Document:

ljpc-ex106_2214.htm

 

 

Exhibit 10.6

 

                      

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED BECAUSE THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

 

 

DATED  JANUARY 12, 2021                   

 

 

 

 

 

 

 

 

 

(1)   PAION AG

(2)   PAION DEUTSCHLAND GMBH

(3)   LA JOLLA PHARMACEUTICAL COMPANY

(4)   La Jolla Pharmaceutical II B.V.

(5)   La Jolla Pharma, LLC

(6)   Tetraphase PHARMACEUTICALS, INC

(7)   Tetraphase PHARMACEUTICALS IRELAND LIMITED

 

 

 

 

 

 

 

 

 

 

 

 

	
	
Licence Agreement

 

 

 

1

 

 

 

THIS LICENCE AGREEMENT IS DATED AS OF 12 JANUARY 2021

 

 

PARTIES:

 

 

	
(1)
	
PAION AG, a company incorporated in Germany (company registration number DE5010352490) whose registered office is at Martinstrasse 10-12, 52062 Aachen, Germany (“Paion Parent”) and PAION DEUTSCHLAND GMBH, a company incorporated in Germany (company registration number HRB 10778) whose registered office is at Heussstraße 25, 52078 Aachen, Germany (“Paion” and, together with Paion Parent, the “Paion Parties”); 

 

	
(2)
	
LA JOLLA PHARMACEUTICAL COMPANY, a company incorporated in the State of California (company registration number US330361285) with an office at 4747 Executive Drive, Suite 240, San Diego, CA 92121 United States of America (“La Jolla”); and 

	
(3)
	
La Jolla Pharmaceutical II B.V., La Jolla Pharma, LLC, Tetraphase Pharmaceuticals, Inc., and Tetraphase Pharmaceuticals Ireland Limited (collectively, “Licensors”), wholly-owned subsidiaries of La Jolla, each with offices at 4747 Executive Drive, Suite 240, San Diego, CA 92121 United States of America.

 

 

WHEREAS:

 

	
(A)
	
The Licensors hold the Licensed Rights for the Licensed Products in the Territory. La Jolla and the Licensors wish to grant Paion a licence to the Licensed Rights in accordance with this Agreement. 

 

	
(B)
	
Paion wishes to acquire the Licensed Rights from La Jolla and the Licensors in order for Paion and the Licensed Subsidiaries to manufacture, have manufactured, market, sell and distribute Licensed Products in the Territory in accordance with this Agreement. 

 

 

THE AGREEMENT:

 

	
1.
	
Grant of licence

	
1.1.
	
The Licensors hereby grant to Paion and the wholly-owned subsidiaries of Paion Parent that hereby agree to be bound by this Agreement (collectively, “Licensed Subsidiaries”) during the Term an exclusive, non-transferable (except as provided in Clause 16) licence under the Licensed Rights to manufacture, have manufactured, sell, offer to sell, import, conduct clinical trials and studies and obtain regulatory approvals, market, distribute, supply, offer for sale and use the Licensed Products, in each case, solely in the Territory. Paion agrees that it has no rights under the Licensed Rights outside the Territory; provided that, if Paion or any Licensed Subsidiary desires to manufacture or have manufactured Licensed Products or conduct clinical trials or studies outside the Territory, upon Paion’s written request and subject to Licensors’ approval, which approval shall not be unreasonably withheld, conditioned, or delayed, the Licensors shall grant to Paion or the relevant Licensed Subsidiary the requested right to manufacture or have manufactured Licensed Products or conduct clinical trials or studies outside the Territory to the extent Licensors may do so without breaching any obligation or triggering a payment obligation under any agreement with a Third Party. Where reasonably requested by Paion or any Licensed Subsidiary, La Jolla and Licensors shall use their good faith efforts to (a) request consent from such Third Parties and (b) secure amendments to any agreements with such Third Parties to the extent necessary for Paion or any Licensed Subsidiary to manufacture or have manufactured Licensed Products or conduct clinical trials or studies outside the Territory without breaching any obligations or triggering payment obligations under such agreements with Third Parties. 

	
1.2.
	
Paion shall not grant sub-licences under this Agreement in any country in the Paion Markets. Paion and Licensed Subsidiaries may grant sub-licences under this Agreement solely in the Sub-licensed Markets, provided that:

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1.2.1
	
subject to Clause 1.2.2, the sub-licensees are subject to the obligations which are equivalent to the obligations on Paion and Licensed Subsidiaries under this Agreement; 

	
 
	
1.2.2
	
the sub-licensees (or their sub-licensees) shall not be permitted to grant any sub-licences with respect to any Licensed Product without the prior written consent of Licensors, which the Licensors shall not unreasonably delay, condition or withhold;

	
 
	
1.2.3
	
the Licensed Know-how and the Confidential Information of the Licensors is only disclosed to such sub-licensees to the extent strictly necessary and under written obligations of confidence which are equivalent to the obligations on Paion and Licensed Subsidiaries under this Agreement; and

	
 
	
1.2.4
	
Paion and Licensed Subsidiaries may, at their discretion, terminate such sub-licences at any time, and promptly notify Licensors of such termination.

	
1.3
	
All Intellectual Property Rights in any Improvements made during the Term by or on behalf of La Jolla and each of the Licensors shall be the exclusive property of La Jolla and/or that Licensor on creation ("Licensors Improvements"). Licensors Improvements shall be deemed to be Licensed Know-how licensed to Paion and its Licensed Subsidiaries at no additional costs, fees or royalties during the Term pursuant to Clause 1.1. Licensors shall provide a summary of any Licensors Improvements within thirty (30) days after the creation of such Licensors Improvements and shall promptly provide all information reasonably requested by Paion regarding such Licensors Improvements.

	
1.4
	
All Intellectual Property Rights in any Improvements made during the Term by or on behalf of Paion or its Licensed Subsidiaries shall be the exclusive property of Paion on creation ("Paion Improvements"). Paion hereby grants, and agrees to cause its Licensed Subsidiaries to grant, to each Licensor and its Affiliates during the Term a non-exclusive, royalty-free, fully paid-up license under all Intellectual Property Rights in any Paion Improvements to manufacture, have manufactured, sell, offer to sell, import, conduct clinical trials and studies and obtain regulatory approvals, market, distribute, supply, offer for sale and use the Licensed Products, in each case, solely outside the Territory. Licensors may grant sub-licences under this Clause 1.4 provided the sub-licensees shall not grant any sub-licences under any Intellectual Property Rights in any Paion Improvements without the prior written consent of Paion, which Paion shall not unreasonably delay, condition or withhold.  Paion shall provide a summary of any Pion Improvement within thirty (30) days after the creation of such Paion Improvement and shall promptly provide all information reasonably requested by Licensors regarding such Paion Improvement.     

	
1.5
	
Paion shall have the option at its own cost, to record the licence granted to it under this Clause 1 in the relevant registries in the Territory. Licensors shall provide reasonable assistance to enable Paion and its Licensed Subsidiaries to make such submission under this Clause 1.5.

	
2.
	
Disclosure of TECHNICAL INFORMATION

	
2.1.
	
La Jolla and the Licensors shall provide to Paion and Licensed Subsidiaries all technical information in its and their possession and control relating to the Licensed Products, including without limitation Licensed Know-how and all Programme Data developed by or on behalf of Licensors, that is necessary or useful for Paion and Licensed Subsidiaries to use and otherwise exploit the Licensed Rights in accordance with this Agreement; provided that, in the case of any such technical information (including Know-How and Programme Data) that is owned by a Third Party, Licensors shall be obligated to provide such technical information only to the extent that the provision of such technical information does not breach any obligation or trigger a payment obligation under any agreement with a Third Party. Where reasonably requested by Paion or any Licensed Subsidiary, La Jolla and Licensors shall use good faith efforts to (a) request consent from such Third Parties and (b) secure amendments to any agreements with such Third Parties to the extent necessary to provide Paion and Licensed Subsidiaries all technical information (including Know-how and Programme Data) owned by such Third Parties that is necessary or useful for Paion and Licensed Subsidiaries to use and otherwise exploit the Licensed Rights in accordance with this Agreement, without breaching any obligations or triggering payment obligations under such agreements with Third Parties. La Jolla and the Licensors shall make such acknowledgements to Third Parties as Paion may reasonably 

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request stating that Paion and its Affiliates are entitled to make exclusive use of the Licensed Know-how and Programme Data for the purpose of exercising their rights in accordance with this Agreement. La Jolla and the Licensors shall provide the technical and other information described in Clause 2.2 to Paion within thirty (30) days after the Commencement Date.   

	
2.2.
	
Such technical and other information to be provided by La Jolla and Licensors to Paion pursuant to Clause 2.1 shall include, without limitation, the latest versions of the following documents in La Jolla's, Licensors’ and/or their Affiliates' possession or control to the extent relating to the Licensed Products:

	
 
	
2.2.1.
	
Investigational new drug applications to any regulatory authorities;

	
 
	
2.2.2.
	
Phase I and II clinical reports;

	
 
	
2.2.3.
	
Phase III protocol and related documents including case report forms and patient informed consent forms;

	
 
	
2.2.4.
	
Investigator brochures; 

	
 
	
2.2.5.
	
Phase III clinical study reports;

	
 
	
2.2.6.
	
New Drug Applications;

	
 
	
2.2.7.
	
Supplementary New Drug Applications;

	
 
	
2.2.8.
	
Label amendments along with clinical and regulatory submission support;

	
 
	
2.2.9.
	
Stability reports; and

	
 
	
2.2.10.
	
Value dossiers.

	
2.3.
	
La Jolla and the Licensors shall, at no additional cost, disclose to Paion and Licensed Subsidiaries any Know-how and/or Programme Data in La Jolla's, Licensors and/or their Affiliates' possession or control that is necessary or useful for the exploitation of the Licensed Rights in the Territory and that La Jolla, Licensors and/or their Affiliates may develop, have developed or acquire during the Term, including without limitation all such Know-how and/or Programme Data which it may obtain from any of its licensees outside the Territory (unless prevented from so doing by the terms of its agreement with any licensee) and that is necessary or useful for Paion and Licensed Subsidiaries to manufacture, have manufactured, sell, offer to sell, import, conduct clinical trials and studies and obtain regulatory approvals, market, distribute, supplying, offer for sale and use the Licensed Products under this Agreement, within thirty (30) days of developing or acquiring such Know-how and/or Programme Data, all of the foregoing of which will be deemed to be included in the Licensed Rights that are granted to Paion and Licensed Subsidiaries in accordance with this Agreement (in the case of Know-how and/or Programme Data obtained from any of La Jolla and/or Licensors' licensees outside the Territory, subject any limitations on the use thereof imposed under any agreements with such licensees). Where reasonably requested by Paion or any Licensed Subsidiary, La Jolla and Licensors shall use good faith to (a) seek consent from La Jolla's and/or Licensors' licensees outside the Territory and (b) secure amendments to any agreements with La Jolla's and/or Licensors' licensees outside the Territory to the extent necessary to provide Paion and Licensed Subsidiaries all such Know-how and/or Programme Data that is obtained from any of La Jolla and/or Licensors' licensees outside the Territory and which is necessary or useful for Paion and Licensed Subsidiaries to manufacture, have manufactured, sell, offer to sell, import, conduct clinical trials and studies and obtain regulatory approvals, market, distribute, supplying, offer for sale and use the Licensed Products under this Agreement.

	
2.4.
	
Subject to Clause 10, Paion and Licensed Subsidiaries shall have the right (in the case of Know-how and/or Programme Data obtained from any of La Jolla and/or Licensors' licensees outside the Territory, subject to Clause 2.3 and any limitations on the use thereof imposed under any agreements with such licensees):

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2.4.1
	
to use the Licensed Know-how and Programme Data disclosed to it pursuant to Clauses 2.1, 2.2 and 2.3 for the purposes contemplated in this Agreement and subject to the terms hereof; and 

	
 
	
2.4.2
	
to disclose Licensed Know-how and Programme Data to its sub-licensees and sub-contractors for their use for the purposes contemplated in this Agreement and subject to the terms hereof.

	
2.5
	
Paion shall be the sole owner of all Programme Data and other technical information which Paion may develop or acquire in relation to the Licensed Products. Paion shall disclose such Programme Data and other technical information to Licensors within thirty (30) days of developing or acquiring such Programme Data and other technical information. Paion hereby grants, and cause its Licensed Subsidiaries to grant, to each Licensor and its Affiliates during the Term a non-exclusive, royalty-free, fully paid-up license to use such Programme Data and other technical information to manufacture, have manufactured, sell, offer to sell, import, conduct clinical trials and studies and obtain regulatory approvals, market, distribute, supply, offer for sale and use the Licensed Products, in each case, solely outside the Territory, subject to Clause 10.

	
3.
	
LICENSED TRADEMARKS

	
3.1.
	
La Jolla and the Licensors shall, at their own cost and expense, maintain and renew the registrations of the Licensed Trademarks in the European Union or member state countries thereof, including payment of all related fees.

	
3.2.
	
Licensors may, at their option, file any additional trademark applications featuring the Licensed Trademarks in the Territory. If Licensors do not file an application to register any trademark registration in the European Union or member state countries thereof featuring the Licensed Trademarks which, in the reasonable opinion of Paion, warrants registration, Licensors shall at their own cost and expense, upon written request of Paion or its Licensed Subsidiaries, apply for such trademark protection as requested by Paion or its Licensed Subsidiaries provided that the ownership and control of any such additional trademarks remains with Licensors. Any new trademarks featuring the Licensed Trademarks that Licensors register in the European Union or any member state countries thereof shall be deemed to be Licensed Trademarks under this Agreement.   

	
3.3.
	
Paion and its Licensed Subsidiaries shall not register or make any application to register any trade mark, design or other registered right which incorporates any Licensed Trademark or anything confusingly similar to any Licensed Trademark or otherwise infringes or dilutes in a material way any Licensed Trademark. 

	
3.4.
	
Paion's and its Licensed Subsidiaries’ right to use the Licensed Trademarks shall be only in conformance with any trademarks usage guidelines of Licensors that may be delivered to Paion from time to time, which guidelines shall be reasonable and shall not be inconsistent with the scope of the license granted under this Agreement.

	
3.5.
	
Paion hereby acknowledges and recognizes Licensors' exclusive worldwide ownership of the Licensed Trademarks and agrees not to take any action inconsistent with such ownership.  Paion acknowledges that its Licensed Subsidiaries’ use of the Licensed Trademarks pursuant to this Agreement and any goodwill established thereby shall inure to the sole benefit of Licensors.  Paion agrees that nothing in this Agreement shall give Paion or any of its Licensed Subsidiaries any right, title or interest in the Licensed Trademarks other than the right to use the Licensed Trademarks in accordance with this Agreement.  Paion further agree that it and its Affiliates will not attack Licensors’ ownership of the Licensed Trademarks, nor shall Paion or any of its Affiliates assist or aid others in attacking Licensors’ ownership of the Licensed Trademarks.  Notwithstanding anything in this Agreement to the contrary, if, by virtue of Paion’s or any Licensed Subsidiary’s use of the Licensed Trademarks, Paion acquires any equity, title or other rights in or to the Licensed Trademarks, Paion or such License Subsidiary, as applicable, shall assign and transfer same to Licensors.

	
3.6.
	
Paion shall reasonably assist Licensors in policing the use of the Licensed Trademarks and shall cooperate with Licensors in protecting the Licensed Trademarks.  Such cooperation by Paion shall 

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be at the sole expense of Licensors.  Paion shall notify Licensors promptly of any infringement of the Licensed Trademarks that comes to its attention or its Licensed Subsidiaries. 

	
3.7.
	
Paion and its Affiliates shall not knowingly take or permit to be taken any actions that would diminish in a material way the goodwill or reputation associated with the Licensed Trademarks.

	
4.
	
MARKETING AUTHORISATIONS

	
4.1.
	
La Jolla and the Licensors shall initiate the transfer of all Marketing Authorisations for the Licensed Products in the Territory with the Regulatory Authority [***] in order for Paion (or its Licensed Subsidiaries) to be appointed as holders of all Marketing Authorisations for the Licensed Products in the Territory.

	
4.2.
	
La Jolla and the Licensors shall reasonably assist Paion and Licensed Subsidiaries, upon reasonable request, in connection with any queries made by Regulatory Authority during the transfer of the Marketing Authorisations or following the transfer the Marketing Authorisations. La Jolla and the Licensors shall give reasonable support to the application, transfer and maintenance of the Marketing Authorisations in the Territory, including but not limited to providing additional documents requested by Regulatory Authority. La Jolla and the Licensors shall reasonably assist Paion in answering any deficiency letters from the Regulatory Authority in the Territory regarding the Licensed Products, as reasonably requested by Paion or Licensed Subsidiaries. Where the Regulatory Authority may require a letter of authorisation or other similar document that La Jolla and/or Licensors are required to provide, La Jolla and the Licensors shall provide these promptly after being requested to do so.

	
4.3.
	
La Jolla and the Licensors shall reasonably assist Paion and Licensed Subsidiaries, upon reasonable request, in connection with any queries made by Regulatory Authority during the application for any new Marketing Authorisations in the Territory. La Jolla and the Licensors shall give reasonable support to the application and maintenance of the new Marketing Authorisations in the Territory. La Jolla and the Licensors shall reasonably assist Paion in answering any deficiency letters from the Regulatory Authority in the Territory regarding the Licensed Products, as reasonably requested by Paion or Licensed Subsidiaries. Where the Regulatory Authority may require a letter of authorisation or other similar document that La Jolla and/or Licensors are required to provide, La Jolla and the Licensors shall provide these promptly after being requested to do so. 

	
4.4.
	
All reasonable costs and fees associated with La Jolla and Licensors complying with their obligations under Clauses 4.1, 4.2 and 4.3 shall be shared by the Parties, with the Parties consulting on how such reasonable costs and fees will be incurred and shared. 

	
5.
	
SUPPLY OF LICENSED PRODUCTS

	
5.1.
	
The Parties shall use commercially reasonable efforts to negotiate and enter into a separate Supply Agreement [***]; such Supply Agreement to incorporate the Supply Terms in Schedule 5.  

	
6.
	
OBLIGATIONS OF PAION

	
6.1.
	
Paion and its Licensed Subsidiaries shall (and shall ensure that its sub-licensees), in developing, using, importing, manufacturing, selling and supplying the Licensed Products, comply with all applicable local, state, and international laws and regulations.

	
6.2.
	
Paion and its Licensed Subsidiaries shall not do or omit to do anything which will:

	
 
	
6.2.1.
	
diminish the rights of Licensors in the Licensed Rights;

	
 
	
6.2.2.
	
impair any registration (or application for registration) of the Licensed Patents; or 

	
 
	
6.2.3.
	
prejudice the validity of the Licensed Patents.

	
6.3.
	
Paion shall use Commercially Reasonable Efforts:

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6.3.1.
	
to execute and fund all clinical trials necessary to obtain, and to obtain and keep in good standing, all Marketing Authorizations for the Licensed Products in the Territory;

	
 
	
6.3.2.
	
to coordinate and control the regulatory strategy and interactions with Regulatory Authorities for the Products in the Territory; and 

	
 
	
6.3.3.
	
to commercialize License Products in the Territory, including to commence commercial sale of  Giapreza in the Territory by no later than August 23, 2022 and to commence commercial sale of XERAVA in the Territory by no later than September 20, 2021. 

	
6.4.
	
Paion will have the sole right and responsibility for planning, funding and implementing commercialization activities for the Product in the Territory.

	
6.5.
	
Paion will be responsible for all costs related to commercialization of the Product, including sales, advertising and promotion in the Territory.

	
6.6.
	
Paion will be responsible for all pricing and reimbursement discussions and shall be free to set the final price independent of Licensors; provided that, Parties will discuss pricing of Licensed Products as part of the Joint Steering Committee and Paion will notify Licensors of setting of prices and any pricing changes for any Licensed Products made by Paion from time to time.

	
6.7.
	
Paion shall be responsible for supply of Licensed Products in the Territory. Paion shall ensure that supply of the Licensed Products in the Territory comply with applicable laws.   

	
6.8.
	
Paion shall be the holder of, and own, each Marketing Authorisation obtained by Paion or transferred to Paion in the Territory. 

	
6.9.
	
Paion shall, either directly, through its Licensed Subsidiaries or sub-licensees, market the Licensed Products in the Territory under the applicable Licensed Trademark in accordance with the Marketing Authorisations. The obligations under this Clause 6.9 shall not apply to the extent the applicable Licensed Trademark is no longer valid and enforceable in the Territory. In such circumstance, Paion, the Licensed Subsidiaries and/or any sub-licensees may, in consultation with La Jolla and Licensors, market the Licensed Products under the International Nonproprietary Names of the Licensed Products or other trademarks in the countries in the Territory where the applicable Licensed Trademark is no longer valid and enforceable. 

	
7.
	
Governance

	
7.1.
	
Joint Steering Committee.  

	
 
	
7.1.1.
	
[***], the Parties will establish a joint steering committee (the “Joint Steering Committee” or the “JSC”), composed of two (2) members of each Party, to oversee and guide the direction of the commercialization of Licensed Products in the Territory under this Agreement. The JSC shall act as a joint steering and decision-making body for the Partnering Program.  The JSC in particular shall: 

	
 
	
(a)
	
oversee the conduct of the Partnering Program and corresponding budget. discuss marketing ideas & brand information; 

	
 
	
(b)
	
review, discuss and approve the Partnering Program and corresponding budget and any revisions;

	
 
	
(c)
	
discuss any ongoing development work by the Parties and any outcomes;

	
 
	
(d)
	
foster a collaborative relationship between the Parties; and

	
 
	
(e)
	
perform such other functions as appropriate to further the purposes of the Partnering Program, as expressly set forth in this Agreement or allocated to it by the Parties’ written agreement. 

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7.2.
	
JSC Membership and Meetings.

	
 
	
7.2.1.
	
JSC Members. Each JSC representative shall have appropriate knowledge and expertise and sufficient seniority within the applicable Party to make decisions arising within the scope of the JSC’s responsibilities.  Each Party may replace its representatives on the JSC on written notice to the other Party.  Paion shall appoint the chairperson of the JSC.  The chairperson shall prepare and circulate agendas to JSC members at least [***] days before each JSC meeting and shall direct the preparation of reasonably detailed minutes for each JSC meeting, which shall be approved by the chairperson and circulated to JSC members within thirty (30) days after such meeting.

	
 
	
7.2.2.
	
Meetings.  The JSC shall hold meetings at such times as it elects to do so, but in no event less frequently than [***] by telephone or video conference, unless otherwise agreed by the Parties.  The first JSC meeting shall be held within thirty (30) days of the Commencement Date. Each Party shall be responsible for all of its own expenses of participating in any JSC meeting.  No action taken at any meeting of the JSC during the Partnering Program shall be effective unless at least one (1) representative of each Party is participating.  In addition, either Party may request that a special ad hoc meeting of the JSC be convened for the purpose of resolving disputes or for the purpose of reviewing or making decisions pertaining to material subject-matter, at such time as may be mutually agreed by the Parties.

	
 
	
7.2.3.
	
Non-Member Attendance. Each Party may from time to time invite a reasonable number of participants, in addition to its representatives, to attend the JSC meetings in a non‐voting capacity; provided that if either Party intends to have any Third Party (including any consultant) attend such a meeting, such Party shall provide reasonable prior written notice to the other Party and obtain the other Party’s approval for such Third Party to attend such meeting, which approval shall not be unreasonably withheld, conditioned, or delayed.  Such Party shall ensure that such Third Party is bound by written confidentiality and non-use obligations consistent with the terms of this Agreement.

	
7.3.
	
Decision-Making.

	
 
	
7.3.1.
	
General.  During the performance of the Partnering Program, the Parties shall use good faith efforts to reach all JSC decisions by consensus, with each Party’s representatives collectively having one (1) vote. If after reasonable discussion and good faith consideration of each Party’s view on a particular matter, the representatives of the Parties cannot reach an agreement as to such matter within fifteen (15) business days, then either Party at any time may refer such issue to the executive officers in accordance with Clause 17.8 for resolution.

	
 
	
7.3.2.
	
Limitations on Authority. The JSC shall have only such powers as are expressly assigned to it in this Agreement, and such powers shall be subject to the terms and conditions of this Agreement.  Without limiting the generality of the foregoing, the JSC shall not have the power to amend, interpret, or waive compliance with this Agreement, and no JSC decision may be in contravention of any terms and conditions of this Agreement.

	
 
	
7.3.3.
	
Discontinuation of the JSC.  The activities to be performed by the JSC shall solely relate to governance under this Agreement. The JSC shall continue to exist until the first to occur of:  (a) the Parties mutually agree to dissolve the JSC or (b) the completion of the Partnering Program under this Agreement.  Upon the first to occur of the foregoing (a) or (b), the JSC shall automatically dissolve and, thereafter, each Party shall designate, to the extent necessary, a contact person for the exchange of information under this Agreement, and decisions which would previously have been made by the JSC, if any, shall be decisions as between the Parties, subject to the other terms and conditions of this Agreement.

	
8.
	
LICENSING FEE, MILESTONE FEES & ROYALTIES

	
8.1.
	
In full consideration of the Licensed Rights and transfer of Marketing Authorisations in accordance 

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with Clause 3, the Paion Parties shall jointly be liable to pay to the Licensors: 

	
 
	
8.1.1.
	
the Licensing Fee;

	
 
	
8.1.2.
	
the Milestone Fees; and

	
 
	
8.1.3.
	
the Royalties.

The Parties acknowledge that payments made by either of the Paion Parties and/or Licensed Subsidiaries in the full amount required under this Clause 8 and received by La Jolla and/or the Licensors shall be in full and final satisfaction of the Paion Parties' and/or Licensed Subsidiaries' obligations under this Clause 8 with respect to such payments, and the Paion Parties and Licensed Subsidiaries shall have no further obligations to La Jolla and/or the Licensors (or any of their licensors) under this Clause 8 with respect to such payments.

Licensing Fee

	
8.2.
	
Following the execution and delivery of this Agreement by each of the Parties, La Jolla or the Licensors shall invoice Paion for the amount of the Licensing Fee and Paion shall, pending receipt of such invoice, pay the amount of the Licensing Fee within 30 days of the date of execution and delivery of this Agreement by each of the Parties. The Parties agree and acknowledge that [***] of the Licensing Fee is attributable to the grant by La Jolla Pharma, LLC of the license under the Licensed Rights with respect to Giapreza and [***] of the Licensing Fee is attributable to the grant by Tetraphase Pharmaceuticals Ireland Limited of the license under the Licensed Rights with respect to XERAVA. Notwithstanding any provision contained in this Agreement to the contrary but subject to Clause 8.1, all amounts owing under Clause 8.1, to the extent attributable to Giapreza, shall be paid directly to La Jolla Pharma, LLC in accordance with the wire transfer instructions provided pursuant to Clause 8.10.3 (and, accordingly, USD [***] of the Licensing Fee shall be paid directly to La Jolla Pharma, LLC and [***] to Tetraphase Pharmaceuticals, Inc.). 

Milestone Fees

	
8.3.
	
Subject to Clause 8.5, promptly upon achievement of each Milestone, Paion shall notify La Jolla of the achievement of each Milestone and the amount of Milestone Fees payable. La Jolla or the Licensors shall invoice Paion for the amount of Milestone Fees payable and the Paion Parties shall pay the amount of such Milestone Fees within forty-five (45) days of achievement of the corresponding Milestone. 

Royalties

	
8.4.
	
Subject to Clause 8.5, the Paion Parties shall pay to the Licensors the following Royalties:

	
 
	
8.4.1.
	
15% of Annual Aggregate Net Sales from the sale of XERAVA in the Paion Markets, so long as a Valid Claim of a Licensed Patent would, in the absence of a license, be infringed from the use, making, sale, offer for sale or importation of XERAVA in the Territory;

	
 
	
8.4.2.
	
35% of Annual Aggregate Net Receipts with respect to sub-licences granted in Sub-licensed Markets relating to the sale of XERAVA, so long as a Valid Claim of a Licensed Patent would, in the absence of a license, be infringed from the use, making, sale, offer for sale or importation of XERAVA in the Territory;

	
 
	
8.4.3.
	
18% of Annual Aggregate Net Sales from the sale of Giapreza in the Paion Markets prior to 31 December 2021 and so long as a Valid Claim of a Licensed Patent would, in the absence of a license, be infringed from the use, making, sale, offer for sale or importation of Giapreza in the Territory;

	
 
	
8.4.4.
	
20% of Annual Aggregate Net Sales from the sale of Giapreza in the Paion Markets from 1 January 2022 until 31 December 2023 and so long as a Valid Claim of a Licensed Patent would, in the absence of a license, be infringed from the use, making, sale, offer for sale or importation of Giapreza in the Territory;

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8.4.5.
	
24% of Annual Aggregate Net Sales from the sale of Giapreza in the Paion Markets after  31 December 2023 and so long as a Valid Claim of a Licensed Patent would, in the absence of a license, be infringed from the use, making, sale, offer for sale or importation of Giapreza in the Territory; and

	
 
	
8.4.6.
	
35% of Annual Aggregate Net Receipts with respect to sub-licences granted in Sub-licensed Markets relating to the sale of Giapreza, so long as a Valid Claim of a Licensed Patent would, in the absence of a license, be infringed from the use, making, sale, offer for sale or importation of Giapreza in the Territory.

Payments

	
8.5.
	
The Royalties and Milestone Fees payable pursuant to Clause 8.3 and 8.4, shall be subject to the following:

	
 
	
8.5.1.
	
in respect of any Licenced Products:

	
 
	
(a)
	
only a single Royalty shall be payable for any XERAVA products; and

	
 
	
(b)
	
only a single Royalty shall be payable for any Giapreza products;

	
 
	
8.5.2.
	
each XERAVA Milestone Fee is payable only once by the Paion Parties upon achievement of each XERAVA Milestone. Each XERAVA Milestone Fee is a one-time non-refundable payment that is satisfied in full when the XERAVA Milestone is achieved and the Paion Parties have made payment of the applicable XERAVA Milestone Fee to Licensors; and

	
 
	
8.5.3.
	
each Giapreza Milestone Fee is payable only once by the Paion Parties upon achievement of each Giapreza Milestone. Each Giapreza Milestone Fee is a one-time non-refundable payment that is satisfied in full when the Giapreza Milestone is achieved and Paion has made payment of the applicable Giapreza Milestone Fee to La Jolla Pharma, LLC.

Payment Caps

	
8.6.
	
If in any Year, the aggregate amount of Milestone Fees and Royalties paid and payable by the Paion Parties for XERAVA exceeds [***] of Annual Aggregate Net Sales and Annual Aggregate Net Receipts for XERAVA in the Territory for a given Year during the Term, then the Paion Parties shall not pay any amount of Milestone Fees and Royalties for XERAVA in excess of [***] of Annual Aggregate Net Sales and Annual Aggregate Net Receipts for XERAVA in that Year (the "Payment Cap"). At the end of each Year, Paion shall notify La Jolla in writing if the Payment Cap applies and the following shall apply:

	
 
	
8.6.1.
	
La Jolla shall refund payments of Milestone Fees and Royalties paid by the Paion Parties for XERAVA in that Year that exceed the Payment Cap within thirty (30) days after receipt of the notification from Paion; and

	
 
	
8.6.2.
	
Milestone Fees and Royalties for XERAVA in that Year that exceed the Payment Cap for that Year shall be carried over and shall be due and payable at the time that the applicable percentage of Annual Aggregate Net Sales and Annual Aggregate Net Receipts is due for the immediately following year; provided that such Milestone Fees and Royalties for XERAVA that exceed the Payment Cap in the previous Year shall be included in the calculation for the Payment Cap in immediately following Year. For instance, if the value of Milestone Fees and Royalties for XERAVA exceed the Payment Cap for Year 1 by USD50,000, then that USD50,000 will be carried over to Year 2. If the value of Milestone Fees and Royalties for XERAVA (including the USD50,000 carried over from Year 1) exceed the Payment Cap for Year 2 by USD80,000, then that USD80,000 will be carried over to Year 3 and so on.  

	
8.7.
	
After the commencement of sales of Generic Products in a given country in the Territory, the Parties will negotiate in good faith a reduction in the Royalties payable hereunder in respect of Net Sales of the relevant Licensed Product in such country, which reduction would become effective upon the 

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level of aggregate sales of all such Generic Products in such country achieving a mutually agreed percentage of aggregate sales of such Generic Products and such Licensed Product in such country; provided that, any such reduction would be subject to La Jolla obtaining consents or amendments from George Washington University,  Harvard University and Healthcare Royalty Management, LLC with respect to the GWU License, the Harvard License and the Royalty Interest Agreement, respectively, which La Jolla agrees to obtain in good faith in such event. 

	
8.8.
	
Royalties and other sums payable under this Agreement are exclusive of VAT (or similar tax).  If the Paion Parties are required by law to make a deduction or withholding from Royalties or such sums, the Paion Parties shall, within ten (10) Business Days of making the deduction or withholding, provide a statement in writing showing the gross amount of the payment, the amount of the sum deducted and the actual amount paid.

	
8.9.
	
The Paion Parties shall pay Royalties on a Quarterly Period basis, and Royalties attributable to Net Sales and Net Receipts during the Quarterly Period shall become due and payable within thirty (30) days of the end of such Quarterly Period.  At the same time as payment of the Royalties set out in this Clause 8 falls due, Paion shall submit or cause to be submitted to Licensors a statement in writing recording the calculation of such Royalties payable and in particular provide the following on a Licensed Product by Licensed Product basis: 

	
 
	
8.9.1
	
the Quarterly Period for which the Royalties were calculated;

	
 
	
8.9.2
	
the Net Sales (including an itemized listing of applicable deductions) and Net Receipts (by sub-licensee) during the Quarterly Period;

	
 
	
8.9.3
	
the amount of Royalties due and payable; and

	
 
	
8.9.4
	
the amount of any withholding or other taxes or duties deductible or due to be deducted from the amount of Royalties due and payable.

	
8.10
	
Payment of invoices by the Paion Parties shall be:

	
 
	
8.10.1
	
within thirty (30) days following the date of receipt of the relevant invoice;

	
 
	
8.10.2
	
exclusive of VAT which shall also be payable by Paion (if applicable); and

	
 
	
8.10.3
	
by electronic funds transfer to the bank accounts designated in writing by La Jolla or Licensors (which will include an account into which payments in respect of Giapreza will be made to La Jolla Pharma, LLC), or on such other terms agreed upon in writing between La Jolla or Licensors and Paion from time to time.

	
8.11
	
All payments by the Paion Parties under this Agreement shall be made in USD or such other currency as the Parties may agree from time to time.

	
8.12
	
Paion shall during the Term of this Agreement keep accurate and complete books of account containing all necessary data for the calculation and/or confirmation of payments due under this Agreement, which books of account shall be retained by Paion for a minimum of three years following the Year to which they pertain; provided that books and records relating to the sale of XERAVA shall in all events be maintained until the expiration of five years from the conclusion of the Quarterly Period to which they relate. Paion shall obtain from any sub-licensee in the Sub-licensed Markets inspection rights comparable with those set forth in this Clause 8.12 that it agrees to exercise from time to time upon the request of Licensors. The records and books of account referred to in this Clause 8.12 shall, on La Jolla giving reasonable prior written notice of no less than five (5) business days, be open during normal working hours on any business day for inspection by La Jolla and/or a public accounting firm of La Jolla’s selection, not more often than once each Year, excluding any inspection that uncovers an underpayment of more than [***]% of the amount due hereunder for the audited period; provided such books and records that relate to the sale of XERAVA also shall be subject to inspection by Harvard University pursuant to the terms of Section 7.3 of the Harvard License and the books and records that relate to the sale of Giapreza also shall be subject to inspection by George Washington University pursuant to the terms of Section 5.4 of the 

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GWU License and the results of any inspection may be shared with Healthcare Royalty Management, LLC pursuant to Section 8.03(d) of the Revenue Interest Agreement. In the event that the inspection reveals an undisputed underpayment or overpayment by Paion, the underpaid or overpaid amount will be paid by the applicable Party promptly. La Jolla will pay for such inspections; provided, that in the event of an underpayment of more than [***]% of the total payments due hereunder for the period covered by the inspection is discovered as a result of any such inspection, then the fees and expenses incurred by La Jolla in connection with such inspection will be paid or reimbursed by Paion.

	
8.13
	
Where sums due are not paid in full by the due date, La Jolla may charge interest on such sums at a rate per annum equal for each day in which an amount is overdue to the lesser of (i) 10.0% and (ii) the maximum amount of interest permitted under applicable law. Interest shall apply from the due date for payment until actual payment in full, whether before or after judgment.

	
8.14
	
If, at any time, a Party considers that the other Party has failed to comply with its obligations under Clause 8, the Party may refer to an independent expert the following questions: 

8.14.1whether the Party has met its obligations under Clause 8; and, if not, 

	
 
	
8.14.2
	
what actions the expert proposes the Party should take in order to meet its obligations under Clause 8.

	
8.15
	
The independent expert shall be appointed in accordance with the Schedule 1. If the independent expert determines that a Party has failed to comply with its obligations under Clause 8, and if the Party fails to take the remedial actions proposed by the independent expert pursuant to Clause 8.14.2 within three (3) months of the expert rendering his or her decision in accordance with Schedule 1, the Party referring the matter to the expert shall be entitled, by giving, at any time within three (3) months after the end of that three (3) month period not less than one (1) month's written notice, to terminate this Agreement. Nothing in this Clause 8.15 shall limit or otherwise affect the exercise of any other right or remedy of a Party under this Agreement or applicable law.   

	
9.
	
PROSECUTION, MAINTENANCE AND PROTECTION OF THE LICENSED RIGHTS 

	
9.1
	
Licensors shall be responsible for filing, prosecuting and maintaining the Licensed Patents. For clarity, any new patent application (and any patent granted thereon) owned by La Jolla or either Licensor (or any other wholly-owned subsidiary of La Jolla) that is (a) related to the Licensed Products or (b) is necessary or useful for Paion and Licensed Subsidiaries to use and otherwise exploit the Licensed Products in accordance with this Agreement, made during the Term by or on behalf of La Jolla and each of the Licensors shall be deemed to be Licensed Patents. La Jolla and the Licensors shall provide Paion, in the case of Licensed Patents that are licensed to Licensors under the GWU License or Harvard License, to the extent Licensors control the prosecution thereof, with drafts of all proposed material filings and correspondences to patent authorities in the Territory and reasonably consider Paion’s input and comment thereto that are timely provided by Paion. Paion shall reimburse Licensors all reasonable external costs actually invoiced by vendors and paid by Licensors for the prosecution and maintenance of the Licensed Patents in the Territory (all being "Patent Fees"). La Jolla shall invoice Paion for such Patent Fees annually and Paion shall pay such invoice within thirty (30) days of receipt in accordance with this Agreement.

	
9.2
	
Paion shall be entitled to request that Licensors, at Paion’s cost, file in the name of a Licensor for patents in additional jurisdictions within the Territory and Licensors' agreement to such request shall not be unreasonably withheld, conditioned or delayed. 

	
9.3
	
In the event that Licensors decide not to pursue, maintain and/or abandon any of the Licensed Patents owned by Licensors, La Jolla will cause Licensors to provide written notice thereof to Paion following such decision.  Upon request of Paion, La Jolla agrees that the relevant Licensor will assign to Paion all its rights, title and interest in the Licensed Patents owned by such Licensor and that such Licensor has determined to discontinue/abandon at no cost to Paion who may continue with such applications and/or registrations in its own name and at its sole cost; provided that any assignment of any such discontinued/abandoned Licensed Patents to Paion will be subject to an unrestricted retained royalty-free, irrevocable, sublicensable, transferable non-exclusive license 

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under such discontinued/abandoned Licensed Patents (and any patent issuing thereon), subject to Paion’s exclusive rights with respect to the Licensed Products in the Territory. 

	
9.4
	
In addition to the obligations of confidence and disclosure restrictions in Clause 10, the Parties acknowledge and agree the Licensed Know-how is highly confidential and Paion shall only disclose the Licensed Know-how to any Third Party insofar as such disclosure is strictly required in accordance with this Agreement, provided that prior to such disclosure such Third Party has executed and is bound by obligations of confidence in respect of the Licensed Know-how that are at least as stringent as those set out in this Agreement and which restrict onward disclosure of such information. Licensors agree that they will not disclose any Licensed Know-how during the Term to any Third Party that is not bound by confidentiality obligations with respect to such Licensed Know-how.    

	
9.5
	
In the event that:

	
 
	
9.5.1
	
any Licensed Right is attacked or, any application in the Licensed Rights, is opposed; or

	
 
	
9.5.2
	
any application for a patent is made by or any patent is granted to a Third Party by reason of which the Third Party may be granted, or may have been granted, rights in the Territory which conflict with any of the rights granted to Paion under any of the Licensed Patents; or

	
 
	
9.5.3
	
any unlicensed activities are carried on by any Third Party in the Territory which would reasonably be expected to constitute an infringement of any Licensed Right; or

	
 
	
9.5.4
	
there has or may have been any unauthorised disclosure and/or use of the Licensed Know-how in the Territory; or

	
 
	
9.5.5
	
any application is made for a compulsory licence under a Licensed Patent, 

the Party becoming aware of such a matter shall promptly notify the other of it. Following any such notice, the Parties shall discuss the most appropriate course of action to defend and/or enforce the Licensed Rights. However, La Jolla shall have the sole right to take action to enforce and/or defend the Licensed Rights as they may in their sole discretion decide and Paion shall provide all assistance reasonably required by Licensors. The expenses incurred in taking such steps and any profits or damages or other recoveries which may be obtained shall be (in the absence of any agreement to the contrary) for the account of Licensors.

	
10
	
Confidential Information

	
10.1
	
Each Party (the "Receiving Party") undertakes:

	
 
	
10.1.1
	
to maintain as secret and confidential all Confidential Information obtained directly or indirectly from the other Party (the "Disclosing Party") and to respect the Disclosing Party's rights therein; 

	
 
	
10.1.2
	
to treat the Disclosing Party's Confidential Information as the confidential and exclusive property of the Disclosing Party; 

	
 
	
10.1.3
	
not to use such Confidential Information for any purpose other than as expressly contemplated in this Agreement or with the Disclosing Party's prior written agreement 

	
 
	
10.1.4
	
not to disclose such Confidential Information to any person other than those of its personnel to whom and to the extent that such disclosure is reasonably necessary for the purposes of this Agreement and subject to  Clause 10.3; and

	
 
	
10.1.5
	
take all reasonable steps necessary to prevent the unauthorised disclosure or use of any of the Disclosing Party's Confidential Information.

	
10.2
	
The provisions of Clause 10.1 shall not apply to Confidential Information which the Receiving Party can demonstrate by reasonable, contemporaneous written evidence:

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10.2.1
	
was, prior to its receipt by the Receiving Party from the Disclosing Party, in the possession of the Receiving Party and at its free disposal; or

	
 
	
10.2.2
	
is subsequently disclosed to the Receiving Party without any obligations of confidence by a Third Party who has not derived it directly or indirectly from the Disclosing Party; or

	
 
	
10.2.3
	
is or becomes generally available to the public through no act or default of the Receiving Party or its Affiliates or any of their personnel; or

	
 
	
10.2.4
	
is independently developed by the Receiving Party by individuals who have not had any knowledge of or direct or indirect access to the Disclosing Party's Confidential Information; or

	
 
	
10.2.5
	
is required to be disclosed to the courts of any competent jurisdiction, or to any Regulatory Authority or financial authority (including any stock exchange with which a Party’s securities are listed), provided that the Receiving Party shall (i) inform the Disclosing Party as soon as is reasonably practicable of any such required disclosure, and (ii) at the Disclosing Party's request seek a protective order or other appropriate remedy (including redaction) or otherwise seek to persuade the court, agency, or authority to have the information treated in a confidential manner, where this is possible under the court, agency, or authority's procedures.

	
10.3
	
The Receiving Party shall procure that all its personnel, who have access to any of the Disclosing Party's Confidential Information, shall be made aware of the confidential nature of the Confidential Information and shall be aware of and subject to these obligations with respect to the Disclosing Party's Confidential Information and, if such personnel otherwise are not legally bound to confidentiality obligations, shall require such personnel to enter into written undertakings of confidentiality at least as restrictive as  Clauses 10.1 and 10.2 which apply to the Disclosing Party's Confidential Information. 

	
10.4
	
Notwithstanding the provisions of this  Clause 10, either Party may disclose Confidential Information to its Affiliates and sub-licensees (or in the case of Licensors to its licensees outside the Territory) and their agents, representatives, employees and consultants (collectively "Third-Party Recipients"):

	
 
	
10.4.1
	
to the extent necessary to facilitate the performance of its obligations under this Agreement; and 

	
 
	
10.4.2
	
as may be required to exercise the rights granted to it under this Agreement or, in the case of Confidential Information of Paion disclosed to Licensors, as may be required for Licensors to exercise the rights outside the Territory,

provided that the Party disclosing Confidential Information to a Third-Party Recipient shall:

	
 
	
10.4.3
	
ensure that any such disclosure is limited to what is necessary to effect the performance of its obligations and/or the exercise of its rights under this Agreement; and

	
 
	
10.4.4
	
procure that all Third-Party Recipients shall be made aware of the confidential nature of the Confidential Information and shall be aware of and subject to these obligations, and shall have entered into written undertakings of confidentiality at least as restrictive as  Clauses 10.1 and 10.2 which apply to the Disclosing Party's Confidential Information.

	
10.5
	
If either Party is reasonably required to make any announcements concerning the transaction contemplated by this Agreement or any ancillary matter:

	
 
	
10.5.1
	
by law or by the rules of any securities exchange or regulatory or governmental body to which either Party is subject; or

	
 
	
10.5.2
	
in connection with information supplied to its shareholders from time to time,

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the announcement shall be made only after consultation with and the prior agreement of the other Party as to the terms and timetable for publication of the announcement, such consultation.

	
10.6
	
Upon any termination of this Agreement, the Receiving Party shall:

	
 
	
10.6.1
	
without undue delay (and in any event within fourteen (14) days) return to the Disclosing Party any documents or other materials that contain the Disclosing Party's Confidential Information, including all copies made, except for one (1) copy as may be necessary to be retained for the purpose of regulatory compliance in the files of its general counsel and not accessed for any purpose other than regulatory compliance; and

	
 
	
10.6.2
	
subject to Clause 10.2, make no further use or disclosure of the Disclosing Party's Confidential Information. 

	
10.7
	
The obligations of the Parties under this Clause 10 shall survive the termination of this agreement for whatever reason for a period of five (5) years; provided that, the confidentiality obligations of Paion with respect to Licensed Know-how that constitutes a trade secret under applicable law shall continue following such termination for so long as the Licensed Know-how continues to be protected as a trade secret under applicable law. 

	
10.8
	
Neither Party shall disclose the existence of this Agreement or any of its terms to any Third Party without the other Party's prior written agreement, such agreement not to be unreasonably withheld, except as may be required to comply with the regulations of any stock exchange or listing authority on which the Disclosing Party's shares are listed or applicable law or the rules of regulatory or governmental body to which either Party is subject. The Parties will consult with each other in advance regarding any press releases about this Agreement and its contents for the purpose of complying with the regulations of any stock exchange or listing authority on which the Disclosing Party's shares are listed or applicable law or the rules of regulatory or governmental body to which either Party is subject. Either Party may disclose the existence of this Agreement to suppliers and other vendors, bona fide potential acquirers, corporate partners, or investors, in each case, that are bound by written undertakings of confidentiality with respect thereto. 

	
11.
	
PHARMACOVIGILANCE

	
11.1
	
Within [***] days of the Commencement Date, but in any case prior to launch of any of the Licensed Products in the Territory, the Parties will enter into a Pharmacovigilance Agreement, to be prepared by Paion and agreed with the Parties. For clarity, if there is any inconsistency between the provisions of this Agreement and the provisions of the Pharmacovigilance Agreement, the provisions of the Pharmacovigilance Agreement shall prevail regarding pharmacovigilance matters. The Pharmacovigilance Agreement shall set forth the obligations of each Party with respect to informing the other Party or Parties of Adverse Events and sharing correspondence with Regulatory Authorities relating to the safety of Licensed Products. 

	
12.
	
Warranties

	
 
	
12.1
	
Each Party warrants that:

	
 
	
12.1.1
	
it is a corporation or limited liability company duly recognized and in good standing under the laws of the country of its incorporation or organization; 

	
 
	
12.1.2
	
it has the full right, power, and authority to enter into this Agreement and to grant the rights and licences granted by it under this Agreement;

	
 
	
12.1.3
	
it has taken all necessary action on its part to authorise the execution and delivery of this Agreement and the performance of its obligations under this Agreement; and

	
 
	
12.1.4
	
execution, delivery of and the performance by the Party of its obligations under this Agreement shall not:

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(a)
	
result in a breach of any provisions of the charter, memorandum or articles of association of the Party; or

	
 
	
(b)
	
result in a breach of, or constitute a default under, any instrument by which the Party is bound including any agreement or arrangement between itself, an Affiliate and any Third Party; or

	
 
	
(c)
	
result in a breach of any order, judgment or decree of any court or governmental agency by which the Party is bound; or result in breach by that Party (or any of its employees or agents) of any regulatory requirements. 

	
12.2
	
La Jolla and the Licensors represent and warrant as of the Commencement Date that:

	
 
	
12.2.1
	
except for the Licensed Patents licensed to Licensors under the GWU Licence and the Harvard Licence and Licensed Know-how or Programme Data controlled by Licensors that is licensed from a Third Party, Licensors are the exclusive owner or applicant of the Licensed Rights, having good, unencumbered title to the Licensed Rights, free from options, liens, security interests, or any other encumbrances of any Third Party;

	
 
	
12.2.2
	
Schedule 2 accurately identifies which Licensed Patents are owned by Licensors and which Licensed Patents are licensed to Licensors under the GWU Licence or the Harvard Licence; 

	
 
	
12.2.3
	
granting of the Licensed Rights under this Agreement does not conflict with any other agreement with any Third Party (including the Revenue Interest Agreement, the GWU Licence and the Harvard Licence);

	
 
	
12.2.4
	
Licensors have not granted and will not grant any licenses or rights with the whole or any part of the Licensed Rights that conflict with the Licensed Rights granted hereunder; 

	
 
	
12.2.5
	
Licensors have not received within the twenty four (24) months immediately preceding the Commencement Date written notice alleging that the practice of the Licensed Patents infringes any proprietary rights of any Third Party;

	
 
	
12.2.6
	
to the knowledge of La Jolla and the Licensors, but subject to the disclosures made by La Jolla’s patent counsel, Foley Hoag, LLP, to Paion Parent’s patent counsel, Konig Szynka Tillman Von Renesse, on January 11, 2021, the use of the Licensed Rights by Paion and Licensed Subsidiaries in accordance with the license granted under this Agreement will not infringe the proprietary rights of any Third Party;

	
 
	
12.2.7
	
to the knowledge of La Jolla and the Licensors,, but subject to the disclosures made by La Jolla’s patent counsel, Foley Hoag, LLP, to Paion Parent’s patent counsel, Konig Szynka Tillman Von Renesse on January 11, 2021, the manufacture, import, selling, marketing, distributing, supplying, offering for sale or supply, keeping and using the Licensed Products in the Territory will not infringe the proprietary rights of any Third Party;

	
 
	
12.2.8
	
the Licensed Patents are all the patents owned or controlled by Licensors in relation to the Licensed Products, and the Licensed Know-How is all the Know-How in the possession and control of Licensors in relation to the Licensed Products, that in each case are necessary or useful for Paion and Licensed Subsidiaries to manufacture, import sell, market, distribute, supply, offer for sale or supply, keep and use the Licensed Products in the Territory;

	
 
	
12.2.9
	
La Jolla and the Licensors have not received within the twenty four (24) months immediately preceding the Commencement Date any claim made against any of them in writing asserting the invalidity of any of the Licensed Patents, and no claim or demand has been asserted in writing to Licensors that challenge the rights of Licensors to license any of the Licensed Rights; 

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12.2.10
	
La Jolla and Licensors have not granted any Third Party (including any Affiliate or investor in Licensors) any ownership interest or title to, or any encumbrances over, the Licensed Rights;

	
 
	
12.2.11
	
all applications, filings, registrations, renewals and fees payable in respect of the Licensed Patents and Licensed Trade Marks have been made or paid when due;

	
 
	
12.2.12
	
the Programme Data provided to Paion by La Jolla and Licensors will be accurate in all material respects to the knowledge of Licensors as of the date of its delivery to Paion by Licensors except as otherwise disclosed to Paion by Licensors and has been compiled in compliance with all applicable laws including respective EU regulatory standards, guidelines and requirements and to the knowledge of La Jolla and the Licensors, can be used for applying for, granting and obtaining of the Marketing Authorisations in the UK and Switzerland;

	
 
	
12.2.13
	
as of the Commencement Date, there are no suits, actions, claims, proceedings, or investigations pending or, to the knowledge of Licensors, threatened by or before any court, by any person relating to Licensors' ability to perform their obligations as set out in this Agreement.

	
12.3
	
No other warranty

Each of Paion and La Jolla acknowledge that, in entering into this Agreement, they do not do so in reliance on any representation, warranty, or other provision except as expressly provided in this Agreement, and any conditions, warranties, or other terms implied by statute or common law are excluded from this Agreement to the fullest extent permitted by law. Without limiting the generality of the foregoing, Licensors make no warranty (express or implied) with respect to the validity or scope of the Licensed Rights or that the exploitation of the Licensed Products in the Territory will be successful.

	
13.
	
Indemnity, limitation of liability, and insurance

	
13.1
	
The Paion Parties shall indemnify, defend and hold Licensors and their Affiliates and each of their respective officers, directors, employees and agents and subject to Clause 13.2, Harvard University and its current or former directors, governing board members, trustees, officers, faculty, medical and professional staff, employees, students, and agents and their respective successors, heirs and assigns (collectively, the "Harvard Indemnitees") harmless from and against all losses, liabilities, damages, costs and expenses (including reasonable attorney’s fees and costs of investigation and litigation, regardless of outcome) resulting from Third Party claims arising out of:

	
 
	
13.1.1
	
Paion's breach of any representation or warranty made by it under this Agreement; 

	
 
	
13.1.2
	
any reckless act or omission, wilful misconduct or breach of any obligation on the part of Paion, its Affiliates and/or its agents under this Agreement; and

	
 
	
13.1.3
	
the sale or other exploitation of any Licensed Product by or on behalf of Paion  or any of its Affiliates or sub-licensees, including the infringement of any Third Party Intellectual Property Right in the course of such sale or exploitation (including any cause of action relating to product liability concerning any product, process, or service made, used or sold pursuant to any right or license granted under this Agreement), but excluding any claims that are subject to indemnification by La Jolla under Clause 13.2.

	
13.2
	
Notwithstanding the foregoing, (i) the obligation of the Paion Parties to indemnify, defend and hold Harvard Indemnitees harmless pursuant to Clause 13.1 shall be limited to Third Party claims arising out of the sale of XERAVA by or on behalf of Paion or any Licensed Subsidiaries or sub-licensees and (ii) La Jolla and the Parties will coordinate the Paion Parties’ indemnification obligations under this Clause 13.1 with the indemnification obligations of Tetraphase Pharmaceuticals, Inc. under the Harvard License to ensure that the Harvard Indemnitees do not receive double recoveries in respect of any claims for which they are entitled to indemnification from the Paion Parties under this Clause 13.1 and from Tetraphase Pharmaceuticals, Inc. under the Harvard License. For the 

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avoidance of doubt, the Paion Parties shall not be liable for any amounts with respect to any Third Party claims pursuant to Clause 13.1 made by Harvard Indemnitees than would otherwise be payable to Licensors and their Affiliates and each of their respective officers, directors, employees and agents if such claim had been made by Licensors.

	
13.3
	
La Jolla shall indemnify, defend and hold Paion and its Affiliates and each of their respective officers, directors, employees and agents harmless from and against all losses, liabilities, damages, costs and expenses (including reasonable attorney’s fees and costs of investigation and litigation, regardless of outcome) resulting from Third Party claims arising out of:

	
 
	
13.3.1
	
La Jolla’s breach of any representation or warranty made by it under this Agreement;

	
 
	
13.3.2
	
any reckless act or omission, wilful misconduct or breach of any obligation on the part of Licensors, their Affiliates and/or their agents under this Agreement.

	
13.4
	
Without prejudice to Paion's and its Affiliates' rights in respect of Clause 12.2 and Clause 13.2.1, the Parties agree as follows with respect to the assertion of infringement claims with respect to the use, manufacture, sale or other exploitation of Licensed Products in the Territory:

	
 
	
13.4.1
	
If a Party becomes aware of a claim that the exercise of Licensed Rights in the Territory infringes any intellectual property rights of a Third Party, such Party shall promptly notify the other of it. Following any such notice, the Parties shall discuss the most appropriate course of action to respond to the claim;

	
 
	
13.4.2
	
La Jolla shall have the first right and responsibility to control the defense of such claim in consultation with Paion and Paion shall provide all assistance reasonably required by La Jolla in connection with such defense.  La Jolla will keep Paion regularly informed of the status and progress of the defense of any such claim and shall consult with Paion with respect to litigation strategy and all important court filings in any litigation arising from any such claim and give good faith consideration to all input and feedback provided by Paion with respect to the conduct of the defense of any such claim. The reasonable expenses incurred in taking such steps and any reasonable damages or settlement payments owing in respect of such claim shall be shared by the Parties on a 50/50 basis and each Party agrees to promptly pay the other Party any reasonable expenses, damages or settlement amounts reasonable paid or incurred by the other Party to the extent necessary to effectuate the 50/50 sharing of responsibility of such reasonable expenses, damages or settlement payments, subject to receipt of reasonable substantiation therefor. Any settlement of any such claim shall require the written agreement of each Party, which shall not be unreasonably withheld or delayed;

	
 
	
13.4.3
	
Paion and/or Licensed Subsidiaries shall have the right but not the obligation to join in the defence of such claim at their sole expense and in consultation with La Jolla. 

	
13.5
	
Notwithstanding the foregoing, a Party obligated to indemnify another Party shall not be liable for any claims if and to the extent any such claims are caused by a breach of this Agreement by the other Party and/or the negligence, recklessness or misconduct of the other Party. 

	
13.6
	
Nothing in this Agreement excludes any Party's liability to the extent that it may not be so excluded under applicable law, including any such liability for death or personal injury caused by that person's negligence, or liability for fraud.

	
13.7
	
The Parties shall have the following obligations: 

	
 
	
13.7.1
	
The indemnified Party shall:

	
 
	
(a)
	
give prompt notice to the indemnifying Party of any claim for which it seeks indemnification under this Agreement;

	
 
	
(b)
	
permit the indemnifying Party: 

18

 

 

 

	
 
	
(i)
	
to control any litigation relating to the claim and its disposition (provided that the indemnifying Party fulfils its obligations in  Clause 13.7.2); and 

	
 
	
(ii)
	
to settle any such claim at its discretion, provided that such settlement does not adversely affect the indemnified Party's rights under this Agreement or impose any obligations on the Indemnified Party other than those set out in this Agreement; and

	
 
	
(c)
	
at the indemnifying Party's reasonable expense, co-operate with the indemnifying Party in its defence of the claim, including without limitation providing promptly to the indemnifying Party all documents relevant to the claim; and

	
 
	
(d)
	
agree that the Party controlling the proceedings shall have sole entitlement to any payments, settlement monies, damages, costs or other expenses arising out of the claim.

	
 
	
13.7.2
	
The indemnifying Party shall:

	
 
	
(a)
	
notify the Indemnified Party promptly in writing, and in no event more than thirty (30) days after receiving notice of the claim, that it intends to indemnify the Indemnified Party (in the absence of any facts that would give the indemnifying Party the right to claim an indemnity from the Indemnified Party);

	
 
	
(b)
	
diligently pursue the defence of the claim and act reasonably and in good faith in relation to all matters relating to the settlement or disposition of the claim; and 

	
 
	
(c)
	
where the settlement of the claim would adversely affect the Indemnified Party's rights under this Agreement or impose any obligations on the Indemnified Party other than those set out in this Agreement, not settle or otherwise resolve the claim without giving prior notice to the Indemnified Party and obtaining its consent in writing, such consent not to be unreasonably withheld or delayed. 

	
 
	
13.7.3
	
The indemnifying Party shall not be liable for any settlement or other disposition of a claim by the Indemnified Party which is reached without the written consent of the indemnifying Party. 

	
13.8
	
The Parties acknowledge that Harvard Indemnitees are intended third party beneficiaries of this Agreement for the purpose of enforcing the provisions of Clauses 13.1.3 and 13.9.1.

	
13.9
	
Liability of Parties

	
 
	
13.9.1
	
To the extent that any Party has any liability in contract, tort, or otherwise under or in connection with this Agreement, including any liability for breach of warranty, its liability shall be limited in accordance with the following provisions of this Clause 13.8. Notwithstanding the foregoing, nothing in this Clause 13.8 limits or restricts the indemnification obligations of any Party under Clauses 13.1 and 13.3 or a Party’s liability for breaches of the confidentiality obligations of Clause 8 or for wilful misconduct. 

	
 
	
13.9.2
	
The aggregate liability of each of La Jolla and Paion (other than, in the case of Paion, its liability for the Licensing Fee, the Milestone Fees and the Royalties), howsoever arising, shall be limited to USD [***].

	
 
	
13.9.3
	
In no circumstances shall any Party be liable under this Agreement for any loss, damage, costs or expenses of any nature whatsoever incurred or suffered by another Party or its Affiliates that is (a) of an indirect, special or consequential nature or (b) any loss of use, business opportunity or goodwill, business interruption or direct or indirect loss of income or profit from third parties. 

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13.9.4
	
Nothing in this Agreement excludes any person's liability to the extent that it may not be so excluded under applicable law, including any such liability for death or personal injury caused by that person's negligence, or liability for fraud.

	
13.10
	
Insurance

	
 
	
13.10.1
	
Each Party shall for the Term, maintain in full force and effect with financially sound and reputable insurers adequate third-party-liability insurance, including, in the case of Paion, maintaining appropriate insurance during the Term and for a period of [***] years thereafter, at its own expense, as reasonably necessary to cover its own product liability and its obligations under this Agreement. Without limiting the generality of the foregoing, Paion, at its sole cost and expense, shall procure and maintain commercial general liability insurance in amounts not less than $[***] annual aggregate, naming the [***] as additional insureds, [***];  provided that, if, notwithstanding Paion’s good faith efforts to procure [***] as additional named insureds under such commercial general liability insurance policies, Paion is unable to do so on terms that are commercially reasonable, then (i) La Jolla, in consultation with Paion, will use good faith efforts to [***] and (ii) the Paion Parties and Licensed Subsidiaries shall not be liable with respect to their inability to [***]. During any clinical trials of any Licensed Product, Paion shall, at its sole cost and expense, procure and maintain commercial general liability insurance. Such commercial general liability insurance shall provide: (a) product liability coverage and (b) broad form contractual liability coverage for Paion's indemnification under this Agreement.

	
 
	
13.10.2
	
Each Party shall provide to the other Party, upon request a certificate indicating that the insurance required by this Clause 13.9 is in force, such certificate to indicate any excess, the policy's commencement date, its expiry date, and the limits of liability.

	
14.
	
Duration and termination

	
 
	
14.1
	
This Agreement shall come into force on the Commencement Date and shall continue until terminated in accordance with this Clause 14 or by law ("Term").

	
 
	
14.2
	
Either Party may terminate this Agreement at any time by notice in writing to the other Party (the "Other Party") upon  the occurrence of any of the following events:

	
 
	
14.2.1
	
if the Other Party is in material breach of this Agreement (and, in the case of a breach capable of remedy, the breach is not remedied within 30 (thirty) days of the Other Party's receiving notice specifying the breach and requiring its remedy); or

	
 
	
14.2.2
	
if (A) the Other Party becomes insolvent or unable to pay its debts as and when they become due, or (B) an order is made or a resolution is passed for the winding up of the Other Party (other than voluntarily for the purpose of solvent amalgamation or reconstruction), or (C) a liquidator, administrator, administrative receiver, receiver, or trustee is appointed in respect of the whole or any part of the Other Party's assets or business, or (D) the Other Party makes any composition with its creditors, or (E) the other Party ceases, or threatens to cease to, continue its business, or (F) as a result of debt and/or maladministration the other Party takes or suffers any similar or analogous action in any jurisdiction.

	
14.3
	
Subject to compliance with applicable laws and listing rules, Paion shall notify La Jolla on the occurrence of any of the following events:

	
 
	
14.3.1
	
Paion or any Licensed Subsidiary fails to make any payment, when due, of principal or interest on any indebtedness for borrowed money, evidenced by bonds, debentures, notes or similar instruments or secured by any lien on any property or asset owned by Paion or such Licensed Subsidiary, in each case, that individually or in the aggregate equals or exceeds [***] and where such failure continues unremedied for a period of at least thirty (30)  days) after the date when due; or

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14.3.2
	
Paion or any Licensed Subsidiary shall breach or default with respect to any other term of one or more items of indebtedness in the principal amount referred to in Clause 14.3.1 above or (b) any loan agreement, mortgage, indenture or other agreement in the amount referred to in Clause 14.3.1 above relating to such item(s) of indebtedness, if the effect of such breach or default is to cause, or to permit the holder or holders of that indebtedness (or a trustee on behalf of such holder or holders) to cause, that indebtedness to become or be declared due and payable prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be (upon the giving or receiving of notice, lapse of time, both, or otherwise).  

	
14.4
	
Without prejudice to any other right or remedy that it may have, Paion may terminate this Agreement immediately in respect of any country in the Paion Markets as to which the following is applicable, by giving notice to Licensors in writing in the event that:

	
 
	
14.4.1
	
within sixty (60) days after the Parties commencing negotiations for a reduction in the Royalties payable in a country in the Territory after commencement of sales of Generic Products in such country pursuant to Clause 8.7, if (i) the Parties have been unable to agree a reduction in the Royalties payable in such country in the Territory or (ii) [***], provided any such termination right shall apply solely with respect to the relevant Licensed Product in the relevant country in the Territory in which sales of the Generic Products have commenced; 

	
 
	
14.4.2
	
upon the receipt of a material adverse regulatory determination by a Regulatory Authority in such country regarding either Licensed Product (such as a suspension of Regulatory Approval); or

	
 
	
14.4.3
	
any legal (including but not limited to preliminary injunction or proceedings on the merits) or administrative action, claim and/or demand brought by any Third Party or Regulatory Authority against Paion or Licensors, which prevents the manufacture, import, sale, supply, use and/or commercialisation of either Licensed Product in such country  by Paion, Licensed Subsidiaries or sub-licensees. 

	
14.5
	
Termination of this Agreement may occur on a Licensed Product by Licensed Product basis or in respect of one or more countries in the Territory, as relevant under the circumstances and elected by the Party having the right to terminate, and this Agreement shall retain its full effect and be validly performed by the Parties for the other Licensed Products in the countries in the Territory not subject to termination in the event of a partial termination. 

	
15.
	
Consequences of termination

	
15.1
	
In the event of termination of this Agreement, all licenses granted to Paion under Clause 1 will terminate, and all sub-licenses granted by Paion or its Licensed Subsidiaries or sub-licensees with respect to the Licensed Products will also terminate, unless the applicable sub-licensee is not then in breach of its sub-license agreement or the terms of this Agreement applicable to such sub-licensee and elects in writing prior to such termination to be granted a direct license from Licensors.  Upon any termination of this Agreement other than a termination by Paion by reason of a breach by La Jolla, Paion will assign to La Jolla, to the extent permissible under applicable Law, any Marketing Authorization then held by Paion or any Affiliate.

	
15.2
	
Termination or expiry of this Agreement for any cause shall not bring to an end any provisions of this Agreement which in order for full effect to be given to them need to survive termination of this Agreement (including for the avoidance of doubt the provisions of Clauses 8.13, 10, 13, 17), which shall continue in full force and effect in accordance with their terms. Subject to Clause 15.3, Paion, Licensed Subsidiaries and sub-licensees shall have the right to continue selling in the Territory for a period of six (6) months after termination of this Agreement any and all inventory of each Licensed Product existing at the time of termination of this Agreement or ordered before the time of termination of this Agreement by Paion, Licensed Subsidiaries and sub-licensees (being "Remaining Licensed Product"). Termination of this Agreement shall not affect any payment obligations that have accrued at the time of termination. 

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15.3
	
If La Jolla terminate this Agreement pursuant to Clause 14.2, Paion, Licensed Subsidiaries and sub-licensees shall immediately cease all sales of Licensed Products in the Territory and La Jolla shall purchase all Remaining Licensed Product in the case of Licensed Product purchased from a Third Party manufacturer, at the price paid by Paion, Licensed Subsidiaries and sub-licensees for such Remaining Licensed Product and, in the case of Licensed Product manufactured by an Affiliate of Paion or a sub-licensee, at a price equal to the manufacturing cost of such Licensed Product.   

	
15.4
	
Save as expressly stated in this Agreement, termination of this Agreement for any reason shall be without prejudice to any other right or remedy of either Party accruing prior to such termination.

	
16.
	
ASSIGNMENT AND CHANGE OF CONTROL

	
16.1
	
Subject to Clause 16.2, Paion shall not assign, mortgage, charge, or otherwise transfer any rights or obligations under this Agreement without the prior written consent of Licensors. 

	
16.2
	
Paion, subject to prior written notice to Licensors and without relieving Paion of any its obligations hereunder, may assign and transfer all its rights and obligations under this Agreement to any of its Affiliates (as nominated by Paion from time to time).

	
16.3
	
In case of Change of Control of a Party, such Party undertakes to immediately inform the other Party in writing. In the event of a Change of Control of Paion, where at completion of such Change of Control, the person acquiring Control of Paion or an Affiliate thereof owns or markets a Competing Product, La Jolla shall, for a period not more than three (3) months from the date of completion of such Change of Control, have the right to terminate this Agreement only with respect to the Licensed Product to which the Competing Product relates upon written notice to Paion.

	
17.
	
General

	
 
	
17.1
	
This Agreement shall bind and be performed for the benefit of the Parties, and their respective permitted successors and assigns.

	
 
	
17.2
	
Neither Party shall have any liability or be deemed to be in breach of this Agreement for any delays or failures in performance of this Agreement, other than an obligation for the payment of money, that result from circumstances beyond the reasonable control of that Party, including without limitation war, actions taken in anticipation of war, civil commotion, destruction of production facilities or materials by causes not attributable to a Party (such as fires, earthquakes or storms), labour disturbances, epidemics, pandemics and actions taken to prevent and respond to epidemics and pandemics, failure of public utilities or common carriers and strikes. The Party affected by such circumstances shall:

	
 
	
17.2.1
	
promptly notify the other Party in writing when such circumstances cause a delay or failure in performance and when they cease to do so; and

	
 
	
17.2.2
	
use its reasonable endeavours to avoid or remove the causes of non-performance and shall continue performance as expeditiously as possible as soon as such causes have been removed.

	
17.3
	
This Agreement may only be amended in writing signed by duly authorised representatives of La Jolla and Paion.

	
17.4
	
No failure or delay on the part of either Party to exercise any right or remedy under this Agreement shall be construed or operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude the further exercise of such right or remedy.

	
17.5
	
If any provision or part of this Agreement is held to be invalid, amendments to this Agreement may be made by the addition or deletion of wording as appropriate to remove the invalid part or provision but otherwise retain the provision and the other provisions of this Agreement to the maximum extent permissible under applicable law.

	
17.6
	
Nothing in this Agreement shall create, evidence, or imply any agency, partnership, or joint venture 

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between the Parties. Neither Party shall act or describe itself as the agent of the other, nor shall it make or represent that it has authority to make any commitments on the other's behalf.

	
17.7
	
All notices related to this Agreement shall be in writing and in English and be sent to the relevant Party at the address as stated on the first page of this Agreement (or any such other trade address notified to the Parties from time to time). To be valid, amendments and modifications to this Agreement have to be signed by both parties. Such notices shall be deemed received as follows:

	
 
	
17.7.1
	
if sent by post, on the seventh (7th) day after the date of posting; or

	
 
	
17.7.2
	
if sent electronically, upon receipt by the sender of a transmission report (or other appropriate evidence) confirming that the electronic submission has been transmitted to the addressee, unless such delivery occurs on a day which is not a business day in the country of receipt or after 4 p.m. on a business day, in which case it will be deemed to have been given or made at 9 a.m. on the next business day.

	
17.8
	
Before any dispute, difference or disagreement concerning this Agreement proceeds to arbitration or to litigation, the Parties shall seek to resolve the matter within thirty (30) days by referring it to each Party's Chief Executive or another senior member of each Party. The Parties' respective Chief Executives (or their nominees) shall meet to try to resolve the dispute. 

	
17.9
	
Any matter or dispute arising out of or in connection with this Agreement which is not able to be resolved pursuant to Clause 17.8 shall be finally settled by commercial arbitration by a single arbitrator to be held in England in accordance with the rules and procedures of the London Court of International Arbitration. The Parties shall ensure that the arbitrator appointed is capable of making decisions on the technical aspects of the dispute as well as experienced in the interpretation and enforcement of contracts made under English law. The arbitrator shall have the power to award costs as he or she sees fit.

	
17.10
	
The validity, construction and performance of this Agreement shall be governed by English law and shall be subject to the exclusive jurisdiction of the English courts to which the parties hereby submit, except that a Party may seek an interim injunction in any court of competent jurisdiction.

	
17.11
	
Each Party agrees to execute, acknowledge, and deliver such further instruments, and do all further similar acts, as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

	
17.12
	
This Agreement sets out the entire agreement between the Parties relating to its subject matter, and supersedes all prior oral or written agreements, arrangements, or understandings between them relating to such subject matter. Subject to Clause 13.8.4, the Parties acknowledge that they are not relying on any representation, agreement, term, or condition which is not set out in this Agreement.

	
17.13
	
Except for the rights of the Indemnitees as provided in Clause 13.1 and subject to Clause 13.2, who may in their own right enforce the provisions of that Clause, this Agreement does not create any right enforceable by any person who is not a party to it. The Parties may amend, renew, terminate, or otherwise vary all or any of the provisions of this Agreement, including Clause 13.1 without the consent of the Indemnitees. 

	
17.14
	
La Jolla shall ensure that all Licensors fulfil their obligations under this Agreement and, subject to Clause 13.8, La Jolla shall be liable for all damages suffered by Paion and Licensed Subsidiaries arising from any breaches of this Agreement by any Licensor as if such breaches arose from the acts or omissions of La Jolla. Paion shall ensure that all Licensed Subsidiaries comply with the applicable terms and conditions of this Agreement and, subject to Clause 13.8, shall be liable for all damages suffered by La Jolla arising from any breaches of this Agreement by any Licensed Subsidiary as if such breaches arose from the acts or omissions of Paion.    

	
17.15
	
This Agreement may be executed in any number of counterparts, and by each Party on separate counterparts. Each counterpart is an original, but all counterparts will together constitute one and the same instrument. Delivery of an executed counterpart signature page of this Agreement by e-mail (PDF) or fax will be as effective as delivery of a manually executed counterpart of this Agreement. In 

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relation to each counterpart, upon confirmation by or on behalf of the signatory that the signatory authorises the attachment of such counterpart signature page to the final text of this Agreement, such counterpart signature page will take effect together with such final text as a complete authoritative counterpart.

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DEFINITIONS

 

	
1.
	
Definitions

	
1.1
	
In this Agreement, the following words and phrases shall have the meaning set out below:

	
"Annual Aggregate Net Sales"
	
The aggregate amount of Net Sales in each Year.

	
"Annual Aggregate Net Receipts"
	
The aggregate amount of Net Receipts in each Year.

	
"Adverse Event"
	
Any untoward medical occurrence in a patient to whom the Licensed Product has been administered, which may or may not have a causal relationship with the Licensed Product.

	
"Affiliate"
	
In relation to a Party, means any business entity that controls, is controlled by or is under common control with that Party; for the purposes of this definition, 'control' shall refer to: (i) the possession, directly or indirectly, of the power to direct the management or policies of an entity by contract or otherwise, or (ii) the ownership, directly or indirectly, of more than 50% (or in any country other than the country in which the Party is incorporated, such lesser percentage as is the maximum permitted level of foreign investment) of the voting securities or capital stock or other ownership interest of an entity.

	
“cGMP”

 

 

 

 

 

 

 
	
The current Good Manufacturing Practices and standards as set forth (and as amended from time to time) in the practices and standards under the applicable laws in the Territory, and the country in which each Licensed Product is manufactured hereunder, where applicable subject to any arrangements, additions or clarifications, and the respective roles and responsibilities, agreed from time to time between the parties in writing.

	
“Change of Control”
	
With respect to a Party, (a) a merger, consolidation, recapitalization, or reorganization of such Party with a Third Party that results in the holders of beneficial ownership (other than by virtue of obtaining irrevocable proxies for purposes of management voting on matters as directed by beneficial owners) of the voting securities of such Party outstanding immediately prior thereto, or any securities into which such voting securities have been converted or exchanged, ceasing to hold beneficial ownership of more than 50% of the combined voting power of the surviving entity or the parent of the surviving entity immediately after such merger, consolidation, recapitalization, or reorganization, (b) a transaction or series of related transactions in which a Third Party, together with its Affiliates, becomes the direct or indirect beneficial owner of more than 50% of the combined voting power of the outstanding securities of such Party, or (c) the sale or other transfer to a Third Party of all or substantially all of such Party’s and its controlled Affiliates’ assets.  Notwithstanding the foregoing, any transaction or series of transactions effected for the purpose of financing the operations of the applicable Party or changing the form or jurisdiction of organization of such Party (such as an initial public offering or other offering of equity securities to non-strategic investors or corporate reorganization) will not be deemed a “Change of Control” for purposes of this Agreement.

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"Claims"
	
All demands, claims, and liability (whether criminal or civil, in contract, tort, or otherwise) for losses, damages, legal costs, and other expenses of any nature whatsoever and all costs and expenses (including legal costs) incurred in connection therewith.

	
"Commencement Date"
	
January 12, 2021.

	
"Commercially Reasonable Efforts"
	
Such effort and resources that would typically be exerted by a reasonable Third-Party pharmaceutical company similar in size, scope, and business profile to Paion to develop and commercialise in the Territory a pharmaceutical product of similar market potential and at a similar stage of its product life.

	
"Competing Product"
	
With respect to Giapreza, a vasopressor for distributive shock approved in the Territory and with respect to XERAVA, a broad-spectrum antibiotic product    approved in the Territory with similar antibacterial efficacy against similar bacterial strains (i.e., ESBLs, CRE, Acinetobacter, Atypicals).

	
"Confidential Information"
	
All confidential information disclosed by, or behalf of, a Party to the other Party in whatever form, whether marked as confidential or not, whether oral or in written, graphical, digital or other tangible form, including the provisions of this Agreement and information that would be regarded as confidential by a reasonable person relating to:

(a)    any confidential scientific and medical information and technical data invented or developed or acquired by Licensors relating to the Active Pharmaceutical Ingredient and Licensed Product, including physical, chemical, bioequivalence and analytical data, product forms and formulations, control assays and specifications, methods of preparation and stability data and specifically including all information contained in any regulatory dossier;

(b)    the business, affairs, customers, clients, suppliers, strategies, plans, intentions or market opportunities of a Party or its Affiliates;

(c)    the operations, processes, technologies, formulations, techniques, compositions of matter, test results, chemical, clinical and physical data, product information, know-how, designs, trade secrets, software or other Intellectual Property Rights of a Party or its Affiliates; and

(d)    any information or analysis derived from the Confidential Information.

	
"Control"
	
Direct or indirect beneficial ownership of fifty percent (50%) or more of the share capital, stock or other participating interest carrying the right to vote or to distribution of profits of that Party, as the case may be.

	
“Emergent Agreement” 
	
means the Master Manufacturing Agreement dated November 20, 2017 between La Jolla and Cangene Biopharma LLC d/b/a Emergent Biosolutions (“CBI”), as amended by the First Amendment entered as of February 21, 2018 between La Jolla and CBI.

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“GAAP”
	
The generally accepted accounting principles in the United States of America in effect from time to time.

	
“Generic Product” 
	
any pharmaceutical product sold by a Third Party (excluding Licensed Products sold by sub-licensees on behalf of Paion or its Licensed Subsidiaries in accordance with the terms of this Agreement or any settlement agreement pertaining to patent litigation arising in connection with this Agreement) that: (a) contains the same active ingredient as the applicable Licensed Product; (b) is approved by the Regulatory Authority in such country as a substitutable generic for such Licensed Product; or (c) is approved in reliance, in whole or in part, on a prior Regulatory Approval of such Licensed Product.

	
“Governmental Authority”
	
Any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government, including, without limitation, any self-regulatory organization.

 

	
"GWU Licence"
	
The Amended and Restated Patent License Agreement dated as of March 1, 2016 between George Washington University and La Jolla.

	
"Harvard Licence"
	
The License Agreement dated as of August 3, 2006 between Harvard University and Tetraphase Pharmaceuticals, Inc., as amended.

	
"Improvement"
	
Any improvement, enhancement or modification to the Licensed Know-how relating to the manufacture of Licensed Products.

 

	
"Intellectual Property Rights"
	
Any and all trademarks, service marks, logos, trade or business names, drawings, patents, utility models, registered designs, unregistered design rights, copyright, database rights, right to prevent passing off, rights in respect of Confidential Information, rights under data exclusivity laws, rights under orphan drug laws, rights under unfair competition laws, property rights in biological or chemical materials, extension of the terms of any such rights (including supplementary protection certificates), applications for and the right to apply for any of the foregoing registered property and rights, rights in Know-how, and similar or analogous rights anywhere in the world.

	
"Know-how"
	
All technical and other information relating to the Licensed Products which is not in the public domain, including information relating to Licensed Products comprising or related to concepts, discoveries, data, designs, formulae, ideas, inventions, methods, models, procedures, designs for experiments and tests and results of experimentation and testing, processes, specifications and techniques, laboratory reports, clinical data, manufacturing data, and information contained in submissions to Regulatory Authorities.

 

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“La Jolla Supplier Agreements”
	
Means, collectively, the Emergent Agreement, the Novasep Agreement, the Patheon Agreement and the PolyPeptide Agreement.

	
"Licensed Know-how"
	
Know-how in the possession or control of Licensors and their Affiliates which: 

(a)    relates to the Licensed Patents and/or the technology that is the subject of the Licensed Patents;

(b)    is required for the purpose of using the Licensed Patents and/or the technology that is the subject of the Licensed Patents; and/or

(c)    relates to the Licensed Products;

in each case, which is necessary or useful for Paion and its Licensed Subsidiaries to manufacture, import or sell Licensed Products.

	
"Licensed Patents"
	
The patents and patent applications listed in Schedule 2 to this Agreement and any and all patents resulting from any such applications, including all extensions, additions, divisions continuations, continuations-in-part, reissues, and re-examinations thereof.

	
"Licensed Products"
	
GiaprezaTM (Angiotensin II) and XERAVATM (Eravacycline).

	
"Licensed Rights"
	
The Licensed Patents, the Licensed Trademarks, the Licensed Know-how, the Programme Data and all Intellectual Property Rights of Licensors therein.

	
"Licensed Trade Marks"
	
The trade marks listed in Schedule 3.

	
"Licensing Fee"
	
USD 22,500,000. 

	
"Licensors"
	
Has the meaning given in the Recitals.

	
"Marketing Authorisation"
	
Such formal approval from the Regulatory Authority as is necessary for the marketing, sale, and use of the Licensed Products within the Territory.

 

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"Milestone Fees"
	
XERAVATM Milestone Fee

 
	
XERAVATM Milestone

 

	
 
	
USD 2,000,000

 
	
Upon Annual Aggregate Net Sales and Annual Aggregate Net Receipts for XERAVATM in the Territory exceeding [***]

 

	
 
	
USD 2,500,000

 
	
Upon grant of a Marketing Authorisation by the European Medicines Agency for a second indication of use for XERAVATM in the Territory

 

	
 
	
USD 5,000,000

 
	
Upon Annual Aggregate Net Sales and Annual Aggregate Net Receipts for XERAVATM in the Territory exceeding [***]

 

	
 
	
USD 15,000,000

 
	
Upon Annual Aggregate Net Sales and Annual Aggregate Net Receipts for XERAVATM in the Territory exceeding [***]

 

	
 
	
 
	
 

	
 
	
GiaprezaTM Milestone Fee

 
	
GiaprezaTM Milestone

 

	
 
	
USD 5,000,000

 
	
Upon Annual Aggregate Net Sales and Annual Aggregate Net Receipts for GiaprezaTM in the Territory exceeding [***]

 

	
 
	
USD 5,000,000

 
	
Upon Annual Aggregate Net Sales and Annual Aggregate Net Receipts for GiaprezaTM in the Territory exceeding [***]

 

	
 
	
USD 15,000,000

 
	
Upon Annual Aggregate Net Sales and Annual Aggregate Net Receipts for GiaprezaTM in the Territory exceeding [***]

 

	
 
	
USD 60,000,000

 
	
Upon Annual Aggregate Net Sales and Annual Aggregate Net Receipts for GiaprezaTM in the Territory exceeding [***]

 

 

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"Net Receipts"
	
The gross amount, including royalties received by Paion or any of its Licensed Subsidiaries from any sub-licensees (including distributors) with respect to sales or other dispositions to a Third Party of Licensed Product in the Sub-licensed Markets minus the following deductions;

(a)    the supply price paid by Paion and its Licensed Subsidiaries for the Licensed Products, whether in bulk, finished form or otherwise, and whether purchased from Licensors and/or Third Parties;

(b    excise taxes, sales taxes, duties, VAT and other similar taxes paid by Paion and/or Licensed Subsidiaries for the Licensed Products;

(d)    storage, freight, postage, shipping, transport, customs, duties, insurance and other transportation and logistics charges paid by Paion and/or Licensed Subsidiaries for the Licensed Products;

(e)    non-affiliated brokers or agent commissions, distribution services agreement fees and other similar amounts allowed or paid by Paion and/or Licensed Subsidiaries to Third Party distributors, including specialty distributors of the Licensed Product; and

(f)    any write-offs or allowances for bad debts taken by Paion or any of its Licensed Subsidiaries, including bad debts and unrecoverable amounts.

For clarity, Net Receipts shall not include any amounts received by Paion or any of its Licensed Subsidiaries as Net Sales.

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"Net Sales"
	
The gross amount billed, invoiced or otherwise recognized as revenue in accordance with GAAP with respect to sales or other dispositions to a Third Party of Licensed Product in the Paion Markets by Paion or any of its Licensed Subsidiaries (but not including sales to an Affiliate of Paion unless the Affiliate is the ultimate end user of the Licensed Products), minus the following deductions:

(a)    credits or allowances granted for damaged products, product expirations, returns, recalls or rejections of the Licensed Product, or for retroactive price reductions and billing errors or adjustments;

(b)    trade and quantity discounts, allowances and credits (including chargebacks);

(c)    excise taxes, sales taxes, duties, VAT and other similar taxes;

(d)    freight, postage, shipping, customs, duties and shipping insurance expense and other transportation charges directly related to the distribution of the Licensed Product;

(e)    non-affiliated brokers or agent commissions, distribution services agreement fees and other similar amounts allowed or paid to Third Party distributors, including specialty distributors of the Licensed Product;

(f)    rebates made with respect to sales paid for by any Governmental Authority, their agencies and purchasers and reimbursers, public or private hospitals, managed health care organizations, group purchase organizations or to trade customers;

(g)    the portion of administrative fees paid during the relevant time period to group purchasing organizations or pharmaceutical benefit managers or similar organizations relating to the Licensed Product;

(h)    any write-offs or allowances for bad debts taken by Paion or its Licensed Subsidiaries, including bad debts and unrecoverable amounts; and

(i)    any customary or similar payments to the foregoing (a) – (h) that apply to the sale or disposition of pharmaceutical products.

For clarity, Net Sales shall not include any amounts received by Paion or any of its Licensed Subsidiaries as Net Receipts.

	
“Novasep Agreement”
	
The Commercial Supply Agreement entered into on October 16, 2017 between Tetraphase Pharmaceuticals, Inc. and Finorga SAS.

 

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"Paion Markets"
	
The following countries in the Territory where Paion and its Licensed Subsidiaries will be selling the Licensed Products: Netherlands, Denmark, Germany, France, United Kingdom, Italy, Sweden, Norway, Finland, Austria, Belgium, Ireland, Spain, Portugal, Estonia and Lithuania and any other country in the Territory that is not included in the Sub-Licensed Markets.

	
“Patheon Agreement” 
	
The Master Manufacturing Services Agreement dated as of June 14, 2017 between Patheon UK Limited and Tetraphase Pharmaceuticals, Inc., as supplemented by the Product Agreement entered into November 30, 2018 between Patheon UK Limited and Tetraphase Pharmaceuticals, Inc.  

	
"Partnering Program"
	
The program activities to be undertaken by the Parties as described in Schedule 1.   

	
"Patent Fees"
	
Has the meaning given in Clause 9.1.

	
"Payment Cap"
	
Has the meaning given in Clause 8.6.

	
"Pharmacovigilance Agreement"
	
A separate agreement between the Parties setting out each Party's responsibilities in relation to pharmacovigilance of the Licensed Products.

	
“PolyPeptide Agreement”
	
means the Master Supply Agreement dated as of March 1, 2018 between La Jolla and  PolyPeptide Laboratories San Diego, Inc. (“PPL-SD”), as supplemented by Work Order, LJPCAG005, dated April 8, 2020 between La  Jolla and PPL-SD.

	
"Programme Data"
	
All data owned or controlled by La Jolla or Licensors and in their possession from any testing of the Licensed Product, including without limitation all such data relating to toxicological, stability, pharmacological and clinical studies in human beings, and any other test data related to the Licensed Product.

	
"Quarterly Periods"
	
The periods of three (3) months commencing on 1 January, 1 April, 1 July and 1 October, respectively.

	
"Regulatory Authority"
	
The body responsible for granting the Marketing Authorisations of the Licensed Product in each country of the Territory.

	
"Revenue Interest Agreement"
	
The Revenue Interest Agreement dated 10 May 2018 between Healthcare Royalty Management, LLC and La Jolla Pharma, LLC, as amended.

	
"Royalties"
	
The amounts payable in accordance with Clause 8.4.

	
"Serious Adverse Event"
	
Any untoward medical occurrence or effect that at any dose results in death, is life-threatening, requires hospitalization or prolongation of existing hospitalization, results in persistent or significant disability or incapacity, or is a congenital anomaly or birth defect. In addition, important medical events that may not result in death, be life-threatening, or require inpatient hospitalisation may be considered a Serious Adverse Event when, based upon appropriate medical judgement, they may jeopardize the patient and may require medical or surgical intervention to prevent one of the outcomes listed in this definition.

32

 

 

 

	
"Sub-licensed Markets"
	
The following countries in the Territory where Paion and its Licensed Subsidiaries will be sub-licensing their rights with respect to sales of the Licensed Products: Greece, Croatia, Slovakia, Slovenia, Bulgaria, Romania, Poland and Hungary.

	
"Supply Agreement"
	
The supply agreement to be negotiated and entered into in accordance with Clause 5.

	
"Territory"
	
The UK, Switzerland and the European Economic Area (EEA), which includes all member state countries of the European Union and Iceland, Liechtenstein and Norway, and as may be mutually extended or amended by written agreement of the Parties.

	
"Term"

"Third Party Supplier"
	
Has the meaning given in Clause 14.1.

Cangene Biopharma LLC d/b/a Emergent Biosolutions, Finorga, SAS, Patheon UK Limited and PolyPeptide Laboratories San Diego, Inc.  

	
"Third Party"
	
Any person other than the Parties and their respective Affiliates.

	
"Valid Claim"
	
Any Licenced Patent which has not expired, been revoked or held unenforceable or invalid by a final decision of a court or other governmental authority of competent jurisdiction and which has not been disclaimed (other than terminal disclaimers), dented or admitted to be invalid or unenforceable through reissue or disclaimer (other than terminal disclaimers), or otherwise and which, in the case of an patent application that has not proceeded to grant, has been pending for no more than [***] years from the date on which it was made.

	
"VAT"
	
Any value added tax imposed in any member state of the European Union pursuant to Council Directive (EC) 2006/112 on the common system of value added tax and national legislation implementing that Directive or any predecessor to it, or supplemental to that Directive, or any similar tax which may be substituted for or levied in addition to it or any value added, sales, turnover or similar tax imposed in any country that is not a member of the European Union.

	
"Year"
	
The period from 1 January to 31 December inclusive, for which the Annual Aggregate Net Sales and Annual Aggregate Net Receipts is calculated. 

 

	
1.2
	
In this Agreement, unless the context requires otherwise:

	
 
	
1.2.1
	
each of La Jolla and Paion are a "Party" and together La Jolla and Paion are the "Parties"';

	
 
	
1.2.2
	
references to Paragraphs and Schedules are to Paragraphs of and Schedules to this Agreement;

	
 
	
1.2.3
	
references to the singular shall include the plural and vice versa;

	
 
	
1.2.4
	
the Schedules will have the same force and effect as if expressly set out in the body of this Agreement;

	
 
	
1.2.5
	
headings are inserted for convenience only and shall not affect the construction or 

33

 

 

 

	
 
		
interpretation of this Agreement; 

	
 
	
1.2.6
	
the words “including” or “includes” mean “including (or includes) without limitation”;

	
 
	
1.2.7
	
in relation to any warranty given under this Agreement, the phrase 'to its knowledge' shall mean to the actual knowledge of the employees of the Party making the warranty as of the date of this Agreement and without any type of external investigation or search;

	
 
	
1.2.8
	
references in this Agreement to termination shall include termination by expiry; 

	
 
	
1.2.9
	
reference to any legislation or law or to any provision thereof shall include references to any such law as it may, after the date hereof, from time to time, be amended, supplemented or re-enacted, and any reference to statutory provision shall include any subordinate legislation made from time to time under that provision;

	
 
	
1.2.10
	
when any number of days is prescribed in any document, the time period shall start on the next business day after the occurrence of the specified event. If the last day does not fall on a business day, then the last day shall be the next succeeding day which is a business day; and

	
 
	
1.2.11
	
a business day shall mean any day of the week excluding Saturdays and Sundays and public holidays on which commercial banks are open in the Territory.

 

Agreed and accepted by the authorised representatives of the Parties.

	
	
SIGNED for and on behalf of PAION AG acting by:

 

	
Name:

Abdelghani Omari

	
Position:

CFO

	
Signature:

/s/ Abdelghani Omari

 

 

	
	
SIGNED for and on behalf of PAION DEUTSCHLAND GMBH acting by:

 

	
Name:

Abdelghani Omari

	
Position:

Managing Director

	
Signature:

/s/ Abdelghani Omari

 

	
SIGNED for and on behalf of LA JOLLA PHARMACEUTICAL COMPANY acting by:

 

	
Name:

Larry Edwards

	
Position:

President and CEO

	
Signature:

/s/ Larry Edwards

 

34

 

 

 

	
	
SIGNED for and on behalf of La Jolla Pharmaceutical II B.V. acting by:

 

	
Name:

Larry Edwards

	
Position:

Director

	
Signature:

/s/ Larry Edwards

 

	
SIGNED for and on behalf of La Jolla Pharma, LLC acting by:

 

	
Name:

Larry Edwards

	
Position:

President and CEO

	
Signature:

/s/ Larry Edwards

 

	
SIGNED for and on behalf of Tetraphase Pharmaceuticals, INC. acting by:

 

	
Name:

Larry Edwards

	
Position:

President and CEO

	
Signature:

/s/ Larry Edwards

	
SIGNED for and on behalf of Tetraphase Pharmaceuticals Ireland Limited  acting by:

 

	
Name:

Larry Edwards

	
Position:

President and CEO

	
Signature:

/s/ Larry Edwards

35

 

 

 

Schedule 1

Appointment of Expert

	
1.
	
Referral Notice. Pursuant to Clause 8.15, either Party may serve notice on the other (a "Referral Notice") that it wishes to refer to an expert (the "Expert") the questions set out in that Paragraph.

	
2.
	
Appointment of Expert. The Parties shall agree the identity of a single independent, impartial Expert to determine such questions. In the absence of such agreement within thirty (30) days of the Referral Notice, each Party shall appoint its own expert, and the two appointed experts shall together appoint an independent, impartial Expert and such Expert shall alone resolve the questions referred to in Paragraph 1 above.

	
3.
	
Exchange of statements of case. Thirty (30) days after the giving of a Referral Notice, both Parties shall exchange simultaneously statements of case in no more than ten thousand (10,000) words in total, and each Party shall simultaneously send a copy of its statement of case to the Expert. Each Party may, within thirty (30) days of the date of exchange of statements of case pursuant to this Paragraph 3, serve a reply to the other Party's statement of case of not more than ten thousand (10,000) words. A copy of any such reply shall be simultaneously sent to the Expert.

	
4.
	
The Expert shall have the power to request copies of any documents in the possession and/or control of the Parties that may be relevant to the dispute. Each Party shall immediately provide to the Expert and the other Party copies of any documents so requested by the Expert. The Expert shall make his or her decision on the questions in dispute on the basis of written statements and supporting documentation only, and subject to Paragraph 5 there shall be no oral hearing. 

	
5.
	
The Expert shall have no power to alter, amend, or add to the provisions of this Agreement, except that the Expert shall have the power to decide all procedural matters relating to the dispute and may call for a one-day hearing if desirable and appropriate.

	
6.
	
The Expert shall issue his or her decision in writing within [***] days of the date of service of the last reply under Paragraph 3 above or, in the absence of receipt of any replies, within [***] days of the date of exchange of statements of case under Paragraph 3 above.

	
7.
	
The Expert's decision shall be final and binding on the Parties except in the case of manifest error. The Expert shall decide the dispute as an expert and not as an arbitrator.

	
8.
	
The Expert's charges shall be borne by the Parties in such proportions as the Expert shall decide.

	
9.
	
The language of dispute resolution shall be English. 

	
10.
	
All documents and information disclosed in the course of expert proceedings and the decision of the Expert shall be kept strictly confidential by the recipient and shall not be used by the recipient for any purpose except for the purposes of proceedings and/or the enforcement of the Expert's decision. 

36

 

 

 

Schedule 2

LICENSED patents

[***] 

 

 

 

 

37

 

 

 

Schedule 3

LICENSED TRADEMARKS

[***]

 

38

 

 

 

Schedule 4

PARTNERING PROGRAMS

 

 

	
•
	
Clinical activities

 

	
•
	
Licensed Product Supply and Quality activities

 

	
•
	
Commercial activities, including pricing of Licensed Products in the Territory

 

39

 

 

 

Schedule 5

SUPPLY TerMS

 [***]

 

 

 

 

 

 

40ljpc-ex107_1081.htm

 

Exhibit 10.7

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

 

 

 

LICENSE AGREEMENT

Between

TETRAPHASE PHARMACEUTICALS, INC.

And

PRESIDENT AND FELLOWS OF

HARVARD COLLEGE

 

 

 

 

 

 

 

Table of Contents

 

							
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Section
	
 
	
 
	
  
	
Page
	
 

	
 
	
 
	
 

	
  1.
	
 
	
Definitions
	
  
	
 
	
1
	
  

	
 
	
 
	
 

	
  2.
	
 
	
Title; Disclosure
	
  
	
 
	
6
	
  

	
 
	
 
	
 

	
  3.
	
 
	
Patent Filing, Prosecution and Maintenance
	
  
	
 
	
7
	
  

	
 
	
 
	
 

	
  4.
	
 
	
License Grant
	
  
	
 
	
9
	
  

	
 
	
 
	
 

	
  5.
	
 
	
Development and Commercialization
	
  
	
 
	
13
	
  

	
 
	
 
	
 

	
  6.
	
 
	
Consideration for Grant of License
	
  
	
 
	
14
	
  

	
 
	
 
	
 

	
  7.
	
 
	
Reports; Payments; Records
	
  
	
 
	
19
	
  

	
 
	
 
	
 

	
  8.
	
 
	
Enforcement of Patent Rights
	
  
	
 
	
20
	
  

	
 
	
 
	
 

	
  9.
	
 
	
Warranties; Limitation of Liability
	
  
	
 
	
22
	
  

	
 
	
 
	
 

	
10.
	
 
	
Indemnification
	
  
	
 
	
23
	
  

	
 
	
 
	
 

	
11.
	
 
	
Term and Termination
	
  
	
 
	
25
	
  

	
 
	
 
	
 

	
12.
	
 
	
Miscellaneous
	
  
	
 
	
27
	
  

 

					
	
 
	
 
	
 
	
 
	
 

	
Exhibit 1.5
	
  
	
Development Milestones
	
  
	
 

	
 
	
 
	
 

	
Exhibit 1.6
	
  
	
Development Plan
	
  
	
 

	
 
	
 
	
 

	
Exhibit 6.2.1
	
  
	
Form of Investment Representation Letter
	
  
	
 

	
 
	
 
	
 

	
Exhibit 6.2.2.1
	
  
	
Capitalization Table
	
  
	
 

 

ii

 

 

LICENSE AGREEMENT

This License Agreement is entered into as of this 3rd day of August, 2006 (the “Effective Date”), by and between Tetraphase Pharmaceuticals, Inc., a Delaware corporation, with its principal place of business c/o Mediphase Venture Partners, 3 Newton Executive Park, Suite 104, Newton, MA 02462 (“Licensee”) and President and Fellows of Harvard College, Holyoke Center, Suite 727, 1350 Massachusetts Ave., Cambridge, MA (“Harvard”). Dr. Andrew G. Myers shall also be party to this Agreement, but solely for purposes of Article 2.

WHEREAS, Harvard is the owner of the Harvard Patent Rights (as defined below) and has the right to grant licenses under the Harvard Patent Rights; and

WHEREAS, Harvard desires to have products based on such patent rights developed and commercialized to benefit the public and is willing to grant a license under such patent rights; and

WHEREAS, Licensee has represented to Harvard, in order to induce Harvard to enter into this Agreement, that Licensee shall commit itself to commercially reasonable efforts to develop, obtain regulatory approval for and commercialize products based on such patent rights; and

WHEREAS, Licensee wishes to obtain a license under such patent rights and Harvard wishes to grant Licensee a license under such patent rights, all in accordance with the terms and conditions of this Agreement; and

WHEREAS, Licensee wishes to retain the services of Dr. Andrew G. Myers as a consultant with respect to the subject matter of this Agreement.

NOW, THEREFORE, the panics hereto, intending to be legally bound, hereby agree as follows:

1. Definitions.

Whenever used in this Agreement with an initial capital letter, the terms defined in this Article I, whether used in the singular or the plural, shall have the meanings specified below.

1.1. “Affiliate” shall mean, with respect to either party, any person, organization or entity controlling, controlled by or under common control with, such party. For purposes of this definition only, “control” of another person, organization or entity shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the activities, management or policies of such person, organization or entity, whether through the ownership of voting securities, by contract or otherwise. Without limiting the foregoing, control shall be presumed to exist when a person, organization or entity (i) owns or directly controls fifty percent (50%) or more of the outstanding voting stock or other ownership interest of the other organization or entity, or (ii) possesses, directly or indirectly, the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the organization or other entity. The parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and that in such cases such lower percentage shall be substituted in the preceding sentence.

1

 

 

1.2. “Calendar Quarter” shall mean each of the periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31, for so long as this Agreement is in effect.

1.3. “Combination Product” shall mean a pharmaceutical preparation that includes one or more Non-Covered Components in addition to one or more Covered Components. All references to Licensed Product in this Agreement shall be deemed to include Combination Product.

1.4. “Covered Component” shall mean any compound (or part thereof) the production, making, use, sale or importation of which falls within the scope of a Valid Claim.

1.5. “Development Milestones” shall mean the development and commercialization milestones set forth in Exhibit 1.5 hereto.

1.6. “Development Plan” shall mean the plan for the development and commercialization of Licensed Products attached hereto as Exhibit 1.6, as such plan may be adjusted from time to time pursuant to Section 5.2.

1.7. “Dr. Myers” shall mean Dr. Andrew G. Myers.

1.8. “FDA” shall mean the United States Food and Drug Administration.

1.9. “Harvard Inventions” shall mean any inventions or discoveries made solely by Dr. Myers (so long as he is an employee of Harvard) in the performance of services for Licensee relating to tetracycline chemistry, including methods of synthesis and novel analogs of tetracycline.

1.10. “Harvard Patent Rights” shall mean, in each case to the extent owned and controlled by Harvard: (a) [**] (including the PCT application and/or the US regular utility application filed at or prior to the one year conversion date claiming priority to such provisional application); (b) any patent or patent application that claims priority to and is a divisional, continuation, reissue, renewal, reexamination, substitution or extension of any patent or patent application identified in (a); (c) any patents issuing on any of the patent applications identified in (a) or (b) and any reissues, renewals, reexaminations, substitutions or extensions thereof; (d) any claim of a continuation-in-part application or patent that is entitled to the priority date of, and is directed specifically to subject matter specifically described in, at least one of the patents or patent applications identified in (a), (b) or (c); (e) any foreign counterpart of any of the patents or patent applications identified in (a), (b) or (c) or of the claims identified in (d); and (f) any claim of any United States or foreign patent or patent application to the extent specifically directed to subject matter of Harvard Inventions.

1.11. “IND” shall mean an FDA Investigational New Drug application, Clinical Study Application, Clinical Trial Exemption, or similar application or submission for approval to conduct human clinical investigations filed with or submitted to a Regulator Authority in any country in conformance with the requirements of such Regulatory Authority.

2

 

 

1.12. “IND-Enabling GLP Toxicology Studies” shall mean genotoxicity, acute toxicology, safely pharmacology, and/or sub-chronic toxicology studies, in species that satisfy applicable regulatory requirements, using applicable Good Laboratory Practices, that meet the standard necessary for submission as part of the filing of an IND with a Regulatory Authority.

1.13. “Infringed Patent” shall mean an issued and unexpired patent (a) that has not been abandoned, held invalid, revoked, held or rendered unenforceable or lost through interference and (b) the claims of which would be infringed by Licensee’s practice of the Harvard Patent Rights and/or Joint Patent Rights in the making, using, offering for sale, selling or importation of Licensed Products.

1.14. “Initiation” shall mean, with respect to a Phase I Clinical Trial, Phase II Clinical Trial or Phase III Clinical Trial, the administration of the first dose to the first patient in such Clinical Trial.

1.15. “Joint Inventions” shall mean all inventions and discoveries made jointly by (a) one or more employees (or others on behalf) of Licensee and (b) Dr. Myers (so long as he is an employee of Harvard) in the performance of services for Licensee relating to tetracycline chemistry, including methods of synthesis and novel analogs of tetracycline.

1.16. “Joint Patent Rights” shall mean (a) any and all patents and patent applications claiming any Joint Inventions; (b) any United States or foreign patent or patent application that claims priority to and is a divisional, continuation, reissue, renewal, reexamination, substitution or extension of at least one of the patents or patent applications identified in (a); (c) any patents issuing on any of the patent applications identified in (a) or (b) and any reissues, renewals, reexaminations, substitutions or extensions thereof; and (d) any claim of a continuation-in-part application or patent that is entitled to the priority date of, and is directed specifically to subject matter specifically described in, at least one of the patents or patent applications identified in (a), (b) or (c).

1.17. “Licensed Patent Rights” shall mean the Harvard Patent Rights and Harvard’s interest in the Joint Patent Rights.

1.18. “Licensed Product” shall mean any product, the manufacture, use, offer for sale, sale or importation of which falls within the scope of a Valid Claim.

1.19. “Major European Country” shall mean any of the following: (a) France, Germany, Italy or the United Kingdom; or (b) the European Union as a whole.

1.20. “Marketing Authorization” shall mean all approvals from the relevant Regulatory Authority necessary to market and sell a Licensed Product in a country.

1.21. “NDA” shall mean a New Drug Application, Biologies License Application, Worldwide Marketing Application, Marketing Authorization Application, filing pursuant to Section 510(k) of the United States Federal Food, Drug, and Cosmetic Act, or similar application or submission for Marketing Authorization of a Licensed Product filed with a Regulatory Authority to obtain marketing approval for a biological pharmaceutical or diagnostic product in that country or in that group of countries.

3

 

 

1.22. “Net Sales” shall mean the gross amount billed or invoiced by or on behalf of Licensee, its Affiliates and Sublicensees (in each case, the “Invoicing Entity”) on sales, leases or other transfers of Licensed Products, less the following to the extent applicable on such sales, leases or other transfers of Licensed Products and not previously deducted from the gross invoice price: (a) customary trade, quantity, and cash discounts to the extent actually allowed and taken; (b) amounts actually repaid or credited by reason of rejection or return of any previously sold, leased or otherwise transferred Licensed Products and uncollectible portions of billed or invoiced amounts with respect to any previously sold, leased or otherwise transferred Licensed Products; (c) rebates, chargebacks, retroactive price reductions, allowances and fees actually paid or credited to customers, wholesalers, distributors, third party payors, governmental agencies, administrators and contractees with respect to Licensed Products sold, leased or otherwise transferred; (d) transportation, freight and insurance charges that are paid by or on behalf of the Invoicing Entity; and (e) to the extent separately stated on purchase orders, invoices, or other documents of sale, any sales, value added or similar taxes, custom duties or other similar governmental charges levied directly on the production, sale, transportation, delivery, or use of a Licensed Product that are paid by or on behalf of the Invoking Entity, but not including any tax levied with respect to income; provided that:

(i) in any transfers of Licensed Products among an Invoicing Entity, Affiliates of such Invoicing Entity and Sublicensees, not for the purpose of resale by any such Affiliate or Sublicensee, Net Sales shall be equal to the fair market value of the Licensed Products so transferred, assuming an arm’s length transaction made in the ordinary course of business; and

(ii) in the event that an Invoicing Party receives non-monetary consideration for any Licensed Products or in the case of transactions not at arm’s length with a non-Affiliate of such Invoicing Entity that is not a Sublicensee, Net Sales shall be calculated based on the fair market value of such consideration or transaction, assuming an arm’s length transaction made in the ordinary course of business.

Sales of Licensed Products by an Invoicing Party to an Affiliate of such Invoicing Party or to a Sublicensee for resale by such Affiliate or Sublicensee shall not be deemed Net Sales and Net Sales shall be determined based on the gross amount invoiced or billed by such Affiliate or Sublicensee on resale to an independent third party purchaser.

In the event that a Licensed Product is sold in any country in the form of a Combination Product, Net Sales of such Combination Product will be adjusted by multiplying actual Net Sales of such Combination Product (i.e., Net Sales as determined above without regard to this paragraph) in such country by the fraction A/(A+B), where A is the average invoice price in such country of a Licensed Product containing the same strength of Covered Component(s) that is included in such Combination Product sold without the Non-Covered Components, if sold separately in such country, and B is the average invoice price of the Non-Covered Component(s) that is included in such Combination Product in such country, if sold separately in such country.

4

 

 

If, in a specific country, either the Covered Component(s) or the Non-Covered Component(s) is not sold separately, the relative value of the Covered Component(s) and the Non-Covered Component(s) in the Combination Product shall be negotiated in and agreed upon in good faith by the parties in order to determine the appropriate ratio for calculating Net Sales with respect to such Combination Product in such country.

1.23. “Non-Covered Component” shall mean a clinically active component of a product that is not a Covered Component.

1.24. “Non-Royalty Sublicense Income” shall mean any payments or other consideration that Licensee or any of its Affiliates receives in connection with a Sublicense, other than royalties based on sales, leases or other transfers of Licensed Products by a Sublicensee. In the event that Licensee or an Affiliate of Licensee receives non-monetary consideration in connection with a Sublicense or in the case of transactions not at arm’s length, Non-Royalty Sublicense Income shall be calculated based on the fair market value of such consideration or transaction, assuming an arm’s length transaction made in the ordinary course of business. Non-Royalty Sublicense Income shall not include payments specifically committed to cover future costs to be actually incurred by Licensee or any of its Affiliates (including customary overhead) in the performance of research and development activities to be performed by Licensee or any of its Affiliates in connection with a Licensed Product or a product expected to become a Licensed Product.

1.25. “Phase I Clinical Trial” shall mean a human clinical trial in any country that would satisfy the requirements of 21 CFR 312.21(a).

1.26. “Phase II Clinical Trial” shall mean a human clinical trial in any country that would satisfy the requirements of 21 CFR 312.21(b).

1.27. “Phase III Clinical Trial” shall mean a human clinical trial in any country that would satisfy the requirements of 21 CFR 312.21(c).

1.28. “Regulatory Authority” shall mean any applicable government regulatory authority involved in granting approvals for the manufacturing, marketing, reimbursement and/or pricing of a Licensed Product, including, in the United States, the FDA.

1.29. “Relative Contribution Rate” shall mean the relative contribution of Dr. Myers in conceiving, making and/or reducing to practice a Joint Invention. Promptly after disclosure of a Joint Invention under Section 2.4 or 2.5, the parties will negotiate in good faith to agree upon the Relative Contribution Rate, which shall not exceed [**] percent ([**]%). If the parties are unable to agree upon the Relative Contribution Rate within [**] days of such disclosure, the matter will be referred to an independent patent counsel appointed by and mutually acceptable to the parties, who will determine the Relative Contribution Rate (not to exceed [**] percent ([**]%)).

1.30. “Sublicense” shall mean: (a) any right granted, license given, or agreement entered into by Licensee to or with any other person or entity (or by a Sublicensee to or with a further Sublicensee permitted by Section 4.2.2.4), under or with respect to or permitting any use of any of the Licensed Patent Rights or otherwise permitting the development, manufacture,

5

 

 

marketing, distribution, use and/or sale of Licensed Products; (b) any option or other right granted by Licensee to any other person or entity (or by a Sublicensee to a further Sublicensee permitted by Section 4.2.2.4) to negotiate for or receive any of the rights described under clause (a); or (c) any standstill or similar obligation undertaken by Licensee toward any other person or entity (or by a Sublicensee toward a further Sublicensee permitted by Section 4.2.2.4) not to grant any of the rights described in clause (a) or (b) to any third party; in each case regardless of whether such grant of rights, license given or agreement entered into is referred to or is described as a sublicense. For clarity, “Sublicense” does not include any implied license that may be deemed to be granted as part of a sale of a License Product.

1.31. “Sublicensee” shall mean any person or entity granted a Sublicense.

1.32. “Third Party Proposed Product” shall mean an actual or potential Licensed Product (a) that is for a therapeutic category (e.g., infectious diseases, inflammatory conditions and oncological conditions) for which no Licensed Product is being developed or commercialized by Licensee, any Affiliate of Licensee or any Sublicensee and (b) that does not contain or consist of any Covered Component that is included in a Licensed Product that is being clinically developed or commercialized by Licensee, any Affiliate of Licensee or any Sublicensee. For the avoidance of doubt, sub-categories within the same general therapeutic category shall be considered the same therapeutic category (e.g., infectious diseases shall include subcategories such as bacterial diseases and fungal diseases).

1.33. “Valid Claim” shall mean: (a) a claim of an issued and unexpired patent within the Harvard Patent Rights or, except as excluded pursuant to Section 3.4.2, Joint Patent Rights that has not been (i) held permanently revoked, unenforceable, unpatentable or invalid by a decision of a court or governmental body of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, (ii) rendered unenforceable through disclaimer or otherwise, (iii) abandoned, or (iv) lost through an interference proceeding; (b) a pending claim of a pending patent application within the Harvard Patent Rights (in a particular country) that (i) has been asserted and continues to be prosecuted in good faith, (ii) has not been abandoned or finally rejected without the possibility of appeal or refiling and (iii) has not remained un-issued for a period of [**] or more years from the date of issuance of the first substantive patent office action considering the patentability of such claim by the applicable patent office in such country, provided that if after the earliest possible date for requesting examination in such country Harvard fails to request examination by such patent office within [**] days after Licensee requests Harvard to do so, such [**]-year period shall run from the date of Licensee’s request that Harvard request examination; or (c) except as excluded pursuant to Section 3.4.2, a pending claim of a patent application within the Joint Patent Rights.

2. Title; Disclosure.

2.1. The entire right, title and interest in Harvard Inventions shall be owned solely by Harvard.

2.2. The entire right, title and interest in Joint Inventions shall be owned jointly by Harvard and Licensee.

6

 

 

2.3. All determinations of inventorship under this Agreement shall be made in accordance with United States patent law. In case of dispute between Harvard and Licensee over inventorship, a mutually acceptable outside patent counsel shall make the determination of the inventor(s) by applying the standards contained in United States patent law.

2.4. Harvard shall disclose to Licensee in a confidential writing the development, making, conception or reduction to practice of any Harvard Inventions or Joint Inventions of which it becomes aware, promptly after its receipt of an invention disclosure form from Dr. Myers.

2.5. Licensee shall disclose to Harvard’s Office of Technology Development in a confidential writing the development, making, conception or reduction to practice of any Harvard Inventions or Joint Inventions promptly after it becomes aware thereof.

2.6. Dr. Myers shall disclose to Licensee and Harvard’s Office of Technology Development in a confidential writing the development, making, conception or reduction to practice of any Harvard Inventions or Joint Inventions promptly after he becomes aware thereof.

2.7. Any consulting or other agreement pursuant to which Dr. Myers performs services for or on behalf of Licensee (so long as he is an employee of Harvard) (a “Consulting Agreement”) shall be consistent with and subordinate to the provisions of this Article 2. Any such Consulting Agreement shall require Dr. Myers to assign his rights in Harvard Inventions and Joint Inventions in a manner consistent with the provisions of this Article 2 and shall allow Dr. Myers to make the disclosures contemplated by Section 2.6.

2.8. In the case of any discrepancy between Article 2 of this Agreement and any Consulting Agreement, the terms of this Agreement shall prevail; provided that (a) Licensee shall have no liability for or obligation to enforce Dr. Myers’ obligations hereunder and (b) Licensee’s sole and exclusive liability to Harvard and Harvard’s sole and exclusive remedy against Licensee for such discrepancy shall be for Licensee to acknowledge that the terms of this Agreement prevail over the noncompliant provisions of such Consulting Agreement and to take reasonable steps to amend the Consulting Agreement to render it consistent with this Agreement.

3. Patent Filing, Prosecution and Maintenance.

3.1. Harvard Patent Rights. Harvard shall be responsible for the preparation, filing, prosecution, protection and maintenance of all Harvard Patent Rights, using patent counsel reasonably acceptable to Licensee. With respect to Harvard Patent Rights, Harvard shall: (a) use independent patent counsel reasonably acceptable to Licensee and instruct such patent counsel to furnish the Licensee with copies of all correspondence relating to the Harvard Patent Rights from the United States Patent and Trademark Office (USPTO) and any other patent office, as well as copies of all proposed responses to such correspondence in time for Licensee to review and comment on such response; (b) give Licensee an opportunity to review the text of each patent application before filing; (c) consult with Licensee with respect thereto; (d) supply Licensee with a copy of the application as filed, together with notice of its filing date and serial number; (e) keep Licensee advised of the status of actual and prospective patent filings; and (f) provide advance copies of any papers related to the filing, prosecution, protection and maintenance of such patent filings. Harvard shall give Licensee the opportunity to provide comments on and make requests of Harvard concerning the preparation, filing, prosecution, protection and maintenance of the Harvard Patent Rights, and shall consider such comments and requests in good faith.

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3.2. Joint Patent Rights. Licensee shall have the first right to prepare, file, prosecute, protect and maintain Joint Patent Rights, at its cost; provided, however, that Licensee may elect to waive such right on a case-by-case basis and if so, Licensee shall notify Harvard promptly in writing and Harvard shall have the right, but not the obligation, to prepare, file, prosecute, protect and maintain such Joint Patent Rights. With respect to Joint Patent Rights, the filing party shall: (a) use independent patent counsel reasonably acceptable to the non-filing party and instruct such patent counsel to furnish the non-filing party with copies of all correspondence relating to the Joint Patent Rights from the USPTO and any other patent office, as well as copies of all proposed responses to such correspondence in time for the other party to review and comment on such response; (b) give the non-filing party an opportunity to review the text of each patent application before filing; (c) consult with the non-filing party with respect thereto; (d) supply the non-filing party with a copy of the application as filed, together with notice of its filing date and serial number; (e) keep the non-filing party advised of the status of actual and prospective patent filings; and (f) provide advance copies of any papers related to the filing, prosecution, protection and maintenance of such patent filings. The filing party shall give the non-filing party the opportunity to provide comments on and make requests of the filing party concerning the preparation, filing, prosecution, protection and maintenance of the Joint Patent Rights, and shall consider such comments and requests in good faith.

3.3. Expenses. Subject to Section 3.4 below, Licensee shall reimburse Harvard for all documented, out-of-pocket expenses incurred by Harvard pursuant to this Article 3 within [**] days after Harvard invoices Licensee. In addition, Licensee shall reimburse Harvard for all documented, out-of-pocket expenses incurred by Harvard prior to the execution of this Agreement with respect to the preparation, filing, prosecution, protection and maintenance of Harvard Patent Rights (estimated to be approximately [**] U.S. Cents ($[**])) within [**] days after the date on which the financing described in Section 11.2.2 below closes.

3.4. Abandonment. Should Licensee decide that it does not wish to pay for the preparation, filing, prosecution, protection or maintenance of any Harvard Patent Rights and/or Joint Patent Rights in a particular country (“Abandoned Patent Rights”), Licensee shall provide Harvard with prompt written notice of such election. Upon receipt of such notice by Harvard, Licensee shall be released from its obligation to reimburse Harvard for the expenses incurred thereafter as to such Abandoned Patent Rights; provided, however, that expenses authorized prior to the receipt by Harvard of such notice shall be deemed incurred prior to the notice.

3.4.1. Effect of Abandonment of Harvard Patent Rights. In the event of Licensee’s abandonment of any Harvard Patent Rights (“Abandoned Harvard Patent Rights”), any license granted by Harvard to Licensee hereunder with respect to such Abandoned Harvard Patent Rights will terminate, and Licensee will have no rights whatsoever to exploit such Abandoned Harvard Patent Rights. Harvard shall then be free, without further notice or obligation to Licensee, to grant rights in and to such Abandoned Harvard Patent Rights to third parties. Such Abandoned Harvard Patent Rights shall cease to constitute Harvard Patent Rights.

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3.4.2. Effect of Abandonment of Joint Patent Rights. In the event of Licensee’s abandonment of any Joint Patent Rights (“Abandoned Joint Patent Rights”), Harvard, in its sole discretion, may choose to terminate any license granted by Harvard to Licensee hereunder with respect to such Abandoned Joint Patent Rights. If Harvard exercises its right to terminate and continues to pay for the preparation, filing, prosecution, protection and maintenance of such Abandoned Joint Patent Rights, it thereafter shall have the right to practice and exploit the inventions claimed in such Abandoned Joint Patent Rights without any duty to account to Licensee or any obligation to obtain any consent or approval of Licensee for such use and exploitation. Harvard also shall then be free, without further notice or obligation to Licensee, and Licensee hereby grants Harvard an exclusive license, to grant rights in and to such Abandoned Joint Patent Rights to third parties; provided, however, that Licensee shall have (and Harvard hereby grants Licensee) the right, without further notice or obligation to Harvard, to practice and exploit the inventions claimed in such Abandoned Joint Patent Rights in connection with Licensee’s development and commercialization of a Licensed Product and to grant rights in and to such Abandoned Joint Patent Rights to third parties in connection with any license of a Licensed Product developed by or on behalf of Licensee. The claims of any such Abandoned Joint Patent Rights shall cease to constitute Valid Claims.

3.5. No Warranty. Nothing contained herein shall be deemed to be a warranty by either party that it can or will be able to obtain patents on patent applications included in the Harvard Patent Rights or Joint Patent Rights, or that any of the Harvard Patent Rights or Joint Patent Rights will afford adequate or commercially worthwhile protection.

3.6. Small Entity Designation. If Licensee, any Sublicensee and/or any holder of an option to obtain a Sublicense does not qualify, or at any point during the term of this Agreement ceases to qualify, as a “small entity’” as provided by the USPTO, Licensee shall so notify Harvard immediately, in order to enable Harvard to comply with USPTG regulations regarding payment of fees with respect to Harvard Patent Rights and Joint Patent Rights.

4. License Grant.

4.1. Licenses.

4.1.1. Harvard Patent Rights. Subject to the terms and conditions set forth in this Agreement, Harvard hereby grants to Licensee an exclusive (except as set forth in clauses (a) and (b) below), worldwide, royalty-bearing license under the Harvard Patent Rights solely to develop, make, have made, use, market, offer for sale, sell and import Licensed Products; provided, however, that:

(a) Harvard shall retain the right to make and use Licensed Products, and to grant licenses to other not-for-profit research organizations to make and use Licensed Products, for internal research, teaching and other educational purposes and not for the purpose of commercial manufacture, distribution or provision of services for a fee; and

(b) the U.S. federal government shall retain rights in the Licensed Patent Rights pursuant to 35 USC §§200-212, 37 CFR §401 et seq. and applicable governmental implementing regulations, and any right granted in this Agreement greater than that permitted under 35 USC §§200-212 or 37 CFR §401 et seq. shall be subject to modification as may be required to conform to the provisions of those statutes and regulations.

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4.1.2. Joint Patent Rights. Subject to the terms and conditions set forth in this Agreement, Harvard hereby grants to Licensee an exclusive, worldwide, royalty-bearing license under Harvard’s interest in the Joint Patent Rights solely to develop, make, have made, use, market, offer for sale, sell and import Licensed Products.

4.2. Sublicense.

4.2.1. Sublicense Grant. Licensee shall be entitled to grant Sublicenses to third parties under the licenses granted pursuant to Section 4.1 if the contemplated Sublicense complies with the terms of this Section 4.2. Any such Sublicense shall be on terms and conditions in compliance with and not inconsistent with the terms of this Agreement. Such Sublicenses shall only be made for consideration and in bona-fide arm’s length transactions.

4.2.2. Sublicense Agreements. Sublicenses shall be granted only pursuant to written agreements, which shall be subject and subordinate to the terms and conditions of this Agreement. Such Sublicense agreements shall contain, among other things, provisions to the following effect:

4.2.2.1. All provisions necessary to ensure Licensee’s ability to perform its obligations under this Agreement, including without limitation its obligations under Sections 6.3, 6.4, 6.5, 7.1.1, 7.3, 9.1 and 12.1;

4.2.2.2. A section substantially the same as Article 10, which also shall state that the Indemnitees (as defined in Article 10) are intended third party beneficiaries of such Sublicense agreement for the purpose of enforcing such indemnification and insurance provisions;

4.2.2.3. In the event of termination of the licenses set forth in Section 4.1 above (in whole or in part (e.g., termination in a particular country)), any existing Sublicense shall terminate to the extent such licenses terminate; provided, however, that, for each Sublicensee, upon termination of a Sublicense agreement, if the Sublicensee is not then in breach of the Sublicense such that Licensee would have the right to terminate such Sublicense agreement, such Sublicensee shall have the right to seek a license from Harvard. Harvard agrees to negotiate such licenses in good faith under reasonable terms and conditions, which shall not impose any representations, warranties, obligations or liabilities on Harvard that are not included in this Agreement;

4.2.2.4. The Sublicensee shall not be entitled to sublicense its rights under such Sublicense agreement without Harvard’s prior written consent; provided that , if the Sublicensee is a major pharmaceutical company, the Sublicensee may grant further Sublicenses with respect to Licensed Products that the Sublicensee is developing and/or commercializing in at least one of (a) the United States, (b) any Major European Country or (c) Japan, in each case subject to Sections 4.2.2.1, 4.2.2.2, 4.2.2.3 and 4.2.2.5, without Harvard’s consent; and

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4.2.2.5. The Sublicensee shall not be entitled to assign the Sublicense agreement without the prior written consent of Harvard, except that Sublicensee may assign the Sublicense agreement to an Affiliate or to a successor in connection with the merger, consolidation, or sale of all or substantially all of its assets or that portion of its business to which the Sublicense agreement relates; provided, however, that any permitted assignee agrees in writing in a manner reasonably satisfactory to Harvard to be bound by the terms of such Sublicense agreement.

4.2.3. Delivery of Sublicense Agreement. Licensee or Sublicensee shall furnish Harvard with a fully executed copy of any Sublicense agreement or further Sublicense agreement under Section 4.2.2.4, promptly after its execution. Harvard shall keep any such copies of Sublicense agreements in its confidential files and shall use them solely for the purpose of monitoring Licensee’s and Sublicensees’ compliance with their obligations hereunder and enforcing Harvard’s rights under this Agreement.

4.2.4. Breach by Sublicensee. Any act or omission by a Sublicensee that would have constituted a breach of this Agreement had it been an act or omission by Licensee, shall constitute a breach of this Agreement.

4.3. Improvements. In the future event that Harvard owns and controls patents and/or patent applications for which Dr. Myers is an inventor that (a) are not Harvard Patent Rights or Joint Patent Rights and (b) include claims that are dominated by any Valid Claims of the Harvard Patent Rights described in Section 1.10(a) – (e), Licensee may notify Harvard in writing that it wishes to obtain a license under such patents and/or patent applications solely with respect to those claims that are dominated by such Valid Claims of the Harvard Patent Rights described in Section 1.10(a) – (e). Harvard will grant Licensee a license under such claims by amending this Agreement to include such claims in the definition of Licensed Patent Rights if (i) Harvard is not, at the time of its receipt of Licensee’s notice, subject to any legal or pre-existing contractual obligations or restraints that would prevent it from granting the requested license and (ii) either (A) the inventors of the invention claimed in such claims (and, in the case of non-Harvard inventors, the institutions with which such inventors are affiliated) do not reasonably object to the grant of the requested license based on an argument that the terms of the license contemplated by this Section 4.3, when considered from the perspective of the parties as of the date of such license, do not provide fair value to Harvard for the license of such patent rights (and, consequently, such inventors’ financial interest in such patent rights will be adversely affected) or (B) if any such inventors or institutions do object, the neutral third party appointed by the parties pursuant to the immediately following sentence does not affirmatively determine that the terms of the license contemplated by this Section 4.3, when considered from the perspective of the parties as of the date of such license, do not provide fair value to Harvard for the license of such patent rights. If Harvard relies upon clause (ii) above to refuse to grant Licensee a license under such claims, Licensee will have the right to seek a determination from a neutral third party (mutually acceptable to the parties) as to whether the terms of the license contemplated by this Section 4.3, when considered from the perspective of the parties as of the date of such license, provide fair value to Harvard for the license of such patent rights. Licensee shall not be required to pay any additional upfront consideration for such license, except for a license issuance fee to be agreed upon by the parties, which will not exceed [**] U.S. Dollars ($[**]). The other financial terms of this Agreement (e.g., milestone payments, royalty

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payments and payments on account of Non-Royalty Sublicense Income) will apply to the requested license (i.e., other than the to-be-agreed upfront consideration, the effect of such requested license shall be to include such additional patents and/or patent applications in Harvard Patent Rights licensed to Licensee under this Agreement, without modifying the economic terms of this Agreement).

4.4. Future Inventions. In the future event that Harvard owns and controls patents and/or patent applications for which Dr. Myers is an inventor that (a) are not dominated by any Valid Claims of the Harvard Patent Rights described in Section 1.10(a) – (e) and (b) include claims with respect to tetracycline chemistry, including methods of synthesis and novel analogs of tetracycline, Licensee may notify Harvard in writing that it wishes to obtain a license under such patents and/or patent applications solely with respect to claims covering tetracycline chemistry, including methods of synthesis and novel analogs of tetracycline. Harvard will enter into good faith negotiations with Licensee for a license under such claims if (a) Harvard is not, at the lime of its receipt of Licensee’s notice, subject to any legal, public policy or pre-existing contractual obligations or restraints that would prevent it from granting the requested license and has not already commenced negotiations for any agreement that would impose such obligations or restraints and (b) Harvard believes that Licensee is an appropriate party to which to grant the requested license (taking into account Licensee’s resources and the potential applications for such patent rights).

4.5. Third Party Proposed Products.

4.5.1. If, at any time following the [**] anniversary of the Effective Date of this Agreement, a third party makes a bona fide proposal to Harvard for developing a Third Party Proposed Product and Harvard is interested in having such Third Party Proposed Product developed and commercialized, Harvard shall notify Licensee of and shall provide Licensee with information regarding the third party’s proposal. Within [**] days of the receipt of such notification from Harvard, Licensee shall notify Harvard whether it is interested in developing such Third Party Proposed Product

4.5.2. If Licensee notifies Harvard within such [**] day period that it is interested in developing such Third Party Proposed Product, the parties will agree upon a development plan with respect to such Third Party Proposed Product, which development plan shall be similar to the Development Plan with respect to other Licensed Products developed by Licensee, subject to necessary adjustments, and will include reasonable milestones. In such case, Licensee shall be obligated (a) to use commercially reasonable efforts to develop and commercialize the Third Party Proposed Product in accordance with such new development plan and (b) to meet the milestones with respect to the Third Party Proposed Product.

4.5.3. In the event Licensee thereafter fails to comply in any material respect with such mutually agreed development and commercialization obligations, and fails to cure such noncompliance after notice from Harvard within the time periods specified in Section 11.2.3.2, Harvard shall be entitled to terminate the license granted in this Agreement under Harvard Patent Rights with respect to such Third Party Proposed Product and shall be free to grant a third party a license under any relevant Harvard Patent Rights solely to develop, make, have made, use, market, offer for sale, sell, and import such Third Party Proposed Product.

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4.5.4. If Licensee states in its notification to Harvard that it is not interested in developing such Third Party Proposed Product but that it wishes to grant a Sublicense under any relevant Harvard Patent Rights to such third party with respect to such Third Party Proposed Product, Licensee shall have [**] days (or such longer time as shall be agreed to by the parties in writing) to negotiate and enter into such a Sublicense agreement with such third party; provided, however, that if Licensee demonstrates that it and such third party have entered into a term sheet with respect to such a Sublicense agreement during such [**] days, Licensee shall be entitled to extend that period for the execution of a binding Sublicense agreement by an additional [**] days.

4.5.5. If Licensee fails to enter into such a Sublicense agreement within such [**] day period or [**] day period, as applicable, Licensee shall promptly (but in any event within [**] days of the end of such period) provide Harvard in writing an explanation for such failure along with the proposed terms offered by Licensee to Sublicensee. If Harvard determines in its good faith judgment that the terms offered by Licensee to such third party were not commercially reasonable, Harvard shall notify Licensee of such determination and provide Licensee with an additional [**] days to enter into a Sublicense with such third party. If Licensee fails to enter into an agreement with such third party within such additional [**] day period, then Harvard shall be free to grant such third party a license under the relevant Harvard Patent Rights solely to develop, make, have made, use, market, offer for sale, sell and import such Third Party Proposed Product; provided, however, that (a) Harvard shall not grant such third party license on terms more favorable to the third party than the terms of the license granted to Licensee in this Agreement with respect to such Third Party Proposed Product unless Harvard first amends this Agreement to provide Licensee with such more favorable terms (and after such amendment provides Licensee with a notice pursuant to Section 4.5.1 that commences a [**] day notice period thereunder during which Licensee may elect to develop such Third Party Proposed Product, in which case Sections 4.5.2 and 4.5.3 will apply) and (b) Harvard must grant such third party license within [**] days after the end of the [**] day period referenced above. The license granted to Licensee in this Agreement under Harvard Patent Rights with respect to such Third Party Proposed Product shall terminate automatically on the effective date of such third party license.

4.6. No Other Grant of Rights. Except as expressly provided in this Agreement, nothing in this Agreement shall be construed to confer any ownership interest, license or other rights upon Licensee by implication, estoppel or otherwise as to any technology, intellectual property rights, products or biological materials of Harvard or any other entity, regardless of whether such technology, intellectual property rights, products or biological materials are dominant, subordinate or otherwise related to any Licensed Patent Rights.

5. Development and Commercialization.

5.1. Diligence. Licensee shall use commercially reasonable efforts, and shall cause its Sublicensees to use commercially reasonable efforts: (i) to develop Licensed Products in accordance with the Development Plan; (ii) to introduce Licensed Products into the commercial market; and (iii) to market Licensed Products following such introduction into the market. In addition, Licensee, by itself or through its Affiliates or Sublicensees, also shall achieve each of the Development Milestones within the time periods specified in Exhibit 1.5. Licensee’s sole and exclusive liability and Harvard’s sole and exclusive remedy for any breach of this Section 5.1 shall be the termination right set forth in Section 11.2.3.1, to the extent applicable.

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5.2. Adjustment of Development Plan. Licensee shall be entitled, from time to time, to make such adjustments to the then applicable Development Plan as Licensee believes, in its good faith judgment, are needed in order to improve Licensee’s ability to meet the Development Milestones. Licensee shall provide Harvard with copies of any such adjusted Development Plans.

5.3. Reporting. Within [**] days after the end of each calendar year, Licensee shall furnish Harvard with a written report summarizing its, its Affiliates, and its Sublicensees’ efforts during the prior year to develop and commercialize Licensed Products, including without limitation: (i) research and development activities, including in reasonable detail medicinal chemistry efforts and animal efficacy and toxicity studies relating to potential Licensed Products; (ii) commercialization efforts; and (iii) marketing efforts. Each report shall contain a sufficient level of detail for Harvard to assess whether Licensee is in compliance with its obligations under Section 5.1.

5.4. Failure. Both parties agree that timely achievement of Development Milestones is subject to considerable uncertainty, given the novelty of the technology embodied in the Licensed Patent Rights, territorial or legal restrictions on the use of pharmaceutical products, the regulatory climate and approval process, and pricing or other government restrictions on certain pharmaceutical products. Accordingly, in the event Licensee fails to achieve any Development Milestone, the parties agree to discuss and, if appropriate, revise said milestone by adding a period of up to [**] months to achieve such milestone, upon Licensee’s written notice to Harvard, accompanied by an explanation for the reasons for such failure and a detailed written plan for promptly achieving such milestones. If Licensee does not provide Harvard with a reasonable basis for its failure to meet a Development Milestone (and lack of finances shall not constitute reasonable basis for such failure) or does not provide Harvard with a detailed written plan for promptly achieving such milestones, Harvard shall notify Licensee in writing of Licensee’s failure and shall allow Licensee [**] days to cure its failure. Licensee’s failure to cure such delay within such [**]-day period shall constitute a material breach of this Agreement and Harvard shall have the right to terminate this Agreement forthwith.

6. Consideration for Grant of License

6.1. License Issuance Fee. As partial consideration for the license granted hereunder, Licensee shall pay Harvard a non-refundable license fee of [**] U.S. Dollars ($[**]) within [**] days after the date on which Licensee completes a Qualifying Financing (as defined in Section 11.2.2 below).

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6.2. Equity.

6.2.1. Initial Grant. As partial consideration for the license granted hereunder, and subject to the execution and delivery of an investment representation letter by Harvard in substantially the form attached hereto as Exhibit 6.2.1, within [**] days after the date on which Licensee completes a Qualifying Financing (as defined in Section 11.2.2 below), Licensee shall issue to Harvard such number of shares of common stock (the “Shares”) of Licensee that constitutes the greater of:

(a) [**] shares of common stock, adjusted for any stock splits and similar events; or

(b) [**] percent ([**]%) of the outstanding common stock of Licensee, on a Fully Diluted Basis, as of the date of completion of the Qualifying Financing, after giving effect to such issuance to Harvard and to the sale in the Qualifying Financing of shares of capital stock having an aggregate purchase price, which together with the aggregate purchase price received by the Company from any investment in its capital stock made prior to the Qualifying Financing, does not exceed the Funding Threshold (i.e., assuming only such shares issued in the Qualifying Financing that are necessary to achieve the Funding Threshold are then outstanding). For purposes of illustration, if the Qualifying Financing were to involve the sale of shares of capital stock having an aggregate purchase price of $[**] and no cash investment in Licensee’s capital stock had been made prior to the Qualifying Financing, then the calculation above in this clause (b) shall only apply to and shall only include the shares of capital stock sold in the Qualifying Financing having an aggregate purchase price of $[**] and shall not include the additional shares of capital stock sold in the Qualifying Financing (i.e., Harvard’s shareholdings will be diluted with respect to the additional shares of capital stock sold in the Qualifying Financing).

6.2.2. Representations and Warranties. Licensee hereby represents and warrants to Harvard that:

6.2.2.1. The capitalization table attached hereto as Exhibit 6.2.2.1 (the “Cap Table”) sets forth all of the outstanding capital stock of Licensee on a Fully Diluted Basis as of the Effective Date after assuming and giving effect to the Shares to be issued to Harvard under Section 6.2.1;

6.2.2.2. Other than as set forth in the Cap Table, as of the Effective Date, there are no outstanding shares of capital stock, convertible securities, outstanding warrants, options or other rights to subscribe for purchase or acquire from Licensee any capital stock of Licensee and there are no contracts or binding commitments providing for the issuance of, or the granting of rights to acquire, any capital stock of Licensee or under which Licensee is obligated to issue any of its securities; and

6.2.2.3. The Shares, when issued pursuant to the terms hereof, shall, upon such issuance, be duly authorized, validly issued, fully paid and nonassessable.

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6.2.3. Anti-Dilution. If, at any time, after the initial issuance of Shares pursuant to Section 6.2.1 and prior to the achievement of the Funding Threshold (as defined below), Licensee issues Additional Securities (as defined below) that would cause the common stock issued to Harvard under this Article 6 to represent less than [**] percent ([**]%) of Licensee’s outstanding stock on a Fully-Diluted Basis (a “Diluting Issuance”), then, within [**] days after the date of such Diluting Issuance, subject to the execution and delivery of an investment representation letter by Harvard in substantially the form attached hereto as Exhibit 6.2.1, Licensee shall issue additional shares of common stock to Harvard such that after giving effect to such issuance to Harvard, the common stock issued to Harvard under this Article 6 shall represent [**] percent ([**]%) of Licensee’s outstanding stock on a Fully Diluted Basis. Such issuances to Harvard shall continue until such time and with respect to those securities as are issued by Licensee prior to Licensee achieving the Funding Threshold. Upon achievement of the Funding Threshold, no additional shares shall be due to Harvard pursuant to this Section 6.2.3.

6.2.4. Definitions. The following terms shall have the following meanings:

(a) “Additional Securities” shall mean shares of capital stock, convertible securities, warrants, options or other rights to subscribe for, purchase or acquire from Licensee any capital stock of Licensee

(b) “Fully Diluted Basis” shall mean, as of a specified date, the number of shares of common stock of Licensee then outstanding (assuming conversion of all other classes of stock into common stock) plus the number of shares of common stock of Licensee issuable upon exercise or conversion of then outstanding convertible securities (other than other classes of stock), options, rights or warrants of Licensee (which shall be determined without regard to whether such securities are then vested, exercisable or convertible).

(c) “Funding Threshold” shall mean a total investment from and after the incorporation of Licensee of [**] U.S. Dollars ($[**]) in cash in exchange for Licensee’s capital stock.

6.3. Milestone Payments.

6.3.1. As partial consideration for the license granted hereunder, Licensee shall pay Harvard the following milestone payments with respect to each Licensed Product, regardless of whether such milestones are achieved by Licensee, an Affiliate of Licensee or a Sublicensee:

6.3.1.1. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product;

6.3.1.2. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product;

6.3.1.3. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product;

6.3.1.4. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product;

6.3.1.5. Two Million U.S. Dollars ($2,000,000) upon Initiation of a Phase III Clinical Trial with respect to such Licensed Product;

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6.3.1.6. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product;

6.3.1.7. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product;

6.3.1.8. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product;

6.3.1.9. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product;

6.3.1.10. [**] U.S. Dollars ($[**]) upon [**] with respect to such Licensed Product; and

6.3.1.11. [**] U.S. Dollars ($[**]) upon [**].

Licensee shall notify Harvard in writing within [**] days following the achievement of each milestone described in this Section 6.3.1, and shall make the appropriate milestone payment within [**] days after the achievement of such milestone. Each milestone payment set forth in this Section 6.3.1 shall be payable no more than once per Licensed Product.

For purposes of this Section 6.3.1, [**] shall include [**] by operation of rule or regulation due to the [**].

For purposes of this Section 6.3.1, if all active pharmaceutical ingredient(s) in a Licensed Product that are Covered Component(s) are the same (irrespective of formulation differences that are not deemed by the applicable Regulatory Authority to result in different active pharmaceutical ingredient(s)) as active pharmaceutical ingredient(s) in Licensed Products for which Licensee has already paid a given milestone payment under this Section 6.3.1, then Licensee shall not be required to pay such milestone payment with respect to such Licensed Product.

6.3.2. The milestones set forth in Section 6.3.1 are intended to be successive, except that the [**] milestones set forth in Sections 6.3.1.6, 6.3.1.7, 6.3.1.8, 6.3.1.9, 6.3.1.10 and 6.3.1.11 are not intended to be successive (i.e., the achievement of such milestones in [**] may occur in any order). In the event that a Licensed Product is not required to [**] associated with a particular milestone ( “Skipped Milestone” ), such Skipped Milestone shall be deemed to have been achieved upon the achievement by such Licensed Product of the next successive milestone ( “Achieved Milestone” ). Payment for any Skipped Milestone that is owed in accordance with the provisions of this Section 6.3.2 shall be due within [**] days after the achievement of the Achieved Milestone.

6.4. Net Sales.

6.4.1. Royalties . As partial consideration for the license granted hereunder, Licensee shall pay Harvard an amount equal to the following percentages of Net Sales of Licensed Products:

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6.4.1.1. [**] percent ([**]%) of calendar year annual Net Sales up to [**] U.S. Dollars ($[**]);

6.4.1.2. [**] percent ([**]%) of calendar year annual Net Sales in excess of [**] U.S. Dollars ($[**]) up to [**] U.S. Dollars ($[**]);

6.4.1.3. [**] percent ([**]%) of calendar year annual Net Sales in excess of [**] U.S. Dollars ($[**]) up to [**] U.S. Dollars ($[**]); and

6.4.1.4. [**] percent ([**]%) of calendar year annual Net Sales in excess of [**] U.S. Dollars ($[**]).

With respect to each Licensed Product, royalties will be payable on a country-by-country basis, so long as the making, using or selling of the Licensed Product is covered by a Valid Claim in the country in which such Licensed Product is made, used or sold.

6.4.2. Joint Patent Rights Only Licensed Products. Notwithstanding the foregoing, in the event that the making, using or selling of a Licensed Product is covered only by a Valid Claim within the Joint Patent Rights (and not by any Valid Claim within the Harvard Patent Rights) in a certain country, the royalty payment rates specified above with respect to such Licensed Product shall be multiplied by the Relative Contribution Rate in such country.

6.4.3. Third Party Royalty Set Off. Notwithstanding the foregoing, in the event that Licensee is required to obtain a license from a third party to an Infringed Patent (as defined below) in order to make, use or sell Licensed Products, and Licensee obtains such a license after arm’s length negotiations, Licensee may offset an amount of up to [**] percent ([**]%) of any amounts paid under such third party license with respect to sales of such Licensed Product against the royalty payments that are due to Harvard pursuant to this Section 6.4 with respect to sales of such Licensed Product in such country; provided that in no event shall (a) the royalty payments to Harvard with respect to such Licensed Product be reduced for any Calendar Quarter by more than [**] percent ([**]%) of the amount otherwise due for such Calendar Quarter with respect to such Licensed Product under this Section 6.4 and (b) the offset that Licensee is entitled to make against royalty payments due to Harvard be greater than any offset that Licensee is entitled to make against royalty payments due to such third party licensee on account of royalty payments made to Harvard under this Agreement. If Licensee is unable to fully offset [**] percent ([**]%) of such amounts paid under third party licenses against royalties due for a Calendar Quarter, Licensee shall be entitled to carry forward to subsequent Calendar Quarters any undeducted amounts for deduction in such subsequent Calendar Quarters, subject to the limitations set forth in subsections (a) and (b) above.

6.5. Non-Royalty Sublicense Income. As partial consideration for the license granted hereunder, Licensee shall pay Harvard an amount equal to the following percentages of Non-Royalty Sublicense Income:

6.5.1. if Licensee grants a Sublicense [**] with respect to the Licensed Product that is the subject of such Sublicense, Licensee shall pay Harvard an amount equal to [**] percent ([**]%) of all Non-Royalty Sublicense Income received in connection with such Sublicense;

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6.5.2. if Licensee grants a Sublicense [**] with respect to the Licensed Product that is the subject of such Sublicense, Licensee shall pay Harvard an amount equal to [**] percent ([**]%) of all Non-Royalty Sublicense Income received in connection with such Sublicense; and

6.5.3. if Licensee grants a Sublicense [**] with respect to the Licensed Product that is the subject of such Sublicense, Licensee shall pay Harvard an amount equal to [**] percent ([**]%) of all Non-Royalty Sublicense Income received in connection with such Sublicense.

7. Reports; Payments; Records.

7.1. Reports and Payments.

7.1.1. Reports. Within [**] days after the conclusion of each Calendar Quarter commencing with the first Calendar Quarter in which Net Sales are generated or Non-Royalty Sublicense Income received, Licensee shall deliver to Harvard a report containing the following information (in each instance, with a Licensed Product-by-Licensed Product breakdown):

(a) the number of units of Licensed Products sold by Licensee, its Affiliates and Sublicensees for the applicable Calendar Quarter;

(b) the gross amount billed for Licensed Products sold by Licensee, its Affiliates and Sublicensees during the applicable Calendar Quarter;

(c) a calculation of Net Sales for the applicable Calendar Quarter, including an itemized listing of applicable deductions; and

(d) the total amount payable to Harvard in U.S. Dollars on Net Sales for the applicable Calendar Quarter, together with the exchange rates used for conversion.

In addition, Licensee shall include in each such report a statement of all Non-Royalty Sublicense Income and the amounts payable to Harvard in respect thereto for the applicable Calendar Quarter. Each such report shall be certified on behalf of Licensee as true, correct and complete in all material respects by Licensee’s Chief Financial Officer or an executive level officer with comparable authority. If no amounts are due to Harvard for any Calendar Quarter, the report shall so state.

7.1.2. Payment for Net Sales. Within [**] days after the end of each Calendar Quarter, Licensee shall pay Harvard all amounts due with respect to Net Sales and Non-Royalty Sublicense Income for the applicable Calendar Quarter.

7.2. Payment Currency. All payments due under this Agreement shall be payable in U.S. Dollars. Conversion of foreign currency to U.S. Dollars shall be made at the conversion rate existing in the United States (as reported in The Wall Street Journal ) on the last working day of the applicable Calendar Quarter. Such payments shall be without deduction of exchange, collection, or other charges.

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7.3. Records. Licensee shall maintain, and shall cause its Affiliates and Sublicensees to maintain, complete and accurate records of Licensed Products that are made, used or sold under this Agreement, any amounts payable to Harvard in relation to such Licensed Products and all Non-Royalty Sublicense Income received by Licensee and its Affiliates, which records shall contain sufficient information to permit Harvard to confirm the accuracy of any reports or notifications delivered to Harvard under Section 7.1. Licensee, its Affiliates and/or its Sublicensees, as applicable, shall retain such records relating to a given Calendar Quarter for at least [**] years after the conclusion of that Calendar Quarter, during which time Harvard shall have the right, at its expense, to cause an independent, certified public accountant to inspect such records during normal business hours for the sole purpose of verifying any reports and payments delivered under this Agreement. Such accountant shall enter into a confidentiality agreement reasonably satisfactory to Licensee and shall not disclose to Harvard any information other than information relating to the accuracy of reports and payments delivered under this Agreement. The parties shall reconcile any underpayment or overpayment within [**] days after the accountant delivers the results of the audit. In the event that any audit performed under this Section 7.3 reveals an underpayment in excess of five percent (5%) in any calendar year, the audited entity shall bear the full cost of such audit. Harvard may exercise its rights under this Section 7.3 [**] per audited entity and only with reasonable prior notice to the audited entity.

7.4. Late Payments. Any payments by Licensee that are not paid on or before the date such payments are due under this Agreement shall bear interest at the lower of (a) [**] percent ([**]%) per month and (b) the maximum rate allowed by law. Interest shall accrue beginning on the first day following the due date for payment and shall be compounded quarterly. Payment of such interest by Licensee shall not limit in any way, Harvard’s right to exercise any other remedies Harvard may have as a consequence of the lateness of any payment.

7.5. P ayment Method. Each payment due to Harvard under this Agreement shall be paid by check or wire transfer of funds to Harvard’s account in accordance with written instructions provided by Harvard. If made by wire transfer, such payments shall be marked so as to refer to this Agreement.

7.6. Withholding and Similar Taxes. Licensee shall use reasonable and legal efforts to reduce tax withholding on payments made to Harvard hereunder. Notwithstanding such efforts, if Licensee concludes that tax withholdings under the laws of any country are required with respect to payments to Harvard, Licensee shall withhold the required amount and pay it to the appropriate governmental authority. In such a case, Licensee will promptly provide Harvard with original receipts or other evidence reasonably desirable and sufficient to allow Harvard to document such tax withholdings adequately for purposes of claiming foreign tax credits and similar benefits.

8. Enforcement of Patent Rights.

8.1. Notice. In the event either party becomes aware of any possible or actual infringement of any Licensed Patent Rights relating to Licensed Products (collectively, an “Infringement), that party shall promptly notify the other party and provide it with details regarding such Infringement

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8.2. Suit by Licensee. Licensee shall have the first right, but not the obligation, to take action in the prosecution, prevention, or termination of any Infringement. Before Licensee commences an action with respect to any Infringement, Licensee shall consider in good faith the views of Harvard and potential effects on the public interest in making its decision whether to sue. Should Licensee elect to bring suit against an infringer, Licensee shall keep Harvard reasonably informed of the progress of the action and shall give Harvard a reasonable opportunity in advance to consult with Licensee and offer its views about major decisions affecting the litigation. Licensee shall give careful consideration to those views, but shall have the right to control the action; provided, however, that if Licensee fails to defend in good faith the validity and/or enforceability of the Licensed Patent Rights in the action, or if Licensee’s license to a Valid Claim in suit terminates, Harvard may elect to take control of the action pursuant to Section 8.3. Should Licensee elect to bring suit against an infringer and Harvard is joined as party plaintiff in any such suit, Harvard shall have the right to approve the counsel selected by Licensee to represent Licensee and Harvard, such approval not to be unreasonably withheld, delayed or conditioned (the parties agree that counsel’s conflict of interest shall be reasonable grounds for withholding approval). The expenses of such suit or suits that Licensee elects to bring, including any expenses of Licensors incurred in conjunction with the prosecution of such suits or the settlement thereof, shall be paid for entirely by Licensee and Licensee shall hold Licensors free, clear and harmless from and against any and all costs of such litigation, including attorney’s fees. Licensee shall not compromise or settle such litigation without the prior written consent of Harvard, which consent shall not be unreasonably withheld, delayed or conditioned (the parties agree that Harvard may withhold approval of any settlement that may reasonably be interpreted to impose any obligations on Harvard or limit the scope, validity or enforceability of any Licensed Patent Rights). In the event Licensee exercises its right to sue pursuant to this Section 8.2, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorney’s fees, reasonably incurred in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Harvard shall receive an amount equal to [**] percent ([**]%) of such funds and the remaining [**] percent ([**]%) of such funds shall be retained by Licensee.

8.3. Suit by Harvard. If Licensee does not take action in the prosecution, prevention, or termination of any Infringement pursuant to Section 8.2 above, and has not commenced negotiations with the infringer for the discontinuance of said Infringement, within [**] days after receipt of notice to Licensee by Harvard of the existence of an Infringement, Harvard may elect to do so. Should Harvard elect to bring suit against an infringer and Licensee is joined as party plaintiff in any such suit, Licensee shall have the right to approve the counsel selected by Harvard to represent Harvard, such approval not to be unreasonably withheld, delayed or conditioned (the parties agree that counsel’s conflict of interest shall be reasonable grounds for withholding approval). The expenses of such suit or suits that Harvard elects to bring, including any expenses of Licensee incurred in conjunction with the prosecution of such suits or the settlement thereof, shall be paid for entirely by Harvard and Harvard shall hold Licensee free, clear and harmless from and against any and all costs of such litigation, including attorney’s fees. Harvard shall not compromise or settle such litigation without the prior written consent of Licensee, which consent shall not be unreasonably withheld, delayed or conditioned (the parties agree that Licensee may withhold approval of any settlement that may reasonably be interpreted to impose any obligations on Licensee or limit the scope, validity or enforceability of any

21

 

 

Licensed Patent Rights). In the event Harvard exercises its right to sue pursuant to this Section 8.3, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorney’s fees, reasonably incurred in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Licensee shall receive an amount equal to [**] percent ([**]%) of such funds and the remaining [**] percent ([**]%) of such funds shall be retained by Harvard.

8.4. Own Counsel. Each party shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted under this Article 8 by the other party for Infringement.

8.5. Cooperation. Each party agrees to cooperate fully in any action under this Article 8 which is controlled by the other party, provided that the controlling party reimburses the cooperating party promptly for any costs and expenses incurred by the cooperating party in connection with providing such assistance.

8.6. Standing. If a party lacks standing and the other party has standing to bring any such suit, action or proceeding, then such other party shall do so at the request of and at the expense of the requesting party. If either party determines that it is necessary or desirable for another party to join any such suit, action or proceeding, the other party shall execute all papers and perform such other acts as may be reasonably required in the circumstances.

8.7. Declaratory Judgment. If a declaratory judgment action is brought naming Licensee and/or any of its Affiliates or Sublicensees as a defendant and alleging invalidity or unenforceability of any claims within the Harvard Patent Rights, Licensee shall promptly notify Harvard in writing and Harvard may elect, upon written notice to Licensee within [**] days after Harvard receives notice of the commencement of such action, to take over the sole defense of the invalidity or unenforceability aspect of the action at its own expense. The Party defending any such action shall give the other Party the opportunity to provide comments on and make requests of the defending Party concerning the conduct of such defense, and shall consider such comments and requests in good faith.

9. Warranties; Limitation of Liability.

9.1. Compliance with Law . Licensee represents and warrants that it will comply, and will ensure that its Affiliates and Sublicensees comply, with all local, state, and international laws and regulations relating to the development, manufacture, use, sale and importation of Licensed Products. Without limiting the foregoing, Licensee represents and warrants that it will comply, and will ensure that its Affiliates and Sublicensees will comply, with all United States export control laws and regulations with respect to Licensed Products.

9.2. No Warranty.

9.2.1. Harvard makes no warranties whatsoever as to the commercial or scientific value of the Harvard Patent Rights or Joint Patent Rights or the inventions disclosed therein. Harvard makes no representation that the practice of the Harvard Patent Rights or Joint Patent Rights or the development, manufacture, use, sale or importation of any Licensed Product, or any element thereof, will not infringe the patent or proprietary rights of any third party.

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9.2.2. Except as otherwise expressly provided in this Agreement, no party makes any warranty with respect to any technology, patents, goods, services, rights or other subject matter of this Agreement and hereby disclaims warranties of merchantability, fitness for a particular purpose and noninfringement with respect to any and all of the foregoing.

9.3. Limitation of Liability.

9.3.1. Except with respect to Licensee’s indemnification obligations under Article 10, neither party will be liable to the other with respect to any subject matter of this Agreement under any contract, negligence, strict liability or other legal or equitable theory for (i) any indirect incidental, consequential or punitive damages or lost profits or (ii) cost of procurement of substitute goods, technology or services.

9.3.2. Harvard’s aggregate liability for all damages of any kind arising out of or relating to this Agreement or its subject matter shall not exceed the amounts paid to Harvard under this Agreement.

10. Indemnification.

10.1. Indemnity.

10.1.1. Licensee shall indemnify, defend and hold harmless Harvard and its current or former directors, governing board members, trustees, officers, faculty, medical and professional staff, employees, students, and agents and their respective successors, heirs and assigns (collectively, the “Indemnitees”) from and against any third party claim, liability, cost, expense, damage, deficiency, loss or obligation or any kind or nature (including, without limitation, reasonable attorney’s fees and other costs and expenses of litigation) (collectively, “Claims”), based upon, arising out of, or otherwise relating to any acts or omissions of the Licensee, its Affiliates, or any of its Sublicensees in connection with Licensed Products or this Agreement or any cause of action relating to product liability concerning any product, process, or service made, used or sold pursuant to any right or license granted under this Agreement. Neither Licensee nor Harvard shall settle any Claim without the prior written consent of the other, which consent shall not be unreasonably withheld, delayed or conditioned, except that Licensee may settle any Claim to which Licensee’s indemnification obligations hereunder apply without the consent of Harvard if such settlement releases all Indemnitees from liability in respect of such Claim, does not impose any obligations on any Indemnitee and does not limit the scope, validity or enforceability of any Licensed Patent Right.

10.1.2. Licensee shall, at its own expense, provide attorneys reasonably acceptable to Harvard to defend against any actions brought or filed against any Indemnitee hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought.

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10.2. Insurance.

10.2.1. Beginning at the time any Licensed Product is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by Licensee, or by an Affiliate, Sublicensee or agent of Licensee, Licensee shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than $[**] per incident and $[**] annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such Licensed Product, Licensee shall, at its sole cost and expense, procure and maintain commercial general liability insurance in such equal or lesser amount as Harvard shall require, naming the Indemnitees as additional insureds. Such commercial general liability insurance shall provide: (a) product liability coverage and (b) broad form contractual liability coverage for Company’s indemnification under this Agreement.

10.2.2. If Licensee elects to self-insure all or part of the limits described above in Section 10.2.1 (including deductibles or retentions which are in excess of $[**] annual aggregate) such self-insurance program must be acceptable to Harvard and the Risk Management Foundation of the Harvard Medical Institutions, Inc. in their sole discretion. The minimum amounts of insurance coverage required shall not be construed to create a limit of Licensee’s liability with respect to its indemnification under this Agreement.

10.2.3. Licensee shall provide Harvard with written evidence of such insurance upon request of Harvard. Licensee shall provide Harvard with written notice at least [**] days prior to the cancellation, non-renewal or material change in such insurance; if Licensee does not obtain replacement insurance providing comparable coverage within such [**]) day period, Harvard shall have the right to terminate this Agreement effective at the end of such [**] day period without notice or any additional waiting periods.

10.2.4. Licensee shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during: (a) the period that any Licensed Product is being commercially distributed or sold by Licensee, or an Affiliate, Sublicensee or agent of Licensee; and (b) a reasonable period after the period referred to in (a) above which in no event shall be less than [**] years.

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11. Term and Termination.

11.1. Term . The term of this Agreement shall commence on the Effective Date and, unless earlier terminated as provided in this Article 11, shall continue in full force and effect on a Licensed Product-by-Licensed Product and country-by-country basis until expiration of the last to expire of the Harvard Patents Rights and Joint Patent Rights.

11.2. Termination.

11.2.1. Termination Without Cause. Licensee may terminate this Agreement upon sixty (60) days prior written notice to Harvard.

11.2.2. Termination for Failure to Obtain Financing . In the event that Licensee fails to complete an investment in the capital stock of Licensee that results in the receipt by Licensee of at least [**] U.S. Dollars ($[**]) (a “Qualifying Financing”) within [**] days after the Effective Date, Harvard may terminate this Agreement immediately upon written notice to Licensee. Notwithstanding the foregoing, if Harvard fails to exercise this right to terminate and Licensee subsequently completes a Qualifying Financing (after the [**] day period) and issues Shares to Harvard as set forth in Section 6.2.1, the termination right set forth in this Section 11.2.2 shall expire and have no further force or effect. The termination right set forth in this Section 11.2.2 is Harvard’s sole and exclusive remedy and Licensee’s sole and exclusive liability for any failure by Licensee to complete a Qualifying Financing.

11.2.3. Termination for Default.

11.2.3.1. In the event that either party commits a material breach of its obligations under this Agreement and fails to cure that breach within [**] days after receiving written notice thereof, the other party may terminate this Agreement immediately upon written notice to the party in breach.

11.2.3.2. If Licensee defaults in its obligations under Section 10.2 to procure and maintain insurance or, if Licensee has in any event failed to comply with the notice requirements contained therein and does not cure such failure within [**] business day of written notice thereof from Harvard, then Harvard may terminate this Agreement immediately without notice or additional waiting period.

11.2.4. Bankruptcy. Harvard may terminate this Agreement upon notice to Licensee if Licensee becomes insolvent, is adjudged bankrupt, applies for judicial or extra-judicial settlement with its creditors, makes an assignment for the benefit of its creditors, voluntarily files for bankruptcy or has a receiver or trustee (or the like) in bankruptcy appointed by reason of its insolvency, or in the event an involuntary bankruptcy action is filed against Licensee and not dismissed within ninety (90) days, or if the other party becomes the subject of liquidation or dissolution proceedings or otherwise discontinues business; provided that the termination right set forth in this Section 11.2.4 shall not be exercisable if Licensee continues to perform its obligations under this Agreement in all material respects.

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11.3. Effect of Termination.

11.3.1. T ermination of Rights. Upon termination of this Agreement by either party pursuant to any of the provisions of Section 11.2: (a) the rights and licenses granted to Licensee under Article 4 shall terminate and all rights in and to and under the Harvard Patent Rights and Harvard’s interest in the Joint Inventions shall revert to Harvard; and (b) any existing agreements that contain a Sublicense shall terminate to the extent of such Sublicense; provided, however, that, for each Sublicensee, upon termination of the Sublicense agreement with such Sublicensee, if the Sublicensee is not then in breach of its Sublicense agreement with Licensee such that Licensee would have the right to terminate such Sublicense, such Sublicensee shall have the right to seek a license from Harvard. Harvard agrees to negotiate such licenses in good faith under reasonable terms and conditions, which shall not impose any representations, warranties, obligations or liabilities on Harvard that are not included in this Agreement. Notwithstanding the foregoing, Licensee shall have a non-exclusive license under Harvard’s interest in any Joint Patent Rights to develop, make, have made, use, market, offer for sale, sell and import Licensed Products, provided that Licensee pays the applicable royalties and payments to Harvard in accordance with Sections 6.4 and 6.5, provides reports and audit rights to Harvard pursuant to Article 7 and maintains insurance in accordance with the requirements of Section 10.2.

11.3.2. Accruing Obligations. Termination of this Agreement shall not relieve the parties of obligations occurring prior to such termination, including obligations to pay amounts accruing hereunder up to the date of termination.

11.3.3. Transfer of Regulatory Filings. In addition, in the event Licensee terminates this Agreement pursuant to Section 11.2.1 or Harvard terminates this Agreement pursuant to Section 5.4, 11.2.2, 11.2.3 or 11.2.4, at Harvard’s request Licensee shall promptly deliver and assign to Harvard all documents and other materials filed by or on behalf of Licensee and its Affiliates with regulatory agencies in furtherance of applications for regulatory approval in the relevant country with respect to Licensed Products (“Assigned Materials”).

11.3.3.1. In the event that Harvard grants a third party a license to make, use, offer for sale, sell or import a Licensed Product and, in connection therewith, also grants the third party a license under or with respect to, or access to, any of the Assigned Materials relating to such Licensed Product, Harvard shall pay Licensee royalties in the amount of [**] percent ([**]%) of all Net Harvard Receipts (as defined below) received by Harvard in connection with such Licensed Product under such license. All such royalties shall be paid by Harvard within [**] days of receipt. With such distribution, Harvard shall provide a financial accounting showing Harvard Receipts (as defined below) received and all deductions therefrom. Licensee shall keep such reports in confidence; provided that Licensee shall be permitted to include the information in such reports in its financial statements and public disclosures as reasonably required to satisfy accounting rules and securities laws and regulations.

11.3.3.2. “Net Harvard Receipts” shall mean Harvard Receipts less Harvard Expenses.

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11.3.3.3. “Harvard Receipts” shall mean all amounts in cash and other consideration actually received by Harvard from the grant of a license to make, use, offer for sale, sell or import a Licensed Product, which license is accompanied by a license or grant of right to use the Assigned Materials with respect to such Licensed Product. Notwithstanding the above, “Harvard Receipts” shall not include payments specifically committed to (a) reimburse patent expenses incurred by Harvard in connection with such Licensed Product and (b) cover future costs to be actually incurred by Harvard (including customary overhead) in accordance with detailed budgets and research workplans included in sponsored research agreements relating to such Licensed Product. The parties do not envision that Harvard would ever elect to commercialize the Licensed Product directly or through any Harvard Affiliate; however, in the event that Harvard commercializes the Licensed Product directly or through an Affiliate, the parties will negotiate appropriate royalty rates to be paid by Harvard comparable to the royalty rates to be paid by Licensee under Section 6.4.1.

11.3.3.4. “Harvard Expenses” shall mean all out-of-pocket expenses and professional fees that are not reimbursed or otherwise paid by a licensee or other third party, including legal fees, patent agent fees and fees paid to other experts, incurred by Harvard in connection with: (a) the filing, prosecution, maintenance or enforcement of any patent application or patent covering the relevant Licensed Product; or (b) the preparation, negotiation, execution and/or enforcement of any agreement pursuant to which the Harvard Receipts are received.

11.4. Survival. The parties’ respective rights, obligations and duties under Articles 7 and 10 and under this Article 11, as well as any rights, obligations and duties which by their nature extend beyond the expiration or termination of this Agreement, shall survive any expiration or termination of this Agreement. In addition, Licensee’s obligations under Section 6.5 with respect to Sublicenses granted prior to termination of the Agreement shall survive termination; provided that the basis for the Non-Royalty Sublicense Income under such Sublicenses received after the termination of this Agreement to which such surviving Section 6.5 obligations relate is, in whole or in part, licenses and/or sublicenses under Harvard Patent Rights or Joint Patent Rights and not exclusively other rights and licenses granted by Licensee in connection with such Sublicense. Harvard’s obligations under Section 12.15 shall survive expiration or termination of this Agreement.

12. Miscellaneous.

12.1. Preference for United States Industry. During the period of exclusivity of this license in the United States, Licensee shall cause any Licensed Product produced for sale in the United States to be manufactured substantially in the United States.

12.2. Use of Name. Licensee shall not, and shall ensure that its Affiliates and Sublicensees shall not, use the name or insignia of Harvard or the name of any of Harvard officers, faculty, other researchers or students, or any adaptation of such names, in any advertising promotional or sales literature, including without limitation any press release or any document employed to obtain funds, without the prior written approval of Harvard; provided that Dr. Myers’ consent to the use of his name and his affiliation with Harvard shall be sufficient approval for the use of his name and affiliation. The restriction set forth in this Section 12.2 shall not apply to any information required by law to be disclosed to any governmental entity, including without limitation any information required to be disclosed pursuant to rules and regulations promulgated by the United States Securities and Exchange Commissions or the rules and regulations of any stock exchange or NASDAQ.

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12.3. Entire Agreement. This Agreement is the sole agreement with respect to the subject matter hereof and except as expressly set forth herein, supersedes all other agreements and understandings between the parties with respect to the same.

12.4. Notices. Unless otherwise specifically provided, all notices required or permitted by this Agreement shall be in writing and may be delivered personally, or may be sent by facsimile or certified mail, return receipt requested, to the following addresses, unless the parties are subsequently notified of any change of address in accordance with this Section 12.4:

 

			
	
 
	
 
	
 

	
If to

License:
	
    
	
Tetraphase Pharmaceuticals, Inc.

c/o Mediphase Venture Partners

3 Newton Executive Park, Suite 104

Newton, Massachusetts 02462

	
 
	
 

	
 
	
    
	
Attn.: Chief Executive Officer

	
 
	
 

	
If to

Harvard:
	
    
	
Office of Technology Development

Harvard University

Holyoke Center 727

1350 Massachusetts Avenue

Cambridge, Massachusetts 02138

	
 
	
 

	
 
	
    
	
Attn.: Chief Technology Development Officer

Any notice shall be deemed to have been received as follows: (i) by personal delivery, upon receipt; (ii) by facsimile, one business day after transmission or dispatch; (iii) by airmail, seven (7) business days after delivery to the postal authorities by the party serving notice. If notice is sent by facsimile, a confirming copy of the same shall be sent by mail to the same address.

12.5. Governing Law and Jurisdiction. This Agreement will be governed by, and construed in accordance with, the substantive laws of the Commonwealth of Massachusetts, without giving effect to any choice or conflict of law provision, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted. Sole jurisdiction is hereby granted by the parties to the state courts of the Commonwealth of Massachusetts or the federal courts of the District of Massachusetts, without restricting any right of appeal.

12.6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns.

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12.7. Headings. Article, section and subsection headings are inserted for convenience of reference only and do not form a part of this Agreement.

12.8. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original.

12.9. Amendment; Waiver. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party waiving compliance. The delay or failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the rights at a later time to enforce the same. No waiver by either party of any condition or of the breach of any term contained in this Agreement, whether by conduct, or otherwise, in any one or more instances, shall be deemed to be, or considered as, a further or continuing waiver of any such condition or of the breach of such term or any other term of this Agreement.

12.10. No Agency or Partnership. Nothing contained in this Agreement shall give any party the right to bind another, or be deemed to constitute either parties as agents for each other or as partners with each other or any third party.

12.11. Assignment and Successors. This Agreement may not be assigned by either party without the consent of the other, which consent shall not be unreasonably withheld, delayed or conditioned, except that each party may, without such consent, assign this Agreement and the rights, obligations and interests of such party to any of its Affiliates, to any purchaser of all or substantially all of its business, stock, assets or research to which the subject matter of this Agreement relates, or to any successor corporation resulting from any merger or consolidation of such party with or into such corporation; provided, in each case, that the assignee agrees in writing to be bound by the terms of this Agreement. Any assignment purported or attempted to be made in violation of the terms of this Section 12.11 shall be null and void and of no legal effect.

12.12. Force Majeure. Neither party will be responsible for delays resulting from causes beyond the reasonable control of such party, including without limitation fire, explosion, flood, war, strike, or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed.

12.13. Interpretation. The parties hereto acknowledge and agree that: (i) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to both parties hereto and not in favor of or against either party, regardless of which party was generally responsible for the preparation of this Agreement.

12.14. Severability. If any provision of this Agreement is or becomes invalid or is ruled invalid by any court of competent jurisdiction or is deemed unenforceable, it is the intention of the parties that the remainder of this Agreement shall not be affected.

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12.15. Confidentiality. Harvard shall keep confidential, not disclose to any third party and not use for any purpose other than monitoring Licensee’s performance under this Agreement any information (including reports) provided to Harvard by Licensee or by Dr. Myers under Sections 2.5, 2.6, 5.3, 7.1 and 7.3 of this Agreement; provided, however, that Harvard (i) may include in its annual reports totals derived from information received from Licensee (without attribution to Licensee) that show revenues generated by the patents and patent applications licensed under this Agreement and (ii) may use and disclose information provided under Sections 2.5 and 2.6 to file patent applications with respect to Harvard Inventions and, as permitted under this Agreement, Joint Inventions; and provided further that the non-disclosure and non-use obligations shall not apply to any information that (a) is or becomes part of the public domain other than by Harvard’s breach of this Section 12.15, (b) is included within Abandoned Harvard Patent Rights or Abandoned Joint Patent Rights, or (c) is required to be disclosed by Harvard pursuant to interrogatories, requests for information or documents, subpoena, civil investigative demand issued by a court or governmental agency or as otherwise required by law (provided that, in such case, Harvard shall notify Licensee immediately upon receipt thereof and give Licensee sufficient advance notice to permit it to seek a protective order or other similar order with respect to such information). To the extent that it is reasonably necessary, Harvard may disclose information it is otherwise obligated under this Section 12.15 not to disclose to (y) its employees on a need-to-know basis and on condition that such employees abide by the obligations set forth in this Section 12.15 and (z) in confidence, to lawyers, accountants and financial advisors.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.

 

									
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
President and Fellows of Harvard College
	
 
	
 
	
 
	
Tetraphase Pharmaceuticals, Inc.

	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
/s/  Isaac Kohlberg
	
 
	
 
	
 
	
By:
	
 
	
/s/  Lawrence G. Miller

	
 
	
 
	
 
	
 
	
 

	
Name:
	
 
	
 
	
 
	
 
	
 
	
Name:
	
 
	
Lawrence G. Miller

	
 
	
 
	
 
	
 
	
 

	
Title:
	
 
	
 
	
 
	
 
	
 
	
Title:
	
 
	
President

I, the undersigned, hereby confirm that I have read the Agreement, that its contents are acceptable to me and that I agree to be bound by the terms of Article 2.

 

									
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
/s/  Andrew G. Myers
	
 
	
 
	
 
	
 
	
 
	
 

	
Andrew G. Myers
	
 
	
 
	
 
	
 
	
 
	
 

 

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Exhibit 1.5

Development Milestones

1. Licensee shall commence [**] with respect to a Licensed Product within [**] months of the Effective Date.

2. Licensee shall commence [**] with respect to a Licensed Product within [**] months of the Effective Date.

3. Licensee shall [**] for a Licensed Product within [**] months of the Effective Date.

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Exhibit 1.6

Development Plan

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Tetraphase Pharmaceuticals

CONFIDENTIAL

Tetraphase Pharmaceuticals: Initial Plan

Summary

This company is to be formed to ensure rapid development of commercial products based on the groundbreaking studies of tetracycline synthesis conducted by Prof. Andrew Myers and colleagues in the Department of Chemistry and Chemical Biology at Harvard University. The initial goal of the company is to create multiple antibiotic candidates based on these synthetic technologies, and to advance these candidates into clinical trials. Subsequently, the company will pursue further antibacterial compounds, through synthetic pathways or in-licensing. The overall goal is to become an integrated pharmaceutical company and a leader in the development of antibacterials. The company name, Tetraphase Pharmaceuticals, refers to the initial focus on tetracyclines, as well as the multiple phases of development that will encompass other types of antibacterials (see below).

Background

Tetracyclines as a class of anti-infective compounds were first employed in the 1940s (chlortetracycline); tetracycline itself was introduced in 1953, and second generation tetracyclines appeared in the 1960s and early 1970s. Indeed, over the three decades from the late 1940’s onward, nearly 30% of all approved antibiotics were tetracyclines. Their use has spanned the spectrum of bacterial infections, including gram-positive and gram-negative bacteria, Chlamydia, mycoplasma and spirochetes. Of note, the anti-inflammatory properties of tetracyclines were also recognized, and it is likely that the effectiveness of this class in conditions such as acne derives at least in part from anti-inflammatory efficacy.

Although tetracyclines, especially doxycycline, remain in widespread use, resistance to tetracyclines emerged as a major problem in the 1970s and has led to reduced efficacy and utility of this class. However, as resistance has subsequently developed to other classes of antibiotics, interest in tetracyclines has been rekindled, in part due to their oral absorption and potentially wide spectrum of action. A new class of tetracyclines, the glycylcyclines, was synthesized in the 1990s, and in mid-2005, a member of this class, tigecycline (Tygacil, Wyeth), received approval in the U.S.

Despite significant interest in this class over the last 15 years, development of new tetracyclines has been hampered by difficulties in synthesis. Little structural diversity has been generated, with almost all efforts directed at a small number of core intermediates. This lack of chemical diversity has led to limitations in anti-infective diversity, with little success in overcoming drug resistance. The glycylcyclines, such as tigecycline, appear to provide an improvement in overcoming resistance, although toxicity remains an issue.

The Myers technology offers a way out of this “box”, with the potential to create multiple novel structures based on different intermediates, and even to expand the number of rings overall. Based on the performance of compounds in this class, it is reasonable to hypothesize that compounds can be designed with improved efficacy, i.e., decreased resistance, coupled with limited toxicity.

 

 

	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
1
	
 
	
March 2006

 

 

Tetraphase Pharmaceuticals

CONFIDENTIAL

 

Market

The worldwide market for anti-infectives is in excess of $25 billion, but the market is in transition. Although the total worldwide anti-infective market was in excess of $25 billion in 2004, growth in this sector has been limited. Indeed, through much of the last 1980’s and 1990’s, this market was perceived as stagnant: effective antibiotics were available for most bacterial pathogens. This perception encouraged a lack of effort in this area. Indeed, several major pharmaceutical companies have reduced or eliminated their antibiotic development programs. Only a handful of new antibacterials have been approved in the last 10 years, most for complex, often hospital-based infections. In a survey conducted in 2004, only 6 of 506 drugs under development at the pharmaceutical companies and larger biotechnology companies were new antibacterial agents (Spellberg et al., 2004). Concurrently, rapidly-developing resistance is limiting the utility of current antibacterials; resistant staphylococcus species are becoming endemic (especially methicillin resistant staphylococcus aureus, or MRSA), and resistance in other gram-positive and gram-negative pathogens is increasing.

The confluence of these trends creates a significant opportunity for anti-infective development, and in particular for a company with an intense focus on antibacterials. There are clear opportunities to develop branded antibiotics which can generate annual sales of $300-500 million.

The target compound for the expanded tetracycline class would therefore have the following characteristics:

 

				
	
 
	
•
	
 
	
Efficacy against staph, aureus and gram negative organisms

 

				
	
 
	
•
	
 
	
Limited gastrointestinal adverse effects

 

				
	
 
	
•
	
 
	
Oral and parenteral availability

These features would make the compound applicable to the following common indications:

 

				
	
 
	
•
	
 
	
Urinary tract infections, including catheter and non-catheter based

 

				
	
 
	
•
	
 
	
Skin and soft tissue infections

 

				
	
 
	
•
	
 
	
Intra-abdominal infections, e.g., appendicitis, diverticulitis, post-operative

 

				
	
 
	
•
	
 
	
Pneumonia, both hospital and community-acquired

Note that Tygacil, the recently approved tetracycline, has been approved for both skin and soft tissue infections and intro-abdominal infections.

An enhanced tetracycline which could address the indications listed above would be expected to have a market opportunity of at least $500 million, and perhaps as much as $1 billion.

Current Status of Tetracyclines

When first introduced into clinical practice in the 1940’s, the tetracyclines had broad activity against gram-positive and gram-negative bacteria and chlmaydia, mycoplasma, etc. The class was used widely in both humans and animals, and by 1953 initial resistance was observed. Since

 

 

	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
2
	
 
	
March 2006

 

 

Tetraphase Pharmaceuticals

CONFIDENTIAL

 

that time, resistance to tetracyclines has increased markedly, limited the use of the class in many common infections. Current indications include urinary tract infections, Lyme disease, shigellosis and rickeettsial, chlamydial and mycoplasmal infections. Doxycycline is the most widely used tetracycline currently, due to limited adverse effects and twice daily dosing.

The first new tetracycline in over 30 years, tigecycline (Tygacil, Wyeth) was approved in June 2005. Tigecycline, the first glycylcycline tetracycline, is a minocycline analog characterized by a substitution at the 9 position (or position 1 of the D ring; see below), It has substantial advantages over earlier tetracyclines. It is active against methicillin-resistant staphylococcous aureus (MRSA), as well as some gram-negatives, including enterococci, enterobacteria, and possibly acinetobacter. Tigecycline evades the major bacterial tetracycline efflux pumps, and also binds to modified bacterial ribosomes, another potential cause of resistance. The drug is approved for complex skin and soft tissue infections, as well as complicated intra-abdominal infections. Major adverse events, as is common in the tetracycline class, occur in the gastrointestinal system. In Phase III studies, 29.5% of patients reported nausea, 19.7% vomiting and 12.7% of patients experienced diarrhea. Tigecycline is administered intravenously every 12 hours.

As such, tigecycline has an attractive clinical spectrum, and pre-approval studies indicate efficacy comparable to currently first-line antibiotics. However, the drug must be administered intravenously and leads to a disturbing incidence of gastrointestinal adverse events. Launch of tigecycline has rekindled interest in the tetracycline class, but there is clearly room for improvement over tigecycline characteristics.

A second glycylcycline is under development by Paratek (PTK-0796). Although limited information is available, this compound is in Phase I clinical trials and is said to possess a similar antibacterial spectrum as tigecycline, but with reduced potency against gram-negative bacteria. The compound was recently partnered with Merck.

Tetracycline optimization

The core structure of all clinically useful tetracyclines is similar, consisting of 4 rings, and conserved areas to the “east” and “south” of the molecule (see below), the areas known to participate in binding to the bacterial ribosomal target. Limited substitutions from tetracycline itself have led to analogs with some improvements in spectrum and clinical characteristics. Prior to the introduction of tigecycline, clinically available tetracyclines had substitutions on the 5, 6 and 7 positions compared to tetracycline (e.g., doxycycline, chlortetracycline, oxytetracycline, minocycline).

 

 

	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
3
	
 
	
March 2006

 

 

Tetraphase Pharmaceuticals

CONFIDENTIAL

 

 

The recently introduced tigecycline and the investigational Paratek compound (PTK-0796) are analogs of minocycline, with substitutions at the 9 position as illustrated below:

 

 

 

	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
4
	
 
	
March 2006

 

 

Tetraphase Pharmaceuticals

CONFIDENTIAL

 

The Myers approach allows a tremendous range of variations, most obviously at positions 6, 7, 8, 9 and 10 (on the C and D rings), but also at other positions likely to be involved in ribosomal binding. Addition of a fifth ring with concomitant substitutions also becomes possible. The shaded area in the figure below is constant in clinically-useful tetracyclines, and is accessible in the Myers synthesis. The Myers synthesis also offers broad opportunities in the unshaded area.

 

[**]

These criteria [**].

[**]

 

											
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
  
	
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Company Objectives

As described the above, the overall objective is to create an integrated pharmaceutical company focused on antibacterials. Initial phases of development will focus on tetracyclines, subsequently broadening to include other classes and types of antibacterials.

 

					
	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
5
	
 
	
March 2006

 

	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
5
	
 
	
March 2006

 

 

Tetraphase Pharmaceuticals

CONFIDENTIAL

 

Stage I

Initially, the company will be [**]

Thus, the near-term objectives of the company will be:

[**]

This process is estimated to require approximately [**]

Stage II

[**]. The company will [**].

Stage III

[**], the company will [**].

Stage IV

[**], the company will [**].

Intellectual Property

The company will [**].

Company structure and pre-clinical development

As noted above, the core competencies of the company will be [**] development.

Pre-clinical [**]. After review of proposals and cost estimates, the consensus of company advisors is that [**].

[**].

Goals:

[**]

 

 

	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
6
	
 
	
March 2006

 

 

Tetraphase Pharmaceuticals

CONFIDENTIAL

 

 

	
	
 

	
Tasks

	
[**]

	
 

	
[**]

	
 

	
[**]

	
 

[**]

The goals are to [**].

Goals: [**].

 

	
	
 

	
Tasks

	
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Goals: [**]

 

	
	
 

	
Tasks

	
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CONFIDENTIAL
	
 
	
7
	
 
	
March 2006

 

 

Tetraphase Pharmaceuticals

CONFIDENTIAL

 

 

	
	
 

	
Tasks

	
[**]

	
 

	
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[**]

	
 

	
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Clinical development

[**]. The company will develop [**].

Commercial Potential

Estimation of the commercial potential of [**].

Pricing

Using [**] it is estimated that the [**].

Forecast

At this time there are [**]. The forecast is built on the following assumptions:

• [**]

• [**]

• [**]

• [**]

Sales Forecast

($ in millions)

 

											
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
   
	
  
	
Year 1
	
 
	
Year 2
	
 
	
Year 3
	
 
	
Year 4
	
 
	
Year 5

	
U.S. Sales
	
  
	
[**]
	
 
	
[**]
	
 
	
[**]
	
 
	
[**]
	
 
	
[**]

Potential

As previously stated, this proposal is built on the Tetraphase product [**] the forecast above.

Company personnel and recruitment

As noted above, approximately [**] personnel will be required for [**], organized as follows:

[**]

[**]

 

 

	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
8
	
 
	
March 2006

 

 

Tetraphase Pharmaceuticals

CONFIDENTIAL

 

With regard to recruitment, [**].

Facility

[**].

Advisors

Advisors with [**].

Prof. Andrew Myers, Chairman: Prof. Myers’ expertise in synthetic chemistry forms the basis for the company, and his ongoing involvement is crucial in the creation and execution of the appropriate synthetic pathways and compounds. Prof. Myers will work closely with the company on a regular basis, attending research meetings and providing guidance.

Dr. Eric Gordon, Drug Development Advisor: Dr. Gordon is Chairman of the Mediphase Scientific Advisory Board and is widely known for his expertise and success in the development of anti-infectives. While holding senior positions in chemistry at Bristol Myers Squibb, Dr. Gordon supervised the development of approved drugs. He subsequently was a founder of two anti-infective-focused biotechnology companies, Versicor and Vicuron.

Dr. Joaquim Trias, Bacteriology Advisor: Dr. Trias served as Vice President, Microbiology Drug Research at Vicuron for 8 years. Previously, he was a senior scientist at Microcide Pharmaceuticals, and prior to that was in the Dept. of Microbiology at the University of Barcelona.

[**]

 

			
	
 
	
 
	
 

	
Timeline
	
 
	
 

	
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Financing

[**] initial financing for the company, which will likely include [**]. The initial financing will [**].

Budget

See attached.

 

 

	
 
	
 
	
 
	
 
	
 

	
CONFIDENTIAL
	
 
	
9
	
 
	
March 2006

 

 

 

																																													
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Budget Yrs. 1-2
	
  
	
Q1
	
 
	
  
	
Q2
	
 
	
  
	
Q3
	
 
	
  
	
Q4
	
 
	
  
	
Year 1
	
 
	
  
	
Q5
	
 
	
  
	
Q6
	
 
	
  
	
Q7
	
 
	
  
	
Q8
	
 
	
  
	
Year 2
	
 
	
  
	
Total
	
 

	
Personnel
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 

	
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Supplies/External
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 

	
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Total
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
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Capital equipment
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 
	
  
	
 
	
 
	
 

	
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Total
	
  
	
 
	
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Exhibit 6.2.1

Form of Investment Representation Letter

 

 

Exhibit 6.2.1

Investment Representation Letter

Tetraphase Pharmaceuticals, Inc.

c/o Mediphase Venture Partners

3 Newton Executive Park

Newton, MA 02462

Re: Issuance of Shares of Common Stock of Tetraphase Pharmaceuticals, Inc.

Dear Sirs:

In order to induce Tetraphase Pharmaceuticals, Inc. (the “ Company ”) to issue to President and Fellows of Harvard College (“ Harvard ”) [ ] shares (the “ Shares ”) of common stock, par value $0.001 per share, of the Company (the “ Common Stock ”), pursuant to Section 6.2.1 of that certain License Agreement, dated July [ ], 2006, between the Company and Harvard (the “ License Agreement ”), Harvard hereby represents, warrants and covenants to the Company as follows:

1. Harvard is acquiring the Shares for its own account for investment only, and not with a view to, or for sale in connection with any distribution of the Shares in violation of the Securities Act of 1933, as amended, (the “ Securities Act ”), or any rule or regulation under the Securities Act.

2. Harvard has had such opportunity as it has deemed adequate to obtain from representatives of the Company such information as is necessary to permit Harvard to evaluate the merits and risks of its acquisition of the Shares.

3. Harvard has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the acquisition of the Shares and to make an informed investment decision with respect to such acquisition.

4. Harvard can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such Shares for an indefinite period.

5. Harvard understands that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 or otherwise may not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.

 

 

6. A legend substantially in the following form will be placed on the certificates represented the Shares:

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be sold, transferred or otherwise disposed of in the absence of an effective registration statement under such Act or an opinion of counsel satisfactory to the corporation to the effect that such registration is not required.”

7. The foregoing representations and warrants are true as of the date of this Investment Representation Letter and shall be true as of the date the Company issues the Shares to Harvard. If such representations and warranties shall not be true in any respect prior to such date, Harvard will give prompt written notice of such fact to the Company.

8. Harvard agrees, in connection with the initial underwritten public offering of the Company securities pursuant to a registration statement under the Securities Act, (i) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock held by Harvard (other than those shares included in the offering) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company’s securities for a period of 180 days from the effective date of such registration statement, and (ii) to execute any agreement reflecting clause (i) as may be requested by the Company or the managing underwriters at the time of such offering.

[Remainder of page intentionally left blank.]

 

 

This Investment Representation Letter shall be binding upon and inure to the benefit of the Company and Harvard and its assigns.

This Investment Representation Letter shall be construed and enforced in accordance with and governed by the laws of the Commonwealth of Massachusetts without giving effect to the principles of conflicts of laws thereof.

This Investment Representation Letter may be exercised in counterparts and by facsimile signature.

 

			
	
 
	
 
	
 

	
President and Fellows of Harvard College

	
 
	
 

	
By:
	
 
	
   

	
 
	
 
	
Name:

	
 
	
 
	
Title:

	
 
	
 

	
Date:
	
 
	
   

 

Investment Representation Letter Signature Page

 

 

A6820amend1

Amendment to License Agreement

This Amendment to License Agreement (this “Amendment”) is entered into as of this 31 st day of January, 2007 (the “Effective Date”), by and between Tetraphase Pharmaceuticals, Inc., a Delaware corporation, with its principal place of business 480 Arsenal St., Suite 110, Watertown, MA 02472 (“Licensee”) and President and Fellows of Harvard College, Holyoke Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 01238 (“Harvard”).

WHEREAS, the parties entered into a License Agreement as of August 3, 2006 (the “License Agreement”), pursuant to which Harvard granted to Licensee an exclusive license under Harvard Patent Rights and Harvard’s interest in Joint Patent Rights (as such terms are defined in the License Agreement);

WHEREAS, Dr. Andrew G. Myers, a Harvard researcher, is (or by definition will be) an inventor of the inventions claimed in the Harvard Patent Rights and Joint Patent Rights;

WHEREAS, Dr. Myers is an inventor of technology claimed in a new patent application [**] owned by Harvard that is neither a Harvard Patent Right nor a Joint Patent Right, but which claims subject matter related thereto; and

WHEREAS, Licensee wishes to obtain a license under such new patent application and Harvard wishes to grant Licensee a license thereunder;

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

		
	
1.
	
Capitalized terms used in this Amendment that are not defined herein shall have the meanings set forth in the License Agreement.

 

		
	
2.
	
Section 1.10 of the License Agreement is replaced in its entirety with the following:

“Harvard Patent Rights” shall mean, in each case to the extent owned and controlled by Harvard: (a) [**] (including the PCT applications and/or the US regular utility applications filed at or prior to the one year conversion date claiming priority to such provisional applications); (b) any patent or patent application that claims priority to and is a divisional, continuation, reissue, renewal, reexamination, substitution or extension of any patent or patent application identified in (a); (c) any patents issuing on any of the patent applications identified in (a) or (b) and any reissues, renewals, reexaminations, substitutions or extensions thereof; (d) any claim of a continuation-in-part application or patent that is entitled to the priority date of, and is directed specifically to subject matter specifically described in, at least one of the patents or patent applications identified in (a), (b) or (c); (e) any foreign counterpart of any of the patents or patent applications identified in (a), (b) or (c) or of the claims identified in (d); and (f) any claim of any United States or foreign patent or patent application to the extent specifically directed to subject matter of Harvard Inventions.

 

		
	
3.
	
Section 6.1 of the License Agreement is replaced in its entirety with the following:

 

 

License Issuance Fee. As partial consideration for the license granted hereunder, Licensee shall pay Harvard the following non-refund able license fees:

(a) [**] U.S. Dollars ($[**]), payable within [**] days after the date on which Licensee completes a Qualifying Financing (as defined in Section 11.2.2 below); and

(b) [**] U.S. Dollars ($[**]) with respect to [**] by January 31, 2007.

 

		
	
4.
	
Section 3.3 of the License Agreement

Expenses. Subject to Section 3.4 below, Licensee shall reimburse Harvard for all documented, out-of-pocket expenses incurred by Harvard pursuant to this Article 3 within [**] days after Harvard invoices Licensee. In addition, Licensee shall reimburse Harvard for all documented, out-of-pocket expenses incurred by Harvard prior to the execution of this Agreement with respect to the preparation, filing, prosecution, protection and maintenance of Harvard Patent Rights (estimated to be approximately [**] U.S. Cents ($[**])) within [**] days after the date on which the financing described in Section 11.2.2 below closes. In the event that this Agreement is amended in accordance with Section 4.3 to add a new patent or patent application to the definition of Harvard Patent Rights, Licensee shall reimburse Harvard for all documented, out-of-pocket expenses incurred by Harvard prior such amendment with respect to the preparation, filing, prosecution, protection and maintenance of such new patent or patent application within [**] days after Harvard invoices Licensee.

 

		
	
5.
	
All other terms and conditions of the License Agreement shall remain unchanged and in full force and effect.

 

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives as of the date first written above.

 

									
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
President and Fellows of Harvard College
	
 
	
 
	
 
	
Tetraphase Pharmaceuticals, Inc.

	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
/s/ Isaac T. Kohlberg
	
 
	
 
	
 
	
By:
	
 
	
/s/ David C. Lubner

	
 
	
 
	
 
	
 
	
 

	
Name:
	
 
	
Isaac T. Kohlberg
	
 
	
 
	
 
	
Name:
	
 
	
David C. Lubner

	
 
	
 
	
 
	
 
	
 

	
Title:
	
 
	
Sr. Associate Provost
	
 
	
 
	
 
	
Title:
	
 
	
SVP, COO

	
 
	
 
	
Chief Technology Dev. Officer
	
 
	
 
	
 
	
 
	
 
	
 

 

Amendment to License Agreement

This second Amendment to License Agreement (this “Second Amendment”) is entered into as of this 6th day of April, 2010 (the “Effective Date”), by and between Tetraphase Pharmaceuticals, Inc., a Delaware corporation, with its principal place of business at 480 Arsenal St., Suite 110, Watertown, MA 02472 (“Licensee”) and President and Fellows of Harvard College, Holyoke Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 01238 (“Harvard”).

WHEREAS, the parties entered into a License Agreement as of August 3, 2006 (as previously amended, the “License Agreement”), pursuant to which Harvard granted to Licensee an exclusive license under Harvard Patent Rights and Harvard’s interest in Joint Patent Rights (as such terms are defined in the License Agreement);

WHEREAS, on January 31, 2007, the parties amended the License Agreement to include a new patent application [**] under Harvard Patent Rights;

WHEREAS, Dr. Myers is an inventor of technology claimed in an additional new patent application [**] owned by Harvard that is neither a Harvard Patent Right nor a Joint Patent Right, but which claims subject matter related thereto; and

WHEREAS, Licensee wishes to obtain a license under such new patent application and Harvard wishes to grant Licensee a license thereunder;

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

			
	
 
	
1.
	
Capitalized terms used in this Second Amendment that are not defined herein shall have the meanings set forth in the License Agreement.

 

			
	
 
	
2.
	
Section 1.10 of the License Agreement is replaced in its entirety with the following:

“Harvard Patent Rights” shall mean, in each case to the extent owned and controlled by Harvard: (a) [**] being referred to as the “Additional Patent Application”) (including the PCT applications and/or the US regular utility applications filed at or prior to the one year conversion date claiming priority to such provisional applications); (b) any patent or patent application that claims priority to and is a divisional, continuation, reissue, renewal, reexamination, substitution or extension of any patent or patent application identified in (a); (c) any patents issuing on any of the patent applications identified in (a) or (b) and any reissues, renewals, reexaminations, substitutions or extensions thereof; (d) any claim of a continuation-in-part application or patent that is entitled to the priority date of, and is directed specifically to subject matter specifically described in, at least one of the patents or patent applications identified in (a), (b) or (c); (e) any foreign counterpart of any of the patents or patent applications identified in (a), (b) or (c) or of the claims identified in (d); and (f) any claim of any United States or foreign patent or patent application to the extent specifically directed to subject matter of Harvard Inventions. The Additional Patent Application and all patents and patent applications listed in clauses (b) through (e) that correspond to the Additional Patent

 

 

Application shall be referred to herein as the “Additional Patent Rights.” For clarity, Additional Patent Rights are a subset of Harvard Patent Rights.

 

			
	
 
	
3.
	
Section 5.4 of the License Agreement is amended by adding to the end of such Section the following:

“Notwithstanding the foregoing, in the event that the Development Milestone that is not achieved and not cured under this Section 5.4 and with respect to which Licensee is in material breach is an Additional Patent Right Development Milestone (as set forth on Exhibit 1.5), then Harvard’s right to terminate this Agreement under Section 5.4 shall be limited to the Additional Patent Rights such that the license and other rights granted under this Agreement to the Additional Patent Rights shall terminate, with this Agreement otherwise remaining in full force and effect in all respects.

 

			
	
 
	
4.
	
Section 6.1 of the License Agreement is replaced in its entirety with the following:

License Issuance Fee. As partial consideration for the license granted hereunder, Licensee shall pay Harvard the following non-refundable license fees:

(a) [**] U.S. Dollars ($[**]), payable within [**] days after the date on which Licensee completes a Qualifying Financing (as defined in Section 11.2.2 below);

(b) [**] U.S. Dollars ($[**]) with respect to [**] by January 31, 2007.

(c) [**] U.S. Dollars ($[**]) with respect to the Additional Patent Rights by April 23, 2010.

 

			
	
 
	
5.
	
Section 6.3.1.4 of the License Agreement is replaced in its entirety with the following:

[**] U.S Dollars ($[**]) upon [**] with respect to such Licensed Product; provided however, that if such Licensed Product is covered by the Additional Patent Rights then the amount due for this milestone payment shall be [**] U.S Dollars ($[**]).

 

			
	
 
	
6.
	
Exhibit 1.5 of the License Agreement is replaced in its entirety with the Exhibit 1.5 attached to this Second Amendment, so as to include additional Development Milestones with respect to the Additional Patent Rights.

 

			
	
 
	
7.
	
Harvard acknowledges that Licensee has paid the license fees required by Section 6.1(a) and (b).

 

			
	
 
	
8.
	
All other terms and conditions of the License Agreement shall remain unchanged and in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Second Amendment to be executed by their duly authorized representatives as of the date first written above.

 

 

 

			
	
 
	
 
	
 

	
President and Fellows of Harvard College
	
  
	
Tetraphase Pharmaceuticals, Inc.

	
 
	
 

	
By: /s/ Isaac T. Kohlberg
	
  
	
By: /s/ Guy Macdonald

	
 
	
  
	
 

	
Name: Isaac T. Kohlberg, Senior Associate Provost
	
  
	
Name: Guy Macdonald

	
 
	
  
	
 

	
Title: Chief Technology Development Officer

Office of Technology Development

Harvard University
	
  
	
Title: President & CEO

 

 

 

Exhibit 1.5

Development Milestones

 

			
	
 
	
1.
	
Licensee shall commence [**] with respect to a Licensed Product within [**] months of the Effective Date.

 

			
	
 
	
2.
	
Licensee shall commence [**] with respect to a Licensed Product within [**] months of the Effective Date.

 

			
	
 
	
3.
	
Licensee shall [**] for a Licensed Product within [**] months of the Effective Date.

The following Development Milestones (the “Additional Patent Rights Development Milestones”) will apply with respect to Licensed Products covered by the Additional Patent Rights:

 

			
	
 
	
1.
	
[**] with respect to such a Licensed Product by [**].

 

			
	
 
	
2.
	
[**] with respect to such a Licensed Product by [**].

 

			
	
 
	
3.
	
[**] with respect to such a Licensed Product by [**].

 

			
	
 
	
4.
	
[**] with respect to such a Licensed Product by [**].

 

 

Third Amendment to License Agreement

This Third Amendment to License Agreement (this “Third Amendment”) is entered into as of this 18 day of February, 2011 (the “Effective Date”), by and between Tetraphase Pharmaceuticals, Inc., a Delaware corporation, with its principal place of business at 480 Arsenal St., Suite 110, Watertown, MA 02472 (“Licensee”) and President and Fellows of Harvard College, Holyoke Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 01238 (“Harvard”).

WHEREAS, the parties entered into a License Agreement as of August 3, 2006 (as previously amended, the “License Agreement”), pursuant to which Harvard granted to Licensee an exclusive license under Harvard Patent Rights and Harvard’s interest in Joint Patent Rights (as such terms are defined in the License Agreement);

WHEREAS, on January 31, 2007, the parties amended the License Agreement (the “First Amendment”) to include a new patent application [**] under Harvard Patent Rights;

WHEREAS, on April 6, 2010, the parties amended the License Agreement (the “Second Amendment”) to include the Additional Patent Application (as defined in the Second Amendment) under Harvard Patent Rights; and

WHEREAS, the parties agreed in a letter dated June, 2, 2010 to include [**] for all purposes of the License Agreement as Additional Patent Rights (as defined in the Second Amendment); and

WHEREAS Dr. Myers is an inventor of technology claimed in a new patent application [**] owned by Harvard which claims subject matter related to the License Agreement;

WHEREAS, Licensee wishes to obtain a license under such new patent application and Harvard wishes to grant Licensee a license thereunder;

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

			
	
 
	
1.
	
Capitalized terms used in this Third Amendment that are not defined herein shall have the meanings set forth in the License Agreement.

 

			
	
 
	
2.
	
Section 1.10 of the License Agreement is replaced in its entirety with the following:

“Harvard Patent Rights” shall mean, in each case to the extent owned and controlled by Harvard: (a) [**] being referred to as the “Additional Patent Applications”) (including the PCT applications and/or the US regular utility applications filed at or prior to the one year conversion date claiming priority to such provisional applications); (b) any patent or patent application that claims priority to and is a divisional, continuation, reissue, renewal, reexamination, substitution or extension of any patent or patent application identified in (a); (c) any patents issuing on any of the patent applications identified in (a) or (b) and any reissues, renewals, reexaminations, substitutions or extensions thereof; (d) any claim of a continuation-in-part application or patent that is

 

 

entitled to the priority date of, and is directed specifically to subject matter specifically described in, at least one of the patents or patent applications identified in (a), (b) or (c); (e) any foreign counterpart of any of the patents or patent applications identified in (a), (b) or (c) or of the claims identified in (d); and (f) any claim of any United States or foreign patent or patent application to the extent specifically directed to subject matter of Harvard Inventions. The Additional Patent Applications and all patents and patent applications listed in clauses (b) through (e) that correspond to the Additional Patent Applications shall be referred to herein as the “Additional Patent Rights.” For clarity, Additional Patent Rights are a subset of Harvard Patent Rights.

 

			
	
 
	
2.
	
All other terms and conditions of the License Agreement shall remain unchanged and in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Third Amendment to be executed by their duly authorized representatives as of the date first written above.

 

			
	
 
	
 
	
 

	
President and Fellows of Harvard College
	
  
	
Tetraphase Pharmaceuticals, Inc.

	
 
	
 

	
By: /s/ Isaac T. Kohlberg
	
  
	
By: /s/ Guy Macdonald

	
 
	
  
	
 

	
Name: Isaac T. Kohlberg, Senior Associate Provost
	
  
	
Name: Guy Macdonald

	
 
	
  
	
 

	
Title: Chief Technology Development Officer

Office of Technology Development

Harvard University
	
  
	
Title: President & CEO

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