG brings the Challenge Action, then during
the Challenge Action Licensee will pay Royalties to UVA LVG at [*] the Royalty rates set forth in each of Section 4.1 and 4.2,
and in the further event that a Challenge Action brought by UVA LVG determines that any claim of a Patent or other IP Right is
valid, Licensee will thereafter pay Royalties to UVA LVG at [*] the Royalty rates set forth in Sections 4.1 and 4.2 for a period
of [*] thereafter. 

 

8.4           
Except as otherwise expressly provided in this Agreement, nothing herein shall be deemed to grant any license or rights
in any technology other than or in addition to the Licensed Technology and Licensed Know-How.

 

8.5           
Licensee and UVA LVG hereby agree that the Licensed Patents shall be extended as and when determined by Licensee, including
without limitation extensions provided under U.S. law at 35 U.S.C. §§154(b) and 156. UVA LVG hereby agrees to provide
Licensee with all necessary assistance in securing such extensions, including without limitation, providing all information regarding
applications for regulatory approval, approvals granted, and the timing of same. UVA LVG acknowledges that extensions under 35
U.S.C. §156 must be applied for within sixty (60) days of the date that a Licensed Product receives permission under the
provision of law under which the applicable regulatory review period occurred for commercial marketing or use, and that UVA LVG’s
failure to promptly provide the necessary information or assistance to Licensee during such sixty (60) day period will cause serious
injury to Licensee, for which UVA LVG will be liable at law, as well as being a breach of this Agreement by UVA LVG.

 

 

    Page 9 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		9.	MARKINGS,
                                         TRADEMARKS AND TRADE NAMES

 

9.1           
Licensee shall have included in all sales, marketing literature and invoices relating to Licensed Products, a statement
to the effect, if applicable, of either “Patent Pending” or the specification of the applicable “U.S. Patent
Number.”

 

9.2           
Licensee shall have marked the appropriate portions of all Licensed Products with any applicable United States and foreign
Patent numbers in accordance with the law of the applicable jurisdiction(s).

 

9.3           
Except as expressly provided in this Agreement, Licensee shall not use any UVA or UVA LVG technology, trade name or trademarks
without the written permission of UVA LVG in advance.

 

		10.	TERM,
                                         TERMINATION AND OTHER REMEDIES

 

10.1        
Unless terminated earlier as otherwise provided in this Agreement, the term (the “Term”) of this Agreement
shall commence on the Effective Date and shall continue in full force and effect until the expiration of the last to expire Licensed
Patents or Licensed PVR, or ten (10) years from the Effective Date of this Agreement if no patents in the Licensed Patents or
Licensed PVR issue in the applicable country (the “Term”). Upon the expiration of the Term, all licenses and other
rights granted to Licensee herein shall become fully paid-up and perpetual.

 

10.2        
Except as otherwise explicitly provided herein, either party shall have thirty (30) days to cure any breach of this Agreement
after receipt of written notice of such breach by the other party. Thereafter, in the absence of timely cure, the other party
may terminate this Agreement upon thirty (30) days written notice to the party in breach.

 

10.3        
UVA LVG shall have the right to terminate this Agreement upon the occurrence of an uncured material breach by Licensee.
Without limitation, any one or more of the following shall each be deemed a material breach of this Agreement by Licensee:

 

		10.3.1	Failure of Licensee to make any payment
                                         when due under this Agreement; or

 

		10.3.2	Failure of Licensee to provide timely
                                         Royalty Reports; or

 

		10.3.3	Assignment by Licensee of substantially
                                         all of its assets for the benefit of creditors or placement in the hands of a trustee
                                         or a receiver; or

 

		10.3.4	Any Licensee decision to cease developing
                                         or quit the business of selling Licensed Products; or

 

    Page 10 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		10.3.5	The uncured breach by Licensee of
                                         any other material term of this Agreement.

 

10.4        
Notwithstanding the foregoing, in the event of Licensee’s bankruptcy (as provided in Section 24), this Agreement
shall terminate immediately.

 

10.5        
Licensee shall have the right to terminate this Agreement upon the occurrence of an uncured material breach by UVA LVG.
Without limitation, any one or more of the following shall each be deemed a material breach of this Agreement by UVA LVG:

 

		10.5.1	Failure of UVA to meet any of UVA’s
                                         obligations under the Research Agreement; or

 

		10.5.2	The uncured breach by UVA LVG of
                                         any material term of this Agreement.

 

10.6        
In the event this Agreement is terminated pursuant to Section 10.5 for an uncured material breach by UVA LVG, all licenses
and other rights granted to Licensee herein shall become perpetual, fully paid up, royalty free and exclusive.

 

10.7        
Licensee may also terminate this Agreement with or without cause upon no less than one hundred eighty (180) days written
notice to UVA LVG. In the event Licensee terminates this Agreement under this Section 10.7, then UVA LVG and Licensee each shall
have the right to pursue patent protection of their respective interests under this Agreement and the Research Agreement.

 

10.8        
Termination of this Agreement shall not affect Licensee’s payment obligations to UVA LVG that accrued prior to the
date of such termination of this Agreement or its obligations under the Sections of this Agreement entitled “Definitions”,
“Progress Reports and Audits (except Section 6.1)”, “Intellectual Property”, “IP Costs”, “Term,
Termination, and Other Remedies”, “Taxes”, “Warranty Disclaimer”, “Costs”, “Confidentiality”,
“Indemnification and Liability”, “Insurance”, “Acquiescence”, “Integration”, “Interpretation”,
“Notices”, “Assignment”, “Bankruptcy”, “Headings”, “Export Controls”,
“No Third Party Beneficiary”, “Severability”, and “Dispute Resolution” as each of those provisions
of this Agreement may be applicable prior to the date of such termination of this Agreement. Termination or expiration of this
Agreement shall not affect UVA LVG’s obligations under the Research Agreement, Sections 2.4, 2.12 and 7.2 of this Agreement
and the Sections of this Agreement entitled “Definitions”, “Term, Termination, and Other Remedies” and
“Confidentiality.”

 

    Page 11 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		11.	TAXES

 

Licensee shall
pay all taxes assessed or levied on, or on account of, the Licensed Technology, Licensed Products made, used or Sold hereunder,
or on account of the amounts payable to, or for the account of, UVA LVG under this Agreement (other than taxes imposed by the
United States of America, the Commonwealth of Virginia or jurisdictions therein, and other than any income or other taxes payable
by UVA LVG as a result of the Royalties and other consideration paid or payable to UVA LVG under this Agreement).

 

		12.	WARRANTY
                                         DISCLAIMER

 

ALL
TECHNOLOGY, INTELLECTUAL PROPERTY, AND information, granted or provided by UVA LVG pursuant to this agreement (“DELIVERABLES”)
are “as is”. UVA LVG makes no warranties of any kind, either expressed or implied, as to any matter including, but
not limited to, warranty of fitness for particular purpose, merchantability, USEFULNESS, TITLE, OR NONINFRINGEMENT. nEITHER party
shall be liable tO the OTHER for indirect, special, or consequential damages, such as loss of profits or INABILITY to use deliverables.
UVA LVG does not make any warranty of any kind with respect to freedom from patent, trademark, or copyright infringement, or theft
of trade secrets and does not assume any liability hereunder for any infringement of any patent, trademark, or copyright arising
from use of DELIVERABLES. Licensee agrees that it will not make any warranty on behalf of UVA LVG TO ANY THIRD PARTY.

 

		13.	COSTS

 

All costs or
expenses incurred by Licensee in carrying out its obligations under this Agreement shall be paid by Licensee, and Licensee shall
not be entitled to reimbursement from Royalties or otherwise from UVA LVG, except as otherwise provided in this Agreement. Licensee
shall obtain at its own expense all necessary licenses and permits and shall comply with all laws, ordinances, rules or regulations
affecting the manufacture, import, exportation, use, and/or sale or transfer of Licensed Technology and Licensed Products.

 

		14.	CONFIDENTIALITY

 

14.1        
Confidential Information” means (i) the Licensed Know-How, (ii) any information relating to the Licensed TBM, (iii)
any information relating to the specific terms of this Agreement (as from time to time amended), (iv) any information relating
to Net Sales, Royalties, Revenue, Sublicensees, Sublicensing Revenue and Royalty Reports, (v) any information relating to Licensed
Patents, Licensed PVR and other IP Rights covered by this Agreement (including information disclosed to either party by the other
party prior to the Effective Date) and/or (vi) any information disclosed by either party or its representatives to the other party
or its representatives in connection with performance of this Agreement, provided that such information is marked “Confidential”
or designated “Confidential” and described in writing within thirty (30) days of disclosure by the disclosing party
to the receiving party.

 

    Page 12 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

14.2        
Confidential Information does not include information that (i) was already in the possession of the receiving party prior
to the disclosure by the disclosing party; (ii) becomes publicly known without the wrongful act or breach of this Agreement; or
(iii) is rightfully received by the receiving party from a third party not under an obligation of confidentiality with respect
thereto; or (iv) is rightfully disclosed by UVA pursuant to the publication rights of Section 10 of the Research Agreement; or
(v) is publically disclosed by Licensee in furtherance of commercialization of Licensed Products; or (vi) is disclosed by Licensee
as part of Licensee’s required public disclosure as a public company.

 

14.3        
Each of UVA LVG, UVA and Licensee shall maintain the confidentiality of all Confidential Information and will not use or
exploit it for any purpose not expressly permitted herein, until ten (10) years after termination of this Agreement. Each of UVA
LVG, UVA and Licensee shall protect Confidential Information from disclosure and unauthorized use with the same care used to protect
its most valuable confidential information but in no event less than reasonable care.

 

14.4        
Upon termination of this Agreement, UVA LVG and UVA shall return to Licensee all originals and copies of all materials
(other than this Agreement) containing any Confidential Information. The independent, external legal counsel of UVA LVG may, however,
retain one archival copy of any such information for purposes of legal compliance only.

 

14.5        
Notwithstanding any other provision of this Agreement, all information provided to UVA, UVA LVG or their respective Affiliates
or obtained by UVA, UVA LVG or their respective Affiliates regarding the supply and the suppliers of any Tangible Biological Materials
to be delivered or provided to UVA by or at the direction of Licensee (“Supplied TBM”) shall be the Confidential Information
of Licensee, and UVA, UVA LVG or their respective Affiliates shall not contact, solicit, contract with and/or enter into any agreement
or understanding with, either directly or indirectly, any third party suppliers of Supplied TBM; provided, however, that this
provision shall only apply to one (1) third-party supplier that will provide Supplied TBM to UVA at the direction of Licensee,
which supplier shall be identified in writing by Licensee to UVA LVG in ATTACHMENT D hereto (the “Named Supplier”)
after the execution by the parties of both this Agreement and the related Research Agreement, dated an even date herewith, between
Licensee and UVA. Licensee represents to UVA LVG that the agreements between Licensee and the Named Supplier contain restrictions
on the Named Supplier not being permitted to contact, solicit, contract with and/or enter into any agreement or understanding
with any third-party entities with whom Licensee is sponsoring research, which will include but not be limited to UVA and UVA
LVG.

 

		15.	INDEMNIFICATION
                                         AND LIABILITY

 

15.1        
UVA LVG shall not be liable to Licensee, Affiliates, Sublicensees, or customers of Licensee for compensatory, special,
incidental, indirect, consequential or exemplary damages resulting from the manufacture, testing, design, labeling, use or sale
of Licensed Products.

 

    Page 13 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

15.2        
Licensee shall defend, indemnify and hold harmless UVA and UVA LVG, and their respective trustees, officers, employees,
attorneys and agents from all claims or demands made against them (and any related losses, expenses or reasonable attorney’s
fees) arising out of or relating to Licensee’s conduct or possession, use, or Sale of Licensed Products, Licensed Technology
or Confidential Information, including but not limited to, any claims of product liability, personal injury, death, damage to
property or violation of any law or regulation; provided, however, that Licensee shall not have any indemnification obligations
under this Agreement in the event the subject claims or demands arise from either a breach of this Agreement by UVA LVG or a breach
of the Research Agreement by UVA. This obligation shall survive termination of this Agreement.

 

		16.	INSURANCE

 

Throughout the
term of this Agreement and for a period of five (5) years thereafter, Licensee shall obtain and maintain, in full force and effect
and at Licensee’s sole cost and expense, the insurance coverage as set forth in Attachment C, the terms of which are incorporated
herein by this reference. In the event that Licensee fails to obtain the insurance required hereunder, or if the insurance lapses
or is cancelled, then Licensee shall be in breach of this Agreement, in which event UVA LVG may terminate this Agreement in the
event Licensee does not cure such breach as provided under Section 10.2. Nothing herein shall be construed to release either party
from any obligation that matured prior to the effective date of such termination.

 

		17.	ACQUIESCENCE

 

No acquiescence
in any breach of this Agreement by either party shall operate to excuse any subsequent or prior breach.

 

		18.	INTEGRATION

 

Except for any
confidential disclosure agreement executed by the parties and the Research Agreement, this Agreement (including the exhibits referenced
herein and attached hereto) supersedes all previous agreements relating to the subject matter hereof, whether oral or in a writing,
and constitutes the entire agreement of the parties hereto and shall not be amended or altered in any respect except in a writing
executed by the parties.

 

		19.	INTERPRETATION

 

This Agreement
shall be governed by, and construed and enforced in accordance with, the laws of the Commonwealth of Virginia, United States of
America, without regard to conflict of law principles. All singular terms shall include plural, and vice versa, as necessary to
interpret and enforce the intent of this Agreement.

 

		20.	DISPUTE
                                         RESOLUTION

 

The parties
consent to the exclusive jurisdiction of the courts of City of Charlottesville, Virginia to resolve any and all disputes relating
to this Agreement. Licensee hereby irrevocably and unconditionally waives any objection to the laying of venue in any court located
in City of Charlottesville, Virginia with respect to any lawsuit relating to this Agreement, consents to receive service of any
summons or other legal process by registered or certified mail, postage prepaid, at the address for notices set forth below, and
waives all objections to the validity of any such summons or legal process.

 

    Page 14 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		21.	INFRINGEMENT

 

21.1        
To the extent permitted by law, Licensee shall have the sole right during the Term of this Agreement to commence an action
for infringement of the Patents or other IP Rights against any unlicensed third party for any infringement occurring within the
Field of Use. UVA LVG shall have the right at its own expense to appear in such action by counsel of its own selection. If, as
a matter of law, an infringement action must be prosecuted in UVA LVG’s name, then UVA LVG shall participate in Licensee’s
pursuit of such action at Licensee’s expense (including without limitation reasonable legal fees and expenses), including
without limitation by being joined as a party to such action. Notwithstanding the foregoing, if an appearance or infringement
action would subject UVA LVG to the jurisdiction of a foreign tribunal that could not otherwise assert jurisdiction over UVA LVG,
then UVA LVG shall have the right to decline to appear or otherwise pursue such action. Settlement of any action initiated and/or
paid for by Licensee shall require the consent of UVA LVG and Licensee, which neither shall unreasonably withhold from the other.
Licensee shall be entitled to retain all damages or costs awarded in such action.

 

21.2        
If Licensee fails, within one hundred twenty (120) days after providing or receiving notice of a potential infringement,
to institute an action against such infringer or notifies UVALVG that it does not plan to institute such action, then UVA LVG
shall have the right to do so at its own expense. Licensee shall cooperate with UVA LVG in such effort at UVA LVG’s cost
and expense (including without limitation reasonable legal fees and expenses), including being joined as a party to such action
if necessary. Notwithstanding the foregoing, if an appearance or infringement action would subject Licensee to the jurisdiction
of a foreign tribunal that could not otherwise assert jurisdiction over Licensee, then Licensee shall have the right to decline
to appear or otherwise pursue such action. Settlement of any action initiated and/or paid for by UVA LVG shall require the consent
of UVA LVG and Licensee, which neither shall unreasonably withhold from the other. UVA LVG shall be entitled to retain all damages
or costs awarded in such action. Notwithstanding the pendency of any infringement (or other) claim or action by or against Licensee
or UVA LVG, Licensee shall have no right to terminate or suspend (or escrow) payment of any amount payable to UVA LVG unless the
claim or action arises from either a breach of this Agreement by UVA LVG or a breach of the Research Agreement by UVA.

 

		22.	NOTICES

 

Any notice under
any of the provisions of this Agreement shall be in writing and deemed given on the second business day after such notice and
all applicable costs are given to a national overnight delivery services (such as UPS or FedEx) addressed to the applicable party
at the address stated on the signature page hereof, or such other address as such party shall specify for itself by like notice
to other party. Each party shall also transmit a copy of such notice by electronic mail to the other party.

 

    Page 15 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		23.	NO
                                         ASSIGNMENT

 

UVA LVG shall
neither assign nor transfer this Agreement or any interest herein without the prior written consent of Licensee. Licensee may
assign or transfer this Agreement upon written notice to UVA LVG.

 

		24.	BANKRUPTCY

 

In the event
Licensee by its own actions or the action of any of its shareholders or creditors (if applicable), files or has filed against
it, under the Bankruptcy laws of the United States, Licensee hereby waives the benefits of an automatic stay provided in 11 U.S.C.
362 and consents and agrees to raise no objection to any petition for relief from such stay by UVA LVG. Licensee further agrees
that this Agreement shall immediately in the event that a creditor or other claimant takes possession of, or a receiver, administrator
or similar officer is appointed over any of the assets of Licensee, or in the event that Licensee makes any voluntary arrangement
with its creditors or becomes subject to any court or administration order pursuant to any U.S. Bankruptcy proceedings or insolvency
law. Licensee will promptly inform UVA LVG of its intention to file a voluntary petition in bankruptcy or of another’s communicated
intention to file an involuntary petition in bankruptcy.

 

		25.	HEADINGS

 

The section
headings contained in this Agreement are set forth for the convenience of the parties only, do not form a part of this Agreement
and are not to be considered a part hereof for the purpose of construction or interpretation hereof, or otherwise.

 

		26.	EXPORT
                                         CONTROLS

 

UVA LVG is subject
to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other
commodities (including the Arms Export Control Act, as amended and the Export Administration Act of 1979), and its obligations
hereunder are contingent on compliance with applicable United States export laws and regulations. The transfer of certain technical
data and commodities may require a license from the cognizant agency of the United States and/or written assurances that Licensee
shall not export data or commodities to certain foreign countries without prior approval of such agency. UVA LVG neither represents
that a license shall not be required nor that, if required, it shall be issued.

 

    Page 16 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		27.	NO
                                         THIRD PARTY BENEFICIARY

 

No person or
entity shall be considered a third party beneficiary of this Agreement.

 

		28.	SEVERABILITY

 

Should any provision
of this Agreement be determined to be unenforceable or otherwise unlawful, then such provision shall be without effect, as if
such provision had not been included herein, the remaining terms of this Agreement shall survive, the Agreement shall be interpreted
so as to most fully achieve the intention of the parties.

 

(The Balance
of This Page Intentionally Left Blank – Signature Page to Follow)

 

    Page 17 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

in
witness whereof, the parties hereto have caused this Agreement to be duly executed in
duplicate counterparts, each of which shall be deemed to constitute an original, effective as of Effective Date.

 

The undersigned
verify that they have the authority to bind to this Agreement the party on behalf of which they are executing below.

 

	
        University of Virginia Patent Foundation

        d/b/a University of Virginia Licensing and Ventures
        Group
	 	
        22nd Century Limited, LLC

	 	 	 
	
        By:
	  
	 	
        By:
	 

	          	Michael P. Straightiff	 	 	Henry Sicignano, III
	         	Executive Director	 	 	President and Manager
	 	 	 
	
        Date:
	 
	 	
        Date:
	 

        

	 	 	 
	
        By:
	 
	 	
        

	          	Erik L. Hewlett, M.D.	 	 
	          	Chair	 	 
	 	 	 
	
        Date:
	  
	 	
        

	 	 	 
	
        Address for Notices:
	 	
        Address for Notices: 

	 	 	 
	
        UVA Licensing & Ventures Group

        722 Preston Avenue, Suite 107

        Charlottesville, VA 22903
	 	
        22nd Century Limited, LLC

        9530 Main Street

        Clarence, NY 14031

        

	 	 	 
	
        Attention: Executive Director
	 	Attention: President and Manager
	Email:	 	Email:

  

    Page 18 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

 

Attachment
A

 

Licensed
Patents

 

	UVA LVG Tech ID:	Track Code:

 

Title:

Patent Applications:

 

    Page 19 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

 

Attachment
B

 

Royalty Report
Format

 

Licensee

 

Address

 

City,
State, Zip

 

Progress Report covering
the period [January-December, YR] for the License between Licensee and
UVALVG dated ________________,

As required under Section
4 of the above-referenced license agreement, the following details the progress made during the reporting period in commercializing
the licensed technology.

 

		§	Overview

 

		§	Scientific/Technical
                                         Development

		·	[*]

		·	[*]

		·	[*]

		·	[*]

		§	Commercial
                                         Development

		·	Business
                                         Development Initiatives and Partnership

		·	Fund
                                         Raising

		·	Grants

 

		§	Licensed
                                         Products sold and royalties due

		·	Including
                                         [*]

 

		§	Sublicensees

		·	Summary
                                         of reports received in reporting period

		·	Overview
                                         of consideration received in reporting period

 

		§	Summary

 

    Page 20 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

 

Attachment
C

 

Required
Insurance Coverages

 

XXII is reviewing
these insurance coverages. XXII will revise this section to comport with the existing insurance levels of XXII. XXII will not
procure more insurance than its current coverages.

 

		1.	General. Licensee shall
                                         obtain and maintain, in full force and effect and at Licensee’s sole cost and expense
                                         one or more insurance policies providing:

 

		a)	Commercial general liability insurance
                                         (including coverage and any necessary endorsements for products /completed operations
                                         as well as for clinical trials if any such trials are to be performed by or on behalf
                                         of Licensee) which provides, for each annual policy period, coverage of no less than
                                         the minimum limits specified below for injury, death and property damage resulting from
                                         each occurrence during the policy period; and

 

		b)	Worker’s compensation insurance
                                         in respect of all of Licensee’s employees with limits of liability and coverage
                                         not less than statutory limits provided by the Commonwealth of Virginia or other applicable
                                         laws and regulations; and

 

		c)	Automobile liability insurance
                                         to cover owned and non-owned automobiles.

 

		2.	Policy Limits. Subject
                                         to the further provisions of this Section, the commercial general liability and products
                                         liability coverages shall have the following minimum limits:

 

		a)	Commercial general liability: [*].
                                         Licensee shall have thirty (30) days following the Effective Date to obtain such coverage.

 

		b)	Products liability:  From
                                         the date immediately prior to first Sale: [*].

 

		c)	UVA LVG may periodically evaluate
                                         the adequacy of the minimum coverage of insurance and coverage limits specified in this
                                         Agreement. UVA LVG reserves the right to require Licensee to adjust the insurance coverage
                                         by modifying the types of required coverages, the limits and/or financial rating and/or
                                         the method of financial rating of Licensee’s insurers as such changes are required
                                         of UVA LVG by its insurance carrier. UVA LVG shall provide Licensee with reasonable notice,
                                         contingent on UVA LVG receiving timely notice from its insurance carrier, of any proposed
                                         modification and, if so requested by Licensee, discuss any proposed modifications in
                                         good faith.

 

		3.	Policy Specifics. Each
                                         policy of insurance required by this Agreement shall:

 

		a)	be issued by reputable and financially
                                         secure insurance carriers having at least an A- rating (A- rating or above by A.M. Best)
                                         and an A.M. Best Class Size of at least VIII,

 

		b)	list each of UVA and UVA LVG, their
                                         respective trustees, officers, employees, faculty, staff, students, agents and their
                                         respective successors, heirs and assigns as additional insureds,

 

		c)	be endorsed to provide that the
                                         insurer waives all subrogation rights it has or may have against any additional insured,
                                         and

 

    Page 21 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

  

		d)	be primary in respect of all additional
                                         insureds.

 

		4.	Evidence of Insurance.
                                         Within thirty (30) days following the Effective Date, and thereafter no later than the
                                         day on which any such policy of insurance is renewed or replaced, Licensee shall provide
                                         UVA LVG with a Certificate of Insurance from each such insurer which evidences compliance
                                         by Licensee with its obligations hereunder. Upon the request of UVA LVG, Licensee shall
                                         provide UVA LVG with a copy of the policy, status of claims and claims history respecting
                                         any of the insurance required to be maintained by Licensee hereunder. Further, Licensee
                                         will not cancel or fail to renew the identified insurance without giving UVA LVG at least
                                         thirty (30) days’ prior written notice thereof.

 

		5.	Clarifications. For the
                                         avoidance of doubt, the minimum insurance coverage and limits set forth in this Agreement
                                         do not constitute a limitation on Licensee’s liability or obligations to indemnify
                                         or defend UVA LVG and UVA and any other additional insured under this Agreement.

 

 

    Page 22 of 23 

    
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

    

 

 

ATTACHMENT
D

 

 

 

 

 

Named
Supplier

 

 

 

    Page 23 of 23xene-ex1020_856.htm

Exhibit 10.20

 

 

 

January 1, 2017

 

Confidential

 

Via Electronic Mail

 

James Empfield

18 School Street

Natick, Massachusetts

01760, USA

 

Dear Jim,

 

Re:  Offer of Continued Employment

 

As we have discussed, you will be transferring within Xenon to be the Senior Vice President, Drug Discovery, employed by Xenon Pharmaceuticals USA Inc. (the “Company”), a wholly-owned subsidiary of Xenon Pharmaceuticals Inc. (the “Parent”), effective as of January 1, 2017.  Subject to Sections L through P below, the Company agrees to employ you, and you agree to serve the Company, on an “at-will” basis, which means that either the Company or you may terminate your employment with the Company at any time and for any or no reason, in accordance with the terms of this agreement (the “Agreement”).

 

This Agreement replaces in its entirety the employment agreement that you previously entered into with Parent on February 8, 2016 (the “Prior Agreement”). You acknowledge and agree that accrued, but unused paid time off with Parent will be transferred to the Company in accordance with applicable law. You further hereby acknowledge and agree that you have received any and all compensation that may be owed to you by Parent or any related entity and that, with the exception of any transferred paid time off balance referenced above, you are not entitled to any additional compensation as the result of your transfer from the Parent to the Company.  You further acknowledge and agree that you will remain eligible to receive your 2016 performance bonus with Parent on the same terms as in effect immediately prior to the effectiveness of this Agreement.

 

A. Base Salary.  Subject to Section V below, you will earn a base salary at a rate of CAD$315,000 per year, less statutory and other applicable deductions as required, for all work and services you perform for the Company (the “Base Salary”).  The Base Salary is payable semi-monthly in arrears in accordance with the Company’s applicable payroll policies.

 

 

XENON PHARMACEUTICALS USA INC.

www.xenon-pharma.com

 

B. Annual Discretionary Bonus.  In addition to your Base Salary, you are eligible to earn an annual discretionary bonus of up to forty percent (40%) of your Base Salary, as then in effect, less statutory and other applicable deductions as required, for each completed calendar year of service.  The payment and amount of the annual bonus is within the sole discretion of the Board of Directors of the Company (the “Board”), based on the determination of the Compensation Committee of the Board of Directors of Parent (the “Compensation Committee”) and will be evaluated in the first quarter of each year in relation to the achievement of corporate and personal objectives and subject to the terms and conditions of Appendix A.  Such objectives will be established annually by the Compensation Committee in its sole discretion. Bonuses are not earned until paid and are contingent upon your continued employment with the Company through the date the bonus is paid.  No “pro-rated” or partial bonus will be provided unless provided for in Sections L through P below or as otherwise approved by the Board, based on the determination of  the Compensation Committee, in its sole discretion.

 

C. Annual Review.  The Compensation Committee will review annually your compensation package, including your salary and bonus percentage (if any) in accordance with its policies, and consideration will be given if the currency exchange rate between the US and Canadian dollars changes in a manner that could have a negative impact on you.  The Compensation Committee’s recommendations regarding your compensation package will be conveyed to the Board for final approval. Any adjustment to your compensation package, including the currency in which it is paid, is at the sole discretion of the Compensation Committee and the Board provided that the Base Salary will not be reduced without your consent and subject to Sections L and M of this Agreement. 

 

D. Expense Reimbursement.  In accordance with its expense policy as amended from time to time, the Company will reimburse any authorized expenses actually and reasonably incurred in the course of performing your employment duties.  The Company will also provide to you, for the duration of your employment, any necessary work tools and equipment, such as a laptop computer and mobile phone.  Subject to advance approval by the Company, you will also be reimbursed for out-of-pocket expenses incurred for attending courses or workshops related to your employment duties. 

 

E. Reporting Structure/Responsibilities.  You will report to the CEO of Parent.  You will perform the responsibilities and duties of your position, and subject to Sections L and M of this Agreement, such other responsibilities and duties as may be reasonably requested by the CEO of Parent from time to time.  You will at all times: (i) conform to the reasonable and lawful directions of the Parent, the Company and the Board; (ii) adhere to all applicable Company and Parent policies; (iii) give the Company the full benefit of your knowledge, expertise, skill and ingenuity; (iv) well and faithfully serve the Company; (v) devote your full working time and best efforts to furthering the interests of the Company; and (vi) exercise the degree of care, diligence and skill that a prudent executive would exercise in comparable circumstances.  You acknowledge and agree that you will sign an acknowledgement of any applicable Company or Parent policy in connection with your commencing employment with the Company.

 

You will not during your employment with the Company, be employed by, or provide products or services of any nature whatsoever to, any other person, company, organization or other entity without prior written permission from the Company, provided that you may provide services to Parent as agreed between Parent and Company as part of your duties under this Agreement (with the understanding that the compensation provided to you under this Agreement shall fully compensate you for any such services to Parent).  This does not restrict you from performing reasonable volunteer activities; however, you must obtain the prior consent of the Company if you wish to serve on a board of directors or advisory board, or if you perform any paid work or services for other organizations.  Schedule A contains a description of all such appointments and positions that you currently occupy, and all paid work and services you currently provide to outside organizations, to which the Company confirms that it provides its permission.  The Company retains the right to revoke any consent for such outside services, especially in the event where any such services may create a conflict of interest.

 

 

Page 2 of 16

 

F. Paid Time Off.  You will earn twenty (20) days of paid time off per calendar year on a pro rata basis. You may use paid time off for any purpose, including vacation, sick or personal days.  You may also be entitled to other leaves, including without limitation, an additional allotment of paid sick days and statutory holidays in accordance with applicable law and the Company’s applicable policies, as may be in effect from time to time. Accrued but unused paid time off and sick days will expire in accordance with the Company’s policies, as amended from time to time.

 

G. Confidentiality Agreement.  As a condition of your employment under this Agreement, you must enter into and abide by the enclosed At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement (the “Confidentiality Agreement”).  Please note that this agreement also deals with, among other things, confidentiality and the ownership of intellectual property developments, and contains non-solicitation, non-competition, and other restrictive covenants.  By entering into the Confidentiality Agreement, you are agreeing that compliance with its provisions is reasonable and a necessary requirement in our highly competitive industry, and may be required by our agreements with our suppliers, customers, and distributors.  In the event that you leave the employ of the Company, you consent to notification by the Company to your new employer about your rights and obligations under the Confidentiality Agreement.

 

H. Stock Options.  As a Company employee, you will be eligible to participate in Parent’s 2014 Equity Incentive Plan, a copy of which you have already been provided.  You were granted 40,000 stock options to purchase common shares of Parent in connection with your hiring by Parent and these options will continue to vest in accordance with their terms while you are employed by Company.  

 

I. Benefits.  You will be eligible to receive and participate in the Company’s employee benefits as may be established from time to time for the Company’s employees, subject to the terms of the applicable plans.  You will be eligible to participate in the Company’s current Group RRSP Plan, or an equivalent USA retirement savings plan, which, subject to compliance with applicable U.S. laws, may include a Company matching contribution of up to the amount of your personal contributions to such retirement savings plan in a given tax year, subject to a cap of 5% of your Base Salary (the “Matching Contribution”).  Alternatively, if either (a) there is no Company-sponsored retirement savings plan in which you are eligible to participate, or (b) there is a Company-sponsored retirement savings plan in which you have contributed the maximum amount permitted by law in a given tax year and applicable U.S. law does not permit receipt of the full Matching Contribution, then the Company may pay you a bonus in an amount through the Company’s regular payroll so that the aggregate amount you receive for a plan year (including any portion of the Matching Contribution) is economically equivalent to the full Matching Contribution.

 

J. Taxes.  Any taxes applicable to your employment compensation package with the Company and your secondment to the Parent will be deducted and remitted to the appropriate authorities in accordance with the Company’s standard policies and applicable law.  You acknowledge and agree that during your employment with the Company, you will be expected to provide services to the Parent pursuant to a secondment arrangement between the Company and the Parent, and that any such services may result in your owing taxes in Canada. You are advised to consult your own financial advisor.

 

K. Insurance and Indemnification.  As an officer of the Company and/or of the Parent during your employment with the Company, you will be covered by Parent’s Directors’ and Officers’ Liability Insurance Policy and such other indemnity policy, agreement or commitment established by the Company or Parent, as may be in effect from time to time, subject to the terms of the Insurance Policy and other policy, agreement or commitment and any amendments made from time to time at the discretion of the Parent’s Board of Directors, provided that no amendment will substantially reduce your entitlements.  Your coverage under such Insurance Policy and any other policy, agreement or commitment will continue after your employment with the Company ends in respect of your employment with the Company.

 

 

Page 3 of 16

 

L. Change of Control.  In this Agreement:

 

	
a.
	
“Average Bonus” means an amount that is (i) the sum of the annual bonus awards (expressed as a percentage of the applicable year’s Base Salary) that you earned in each of the three (3) completed calendar years preceding the date your employment with the Company terminates, divided by (ii) three (3), multiplied by (iii) your Base Salary at the time your employment with the Company terminates [for example: (15%+5%+10%)/3 = 10% of Base Salary].

 

	
b.
	
“Change of Control” means: 

 

	
 
	
(i)
	
the acquisition by any person or persons acting jointly or in concert (as determined by the Securities Act) (“Person”), whether directly or indirectly, of voting securities of the Parent that, together with all other voting securities of the Parent held by such Person, constitute in the aggregate more than 50% of all outstanding voting securities of the Parent; provided, however, that for purposes of this subsection, the acquisition of additional securities by any one Person, who owns more than 50% of all outstanding voting securities of the Parent will not be a Change of Control;

 

	
 
	
(ii)
	
an amalgamation, arrangement or other form of business combination of the Parent with another corporation that results in the holders of voting securities of that other corporation holding, in the aggregate, more than 50% of all outstanding voting securities of the corporation resulting from the business combination; provided, however, that for purposes of this subsection, the acquisition of additional securities by any one Person, who owns more than 50% of all outstanding voting securities of the Parent will not be a Change of Control; or

 

	
 
	
(iii)
	
a change in the ownership of a substantial portion of the Parent’s assets, including the sale, lease, transfer or exchange of a substantial portion of the Parent’s assets, to another Person, other than in the ordinary course of business of the Parent, which occurs on the date that such Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Parent that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Parent immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Parent’s assets: (A) a transfer to a Related Entity, or (B) a transfer of assets by the Parent to: (1) a stockholder of the Parent (immediately before the asset transfer) in exchange for or with respect to the Parent’s stock, (2) an entity of which the Parent has Control, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the all outstanding voting securities of the Parent, or (4) an entity of which a Person described in this subsection (iii)(B)(3) has Control.  For purposes of this subsection (iii), gross fair market value means the value of the assets of the Parent, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets;

 

provided, however, that a Change in Control will not be deemed to have occurred if such Change in Control results solely from the issuance, in connection with a bona fide public offering, financing or series of financings by the Parent, of voting securities of the Parent or any rights to acquire voting securities of the Parent which are convertible into voting securities.

 

Further and for the avoidance of doubt, a transaction will not constitute a Change of Control if: (x) its sole purpose is to change the state or jurisdiction of the Parent’s incorporation, or (y) its sole purpose is to create a holding company the voting securities of which will be owned in substantially the same proportions by the persons who held the Parent’s voting securities immediately before such transaction.

 

	
c.
	
“Good Reason” means any of the following occurring within twelve (12) months after the occurrence of a Change of Control.

 

 

Page 4 of 16

 

	
 
	
(i)
	
any unilateral change or series of changes to your employment responsibilities, reporting relationship, or status within the Company or Parent, such that immediately after such a change or series of changes to your responsibilities, reporting relationship, or status, taken as a whole, and taking into account the size and complexity of the business of the Company or Parent at that time, are substantially less than those assigned to you immediately prior to such change or series of changes; or

 

	
 
	
(ii)
	
a material reduction in your Base Salary or other compensation as in effect prior to the Change of Control; or

 

	
 
	
(iii)
	
the taking of any action by the Company or Parent, or the failure by the Company or Parent to take any action, that would materially adversely affect your participation in, or materially reduce your aggregate benefits under, the total package of incentive, bonus, compensation, RRSP, life insurance, health, accident disability and other similar plans in which you are participating prior to the action by the Company or Parent or the failure by the Company or Parent to take any action; or

 

	
 
	
(iv)
	
the unilateral requirement that you relocate to a new location that is both (a) more than 60 kilometers from your previous work location and (b) more than 60 kilometers from your primary residence; it being understood that you shall not be considered to have been relocated for purposes of this subsection (iv) if you are providing services to the Company consistent with Section R of this Agreement or you otherwise expressly consent to a change to Section R; or

 

	
 
	
(v)
	
failure or refusal of the Successor Company to offer you terms and conditions of employment, including the provisions of Section M of this Agreement, that are substantially the same as the provisions of this Agreement; 

 

provided that any change or series of changes in reporting relationship alone will not constitute Good Reason.

 

	
d.
	
“Successor Company” means, in connection with a Change of Control, the surviving or acquiring company or entity.

 

	
e.
	
“Cause” has the meaning set forth in Appendix A. 

 

M. Resignation for Good Reason or Termination without Cause in Connection With or Following Change of Control:  In the event of your resignation for Good Reason or a termination without Cause:

 

	
a.
	
prior to the Change of Control but related or connected to the Change of Control; or,

 

	
b.
	
within twelve (12) months after the date of the Change of Control, 

 

then, your employment will end on the date it is terminated by the Company or Successor Company or the date terminated by you for Good Reason, in which case the Company or Successor Company will provide you with the following, subject to Appendix A and the conditions precedent therein:

 

	
a.
	
payment equal to twelve (12) months’ Base Salary, plus one (1) additional month of Base Salary for every year of consecutive service with the Company, including any service with Parent, and Successor Company, up to a combined maximum of eighteen (18) months (the “COC Payment Period”);

 

 

Page 5 of 16

 

	
b.
	
payment of your Average Bonus pro-rated for the period of the bonus year you worked, less statutory and other applicable deductions as required, provided that if a bonus has not yet been determined for the preceding completed calendar year, the Company or Successor Company will first make that determination in the ordinary course using relevant criteria in a manner consistent with prior practice so that the Average Bonus can then be determined and paid in accordance with this provision;

 

	
c.
	
payment of an amount equal to the contributions to your retirement savings plan the Company would have paid on your behalf during the COC Payment Period and, if unpaid, for the period leading up to the termination of your employment;

 

	
d.
	
notwithstanding any provision in the Equity Incentive Plan to the contrary:

 

	
 
	
i.
	
immediate vesting of all unvested stock options and other deferred compensation awards granted to you by the Parent or the Successor Company; and 

 

	
 
	
ii.
	
with respect to stock options and other deferred compensation granted pursuant to the Equity Incentive Plan and any subsequent deferred compensation plan, continued exercise rights for the longer of the period stipulated in the applicable plan or grant and 6 months from the termination of your employment. 

 

	
e.
	
payment directly on your behalf or reimbursement to you for the cost of the monthly premiums for you and your eligible dependents to continue your health care benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) up to the earlier of (I) the end of the Payment Period, or (II) the date you commence full-time employment.

 

In the case of your resignation for Good Reason, you must provide the Company or Successor Company with thirty (30) days’ written notice of Good Reason within three (3) months after the occurrence of Good Reason or, where based on a series of changes, the notice period that is based on three (3) month from the occurrence of Good Reason will commence on the occurrence of the last change in the series. Within thirty (30) days after receipt of written notice of Good Reason, the Company or the Successor Company may correct, reverse, rectify or otherwise resolve the change or series of changes that constitute Good Reason, in which case your employment with the Company or Successor Company will continue. 

 

Subject to Appendix A, the payments above, will be inclusive of any termination or severance pay owing to you under applicable law, and will be subject to statutory withholdings and other regular payroll deductions. You will not be eligible for any additional severance or separation payments under any other Company policy or practice. You will be entitled to the pay, if any, accrued and owing under this Agreement up to the date of termination of your employment. In the event you trigger termination under the Change of Control/Good Reason terms above or are entitled to the termination provisions above as a result of the termination of your employment without Cause, you will not be eligible for any payment pursuant to the termination sections below.

 

Termination:

 

N. Resignation.  If for any reason you should wish to leave the Company, you will provide the Company with three (3) months’ prior written notice of your intention (the “Resignation Period”).  You agree that in order to protect the Company’s interests, the Company may, in its sole and unfettered discretion, waive the Resignation Period and end your employment immediately by delivering to you a written notice, which shall cease any further pay or compensation obligations of the Company (except for pay, if any, accrued and owing under this Agreement up to the date of termination of your employment).  Nothing in this provision is intended to alter the at-will nature of your employment with the Company.

 

 

Page 6 of 16

 

O. Termination for Cause.  The Company may terminate your employment at any time for Cause, effective upon delivery by the Company to you of a written notice of termination of your employment for Cause.  You will not be entitled to receive any further pay or compensation (except for pay, if any, accrued and owing under this Agreement up to the date of termination of your employment), severance pay, notice, payment in lieu of notice, benefits or damages of any kind, and for clarity, without limiting the foregoing, you will not be entitled to any bonus or pro rata bonus payment that has not already been awarded by the Company.

 

P. Termination Without Cause.  The Company may terminate your employment without Cause at any time upon providing you written notice of termination and a severance payment in the amount of twelve (12) months plus one (1) additional month for every one (1) year of consecutive service with the Company or Parent, including service prior to the Effective Date and service provided pursuant to the Prior Agreement, up to a combined maximum of eighteen (18) months (the “Payment Period”), and subject to Appendix A and the conditions precedent therein.  

 

In addition to the severance payment above, in the event of a termination without Cause, the Company will provide you with the following, and, as above, subject to Appendix A and the conditions precedent therein: 

 

	
 
	
(i)
	
the Company will pay on your behalf or otherwise reimburse you for the cost of the monthly premiums for you and your eligible dependents to continue your health care benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) up to the earlier of (I) the end of the Payment Period, or (II) the date you commence full-time employment; 

 

	
 
	
(ii)
	
the Company will pay you an Average Bonus pro-rated for the period of the partial bonus year you actually worked immediately prior to the termination of your employment, less statutory and other applicable deductions as required, provided that if a bonus has not yet been determined for the preceding completed calendar year, the Compensation Committee will first make that determination in the ordinary course using relevant criteria in a manner consistent with prior practice and make its recommendation to the Board so that the Average Bonus can then be determined and paid in accordance with this provision;  

 

	
 
	
(iii)
	
the Company will pay an amount equal to the contributions to your retirement savings plan it would have paid on your behalf for the Payment Period.

 

	
 
	
(iv)
	
notwithstanding any provision in the Equity Incentive Plan to the contrary, all options and any other deferred compensation granted to you will continue to vest for a period of three (3) months after the date your employment terminates and all vested stock options and other deferred compensation will be exercisable until the earlier of the original expiry day of the stock options and deferred compensation and the date that is six (6) months after the date your employment terminates.

 

Any payments, severance, or other benefits hereunder will be subject to applicable withholdings and deductions.  You will not be entitled to receive any further pay or compensation except (i) as expressly set out in this Agreement, and (ii) the pay, if any, accrued and owing under this Agreement up to the date of termination of your employment.

 

On termination of your employment, regardless of the reason for such termination, you shall immediately (and with contemporaneous effect) resign any directorships, offices or other positions that you may hold, if any, in the Company, Parent or any affiliate, unless otherwise agreed in writing by the Company and Parent.

 

Q. Work Permit.  You will be required to work in the Canadian office of Parent as further described in Section R below. As such, it continues to be a material requirement of this Agreement that you maintain your authorization to work in Canada during your employment with the Company.  Parent will support your application for such authorization.

 

Page 7 of 16

 

 

R. On-Site Expectations.  You will be expected to be on site at Parent’s place of business as required to perform your duties and responsibilities. 

 

S. Signing Bonus.  You acknowledge and agree that you received a $50,000 USD gross amount signing bonus upon execution of the Prior Agreement (the “Prior Agreement Effective Date”), less statutory and other deductions as required. Should you decide to leave the Company, or should you be terminated with Cause before the first anniversary of the Prior Agreement Effective Date, you will promptly reimburse the Parent the signing bonus in its entirety. 

 

T. [Reserved] 

 

U. FDA Debarment.  As a condition of your employment with the Company, you must certify and reaffirm that you are not under investigation by the FDA for debarment action, have not been debarred under the Generic Drug Enforcement Act of 1992 (21 U.S.C. 301 et seq.), and are not otherwise being investigated, restricted or disqualified from performing services relating to clinical trials by the FDA or any other regulatory authority or professional body in any other jurisdiction. If, during the course of your employment with the Company, you become subject to such investigation or otherwise are restricted or disqualified, you will promptly inform Parent’s Legal Department of such event. 

 

V. Miscellaneous

 

No Implied Entitlement.  Other than as expressly provided herein, you will not be entitled to receive any further pay or compensation, severance pay, notice, payment in lieu of notice, incentives, bonuses, benefits or damages of any kind.  

 

Continued Effect.  Notwithstanding any changes in the terms and conditions of your employment which may occur in the future, including any changes in position, duties or compensation, the termination provisions in this Agreement will continue to be in effect for the duration of your employment with the Company unless otherwise amended in writing and signed by the Company. 

 

Authorization to Deduct Debts.  If, on the date you leave employment, you owe the Company any money, you hereby authorize the Company to deduct any such debt from your final pay or any other payment due to you to the extent permitted by applicable law.  Any remaining debt will be immediately payable to the Company and you agree to satisfy such debt within 14 days after any demand for repayment, to the extent permitted by applicable law.

 

Dispute Resolution.  IN CONSIDERATION OF YOUR EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES AND YOUR RECEIPT OF THE COMPENSATION AND OTHER BENEFITS PAID TO YOU BY THE COMPANY, AT PRESENT AND IN THE FUTURE, YOU AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR, SHAREHOLDER OR BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING OUT OF, RELATING TO, OR RESULTING FROM YOUR EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF YOUR EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION, AS SET FORTH IN THE CONFIDENTIALITY AGREEMENT.

 

Legal Counsel.  You have been advised by the Company to retain independent legal advice with respect to this Employment Agreement.

 

Currency.  Except as otherwise specifically indicated, all monetary amounts referenced herein are in Canadian dollars. Notwithstanding anything herein to the contrary, the Company, in its discretion, may adjust the compensation payable under this Agreement to be payable in U.S. dollars at any time during the term of your employment with the Company.

 

 

Page 8 of 16

 

Severability.  If any part, article, section, clause, paragraph or subparagraph of this Agreement is held to be indefinite, invalid, illegal or otherwise voidable or unenforceable for any reason, the entire Agreement will not fail on the account thereof and the validity, legality and enforceability of the remaining provisions will in no way be affected or impaired thereby. 

 

Entire Understanding.  We also confirm that this Agreement (including Appendix A) and the attached Confidentiality Agreement and the Equity Incentive Plan and related documentation set forth our entire understanding of the terms of your employment with the Company, and cancels and supersedes all previous invitations, proposals, letters, correspondence, negotiations, promises, agreements with the Parent, the Company, or any related entity (including the Prior Agreement), covenants, conditions, representations and warranties with respect to the subject matter of this Agreement.  Any modifications to these employment terms must be made in writing and signed by both you and the Company.

 

Governing Law.  This Agreement and all matters arising hereunder will be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard for conflict of law provisions. 

 

Protected Activity Not Prohibited.  I understand that nothing in this Agreement shall in any way limit or prohibit me from engaging in any Protected Activity. For purposes of this Agreement, “Protected Activity” means filing a charge or complaint with, or otherwise communicating or cooperating with or participating in any investigation or proceeding that may be conducted by any federal, state or local government agency or commission, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, and the National Labor Relations Board (“Government Agencies”). I understand that in connection with such Protected Activity, I am permitted to disclose documents or other information as permitted by law, and without giving notice to, or receiving authorization from, the Company or Parent. Notwithstanding, in making any such disclosures or communications, I agree to take all reasonable precautions to prevent any unauthorized use or disclosure of any information that may constitute Company Confidential Information to any parties other than the Government Agencies. I further understand that “Protected Activity” does not include the disclosure of any Company or Parent attorney-client privileged communications. In addition, I hereby acknowledge that the Company has provided me with notice in compliance with the Defend Trade Secrets Act of 2016 regarding immunity from liability for limited disclosures of trade secrets. The full text of the notice is attached in Appendix B.

 

 

Page 9 of 16

 

If you have any questions or concerns regarding the above, please do not hesitate to contact me.

 

To accept this Agreement on the terms set out herein, please sign where indicated below, and return a signed copy of this Agreement along with a signed copy of the Confidentiality Agreement to me before March 10, 2017.

 

Yours sincerely,

 

XENON PHARMACEUTICALS USA INC.

/s/ Ian Mortimer

Ian Mortimer

President 

Attachment: Confidentiality Agreement

 

 

 

 

I hereby confirm that I have read, understand and voluntarily accept the terms of this Agreement:

 

 

			
	
/s/ James Empfield
	
 
	
March 7, 2017

	
James Empfield
	
 
	
Date

 

Page 10 of 16

 

APPENDIX A

 

ADDITIONAL TERMS TO EXECUTIVE EMPLOYMENT AGREEMENT

 

Unless otherwise defined below, capitalized terms used herein will have the meanings set forth in the Agreement.

 

	
 
	
A.
	
Conditions to Receipt of Annual Bonus.  Your annual bonus must be paid no later than March 15th of the year following the year for which you earn such bonus.

 

	
 
	
B.
	
Conditions to Receipt of Severance.  

 

	
 
	
a.
	
Release of Claims. The receipt of any vesting acceleration, severance payments and benefits pursuant to Sections M or P of the Agreement will be subject to you signing and not revoking a separation agreement and release of claims related to your service with the Company (which may include an agreement not to disparage the Company, affirmation of your obligations under the Confidentiality Agreement (as defined above), and other standard terms and conditions) in a form reasonably satisfactory to the Company (the “Release”) and provided that such Release becomes effective and irrevocable no later than sixty (60) days (or such longer time as may be required by applicable law) following the termination date (such deadline, the “Release Deadline”).  If the Release does not become effective and irrevocable by the Release Deadline, you will forfeit any rights to severance or benefits under this Agreement.  In no event will severance payments or benefits be paid or provided until the Release becomes effective and irrevocable.  In the event that the Release Deadline spans two calendar years, then any severance payments or benefits payable under Sections M or P that otherwise constitute Deferred Payments (as defined below) will be paid no earlier than the first day of the second calendar year, subject to any delayed as may be required for Section 409A.

 

	
 
	
b.
	
Section 409A 

 

	
 
	
(i)
	
Notwithstanding anything to the contrary in this Agreement, no Deferred Payments will be paid or otherwise provided until you have a “separation from service” (within the meaning of Section 409A) from the relevant position or positions.  Similarly, no severance payable to you, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A solely pursuant to Treasury Regulation Section 1.409A‐1(b)(9) will be payable until you have a “separation from service” (within the meaning of Section 409A).

 

 

Page 11 of 16

 

	
 
	
(ii)
	
Notwithstanding anything to the contrary in this Agreement, if you are a “specified employee” within the meaning of Section 409A at the time of your termination of employment (other than due to death), then the Deferred Payments that are payable within the first six (6) months following your separation from service, will, to the extent required to be delayed pursuant to Section 409A(a)(2)(B) of the Code, become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of your separation from service.  All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if you die following your separation from service, but prior to the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of your death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.  In no event will the Company reimburse you for any taxes that may be imposed on you as a result of Section 409A. Each payment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A‐2(b)(2) of the U.S. Treasury Regulations.

 

	
 
	
(iii)
	
Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the U.S. Treasury Regulations will not constitute Deferred Payments for purposes of this Agreement.

 

	
 
	
(iv)
	
Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the U.S. Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not constitute Deferred Payments for purposes of this Agreement. 

 

	
 
	
(v)
	
With respect to any expense reimbursements which are not otherwise excludible from your gross taxable income, to the extent required to comply with the provisions of Section 409A, no reimbursement of expenses incurred by you during any taxable year shall be made after the last day of the following taxable year, the right to reimbursement of any such expenses shall not be subject to liquidation or exchange for another benefit, and the amount of expenses eligible for reimbursement during any taxable year may not affect the expenses eligible for reimbursement in any other taxable year.

 

	
 
	
(vi)
	
The provisions of this Agreement and the payments and benefits hereunder are intended to be exempt from or comply with the requirements of Section 409A so that none of the severance or other payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to be so exempt or so comply.  The Company and you agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to you under Section 409A.

 

	
 
	
(vii)
	
Definitions:

 

	
 
	
(A)
	
“Deferred Payment” means any severance pay or benefits to be paid or provided to you (or your estate or beneficiaries) pursuant to this Agreement and any other severance payments or separation benefits to be paid or provided to you (or your estate or beneficiaries), that in each case, when considered together, are considered deferred compensation under Section 409A.

 

Page 12 of 16

 

	
 
	
(B)
	
“Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986 (the “Code”) and the final regulations and any guidance thereunder and any applicable state law equivalent, as each may be amended or promulgated from time to time.

	
 
	
(C)
	
“Section 409A Limit” means two (2) times the lesser of: (i) your annualized compensation based upon the annual rate of pay paid to you during your taxable year preceding the taxable year of your separation from service as determined under U.S. Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any U.S. Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which your separation from service occurred.

 

“Cause” shall mean: (i) your continued failure to substantially perform the material duties and obligations under this Agreement (for reasons other than death or disability), which failure, if curable within the discretion of the Company, is not cured to the reasonable satisfaction of the Company within thirty (30) days after receipt of written notice from the Company of such failure; (ii) your failure or refusal to comply with the policies, standards and regulations established by the Company from time to time which failure, if curable in the discretion of the Company, is not cured to the reasonable satisfaction of the Company within thirty (30) days after receipt of written notice of such failure from the Company; (iii) any act of personal dishonesty, fraud, embezzlement, misrepresentation, or other unlawful act committed by you that benefits you at the expense of the Company; (iv) your violation of a U.S. or Canadian federal, provincial or state law or regulation applicable to the Company’s business; (v) your violation of, or a plea of nolo contendere or guilty to, a felony under the laws of the United States or any state or Canada or any province; (vi) your material breach of the terms of this Agreement or the Confidentiality Agreement; or (vii) the Company’s severe financial distress, whereby the Company is in the process of winding down its business and your employment is terminated in connection with such winding down.

 

Page 13 of 16

 

 

SCHEDULE A

 

Disclosure of Volunteer, Board and Other External Commitments

 

			
	
Position
	
Organization
	
Length of Appointment/Engagement

	
None
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

 

 

 

 

 

Page 14 of 16

 

Schedule B

 

Duties and Responsibilities

 

 

 

Your duties and responsibilities in this position will include those listed below:

 

	
1.
	
Leading the growth of Parent’s drug discovery and development pipeline from identified targets to the pre-clinical development stage.

	
2.
	
Providing direction and input on pre-clinical discovery activities in a manner that aligns with Parent’s focus on rare diseases.

	
3.
	
Managing lead optimization activities.

	
4.
	
Evaluating and selecting lead and development candidates.

	
5.
	
Designing the Parent’s internal pre-clinical discovery stage programs and research protocols, and evaluation of program progression.

	
6.
	
Developing and managing pre-clinical discovery R&D budgets.

	
7.
	
Participating in the initial recruitment, development and retention of key human resources within the preclinical discovery R&D group. Parent’s SVP, Drug Discovery will also be responsible for evaluating external R&D providers, including CROs and vendors.

	
8.
	
Working with partners and potential partners to develop partnered research plans and responsibilities.

	
9.
	
Monitoring and reporting internally on partnered R&D activities and milestone progression.

	
10.
	
Other duties as required from time to time.

	
11.
	
Strictly adhere to all Company and Parent corporate policies, particularly those concerning confidentiality, intellectual property, and safety.

 

 

Page 15 of 16

 

APPENDIX B

 

Section 7 of The Defend Trade Secrets Act of 2016

 

“ . . . An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. . . . An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual—(A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

 

 

 

Page 16 of 16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00268-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00268-of-00352.parquet"}]]