Exhibit 10.4
Certain identified information has been excluded from the exhibit by marking such portions with brackets (“[***]”) because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential.
COLLABORATION AND LICENSE AGREEMENT
by and among
SPERO THERAPEUTICS, INC.,
INNOVENT BIOLOGICS (SUZHOU) CO., LTD.,
and
FORTVITA BIOLOGICS (USA), INC.
dated as of July 8, 2026
TABLE OF CONTENTS
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Article 1 |
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DEFINITIONS |
1 |
Article 2 |
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GOVERNANCE |
25 |
2.1 |
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Alliance Managers |
25 |
2.2 |
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Committees |
25 |
2.3 |
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Scope of Governance |
28 |
2.4 |
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Joint Patent Committee |
28 |
2.5 |
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Discontinuation of Committees |
29 |
2.6 |
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Joint Global Study |
29 |
Article 3 |
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LICENSES; NON-COMPETITION, AND OPTION |
29 |
3.1 |
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License Grant to Licensee |
29 |
3.2 |
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License Grant to Innovent |
31 |
3.3 |
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Right to Sublicense |
33 |
3.4 |
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Retained Rights |
34 |
3.5 |
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No Implied Licenses; Negative Covenant |
34 |
3.6 |
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Non-Competition |
34 |
3.7 |
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Non-Compete: Effects of Change of Control |
35 |
3.8 |
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Non-Compete: Acquisition of a Third Party by a Party |
36 |
3.9 |
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Non-Compete: Distinguishable Competing Product; Option Rights |
36 |
3.10 |
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Future Upstream License Agreements |
38 |
Article 4 |
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REGULATORY AND TECHNOLOGY TRANSFER |
39 |
4.1 |
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Regulatory and Technology Transfer |
39 |
4.2 |
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Technical Support |
39 |
Article 5 |
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DEVELOPMENT |
40 |
5.1 |
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Responsibilities |
40 |
5.2 |
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Diligence |
40 |
5.3 |
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Development Plan |
40 |
5.4 |
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Development Reports |
40 |
5.5 |
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Records |
41 |
5.6 |
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Data Exchange and Use |
41 |
Article 6 |
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COMBINATION CLINICAL TRIALS |
41 |
6.1 |
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Innovent Combination Clinical Trial |
41 |
6.2 |
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Licensee Combination Clinical Trial |
42 |
6.3 |
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Combination Clinical Trial Data |
42 |
Article 7 |
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REGULATORY |
42 |
7.1 |
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Licensee Territory |
42 |
7.2 |
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Innovent Territory |
43 |
7.3 |
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Provision of Regulatory Submissions |
43 |
7.4 |
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Notice of Meetings and Regulatory Actions |
43 |
7.5 |
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Cooperation |
43 |
7.6 |
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No Harmful Actions |
43 |
7.7 |
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Notification of Threatened Action |
43 |
7.8 |
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Rights of Reference |
44 |
7.9 |
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Adverse Events Reporting |
44 |
7.10 |
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Remedial Actions |
45 |
7.11 |
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Safety and Regulatory Audits |
45 |
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Article 8 |
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MANUFACTURING AND SUPPLY |
46 |
8.1 |
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Clinical and Commercial Supply |
46 |
Article 9 |
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COMMERCIALIZATION; MEDICAL AFFAIRS |
48 |
9.1 |
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Responsibilities |
48 |
9.2 |
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Commercialization Diligence |
48 |
9.3 |
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Commercialization Plan |
48 |
9.4 |
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Commercialization Reports |
49 |
9.5 |
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Records |
49 |
9.6 |
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Product Trademarks |
49 |
9.7 |
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No Diversion |
50 |
9.8 |
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Medical Affairs |
50 |
Article 10 |
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PAYMENTS |
51 |
10.1 |
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Upfront Payment |
51 |
10.2 |
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IND Milestone Payment |
51 |
10.3 |
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Development and Regulatory Milestones |
51 |
10.4 |
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Distinguishable Competing Product Milestones |
53 |
10.5 |
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Sales Milestones |
54 |
10.6 |
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Royalties |
54 |
10.7 |
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Payment |
57 |
10.8 |
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Audits |
58 |
10.9 |
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Interest |
58 |
10.10 |
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Taxes |
59 |
10.11 |
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Upstream Costs |
60 |
Article 11 |
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CONFIDENTIALITY; PUBLICATION |
60 |
11.1 |
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Confidential Information |
60 |
11.2 |
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Permitted Disclosures |
61 |
11.3 |
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Confidential Treatment |
62 |
11.4 |
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Use of Names |
63 |
11.5 |
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Publication of Licensed Product Information |
63 |
11.6 |
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Public Announcements |
64 |
11.7 |
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Prior Non-Disclosure Agreements |
65 |
Article 12 |
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REPRESENTATIONS, WARRANTIES, AND COVENANTS |
65 |
12.1 |
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Representations and Warranties of Each Party |
65 |
12.2 |
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Additional Representations and Warranties of Innovent |
66 |
12.3 |
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Additional Representations and Warranties of Licensee |
68 |
12.4 |
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Covenants |
68 |
12.5 |
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NO OTHER REPRESENTATIONS OR WARRANTIES |
70 |
Article 13 |
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INDEMNIFICATION |
70 |
13.1 |
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By Licensee |
70 |
13.2 |
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By Innovent |
70 |
13.3 |
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Procedure |
70 |
13.4 |
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Insurance |
71 |
13.5 |
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LIMITATION OF LIABILITY |
71 |
Article 14 |
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INTELLECTUAL PROPERTY |
72 |
14.1 |
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Ownership |
72 |
14.2 |
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Disclosure of Inventions |
72 |
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14.3 |
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Prosecution |
73 |
14.4 |
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Defense of Third Party Infringement Claims |
74 |
14.5 |
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Enforcement |
75 |
14.6 |
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Patent Listing |
77 |
14.7 |
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Patent Term Extension |
77 |
14.8 |
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CREATE Act |
77 |
Article 15 |
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TERM AND TERMINATION |
78 |
15.1 |
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Term and Expiration |
78 |
15.2 |
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Termination for Mutual Agreement |
78 |
15.3 |
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Termination for Convenience |
78 |
15.4 |
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Termination for Material Breach |
78 |
15.5 |
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Termination for Certain Licensee Actions |
79 |
15.6 |
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Licensee Alternative to Termination |
80 |
15.7 |
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Effects of Termination |
80 |
15.8 |
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Other Remedies |
82 |
15.9 |
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Survival |
82 |
Article 16 |
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DISPUTE RESOLUTION |
82 |
16.1 |
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General |
82 |
16.2 |
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Construction |
82 |
16.3 |
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Escalation |
83 |
16.4 |
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Arbitration |
83 |
16.5 |
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Certain Disputes |
84 |
Article 17 |
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MISCELLANEOUS |
84 |
17.1 |
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Governing Law |
84 |
17.2 |
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Force Majeure |
85 |
17.3 |
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Performance by Affiliates |
85 |
17.4 |
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Assignment |
85 |
17.5 |
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Severability |
85 |
17.6 |
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Notices |
85 |
17.7 |
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Entire Agreement; Amendments |
87 |
17.8 |
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Headings |
87 |
17.9 |
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Independent Contractors |
87 |
17.10 |
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Waiver |
88 |
17.11 |
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Waiver of Rule of Construction |
88 |
17.12 |
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Counterparts |
88 |
17.13 |
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Language |
88 |
EXHIBITS
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Exhibit 1.86 |
Innovent Platform Patents |
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Exhibit 1.102 |
Licensed Patents |
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Exhibit 1.104 |
Existing Licensed Product Specific Patents |
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Exhibit 5.3 |
Licensee Development Plan |
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Exhibit 8.1(b) |
Supply Agreement Material Terms |
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Exhibit 11.6 |
Initial Press Release |
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Exhibit 15.7(c) |
Procedures Applicable to Disagreements With Respect to Reversion Terms or Reversion Sublicense Terms |
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COLLABORATION AND LICENSE AGREEMENT
This Collaboration and License Agreement (this “Agreement”) is made as of July 8, 2026 (the “Effective Date”), by and among Spero Therapeutics, Inc., a corporation organized and existing under the laws of the State of Delaware (“Licensee”), with offices located at 675 Massachusetts Avenue, 14th Floor, Cambridge, Massachusetts 02139, United States, and Innovent Biologics (Suzhou) Co., Ltd., a company established in the People’s Republic of China (“Innovent Suzhou”), with offices located at 168 Dongping Street, Suzhou Industrial Park, Jiangsu 215123, China, and Fortvita Biologics (USA), Inc., a Delaware corporation with an office and place of business at 950 Page Mill Rd, Suite 204, Palo Alto, California 94304, United States (“Fortvita USA” and, collectively with Innovent Suzhou, “Innovent”). Innovent and Licensee may be referred to in this Agreement individually as a “Party” and together as the “Parties.”
RECITALS
A.Innovent has discovered and developed certain proprietary monoclonal antibodies designed to bind to CD40L, including the molecule known internally as IBI355, and controls certain intellectual property rights relating thereto.
B.Licensee wishes to obtain an exclusive license from Innovent to develop and commercialize Licensed Products outside of Greater China (as such terms are defined below).
C.Innovent is willing to grant such a license to Licensee and to collaborate with Licensee on the development and commercialization of Licensed Products in the Licensee Territory (as such terms are defined below), all in accordance with and subject to the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
The following initially capitalized terms, whether used in the singular or plural, have the respective meanings set forth below:
1.1 “Acquired Party” has the meaning set forth in Section 3.8.
1.2 “Acquisition Party” has the meaning set forth in Section 3.7.
1.3 “Adverse Event” means any unwanted or harmful medical occurrence in a patient or subject who is administered a Licensed Product, whether or not considered related to such Licensed Product, including any undesirable sign (including abnormal laboratory findings of clinical concern).
1.4 “Affiliate” means, with respect to a specified Person, any entity that directly or indirectly controls, is controlled by or is under common control with such Person for so long as such control exists. As used in this Section 1.4, “control” (and, with correlative meanings, the terms “controlled by” and “under common control with”) means, in the case of a corporation, the ownership of more than fifty percent (50%) of the outstanding voting securities thereof or, in the case of any other type of entity, an interest that results in the ability to direct or cause the direction of the management and policies of such entity or the power to appoint more than fifty percent (50%) of the members of the governing body of the entity or, where ownership of more than fifty percent (50%) of such securities or interest is prohibited by law, ownership of the maximum amount legally permitted.
1.5 “Agreement” has the meaning set forth in the preamble.
1.6 “Alliance Manager” has the meaning set forth in Section 2.1.
1.7 “Annual Net Sales” means, with respect to a given Licensed Product in a given Calendar Year, the aggregate Net Sales of such Licensed Product in such Calendar Year.
1.8 “Anti-Corruption Laws” has the meaning set forth in Section 12.4(d)(i).
1.9 “Applicable Accounting Standards” means, with respect to a Party, International Financial Reporting Standards (“IFRS”) or GAAP, in each case as generally and consistently applied throughout such Party’s or its Affiliate’s or Sublicensee’s organization. Each Party shall promptly notify the other Party in the event that it changes the Applicable Accounting Standards pursuant to which its records are maintained; provided that, each Party may only use internationally recognized accounting principles (e.g., IFRS, GAAP, etc.) as its Applicable Accounting Standards.
1.10 “Applicable Laws” means all statutes, ordinances, regulations, rules or orders of any kind whatsoever of any Governmental Authority that may be in effect from time to time and applicable to any of the relevant activities contemplated by this Agreement.
1.11 “Assist” means providing, directly or indirectly, a Third Party with (a) any analysis of any of the Licensed Patents or any portion thereof; (b) prior art or analysis of any prior art to any of the Licensed Patents; (c) any documents in Licensee’s possession, custody, or control relating to any of the Licensed Patents, in whole or in part, or to any prior art to any of the Licensed Patents; or (d) financial or technical support, in each case ((a)-(d)), with the intent of assisting a Patent Challenge of any of the Licensed Patents or any portion thereof.
1.12 “Audited Party” has the meaning set forth in Section 10.8(b).
1.13 “Biosimilar Product” means, with respect to a Licensed Product that has received Regulatory Approval in a country within the Licensee Territory and is being marketed and sold by Licensee or any of its Affiliates or Sublicensees in such country, any drug product for human use that: (a) is sold in such country by a Third Party who did not purchase or acquire such product or its active components or ingredients in a chain of distribution that included Licensee or any of its Affiliates or Sublicensees; and (b) has received Regulatory Approval in such country as a biosimilar, bioequivalent (or similar designation) of such Licensed Product by the applicable Regulatory Authority in such country, pursuant to an abbreviated approval process in accordance with the then-current rules and regulations in such country, in reliance on a prior Regulatory Approval of such Licensed Product or the data contained or incorporated by reference in a Regulatory Approval for such Licensed Product, where such Licensed Product is the “reference medicinal product,” “reference listed product” or similar designation in such country, including, for clarity, any product for which any Regulatory Approval is sought or obtained pursuant to 42 U.S.C. §262(k) as a biosimilar to such Licensed Product, or any other similar law of any jurisdiction, by reference to a prior Regulatory Approval granted with respect to such Licensed Product; or that is “biosimilar” to such Licensed Product, as the term “biosimilar” is defined in 42 U.S.C. §262(i)(2) or any other similar law of any jurisdiction.
1.14 “Breach Notice” has the meaning set forth in Section 15.4(a).
1.15 “Business Day” means a day other than Saturday, Sunday, or any day on which banks located in New York, U.S., are authorized or obligated to close, or any day that is a government mandated holiday in China. Whenever this Agreement refers to a number of days, such number will refer to calendar days unless Business Days are specified.
1.16 “Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31st, June 30th, September 30th and December 31st; provided that the first Calendar Quarter of the Term will extend from the Effective Date until the end of the then-current Calendar Quarter, and the last Calendar Quarter of the Term will end on the effective date of termination or expiration of this Agreement.
1.17 “Calendar Year” means each twelve (12) month period commencing on January 1st and ending on December 31st; provided that the first Calendar Year of the Term will extend from the Effective Date to December 31st of the then-current Calendar Year, and the last Calendar Year of the Term will end on the effective date of the termination or expiration of this Agreement.
1.18 “Cell Culture Media” means the Innovent proprietary cell culture media used by or on behalf of Innovent or any of its Affiliates for the Manufacture of Licensed Compounds and/or Licensed Products.
1.19 “cGMP” means all applicable current Good Manufacturing Practices including, as applicable, (a) the principles detailed in the U.S. Current Good Manufacturing Practices, 21 C.F.R. Parts 4, 210, 211, 601, 610 and 820, (b) European Directive 2003/94/EC and Eudralex 4, (c) the principles detailed in the ICH Q7 guidelines, and (d) the equivalent Applicable Laws in any relevant country or region, each as may be amended and applicable from time to time.
1.20 “Change of Control” means, with respect to a Party, the occurrence of any of the following events: (a) any Third Party acquires, directly or indirectly, the beneficial ownership of any voting security of such Party, or if the percentage ownership of any Third Party in the voting securities of such Party is increased through stock redemption, cancellation, or other recapitalization, and immediately after such acquisition or increase such Third Party is, directly or indirectly, the beneficial owner of voting securities representing more than fifty percent (50%) of the total voting power of all of the then outstanding voting securities of such Party; (b) a merger, consolidation, recapitalization, or reorganization of such Party is consummated which results in shareholders or equity holders of such Party immediately prior to such transaction no longer owning at least fifty percent (50%) of the outstanding voting securities of the surviving entity (or its parent entity) immediately following such transaction; or (c) there is a sale or transfer to a Third Party of all or substantially all of such Party’s consolidated assets that relate to the subject matter of this Agreement, through one or more related transactions. Notwithstanding the foregoing, (i) any investment transaction by venture capital, private equity or other financial investors, including through a private placement, the purpose of which is to raise capital for a Party; (ii) any reorganization, merger or consolidation of a Party in which the holders of the voting securities of such Party immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of such Party or such other surviving or resulting entity; and (iii) any underwritten public offering of equity securities by a Party pursuant to an effective registration statement under the applicable securities laws of any country or jurisdiction shall not, in any case, constitute a Change of Control for purposes of this Agreement.
1.21 “Claims” has the meaning set forth in Section 13.1.
1.22 “Clinical Trial” means any clinical trial of a product in human subjects (a) as defined in 21 C.F.R. §312.21, as amended from time to time, or (b) as prescribed by the Regulatory Authorities in any jurisdiction outside the U.S.
1.23 “CMO” means any Third Party contract manufacturing organization.
1.24 “Combination Product” means any Licensed Product that comprises a Licensed Compound with one or more other clinically or pharmacologically active compounds or ingredients or delivery devices other than a Licensed Compound in a single formulation or final package presentation for sale as a single unit (including separate unit doses so configured). The Licensed Compound portion of any Combination Product shall be deemed the “Licensed Component” and the other clinically or pharmacologically active compounds or ingredients or delivery devices of such Combination Product shall be deemed the “Other Components.”
1.25 “Commercialization” or “Commercialize” means all activities directed to marketing, distribution, promoting or selling of pharmaceutical products (including importing and exporting activities in connection therewith), but excluding activities directed to Manufacturing or Development. “Commercializing” and “Commercialized” have the correlative meanings.
1.26 “Commercially Reasonable Efforts” means, with respect to the efforts to be expended by a Party with respect to any objective, [***].
1.27 “Committee(s)” means the JSC or any subcommittee established by the JSC, as applicable.
1.28 “Competing Product” means any monoclonal antibody, bispecific antibody or multispecific antibody Targeting CD40L, excluding any Licensed Compound, any Licensed Product, and any Terminated Product.
1.29 “Confidential Information” has the meaning set forth in Section 11.1.
1.30 “Confidentiality Agreement” means the Mutual Non-Disclosure Agreement between the Parties dated [***].
1.31 “Control” or “Controlled” means, with respect to any Know-How, Patents or other subject matter, that a Party or any of its Affiliates has the legal authority or right (whether by ownership, license or otherwise, without taking into account any license granted by one Party to the other Party pursuant to this Agreement) to grant a license, sublicense, access or right to use (as applicable) under such Know-How, Patents or other subject matter, on the terms and conditions set forth herein, in each case, without breaching the terms of any agreement with a Third Party. Notwithstanding the foregoing, (a) in the event of a Change of Control of a Party, any Know-How, Patents and other subject matter Controlled by the Acquisition Party immediately prior to such Change of Control transaction will not be Licensed Technology, Licensee Product IP, or Grant-Back Technology except, in each case, to the extent any such Know-How, Patents or other subject matter (i) is also Controlled by such Party or any of its Affiliates existing immediately prior to such Change of Control transaction, or (ii) is generated or used by such Party or any of its Affiliates in the Exploitation of any Licensed Compound or Licensed Product after such Change of Control transaction; and (b) Innovent and its Affiliates shall not be deemed to Control any Know-How, Patents or other subject matter licensed to Innovent or any of its Affiliates after the Effective Date unless Licensee elects to receive a sublicense thereunder in accordance with Section 3.10.
1.32 “Cover,” “Covered” or “Covering” means with respect to any Patent and any Licensed Product or Licensed Compound, that, in the absence of the ownership of or a license to such Patent, the Development, Manufacture, use, Commercialization or other Exploitation of such Licensed Product or Licensed Compound would fall within the scope of one or more claims of such Patent (including, with respect to a pending claim of a Patent, as if such pending claim were to issue without modification).
1.33 “Cure Period” has the meaning set forth in Section 15.4(a).
1.34 “Data” means (a) any and all results of research, preclinical studies, including in vitro and in vivo studies, Clinical Trials and other testing of any composition of matter, product candidate or product, and (b) any and all other data related to the development, manufacture or commercialization of any composition of matter, product candidate or product, including any biological, chemical, pharmacological, toxicological, pharmacokinetic, preclinical, clinical, CMC, analytical, quality control, mechanical, software and electronic data, results and descriptions.
1.35 “Development” or “Develop” means any research and preclinical and clinical drug or biological development activities, including test method development, toxicology, formulation, quality assurance/quality control development, statistical analysis, preclinical studies and Clinical Trials and regulatory affairs, and regulatory activities, including filing for, obtaining and maintaining Regulatory Approval, but excluding activities directed to Manufacturing or Commercialization. “Developing” has the correlative meaning.
1.36 “Development and Regulatory Milestone Event” has the meaning set forth in Section 10.3(a).
1.37 “Development and Regulatory Milestone Payment” has the meaning set forth in Section 10.3(a).
1.38 “Disclosing Party” has the meaning set forth in Section 11.1.
1.39 “Dispute” has the meaning set forth in Section 16.1.
1.40 “Dispute Referral” has the meaning set forth in Section16.3.
1.41 “Distinguishable Competing Product” has the meaning set forth in Section 3.9.
1.42 “Divestiture” means, with respect to a Competing Product: (a) the divestiture of such Competing Product through: (i) an outright sale or assignment of all material rights in such Competing Product to a Third Party; (ii) an exclusive out-license to a Third Party of all development, manufacture, and commercialization rights with respect to such Competing Product, with no further role, influence, or authority of the applicable Party, directly or indirectly, with respect to such Competing Product; or (iii) a combination of the transactions contemplated by the foregoing clauses (i) and (ii); or (b) the cessation of all Development, Manufacture and Commercialization activities with respect to such Competing Product (subject, if applicable, to applicable wind-down activities and applicable requirements of Applicable Law). For clarity, subject to the preceding sentence, the right of the applicable Party to receive royalties, milestones, or other payments in connection with an acquirer’s, assignee’s, or licensee’s Development, Manufacture, or Commercialization of a Competing Product pursuant to subsection (a) above shall not be deemed to disqualify the applicable sale, assignment, or license from constituting a Divestiture. When used as a verb, “Divest” and “Divested” mean to cause or have caused a Divestiture.
1.43 “Dollars” and “$” mean United States dollars.
1.44 “Effective Date” has the meaning set forth in the preamble.
1.45 “EMA” means the European Medicines Agency, or any successor agency thereto.
1.46 “Excluded Formulation Know-How” means any Know-How that (a) consists of a specific Licensed Product formulation or its Manufacture and that is at a concentration of [***] or greater of active pharmaceutical ingredient; or (b) is designed, developed or intended by or on behalf of a Party or its Affiliates for subcutaneous administration (whether delivered by [***]); provided that Excluded Formulation Know-How does not include Know-How that has broader applicability beyond a specific Licensed Product. For clarity, Excluded Formulation Know-How may include specific composition and relative proportions of ingredients in, and specific process conditions used to Manufacture, any such formulation, but does not include more general Know-How that is not specific to such formulation.
1.47 “Existing Upstream License Agreement” means that certain [***].
1.48 “Exploit” means Develop, Manufacture, have Manufactured, use, practice, sell, offer for sale, import, export, Commercialize or otherwise exploit. “Exploitation” has the correlative meaning.
1.49 “Export Controls” has the meaning set forth in Section 12.4(e)(i).
1.50 “FDA” means the United States Food & Drug Administration, or any successor agency thereto.
1.51 “Field” means all human and animal uses.
1.52 “First Commercial Sale” means, on a Licensed Product-by-Licensed Product and country-by-country basis within the Licensee Territory, the first arm’s length sale of a Licensed Product to a Third Party in a country by Licensee or its Affiliate or Sublicensee for use or consumption in such country following receipt of Regulatory Approval of such Licensed Product in such country; provided that in no event will any sale of a Licensed Product in a country (a) at or below cost in connection with the Development of a Licensed Product (including the conduct of Clinical Trials), or (b) at or below cost for charitable purposes or patient access (including in connection with “treatment IND sales,” “named patient sales” and “compassionate use sales”), be considered a “First Commercial Sale.”
1.53 “FTE” means full-time equivalent employee of Innovent based on a total of [***] hours of scientific, technical or managerial activities under this Agreement per Calendar Year. Overtime and work on weekends, holidays, and the like, in each case, will not be counted with any multiplier (e.g., time-and-a-half or double time) toward the number of hours that are used to calculate the FTE contribution. The portion of an FTE billable by Innovent for one individual during a given accounting period will be determined by dividing the number of hours worked directly by such individual on the work to be conducted under this Agreement during such accounting period and the number of FTE hours applicable for such accounting period based on [***] working hours per Calendar Year.
1.54 “FTE Costs” means, with respect to Innovent and an activity for any period, the FTE Rate multiplied by the applicable number of FTEs performing such activity during such period.
1.55 “FTE Rate” means [***] dollars ($[***]) per FTE per Calendar Year.
1.56 “GAAP” means U.S. Generally Accepted Accounting Principles, consistently applied.
1.57 “GCP” means all applicable Good Clinical Practice standards for the design, conduct, performance, monitoring, auditing, recording, analyses and reporting of Clinical Trials, including, as applicable (a) as set forth in the International Council on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use Guideline for Good Clinical Practice (CPMP/ICH/135/95) and any other guidelines for good clinical practice for trials on medicinal products in the Licensee Territory or the Innovent Territory, (b) the Declaration of Helsinki (2004) as last amended at the 52nd World Medical Association in October 2000 and any further amendments or clarifications thereto, (c) U.S. Code of Federal Regulations Title 21, Parts 50 (Protection of Human Subjects), 56 (Institutional Review Boards) and 312 (Investigational New Drug Application), as may be amended from time to time, and (d) the equivalent guidelines or Applicable Laws in any other region in the Licensee Territory or the Innovent Territory, each as may be amended and applicable from time to time and in each case, that provide for, among other things, assurance that the clinical Data and reported results are credible and accurate and protect the rights, integrity, and confidentiality of trial subjects.
1.58 “GLP” means all applicable Good Laboratory Practice standards, including, as applicable, as set forth in the then-current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, or the equivalent guidelines or Applicable Laws in any other region in the Licensee Territory or the Innovent Territory, each as may be amended and applicable from time to time.
1.59 “GLP Tox Study(ies)” means any nonclinical safety and toxicology studies, including IND-enabling studies, conducted in compliance with GLP requirements and designed to support Regulatory Submissions, to be filed with FDA, such as repeat‑dose toxicity, safety pharmacology, genotoxicity, reproductive or developmental toxicity studies.
1.60 “Governmental Authority” means any court, commission, authority, department, ministry, official or other instrumentality of, or being vested with public authority under any law of, any country, region, state or local authority or any political subdivision thereof, or any association of countries.
1.61 “Grant-Back Technology” means, with respect to any Terminated Product, (a) all Know-How Controlled by Licensee or any of its Affiliates that is necessary for the Exploitation of such Terminated Product as of the effective date of termination and at any time during the [***] period prior to the applicable effective date of termination and (b) all Patents that are Controlled by Licensee or any of its Affiliates that Cover such Know-How and/or the Terminated Product as of the effective date of termination and at any time during the [***] period prior to the applicable effective date of termination.
1.62 “Greater China” means the mainland of the People’s Republic of China, Taiwan, Hong Kong and Macau.
1.63 “GSP” means all applicable Good Supply Practice standards, including, as applicable, as set forth in the then-current good supply practice standards promulgated or endorsed by the FDA as defined in Good Supply Practice for Pharmaceutical Products or the equivalent Applicable Laws in any other region in the Licensee Territory or the Innovent Territory, each as may be amended and applicable from time to time.
1.64 “ICC Rules” has the meaning set forth in Section 16.4(a).
1.65 “ICH” means The International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use.
1.66 “Included FTEs” means an aggregate of [***] hours of services that Licensee requests Innovent to provide to Licensee in accordance with the applicable provisions of this Agreement, which Innovent shall provide in accordance with the applicable provisions of this Agreement without charge to or reimbursement by Licensee.
1.67 “IND” means an investigational new drug application or equivalent application filed with the applicable Regulatory Authority, which application is required to commence or conduct Clinical Trials in the applicable jurisdiction.
1.68 “Indemnitee” has the meaning set forth in Section 13.3.
1.69 “Indemnitor” has the meaning set forth in Section 13.3.
1.70 “Indication” means a specific disease, disorder or condition which is recognized by the applicable Regulatory Authority in a given country or jurisdiction as a discrete disease, disorder or condition in the labeling of a Licensed Product. For clarity, (a) different genetic subtypes, organs of origin, or histologies of a disease, disorder or condition shall not constitute distinct Indications, and (b) treatment of different populations of patients having a disease, disorder or condition (e.g., front-line treatment, treatment of second-line therapy, relapsed refractory treatment and maintenance treatment) shall not constitute distinct Indications. Notwithstanding the foregoing, if the filing of an MAA for a new Indication (i.e., an Indication that is not excluded as a distinct Indication by the foregoing sentence and for which an MAA has not previously been filed) requires the completion of a separate pivotal trial for such Indication, then such Indication shall be deemed to be a distinct Indication for purposes of this Agreement.
1.71 “Indirect Tax” has the meaning set forth in Section 10.10(c).
1.72 “Infringement” has the meaning set forth in Section 14.5(a).
1.73 “Initiation” or “Initiate” means, with respect to a product and a Clinical Trial, dosing of the first patient in such Clinical Trial with such product.
1.74 “Innovent” has the meaning set forth in the preamble.
1.75 “Innovent Combination Clinical Trial” has the meaning set forth in Section 6.1(a).
1.76 “Innovent Combination Blocking Claim” has the meaning set forth in Section 3.1(e).
1.77 “Innovent Combination Patent” means any Patent Controlled by Innovent or any of its Affiliates that (a) claims or Covers the use of a Licensed Compound or Licensed Product with one or more compounds or products that are not Licensed Compounds or Licensed Products, including an Innovent Product, as a combination therapy, including any method of use, dosing, administration, treatment regimen, or patient population claim specific to such combination therapy, or (b) claims or Covers any data, results, or Know-How generated by or on behalf of Innovent or its Affiliates in the conduct of an Innovent Combination Clinical Trial, in each case ((a) and (b)), solely to the extent such Patent claim is specifically directed to a combination therapy comprising a Licensed Compound or Licensed Product and one or more other compounds or products, including Innovent Products, and not to the Licensed Compound or Licensed Product alone. For clarity, Innovent Combination Patents exclude any Patent, or claim thereof, that specifically Covers the composition of matter, formulation, method of manufacture, or use of a Licensed Compound or Licensed Product other than in a combination therapy with one or more other compounds or products, including an Innovent Product.
1.78 “Innovent Combination Therapy” has the meaning set forth in Section 6.1(a).
1.79 “Innovent Controlled Patents” has the meaning set forth in Section 14.3(d).
1.80 “Innovent Formulation Blocking Claim” has the meaning set forth in Section 3.1(d).
1.81 “Innovent Formulation Patent” has the meaning set forth in Section 3.1(b).
1.82 “Innovent Indemnitee(s)” has the meaning set forth in Section 13.1.
1.83 “Innovent Manufacturing Technology” means the Licensed Know-How consisting of the cell line and related Know-How licensed by [***] to Innovent Suzhou pursuant to the Existing Upstream License Agreement that is used by or on behalf of Innovent or any of its Affiliates for the Manufacture of Licensed Products and Licensed Compounds.
1.84 “Innovent Platform” means Innovent’s platform-based proprietary technology used by Innovent or its Affiliates to discover, generate, develop or manufacture compounds, including Licensed Compound(s).
1.85 “Innovent Platform Know-How” means Licensed Know-How that specifically relates to the Innovent Platform.
1.86 “Innovent Platform Patents” means the Licensed Patents listed in Exhibit 1.86 that Cover the Innovent Platform and/or claim or disclose Innovent Platform Know-How.
1.87 “Innovent Platform Technology” means (a) Innovent Platform Patents and (b) Innovent Platform Know-How.
1.88 “Innovent Product” means any pharmaceutical product that is proprietary to, and is owned or otherwise Controlled by, Innovent or any of its Affiliates that is not a Licensed Compound or Licensed Product.
1.89 “Innovent Product Marks” has the meaning set forth in Section 9.6(b).
1.90 “Innovent Territory” means Greater China.
1.91 “Invention” means any process, method, composition of matter, article of manufacture, discovery or finding, or other Know-How, patentable or otherwise, that is invented, discovered or generated (a) solely by or on behalf of either Party, its Affiliates, Sublicensees (or (sub)licensees, with respect to Innovent), agents or independent contractors or (b) jointly by or on behalf of both Parties, their Affiliates, Sublicensees (or (sub)licensees, with respect to Innovent), agents or independent contractors, in each case, during the Term in the performance of any activity contemplated by this Agreement or otherwise in the exercise of its (or their) rights or carrying out its (or their) obligations under this Agreement.
1.92 “IRA Subject Product” means any Licensed Product that is designated as a “selected drug” by the Secretary of the U.S. Department of Health and Human Services for drug price negotiation under the Inflation Reduction Act (Public Law No. 117-169) of 2022 in the United States.
1.93 “Joint Inventions” has the meaning set forth in Section 14.1(b).
1.94 “Joint Patents” has the meaning set forth in Section 14.1(b).
1.95 “Joint Steering Committee” or “JSC” has the meaning set forth in Section 2.2(a).
1.96 “Justified Delay” means any delay that is attributable to (a) any toxicity or drug safety issue or Serious Adverse Event that is reasonably related to or observed in connection with, as applicable, any Development or Commercialization activities conducted with respect to a Licensed Product; (b) Licensee’s reasonable response to any guidance or inquiries that are received from, or any action or inaction by, any Regulatory Authority in a Major Market (such as a clinical hold, a recall, or withdrawal) with respect to a Licensed Product; (c) Innovent’s delay in delivering to Licensee any chronic toxicology data or other data in Innovent’s possession and Control that are compliant with FDA requirements and are required for purposes of Licensee’s IND filing in the United States; (d) any need for Licensee to regenerate any data provided by Innovent to Licensee hereunder in order to file Licensee’s first IND for a Licensed Product in the United States to the extent such need arises from guidance received by Licensee from the FDA or is to comply with any Applicable Laws in the United States; (e) any force majeure event that affects a Licensed Product as described in Section 17.2; or (f) any legal injunction issued by a court of competent jurisdiction or by operation of Applicable Laws in any Major Market that affects a Licensed Product.
1.97 “Know-How” means any scientific or technical information, results, data, and materials of any type whatsoever, in any tangible or intangible form whatsoever, including Data, databases, safety information, practices, methods, techniques, technology, specifications, formulations, formulae, chemical or biological materials, knowledge, know-how, skill, experience, trade secrets, test data including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data.
1.98 “Knowledge” means, with respect to any representation given by Innovent in this Agreement, the actual knowledge of the executive officers of Innovent and Innovent’s management personnel (including its applicable program managers and legal personnel), in each case, having substantial responsibilities for Innovent’s Development and Manufacture of Licensed Products and legal matters relating thereto, after reasonable inquiry of such Person’s direct reports and outside counsel where such direct reports and outside counsel would reasonably be expected to have substantial additional knowledge relevant to the applicable subject matter, without any obligation to conduct any freedom-to-operate analysis, patent search, patent clearance review, legal investigation, or other independent investigation, or review of archived records to establish Knowledge.
1.99 “Licensed Component” has the meaning set forth in Section 1.24.
1.100 “Licensed Compound” means (a) the molecule known internally by Innovent as IBI355, (b) any backup molecules of IBI355 made by or on behalf of Innovent or any of its Affiliates as of the Effective Date or during the Term that are monoclonal antibodies Targeting CD40L (“Backups”), and (c) any Derivatives of IBI355 or any Backup, in each case of (a) - (c), in the monoclonal antibody modality. For purposes of this definition, “Derivative” means any antibody that (i) is discovered, optimized or modified from or otherwise based on IBI355 or any Backup, (ii) is made by or on behalf of Licensee or its Affiliates or Sublicensees, and (iii) incorporates the antigen-binding sequence of IBI355 or the antigen-binding sequence of a Backup.
1.101 “Licensed Know-How” means any and all Know-How Controlled by Innovent or its Affiliates as of the Effective Date or during the Term, including Innovent’s or its Affiliate’s joint ownership interest in any Know-How within the Joint Inventions, that is necessary or reasonably useful for the Exploitation of any Licensed Compound or Licensed Product in the Field in the Licensee Territory; provided that, (a) subject to Section 3.1, any Excluded Formulation Know-How; and (b) any Know-How generated by or on behalf of Innovent or its Affiliates in the conduct of any Innovent Combination Clinical Trial other than any such Know-How that is safety data (“Innovent Combination Clinical Trial Know-How”), shall each be excluded from the Licensed Know-How (all such Know-How described in clauses (a) and (b), “Excluded Innovent Know-How”).
1.102 “Licensed Patents” means any and all Patents that (a) are Controlled by Innovent or its Affiliates as of the Effective Date or during the Term, including Innovent’s or its Affiliate’s interest in any Joint Patents, and (b) that claim the composition of matter, formulation, method of use or method of manufacture of Licensed Compounds or Licensed Products in the Field in the Licensee Territory, including for clarity, all Licensed Product Specific Patents and Innovent Platform Patents. Without limiting the foregoing, Exhibit 1.102 sets forth a list of all Licensed
Patents existing as of the Effective Date. For clarity, Licensed Patents exclude Innovent Formulation Patents (subject to Section 3.1) and Innovent Combination Patents.
1.103 “Licensed Product” means any product that comprises or incorporates any Licensed Compound in any form, formulation and delivery mode, including any Combination Product; provided that a Licensed Product may not contain any compound that is proprietary to Innovent but that is not a Licensed Compound.
1.104 “Licensed Product Specific Patents” means any Licensed Patent, other than any Innovent Platform Patent listed in Exhibit 1.86, that includes at least one independent claim that specifically Covers the Licensed Compound or a Licensed Product as a distinct monoclonal antibody that Targets CD40L, including (a) the Licensed Patent existing as of the Effective Date and listed on Exhibit 1.104 (the “Existing Licensed Product Specific Patents”), (b) any patent application claiming priority from such Licensed Patent, including divisions, continuations, continuations-in-part, additions, (c) any patent that issues from such Licensed Patent, including any patent applications claiming priority thereto, and any utility or design patent or certificate of invention, and (d) any re-issues, renewals, extensions, substitutions, re-examinations or restorations, registrations and revalidations, and supplementary protection certificates and equivalents to any of the foregoing (a) through (c).
1.105 “Licensed Technology” means all (a) Licensed Patents and (b) Licensed Know-How.
1.106 “Licensee” has the meaning set forth in the preamble.
1.107 “Licensee Combination Clinical Trial” has the meaning set forth in Section 6.2(a).
1.108 Licensee Combination Blocking Claim” has the meaning set forth in Section 3.2(z).
1.109 “Licensee Combination Patent” means any Patent Controlled by Licensee or any of its Affiliates that (a) claims or Covers the use of a Licensed Compound or Licensed Product with one or more compounds or products that are not Licensed Compounds or Licensed Products, including any compound or product that is proprietary to Licensee, including any method of use, dosing, administration, treatment regimen, or patient population claim specific to such combination therapy, or (b) claims or Covers any data, results, or Know-How generated by or on behalf of Licensee or its Affiliates in the conduct of a Licensee Combination Clinical Trial, in each case ((a) and (b)), solely to the extent such Patent claim is specifically directed to a combination therapy comprising a Licensed Compound or Licensed Product and one or more other compounds or products, including any compounds or products that are proprietary to Licensee and not to the Licensed Compound or Licensed Product alone. For clarity, Licensee Combination Patents exclude any Patent, or claim thereof, that specifically Covers the composition of matter, formulation, method of manufacture, or use of a Licensed Compound or Licensed Product other
than in a combination therapy with one or more other compounds or products, including any compound or product that is proprietary to Licensee.
1.110 “Licensee Combination Therapy” has the meaning set forth in Section 6.2(a).
1.111 “Licensee Controlled Patents” has the meaning set forth in Section 14.3(b).
1.112 “Licensee Formulation Patent” has the meaning set forth in Section 3.2(b).
1.113 “Licensee Formulation Blocking Claim” has the meaning set forth in Section 3.2(y).
1.114 “Licensee Indemnitee(s)” has the meaning set forth in Section 13.2.
1.115 “Licensee Product IP” means all Know-How and Patents Controlled by Licensee or its Affiliates as of the Effective Date or during the Term that are necessary or reasonably useful to Exploit any Licensed Compound or Licensed Product, including any Patents claiming or Covering any Sole Inventions Controlled by Licensee and any Know-How within Sole Inventions Controlled by Licensee; provided that, (a) subject to Section 3.2, any Excluded Formulation Know-How and (b) any Know-How generated by or on behalf of Licensee or its Affiliates in the conduct of any Licensee Combination Clinical Trial other than any such Know-How that is safety data (“Licensee Combination Clinical Trial Know-How”), shall each be excluded from the Licensee Product IP (such Know-How, “Excluded Licensee Know-How”).
1.116 “Licensee Product Marks” has the meaning set forth in Section 9.6(a).
1.117 “Licensee Territory” means worldwide, excluding the Innovent Territory.
1.118 “Losses” has the meaning set forth in Section 13.1.
1.119 “MAA” means (a) a Biologics License Application (as more fully defined in 21 C.F.R. §601.2, as may be amended) or (b) the equivalent application(s) filed with any Regulatory Authority in any jurisdiction outside the U.S. for approval to market and sell a new drug in such jurisdiction, excluding any application for pricing or reimbursement approvals; but, in each case, including all amendments and supplements to any of the foregoing.
1.120 “Major EU Country” means each of France, Germany, Italy, Spain and the United Kingdom.
1.121 “Major Markets” means the United States, each of the Major EU Countries and Japan.
1.122 “Manufacture” or “Manufacturing” or “Manufactured” means, with respect to a product (or any components or process steps involving any such product), all operations involved in the manufacturing, filling and finishing, quality control testing (including in-process, release and stability testing, if applicable), storage, releasing, packaging, labeling, and supply of such product.
1.123 “Manufacturing Support” has the meaning set forth in Section 8.1(c).
1.124 “Manufacturing Technology Transfer” has the meaning set forth in Section 8.1(c).
1.125 “Manufacturing Technology Transfer Plan” has the meaning set forth in Section 8.1(c).
1.126 “Material Development Activity” means, with respect to a Licensed Compound or Licensed Product, any material clinical and non-clinical research, Development, Manufacturing and regulatory activities conducted in relation to such Licensed Compound or Licensed Product, including toxicology and pharmacology studies, development of test methods and stability protocols, process development, formulation and delivery system development, quality assurance and quality control, statistical analysis, Clinical Trials, regulatory affairs (including Clinical Trial-related regulatory activities), pharmacovigilance, any activities that are conducted to obtain and maintain any MAA, and any activities carried out in preparation for any of the foregoing.
1.127 “Milestone Payments” means Development and Regulatory Milestone Payments and/or Sales Milestone Payments, as applicable.
1.128 “Net Sales” means, with respect to any Licensed Product, the gross price billed or invoiced on sales of such Licensed Product by Licensee or its Affiliates or Sublicensees (each, a “Selling Party”) to an end user or any Third Party that is not a Sublicensee, less the following deductions, to the extent actually incurred, allowed, paid, accrued or specifically allocated to such gross sales amounts of such Licensed Product:
(a)normal and customary cash, trade, prompt payment or quantity discounts, allowances and credits, cash and non-cash coupons and mandated discounts actually granted to trade customers, managed health care organizations, pharmaceutical benefit managers, group purchasing organizations, and national, state or local governments;
(b)compulsory payments and cash rebates imposed on sales of the Licensed Product and paid to a Governmental Authority or its agent pursuant to Applicable Law by reason of any national or local health insurance program or similar program, and rebates, refunds, chargebacks and discounts actually granted to managed health care organizations, pharmacy benefit managers, Governmental Authorities or their agencies, purchasers or reimbursers, or trade customers, in each case solely to the extent such amounts are specifically and solely allocated to sales of the Licensed Product, and are actually incurred, paid, accrued or taken;
(c)normal and customary inventory management fees, and other bona fide service fees paid to distributors and wholesalers, in each case, actually allowed or paid for distribution and delivery of such Licensed Product, to the extent billed on the gross sales invoice or recognized;
(d)credits or allowances for defective or damaged Licensed Product (including allowances for spoiled, outdated or withdrawn Licensed Product), or for returns or rejections of Licensed Product, including in connection with recalls and retroactive price reductions;
(e)amounts written off by reason of uncollectible debt; provided, however, that (i) the amount of such uncollectible receivables shall not be in excess of [***] percent ([***]%) of Net Sales with respect to any given Calendar Quarter and (ii) if the debt is thereafter paid, the corresponding amount shall be added to the Net Sales of the period during which it is paid;
(f)insurance, customs charges, freight, postage, shipping, handling, and other transportation costs incurred by a Selling Party in shipping any Licensed Product to a Third Party;
(g)import taxes, export taxes and excise taxes to the extent included in the gross amount invoiced and annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48) and other comparable Applicable Laws allocated to sales of the Licensed Product in accordance with Applicable Accounting Standards, sales tax, value-added taxes, consumption taxes, duties, or other taxes levied on, absorbed, determined, or imposed with respect to such sales (excluding income or net profit taxes or franchise taxes of any kind) to the extent the Selling Party is not otherwise entitled to a credit or refund for such taxes, duties, or payments made;
(h)any other items actually deducted from gross invoiced sales amounts as reported by the Selling Party in its financial statements in accordance with its Applicable Accounting Standards, applied on a consistent basis, but which may not be duplicative of the deductions specified above.
To the extent that a Selling Party receives consideration other than or in addition to cash upon the sale or disposition of a Licensed Product, Net Sales will be calculated based on the average price charged for such Licensed Product, as applicable, during the preceding royalty period, or in the absence of such sales, based on such Selling Party’s reasonable determination in good faith of the fair market value of the Licensed Product.
Each of the amounts set forth above will be determined from the books and records of Licensee or its Affiliate or Sublicensee, maintained in accordance with GAAP or, in the case of Sublicensees, such similar accounting principles, consistently applied, and any amounts that are deducted from Net Sales pursuant to one subsection may not be deducted pursuant to another subsection (i.e., a deduction may only be taken once).
Net Sales will exclude any transfer or sale of a Licensed Product (i) at or below cost in connection with the Development or testing of a Licensed Product (including the conduct of Clinical Trials), or (ii) at or below cost for charitable purposes or patient access (including in connection with so-called “treatment IND sales,” “named patient sales” and “compassionate use sales”). Subject to the foregoing, amounts received or invoiced by Licensee or its Affiliates or Sublicensees for the transfer or sale of a Licensed Product by and between Licensee or any of its Affiliates or Sublicensees for resale will not be included in the computation of Net Sales so long as such
Licensed Product is subsequently resold to a non-Sublicensee Third Party and such subsequent sale is included in the computation of Net Sales under this Agreement.
All discounts, allowances, credits, rebates and other deductions, to the extent allocable across multiple products including a Licensed Product, shall be fairly allocated between such Licensed Product and other products of Licensee or its Affiliates or Sublicensees so that such Licensed Product does not bear a disproportionate portion of such deductions. In no circumstances will Licensee or its Affiliates or Sublicensees sell Licensed Product as a “loss leader”.
Net Sales for a Combination Product in a country shall be calculated as follows:
(i) If both the Licensed Component and the Other Components are sold independently in such country in the same formulation and dosage, then Net Sales will be calculated by multiplying the total Net Sales (as described above) of the Combination Product by the fraction A/(A+B), where A is the average gross selling price in such country of the Licensed Component sold separately in the same formulation and dosage, and B is the (sum of the) average gross selling price(s) in such country of the Other Component(s) sold separately in the same formulation and dosage or device form, during the applicable Calendar Year.
(ii) If the Licensed Component is sold independently of the Other Component(s) in such country in the same formulation and dosage, but the average gross selling price of the Other Component(s) cannot be determined, then Net Sales will be calculated by multiplying the total Net Sales (as described above) of such Combination Product by the fraction A/C, where A is the average gross selling price in such country of such Licensed Component sold independently in the same formulation and dosage and C is the average gross selling price in such country of the Combination Product.
(iii) If the Other Component(s) are sold independently of the Licensed Component in such country in the same formulation and dosage or device form, but the average gross selling price of such Licensed Component cannot be determined, then Net Sales will be calculated by multiplying the total Net Sales (as described above) of such Combination Product by the fraction [1-B/C], where B is the (sum of the) average gross selling price(s) in such country of the Other Component(s) in the same formulation and dosage or device form and C is the average gross selling price in such country of the Combination Product.
(iv) If the average gross selling price of such Licensed Components and the Other Component(s) in the same formulation and dosage or device form, as applicable, cannot be determined, then Net Sales will be calculated by multiplying the total Net Sales (as described above) of such Combination Product by a fraction to be determined by the Parties in good faith based on the relative value contributed by the Licensed Components and Other Components of such Combination Product.
(v) For purposes of calculating the average Net Sales per unit sold of a Licensed Component and Other Component(s) of a Combination Product, any of the deductions described herein that apply to such Combination Product shall be allocated among sales of the Licensed Component and sales of the Other Component(s) included in such Combination Product as follows: (1) deductions that are attributable solely to the Licensed Component or one of the
Other Component(s) shall be allocated solely to Net Sales of the Licensed Component or such Other Component, as applicable, and (2) all other deductions shall be subject to a reasonable good-faith allocation by the Parties among sales of the Licensed Component and sales of the Other Component(s).
1.129 “NHP PD/Functional Data” means the non-human primate pharmacodynamic and/or functional evidence study results (and expressly excluding data from GLP Tox Studies), which (a) are generated in a controlled and head-to-head NHP study comparing the applicable bispecific or multispecific antibody to a CD40L monospecific antibody at matched exposure levels; (b) include at least one functional readout demonstrating incremental biological activity of the bispecific or multispecific antibody over a CD40L monospecific antibody; and (c) such functional readout(s) have some precedence for either predicting efficacy, or at least be strongly associated with the magnitude of efficacy, in the proposed human disease(s). For purposes of the foregoing, such data shall also demonstrate dual target engagement, including evidence that each binding domain of such bispecific or multispecific antibody is functionally active (e.g. based on assay of receptor occupancy and downstream pathway modulation), and all such data shall be generated within the same study and exposure range to enable appropriate attribution of observed effects. Such study shall be conducted in a stimulated challenge setting (e.g., antigen-driven) in which incremental effect can be meaningfully detected. For clarity, “functional readout” may include, by way of example and without limitation: [***].
1.130 “NMPA” means the National Medical Products Administration, formerly known as the China Food and Drug Administration, and local or provincial counterparts thereto, and any successor agency(ies) or authority thereto having substantially the same function.
1.131 “Non-Compete Period” has the meaning set forth in Section 3.6(a).
1.132 “Other Components” has the meaning set forth in Section 1.24.
1.133 “Out-of-Pocket Costs” means the reasonable and documented amounts paid by a Party or any of its Affiliates to Third Party subcontractors (without mark-up by such Party or any of its Affiliates) under arm’s length arrangements for services or material provided by such subcontractors in performance of activities under this Agreement.
1.134 “Party” or “Parties” has the meaning set forth in the preamble to this Agreement.
1.135 “Patent” or “Patents” means (a) all national, regional and international patents and patent applications, including any provisional patent application, (b) any patent applications claiming priority from such patent applications or provisional patent applications, including divisions, continuations, continuations-in-part and additions, (c) any patent that issues from any of the foregoing patent applications, including any utility or design patent or certificate of invention, and (d) any re-issues, renewals, extensions, substitutions, re-examinations or restorations, registrations and revalidations, and supplementary protection certificates and equivalents applicable to any of the foregoing.
1.136 “Patent Challenge” has the meaning set forth in Section 15.5(b).
1.137 “Person” means any individual, sole proprietorship, corporation, joint venture, limited liability company, partnership, limited partnership, limited liability partnership, trust or any other private, public or governmental entity.
1.138 “Pharmacovigilance Agreement” has the meaning set forth in Section 7.9(a).
1.139 “Phase 1 Clinical Trial” means a Clinical Trial of a Licensed Product that is described as a phase 1 clinical trial in its protocol, or that would otherwise satisfy the requirements of 21 C.F.R. §312.21(a), as amended from time to time, or the corresponding requirements of any applicable jurisdiction in the Licensee Territory other than the United States.
1.140 “Phase 1/2 Clinical Trial” means a Clinical Trial of a Licensed Product that combines into a single protocol both a Phase 1 Clinical Trial and a Phase 2 Clinical Trial.
1.141 “Phase 2 Clinical Trial” means a Clinical Trial of a Licensed Product that is described as a phase 2 clinical trial in its protocol or that would otherwise satisfy the requirements of 21 C.F.R. §312.21(b), as amended from time to time, or the corresponding requirements of any applicable jurisdiction in the Licensee Territory other than the United States.
1.142 “Phase 2/3 Clinical Trial” means a Phase 2 Clinical Trial of a Licensed Product that is commenced without sufficient statistical powering to satisfy the criteria for a Phase 3 Clinical Trial but that becomes a Registrational Clinical Trial based on the strength of the Data generated in such Clinical Trial.
1.143 “Phase 3 Clinical Trial” means a Clinical Trial of a Licensed Product that would satisfy the requirements of 21 C.F.R. § 312.21(c), as amended from time to time, or the corresponding requirements of any applicable jurisdiction in the Licensee Territory other than the United States.
1.144 “PMDA” means the Japanese Pharmaceutical and Medical Device Administration or any successor agency thereto.
1.145 “Pricing and Reimbursement Approval” means any approval, agreement, determination or other decision by the applicable Governmental Authority of a country or jurisdiction that establishes prices charged to end-users for pharmaceutical or biologic products at which a particular pharmaceutical or biologic product will be reimbursed by applicable Governmental Authority in such country or jurisdiction.
1.146 “Prosecution” means, with respect to a Patent, the filing, preparation, prosecution (including conducting all correspondence and interactions with any patent office and seeking, conducting and defending any interferences, inter partes reviews, reissue proceedings, reexaminations, and oppositions and similar proceedings), and maintenance thereof, including obtaining patent term extensions, regulatory exclusivity, supplemental protection certificates, or their equivalents with respect thereto. When used as a verb, “Prosecute” and “Prosecuting” mean to engage in Prosecution. “Prosecution,” “Prosecute,” and “Prosecuting” exclude any enforcement action with respect to a Patent.
1.147 “Public Official” means (a) any officer, employee or representative of any regional, federal, state, provincial, county or municipal government or government department, agency or other division; (b) any officer, employee or representative of any commercial enterprise that is owned or controlled by a government, including any state-owned or controlled veterinary or medical facility; (c) any officer, employee or representative of any public international organization, such as the African Union, the International Monetary Fund, the United Nations or the World Bank; and (d) any person acting in an official capacity for any government or government entity, enterprise or organization identified above.
1.148 “Quality Agreement” has the meaning set forth in Section 8.1(b)(i).
1.149 “Receiving Party” has the meaning set forth in Section 11.1.
1.150 “Registrational Clinical Trial” means a Clinical Trial of a Licensed Product conducted with a defined dose or set of defined doses of such Licensed Product on sufficient numbers of human patients, which Clinical Trial is prospectively designed to be sufficient for the filing of an MAA of such Licensed Product with the applicable Regulatory Authority in the Licensee Territory.
1.151 “Regulatory Approval” means, with respect to a Licensed Product in a region or a country, the approvals from the necessary Governmental Authority to import, market and sell such Licensed Product in such region or country (excluding Pricing and Reimbursement Approvals).
1.152 “Regulatory Authority” means any applicable Governmental Authority responsible for granting Regulatory Approvals for a Licensed Product, including the FDA, the EMA, the PMDA, the NMPA and any other corresponding national or regional Governmental Authority.
1.153 “Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights (other than any exclusivity rights conferred by Patents) conferred by a Regulatory Authority on a Licensed Product under Applicable Laws in a country or jurisdiction in connection with the Regulatory Approval for such Licensed Product in such country or jurisdiction that prevents another party other than the Regulatory Approval holder and such Regulatory Authority from using and from otherwise relying on the Regulatory Approval or data supporting the Regulatory Approval for such Licensed Product without the prior written authorization of the Regulatory Approval holder.
1.154 “Regulatory Submissions” means (a) any filing, application, or submission with any Regulatory Authority, (b) any authorizations, approvals or clearances arising from the foregoing, including Regulatory Approvals and MAAs, (c) all material correspondence or communication with or from the relevant Regulatory Authority, and (d) the minutes of any material meetings, telephone conferences or discussions with the relevant Regulatory Authority, in each case, with respect to a Licensed Product.
1.155 “Remedial Action” has the meaning set forth in Section 7.10.
1.156 “Representative” has the meaning set forth in Section 11.1.
1.157 “Requisite Amount” means (a) following the Initiation of a Phase 1 Clinical Trial for a Licensed Product in the Licensee Territory but prior to the Initiation of a Phase 2 Clinical Trial for a Licensed Product in the Licensee Territory, [***] dollars ($[***]), (b) following the Initiation of a Phase 2 Clinical Trial for a Licensed Product in the Licensee Territory but prior to receipt of top line data for a Phase 2 Clinical Trial for a Licensed Product in the Licensee Territory, [***] dollars ($[***]), or (c) following the Initiation of a Phase 3 Clinical Trial for a Licensed Product in the Licensee Territory, [***] dollars ($[***]).
1.158 “Reversion License” has the meaning set forth in Section 15.7(b).
1.159 “Reversion Terms” has the meaning set forth in Section 15.7(c).
1.160 “Royalty Payment” has the meaning set forth in Section 10.6(a).
1.161 “Royalty Term” has the meaning set forth in Section 10.6(b).
1.162 “Safety Risk” means a Party’s reasonable belief, based upon information that becomes available to such Party or an analysis of the existing information that is conducted by such Party, that a Licensed Product has a safety issue that would reasonably be expected to have a material adverse effect on the Development or Commercialization of Licensed Products.
1.163 “Sales Milestone Event” has the meaning set forth in Section 10.5(a).
1.164 “Sales Milestone Payment” has the meaning set forth in Section 10.5(a).
1.165 “Securities Regulator” has the meaning set forth in Section 11.2(d).
1.166 “Senior Executive” means (a) with respect to Innovent, its Chief Executive Officer (or any of his or her direct reports having authority to agree to a final resolution of a disputed matter under this Agreement) (or any of his or her direct reports having authority to agree to a final resolution of a disputed matter under this Agreement) and (b) with respect to Licensee, its Chief Executive Officer (or any of his or her direct reports having authority to agree to a final resolution of a disputed matter under this Agreement).
1.167 “Serious Adverse Event” means any Adverse Event that, at any dose: (a) results in death; (b) is life-threatening; (c) requires inpatient hospitalization or prolongation of existing hospitalization; (d) results in persistent or significant disability/incapacity; or (e) is a congenital anomaly/birth defect. In the case of other Adverse Events, medical and scientific judgment should be exercised in deciding whether expedited reporting is appropriate. Such events may be important medical events that may not be immediately life-threatening or result in death or hospitalization but which may jeopardize the patient or may require intervention to prevent one of the other outcomes listed in the first sentence of this definition. Such events should usually be considered Serious Adverse Events.
1.168 “Shelving Event” means, prior to the first Regulatory Approval in the United States of a Licensed Product, any consecutive [***] period during which Licensee fails to (a) conduct any Material Development Activity and (b) expend at least the Requisite Amount (based on external costs only and excluding internal cost (e.g., direct labor costs)) with respect to the
Licensed Compound and Licensed Product; provided that, any such failure is not attributable to a Justified Delay. For clarity, satisfaction of the criterion in clause (a) and (b) above with respect to one Licensed Product during an applicable period precludes the occurrence of a Shelving Event during such period.
1.169 “Sole Inventions” has the meaning set forth in Section 14.1(b).
1.170 “Sublicensee” means a Third Party to whom Licensee or any of its Affiliates has granted or grants a sublicense under any of the rights or licenses granted to Licensee pursuant to this Agreement. For clarity, a Third Party that was granted a further sublicense (including through multiple tiers) by a Sublicensee will also be deemed a Sublicensee and such further Sublicensee will be bound by the terms of this Agreement applicable to Sublicensees.
1.171 “Supply Agreement” has the meaning set forth in Section 8.1(b)(i).
1.172 “Target” means any receptor, ligand or other molecule that is potentially associated with a disease or condition, and potentially has a biological activity that is modified by direct interaction with an antibody.
1.173 “Targeting” means, with respect to a Target and any Licensed Compound or other compound, product, antibody, antibody fragment or agent, that such Licensed Compound or other compound, product or agent binds to and activates, inhibits, or otherwise modulates such Target as its primary mechanism of action.
1.174 “Tax” or “Taxes” means any present or future taxes, levies, imposts, duties, charges, assessments or fees of any nature (including any interest thereon), including VAT.
1.175 “Term” has the meaning set forth in Section 15.1(a).
1.176 “Terminated Product” means each Licensed Product that Licensee is Developing and/or Commercializing at the time of termination.
1.177 “Third Party” means an entity other than (a) Licensee and its Affiliates or (b) Innovent and its Affiliates.
1.178 “Third Party Infringement Claim” has the meaning set forth in Section 14.4.
1.179 “Third Party License” has the meaning set forth in Section 10.6(c)(ii).
1.180 “U.S.” means the United States and its territories.
1.181 “U.S. Dollars” means United States dollars, the lawful currency of the U.S.
1.182 “Valid Claim” means (a) a claim of an issued and unexpired Patent that has not been permanently revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, which decision is not appealable or is not appealed within the time allowed for appeal, and has not been abandoned, disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise or (b) a claim of a pending Patent application that (i) has not been pending for more than [***] years from the filing date of the earliest Patent application from which such pending Patent application derives priority, and (ii) (A) has not been cancelled, withdrawn or abandoned, or (B) finally rejected by an administrative agency action from which no appeal can be taken or that has not been appealed within the time allowed for appeal; provided that, in the case of a pending claim that ceases to be a Valid Claim due to the foregoing time limit of clause (b)(i), if such pending claim later issues, such claim shall thereafter be considered a Valid Claim for all purpose hereunder so long as it meets the requirements of clause (a).
1.183 “VAT” means value-added taxes or other similar taxes.
1.184 “Withholding Amount” has the meaning set forth in Section 10.10(b).
Additional Definitions:
|
|
Additional Data Plan |
Section 10.3(d) |
Additional Development and Regulatory Milestone Event |
Section 10.4(a) |
Additional Development and Regulatory Milestone Payment |
Section 10.4(a) |
[***] |
Section 3.6(d) |
Ancillary Agreement |
Section 17.7 |
Consulting Firm |
Section 2.2(e)(iii)(B) |
Development Plans |
Section 5.3 |
Entity |
Section 17.9 |
Extended Option Period |
Section 3.9(b) |
Initial Option |
Section 3.9(b) |
Initial Option Period |
Section 3.9(b) |
Joint Patent Committee or JPC |
Section 2.4 |
Launch Quarter |
Section 10.6(c)(iv) |
Licensee Development Plan |
Section 5.3 |
Licensee Product Patents |
Section 14.3(a) |
[***] |
Section 1.47 |
Negotiation Period |
Section 8.1(e) |
Notified Party |
Section 2.2(e)(iii)(A) |
Notifying Party |
Section 2.2(e)(iii)(A) |
Option |
Section 3.9(b) |
Option Exercise Fee |
Section 3.9(e) |
Product Infringement |
Section 14.5(b)(i) |
Safety Matter |
Section 2.2(e)(iii)(A) |
Safety Matter Notice |
Section 2.2(e)(iii)(A) |
Secondary Manufacturer |
Section 8.1(e) |
Selling Party |
Section 1.128 |
Regulatory Assistance |
Section 7.5 |
Regulatory and Technology Transfer |
Section 4.1(a) |
Regulatory and Technology Transfer Plan |
Section 4.1(a) |
Reversion Sublicense Terms |
Section 15.7(c) |
Tax Action |
Section 10.10(b) |
ARTICLE 2
GOVERNANCE
2.1 Alliance Managers. Promptly following the Effective Date, each Party shall designate an individual to act as the primary business contact for such Party for matters related to this Agreement (each such individual appointed, an “Alliance Manager”), unless another individual is expressly specified in this Agreement or designated by the Parties for a particular purpose. The Alliance Managers will (a) facilitate the flow of information between the Parties and otherwise promote communication, coordination and collaboration between the Parties by providing central points of contact for communication by and between the Parties’ functions/subject matter experts; and (b) manage the JSC (and any other Committee) meetings by (i) calling meetings; (ii) preparing and issuing minutes of each such meeting within [***] thereafter; and (iii) preparing and circulating an agenda for each upcoming meeting of each Committee, in each case, at the direction of and in consultation with the then-current chair of the applicable Committee. Each Party may remove and replace its Alliance Manager at any time by written notice to the other Party.
2.2 Committees.
(a)Joint Steering Committee. Within [***] following the Effective Date, Innovent and Licensee will establish a joint steering committee (the “Joint Steering Committee” or “JSC”), in accordance with Section 2.2(b), to monitor the overall collaboration between the Parties under this Agreement, including monitoring the Development of the Licensed Compounds and Licensed Products in the Licensee Territory and in the Innovent Territory, and to serve as a forum for the exchange and discussion of information with respect thereto. The JSC will be responsible for:
(i)establishing such Committees as are necessary or advisable, if any, to undertake any of the responsibilities of the JSC delegated to such subcommittee by the JSC or to further the purposes of this Agreement;
(ii)reviewing and discussing the Development Plans and any amendments or updates thereto;
(iii)reviewing and monitoring the progress of Development activities under this Agreement;
(iv)monitoring the strategic direction of the collaboration between the Parties under this Agreement with respect to the Licensed Compounds and Development and regulatory activities with respect thereto in the Licensee Territory and the Innovent Territory;
(v)discussing the Parties’ proposals to conduct Innovent Combination Clinical Trials and Licensee Combination Clinical Trials; and
(vi)undertaking such other matters as are specifically assigned to the JSC in this Agreement.
(b)Membership. The JSC will be composed of [***] representatives of each of Innovent and Licensee (or such other equal number of representatives of each Party as agreed in writing by Innovent and Licensee). Each Party will appoint its initial JSC representatives by written notice to the other Party within [***] of the Effective Date and will appoint its initial representatives to any other Committee by written notice to the other Party within [***] of establishment of such Committee. Either Party may replace its respective Committee representatives at any time with prior written notice to the other Party; provided that each Party will ensure that, at all times during the existence of a Committee, such Party’s Committee representatives (initial or replacement) have appropriate expertise and sufficient seniority to represent such Party regarding matters before the JSC; provided further, that the Parties shall use reasonable efforts not to make changes to such representatives during the [***] after establishment of each Committee. With respect to the JSC, each Party will ensure that at all times during the existence of the JSC at least one of each Party’s JSC representatives is a [***]. A member of the JSC may also be a member of any other Committee established by the JSC if so desired by the Party who appoints such member.
(c)Meetings. Each of the Committees, once established, will meet at least [***], or more or less often as otherwise agreed to by the Parties. Responsibility for chairing Committee meetings will alternate between the Parties. The chair for any Committee meeting will not have any greater authority than any other representative of either Party on such Committee. All Committee meetings may be conducted by telephone, video-conference, or in person. Each Party will bear its own personnel and travel costs and expenses relating to participation in Committee meetings. Upon each Party’s invitation, a reasonable number of additional representatives of such Party may attend Committee meetings in a non-voting capacity (provided that such additional representatives shall be bound by written confidentiality and non-use obligations consistent with the terms of this Agreement).
(d)Minutes. The Alliance Managers of each Party shall alternate the responsibility for preparing minutes of each Committee meeting. The chair of each Committee meeting will be responsible for ensuring draft minutes of such Committee meeting are circulated by the responsible Alliance Manager to all members of such Committee for comments. Such minutes will provide a description, in reasonable detail, of the discussions at the meeting. The Alliance Managers of each Party will promptly discuss any comments on such minutes and finalize the minutes no later than the date of the next applicable Committee meeting.
(e)Decision-Making. Decisions of the JSC will be made by unanimous vote, with each Party’s representatives on such Committee collectively having one vote. No vote of the JSC may be taken unless at least one of each Party’s representatives is present for such vote. If after reasonable discussion and good faith consideration of each Party’s view on a particular matter before the JSC, the JSC cannot reach a decision as to such matter within [***] after such matter was brought to the JSC for resolution, then:
(i)With respect to any such matter that is primarily related to the Innovent Territory, the JSC representatives of Innovent shall have final decision-making authority with respect to any such matter; provided that, without limiting subsection (iii), such representative of Innovent shall not exercise such final-decision marking authority in a manner that would reasonably be expected to have a material adverse effect on the Exploitation of Licensed Products in the Licensee Territory.
(ii)With respect to any matter that is primarily related to the Licensee Territory, the JSC representatives of Licensee shall have final decision-making authority with respect to such matter; provided that, without limiting subsection (iii), such representative of Licensee shall not exercise such final-decision marking authority in a manner that would reasonably be expected to have a material adverse effect on the Exploitation of Licensed Products in the Innovent Territory.
(A)In the event that, after taking into account safety profiles for pharmaceutical agents in the Field for Indications within the Parties’ respective Development Plans and drug-related Serious Adverse Events expected from proposed Development activities, a Party (a “Notifying Party”) reasonably believes in good faith, based upon information that becomes available to such Party or an analysis of the existing information that is conducted by such Party, that the Development of a Licensed Product proposed by the other Party (the “Notified Party”) poses a Safety Risk ( the matter as to whether such activity may result in such a Safety Risk, a “Safety Matter”), then the Notifying Party may provide written notice to the Notified Party (each, a “Safety Matter Notice”) stating such belief, including a detailed explanation of the Notifying Party’s basis therefor and such Party’s recommended course of action to address the Safety Risk. If the Notified Party does not agree with Notifying Party’s recommended course of action, the Parties shall refer such dispute, within [***] of the initial written notice under this Section 2.2(e)(iii), to the JSC. The JSC shall attempt in good faith to resolve such dispute. If the JSC is unable to resolve a given dispute under this Section 2.2(e)(iii)(A) within [***] after being referred such dispute, the Parties shall refer such dispute to the respective Senior Executives, and such Senior Executives shall attempt in good faith to resolve such dispute. If the Senior Executives are unable to resolve a given dispute under this Section 2.2(e)(iii)(A) within [***] after being referred such dispute, the dispute shall be resolved pursuant to subsection (B) of this Section 2.2(e)(iii).
(B)If the Parties are unable to resolve any dispute that arises under subsection (A) of this Section 2.2(e)(iii), the Parties shall engage an independent, impartial and conflict-free Third Party consulting firm which shall have relevant subject matter expertise and experience (the “Consulting Firm”). The Consulting Firm shall be mutually agreed to by the Parties. The Parties shall use their best efforts to cause the Consulting Firm to be selected and retained within [***] of the end of the [***] period referred to in subsection (A) above. The fees and expenses of the Consulting Firm shall be borne by the Notifying Party. With respect to any such dispute referred to the Consulting Firm pursuant to this subsection (B), the Consulting Firm shall be entitled to make either of the following determinations: (1) that such activity creates a Safety Risk that could reasonably be expected to have a material adverse effect on the Development or Commercialization of such Licensed Product in the Notifying Party’s Territory, in which case the Consulting Firm shall specify the steps to be taken to address such safety issue, or (2) that the Notified Party’s proposed activity does not create a potential Safety Risk that could reasonably be expected to have a material adverse effect on the Development or Commercialization of such Licensed Product in the Notifying Party’s Territory.
(C)Upon receipt of a Safety Matter Notice, the Notified Party shall suspend (with respect to any ongoing activity, subject to ethical obligations to continue support of subjects already enrolled in a Clinical Trial) or not commence (with respect to any proposed activity) the Development or Commercialization activity that is the subject of such Safety Matter Notice unless and until the Safety Matter that is the subject of such Safety Matter Notice is resolved in accordance with this Section 2.2(e)(iii) and may only continue or commence such activity if such Safety Matter is resolved in the Notified Party’s favor in accordance with this Section 2.2(e)(iii) or the Parties (after considering in good faith any recommendation of the Consulting Firm) mutually agree on steps to be taken to address such safety issue.
(iv)Notwithstanding any other provision of this Article 2 to the contrary, the JSC, in the exercise of the foregoing decision-making authority, will not have the right to: (A) modify or amend the terms and conditions, or waive any term or condition, of this Agreement; (B) determine any issue in a manner that would conflict with, or cause a Party to breach or violate, the terms and conditions of this Agreement or any Applicable Laws; (C) make any determination that a Party is in breach (or not in breach) of this Agreement; (D) make a decision that is expressly stated to require the written agreement or written consent of the Parties; or (E) cause the other Party to undertake any activities or incur any costs without such other Party’s prior written consent. Except as provided in Section 2.2(e)(iii), no matters within the scope of the JSC’s authority will be subject to the dispute resolution provisions set forth in Article 16.
2.3 Scope of Governance. Notwithstanding the creation of a Committee, each Party will retain the rights, powers and discretion granted to it hereunder, and no Committee will be delegated or vested with rights, powers or discretion unless such delegation or vesting is expressly provided herein. No decision of a Committee will be in contravention of any terms and conditions of this Agreement. Only those specific issues that are expressly provided in this Agreement to be decided by such Committee may be decided by such Committee. Each Party has final decision-making authority with respect to the implementation of its operational, day-to-day activities.
2.4 Joint Patent Committee.
(a)Formation. Within [***] following the establishment of the JSC, the JSC will establish as a subcommittee of the JSC a joint patent committee (the “Joint Patent Committee” or “JPC”), in accordance with Section 2.2(c), to monitor the Parties’ Patent Prosecution activities in accordance with Article 14 with respect to Licensed Patents and to serve as a forum for the exchange and discussion of information with respect thereto and perform such other functions as set forth in this Agreement, or as the Parties may mutually agree, except where in conflict with any provision of this Agreement. The JPC shall be consultative in nature and shall not have any decision-making authority.
(b)Composition. The JPC will be comprised of up to [***] patent attorneys representing each Party. In the event the Parties use mutually agreed outside counsel to Prosecute one or more of the Licensed Patents hereunder, such counsel may attend JPC meetings, provided that the Parties shall first execute a mutually-acceptable common interest agreement. As appropriate, and solely to the extent consistent with the terms and conditions of any applicable common interest agreement, additional employees or consultants of each Party may, from time to time, attend the JPC meetings as nonvoting observers; provided that, no Third Party personnel may
attend unless otherwise agreed by both Parties, such Third Party is bound by confidentiality and non-use obligations consistent with the terms of this Agreement, and such attendance is consistent with the terms and conditions of any applicable common interest agreement. In addition, the Parties acknowledge and agree that, with regard to such Prosecution or enforcement of Joint Patents, the interests of the Parties are to obtain the strongest patent protection possible, and as such are aligned and are legal in nature.
2.5 Discontinuation of Committees. All Committees will continue to exist until the first to occur of: (a) the Parties’ written agreement to disband such Committee; and (b) unless otherwise agreed by the Parties, the first Regulatory Approval of the first Licensed Product in the U.S. Upon the occurrence of any event described in clause (a) or (b) above, all Committees will disband and shall have no further authority or duties under this Agreement. After the JSC ceases to exist, (i) each Party shall designate a contact person for the exchange of information previously exchanged through the JSC, and (ii) any decisions that are designated under this Agreement as being subject to the review or approval of the JSC will be made by written agreement of the Parties directly, subject to the other terms and conditions of this Agreement.
2.6 Joint Global Study. If either Party wishes to conduct a multi-regional Clinical Trial with a Licensed Product that includes the Licensee Territory and the Innovent Territory, (a) such Party shall submit to the JSC the proposed strategy, protocol design, expected budget and process timeline for such Clinical Trial for review and discussion and (b) if the Parties agree that such Clinical Trial may be conducted, the Parties shall prepare a joint development plan that sets forth the timeline, budget, cost allocation, and other details of such Clinical Trial to be conducted by or on behalf of the Parties, and shall submit such plan to the JSC for its review and approval.
ARTICLE 3
LICENSES; NON-COMPETITION, AND OPTION
3.1 License Grant to Licensee. Subject to the terms and conditions of this Agreement, Innovent, on behalf of itself and its Affiliates, hereby grants to Licensee the following licenses:
(a)an exclusive (even as to Innovent and its Affiliates, subject to Section 3.4), non-transferable (except as set forth in Section 17.4), royalty-bearing license (or sublicense with respect to any Licensed Technology that is in-licensed by Innovent or any of its Affiliates from a Third Party), with the right to grant sublicenses through multiple tiers (in accordance with Section 3.3), under the Licensed Technology to Exploit the Licensed Compounds and Licensed Products in the Field in the Licensee Territory; and
(b)a non-exclusive, non-transferable (except as set forth in Section 17.4), royalty-bearing license (or sublicense with respect to any Licensed Technology that is in-licensed by Innovent or any of its Affiliates from a Third Party), with the right to grant sublicenses through multiple tiers (in accordance with Section 3.3), under the Licensed Technology to non-clinically Develop and Manufacture the Licensed Compounds and Licensed Products in the Field in the Innovent Territory, solely to the extent required or reasonably useful in connection with the
Development, Manufacture and Commercialization of such Licensed Compounds and Licensed Products in the Field in the Licensee Territory.
The above licenses exclude Excluded Innovent Know-How and Innovent shall not be obligated to disclose such Excluded Innovent Know-How to Licensee; provided that, if at any time during the Term, Innovent files a Patent Covering or claiming Excluded Formulation Know-How that is necessary or reasonably useful to Exploit any Licensed Compound or Licensed Product (each, an “Innovent Formulation Patent”), then (a) Innovent will provide Licensee with prompt written notice which notice shall include a description of such Innovent Formulation Patent, and (b) thereafter if Licensee notifies Innovent that Licensee wishes to include the Innovent Formulation Patent as Licensed Patent for purposes of this Agreement, the Parties will negotiate in good faith the terms pursuant to which the Innovent Formulation Patent will be included as Licensed Patent for purposes of this Agreement.
(c)For the avoidance of doubt, nothing in this Agreement shall restrict Licensee or its Affiliates or Sublicensees from independently developing and Exploiting Know-How that is the same or similar to Excluded Innovent Know-How or from developing and Exploiting Know-How that is or becomes publicly known or is learned by Licensee from a source that is permitted to disclose such Know-How without any breach of a confidentiality and non-use obligation owed to Innovent. In addition, notwithstanding the exclusion of Excluded Innovent Know-How from the licenses granted to Licensee in Sections 3.1(a) and (b) above, subject to Licensee’s obligations pursuant to Article 11, Licensee and its Affiliates and Sublicensees shall be permitted to use Excluded Innovent Know-How that Innovent discloses to Licensee for the Exploitation of Licensed Products.
(d)The above licenses exclude Innovent Formulation Patents. If the Exploitation, by Licensee or any Affiliate or Sublicensee or any Third Party customer of Licensee or any such Affiliate or Sublicensee, of any Licensed Product infringes a claim of an Innovent Formulation Patent (an “Innovent Formulation Blocking Claim”), Innovent covenants and agrees that it and its Affiliates will not enforce such Innovent Formulation Blocking Claim against Licensee or any Affiliate or Sublicensee of Licensee or any Third Party customer of Licensee or any such Affiliate or Sublicensee, as the case may be, solely with respect to any such Person’s Exploitation of such Licensed Product in the Licensee Territory. Innovent further covenants and agrees that it shall not assign or otherwise transfer any Innovent Formulation Patent that includes an Innovent Formulation Blocking Claim to any Third Party except pursuant to an enforceable written assignment or other written agreement in which such Third Party agrees to assume the covenants of Innovent set forth in this Section 3.1(d) and that specifies Licensee, its Affiliates and Sublicensees and any Third Party customers of Licensee and any such Affiliate or Sublicensee are third party beneficiaries of such covenants.
(e)The above licenses exclude Innovent Combination Patents, and Innovent shall not be obligated to disclose Innovent Combination Clinical Trial Know-How to Licensee. If the Exploitation, by Licensee or any Affiliate or Sublicensee or any Third Party customer of Licensee or any such Affiliate or Sublicensee, of any Licensed Product infringes a claim of an Innovent Combination Patent (an “Innovent Combination Blocking Claim”), Innovent covenants and agrees that it and its Affiliates will not enforce such Innovent Combination Blocking Claim against Licensee or any Affiliate or Sublicensee of Licensee or any Third Party customer of
Licensee or any such Affiliate or Sublicensee, as the case may be, solely with respect to any such Person’s Exploitation of such Licensed Product in the Licensee Territory. Innovent further covenants and agrees that it shall not assign or otherwise transfer any Innovent Combination Patent that includes an Innovent Combination Blocking Claim to any Third Party except pursuant to an enforceable written assignment or other written agreement in which such Third Party agrees to assume the covenants of Innovent set forth in this Section 3.1(e) and that specifies Licensee, its Affiliates and Sublicensees and any Third Party customers of Licensee and any such Affiliate or Sublicensee are third party beneficiaries of such covenants.
For clarity, the non-assertion covenants in the foregoing clauses (d) and (e) do not constitute licenses to use any Innovent Combination Patent or Innovent Formulation Patent.
Licensee acknowledges and agrees that (a) Innovent obtained the rights to certain Licensed Technology under the Existing Upstream License Agreement; (b) the licenses granted by Innovent to Licensee under this Section 3.1 with respect to such Licensed Technology constitute sublicenses under the Existing Upstream License Agreement and are subject and subordinate to Sections 2.4, 2.5, 3, 4.3.1, 4.3.2, 8, 9.2 and 10.5 of the Existing Upstream License Agreement; (c) Licensee shall comply with Sections 2.4, 2.5, 4.2, 4.3.1, 4.3.2, 6.1, 6.3, 8, 10.5 and 15.4 of the Existing Upstream License Agreement as applicable to Licensee as a sublicensee; and (d) Innovent’s licenses to certain Licensed Technology under the Existing Upstream License Agreement and the licenses granted by Innovent to Licensee under this Section 3.1 with respect to such Licensed Technology are non-exclusive. Innovent shall use commercially reasonable efforts to obtain, promptly following the Effective Date, any consent or approval required under the Existing Upstream License Agreement to permit Innovent to grant the sublicenses to Licensee hereunder with respect to Licensed Technology owned or controlled by [***], including any such consent or approval required to permit Licensee to grant further sublicenses with respect to such Licensed Technology; provided that, (i) Licensee agrees to cooperate with Innovent and provide any reasonable assistance to Innovent as Innovent may reasonably request in order to facilitate Innovent’s negotiations with [***] with respect to such consent or approval and (ii) if Innovent, despite using commercially reasonable efforts, is unable to obtain any such consent or approval, Innovent shall discuss in good faith with Licensee a reasonable arrangement that will provide Licensee with all of the benefits of, subject to the related obligations under, such Upstream License Agreement as if the appropriate consent or approval had been obtained. Innovent shall keep Licensee reasonably informed of the status of such efforts, including by consulting with Licensee regarding each draft of any such consent or approval and considering in good faith any timely comments thereon provided by Licensee.
3.2 License Grant to Innovent. Subject to the terms and conditions of this Agreement, Licensee, on behalf of itself and its Affiliates, hereby grants to Innovent the following licenses:
(a)an exclusive, non-transferable (except as set forth in Section 17.4), fully-paid up and royalty-free, perpetual and irrevocable license, with the right to grant sublicenses through multiple tiers, under the Licensee Product IP to Exploit the Licensed Compounds and Licensed Products in the Field in the Innovent Territory, and
(b)a non-exclusive, non-transferable (except as set forth in Section 17.4), fully-paid up and royalty-free, perpetual and irrevocable license, with the right to grant sublicenses through multiple tiers, under the Licensee Product IP (i) to research, non-clinically Develop, Manufacture and have Manufactured (directly or through its Affiliates or any Third Party) Licensed Compounds and Licensed Products in the Field in the Licensee Territory solely to the extent required or reasonably useful in connection with the Development, Manufacture and Commercialization of Licensed Compounds and the Licensed Products in the Field in the Innovent Territory; (ii) solely with Licensee’s prior written consent, to conduct Innovent Combination Clinical Trials in the Licensee Territory; and (iii) to conduct any research and non-clinical Development activities with respect to Innovent Combination Therapy in the Licensee Territory. Notwithstanding the foregoing, the licenses granted by Licensee to Innovent in this Section 3.2 do not include licenses to Know-How or Patents Controlled by Licensee or its Affiliates that Licensee and its Affiliates do not use with Licensed Compounds and Licensed Products in the Licensee Territory or to any compound proprietary to Licensee or its Affiliates other than Licensed Compounds.
The above licenses exclude Excluded Licensee Know-How and Licensee shall not be obligated to disclose such Excluded Licensee Know-How to Innovent; provided that, if at any time during the Term, Licensee files a Patent Covering or claiming formulation Know-How that is necessary or reasonably useful to Exploit any Licensed Compound or Licensed Product (each, a “Licensee Formulation Patent”), then (a) Licensee will provide Innovent with prompt written notice which notice shall include a description of such Licensee Formulation Patent, and (b) thereafter if Innovent notifies Licensee that Innovent wishes to include the Licensee Formulation Patent as Licensee Product IP for purposes of this Agreement, the Parties will negotiate in good faith the terms pursuant to which the Licensee Formulation Patent will be included as Licensee Product IP for purposes of this Agreement.
(x)For the avoidance of doubt, nothing in this Agreement shall restrict Innovent or its Affiliates or (sub)licensees from independently developing and Exploiting Know-How that is the same or similar to Excluded Licensee Know-How or from developing and Exploiting Know-How that is or becomes publicly known or is learned by Innovent from a source that is permitted to disclose such Know-How without any breach of a confidentiality and non-use obligation owed to Licensee. In addition, notwithstanding the exclusion of Excluded Licensee Know-How from the licenses granted to Innovent in Sections 3.2 (a) and (b) above, subject to Innovent’s obligations pursuant to Article 11, Innovent and its Affiliates and (sub)licensees shall be permitted to use Excluded Licensee Know-How that Licensee discloses to Innovent for the Exploitation of Licensed Products.
(y)The above licenses exclude Licensee Formulation Patents. If the Exploitation, by Innovent or any Affiliate or (sub)licensee or any Third Party customer of Innovent or any such Affiliate or (sub)licensee, of any Licensed Product infringes a claim of a Licensee Formulation Patent (a “Licensee Formulation Blocking Claim”), Licensee covenants and agrees that it and its Affiliates will not enforce such Licensee Formulation Blocking Claim against Innovent or any Affiliate or (sub)licensee of Innovent or any Third Party customer of Innovent or any such Affiliate or (sub)licensee, as the case may be, solely with respect to any such Person’s Exploitation of such Licensed Product in the Innovent Territory. Licensee further covenants and agrees that it shall not assign or otherwise transfer any Licensee Formulation Patent that includes
a Licensee Formulation Blocking Claim to any Third Party except pursuant to an enforceable written assignment or other written agreement in which such Third Party agrees to assume the covenants of Licensee set forth in this Section 3.2(y) and that specifies Innovent, its Affiliates and (sub)licensees and any Third Party customers of Innovent and any such Affiliate or (sub)licensee are third party beneficiaries of such covenants.
(z)The above licenses exclude Licensee Combination Patents, and Licensee shall not be obligated to disclose Licensee Combination Clinical Trial Know-How to Innovent. If the Exploitation, by Innovent or any Affiliate or (sub)licensee or any Third Party customer of Innovent or any such Affiliate or (sub)licensee, of any Licensed Product infringes a claim of a Licensee Combination Patent (a “Licensee Combination Blocking Claim”), Licensee covenants and agrees that it and its Affiliates will not enforce such Licensee Combination Blocking Claim against Innovent or any Affiliate or (sub)licensee of Innovent or any Third Party customer of Innovent or any such Affiliate or (sub)licensee, as the case may be, solely with respect to any such Person’s Exploitation of such Licensed Product in the Innovent Territory. Licensee further covenants and agrees that it shall not assign or otherwise transfer any Licensee Combination Patent that includes a Licensee Combination Blocking Claim to any Third Party except pursuant to an enforceable written assignment or other written agreement in which such Third Party agrees to assume the covenants of Licensee set forth in this Section 3.2(z) and that specifies Innovent, its Affiliates and (sub)licensees and any Third Party customers of Innovent and any such Affiliate or (sub)licensee are third party beneficiaries of such covenants.
For clarity, the non-assertion covenants in the foregoing clauses (y) and (z) do not constitute licenses to use any Licensee Combination Patent or Licensee Formulation Patent.
Neither Licensee nor its Affiliates shall negotiate or obtain an upstream license agreement with any Third Party that includes a license within the Innovent Territory to any Patent or Know-How that will constitute Licensee Product IP without the prior written consent of Innovent, excluding non-exclusive license agreements for licenses of a scope of use within the scope of the license set forth in Section 3.1(b). Subject to the foregoing, Innovent acknowledges and agrees that if Innovent provides such consent and the licenses granted by Licensee to Innovent under this Section 3.2 with respect to Licensee Product IP constitute sublicenses under any such upstream license agreement between Licensee or any of its Affiliates, on the one hand, and Third Party licensors, on the other hand, then such licenses under this Section 3.2 shall be subject and subordinate to all applicable provisions of such upstream license agreements and Innovent shall be responsible for paying to Licensee any royalty, milestone and other license fee amounts thereunder that are reasonably attributable to Innovent’s sublicense thereunder; provided that, Innovent may elect not to receive a sublicense under any such Licensee Product IP and if Innovent makes such election, such Licensee Product IP shall not be sublicensed to Innovent under this Section 3.2 unless and until Innovent has agreed to the foregoing obligations.
3.3 Right to Sublicense.
(a)Licensee has the right to sublicense (through multiple tiers) any of its licenses granted to it under Section 3.1 to an Affiliate of Licensee or any Third Party, in each case, subject to the terms of this Section 3.3. Licensee will provide Innovent with (i) prior written notice of each such sublicense and (ii) a fully executed, true, and complete copy of each sublicense
agreement with any such Sublicensee no later than [***] after the execution thereof; provided that Licensee may redact confidential or commercially sensitive information that is not reasonably necessary for Innovent to monitor Licensee’s compliance with this Agreement.
(b)Licensee will remain directly responsible for all its obligations under this Agreement, regardless of whether any such obligation is delegated, subcontracted or sublicensed to any of its Affiliates, Sublicensees, or subcontractors. Any action by any Affiliate, Sublicensee, or subcontractor of Licensee that would result in a breach of the terms or conditions of this Agreement will be deemed a direct breach by Licensee of such terms or conditions. Licensee will, prior to engaging any Affiliate, Sublicensee, or subcontractor, enter into a written agreement with such Person containing terms and conditions that are consistent with the terms and conditions of this Agreement, including requiring such Person to protect and keep confidential any Confidential Information of Innovent in accordance with written confidentiality and non-use obligations no less restrictive than those set forth in Article 11.
3.4 Retained Rights.
(a)Innovent hereby expressly retains, on behalf of itself (and its Affiliates) all rights under the Licensed Technology that are not expressly licensed to Licensee. Licensee hereby expressly retains, on behalf of itself (and its Affiliates) all rights under Know-How and Patents Controlled by Licensee and its Affiliates that are not expressly licensed to Innovent.
(b)Innovent hereby expressly retains, on behalf of itself (and its Affiliates), all rights under the Licensed Technology as are necessary, either itself or through its Affiliates, subcontractors or Sublicensees, to exercise Innovent’s rights or fulfill Innovent’s obligations under this Agreement, including to Manufacture and have Manufactured Licensed Products and Licensed Compounds for supply to and use by Licensee in the Licensee Territory.
(c)For clarity, Innovent retains the exclusive and worldwide right to use the Innovent Platform Technology to Exploit any compound and product other than the Licensed Compounds and Licensed Products.
3.5 No Implied Licenses; Negative Covenant. Except as set forth herein, nothing in this Agreement grants any license or other intellectual property interest of either Party to the other Party, by implication or otherwise, under any Know-How, trademarks or Patents of the other Party. Each Party shall not, and shall not permit any of its Affiliates, Sublicensees (or (sub)licensees in the case of Innovent), or subcontractors to, practice any Patent or Know-How licensed to it by the other Party outside the scope of the licenses granted to such Party under this Agreement.
3.6 Non-Competition. Subject at all times to Section 3.7, Section 3.8, and Section 3.9:
(a)Licensee Non-Compete. From the Effective Date until the fifth (5th) anniversary thereof (the “Non-Compete Period”), neither Licensee nor its Affiliates or Sublicensees will, without Innovent’s prior written consent, directly or indirectly, by themselves or in collaboration with any Third Party, clinically develop or Commercialize any Competing Product in the Licensee Territory (including through any license or grant of rights, authorization, appointment or permission), in each case, other than through activities conducted by or on behalf
of Licensee and its Affiliates and Sublicensees with respect to Licensed Compounds and Licensed Products as contemplated under this Agreement.
(b)Innovent Non-Compete. During the Non-Compete Period, neither Innovent nor any of its Affiliates shall, without the prior written consent of Licensee, directly or indirectly, by themselves or in collaboration with any Third Party, clinically develop or Commercialize any Competing Product in the Licensee Territory (including through any license or grant of rights, authorization, appointment or permission); provided that the restriction in this Section 3.6(b) shall automatically terminate with respect to any Distinguishable Competing Product if Innovent provides Licensee with an opportunity to exercise the Option for such Distinguishable Competing Product pursuant to Section 3.9 and Licensee fails to or declines to exercise such Option during the Initial Option Period or Extended Option Period, as applicable.
(c)Other Modalities. For the avoidance of doubt, neither Party shall be restricted from research, clinically Developing or Commercializing any product Targeting CD40L in a modality other than a monoclonal, bispecific or multispecific antibody modality, including but not limited to any antibody drug conjugates, and any such product shall not be deemed a Competing Product for purposes of this Agreement.
(d)[***] Exception. Notwithstanding anything to the contrary in Section 3.6(b), Innovent’s Affiliate [***] Biologics (“[***]”) shall have the right to continue to provide contract development and manufacturing (CDMO) services to Third Parties on a fee for service basis with respect to Competing Products in the Licensee Territory and the conduct of such services shall not constitute a breach by Innovent of its obligations set forth in Section 3.6(b); provided that, for so long as [***] conducts such services, Innovent and [***] shall implement firewall procedures in accordance with Section 3.7; and provided further that, without limiting Section 3.1(a) or Section 15.1(b), Innovent shall not at any time while Licensee’s exclusive license under the Licensed Technology pursuant to Section 3.1(a) or Section 15.1(b) remains in force, authorize, license or otherwise permit or assist [***] to practice the Licensed Patents to provide CDMO services to Third Parties with respect to Licensed Products or Competing Products in the Licensee Territory.
3.7 Non-Compete: Effects of Change of Control. Notwithstanding Section 3.6(a) and Section 3.6(b), if a Party (each, a “Change of Control Party”) undergoes a Change of Control with a Third Party or Licensee grants a Sublicense to a Third Party (such Third Party, together with any of its Affiliates existing prior to such Change of Control or such Sublicensee together with its Affiliates, an “Acquisition Party”), the Acquisition Party shall have the right to engage in the Exploitation of a Competing Product that would otherwise be prohibited by Section 3.6(a) or Section 3.6(b), as applicable, and such conduct shall not constitute a breach by such Party of its obligations set forth in Section 3.6(a) or Section 3.6(b), as applicable, provided that (i) such Acquisition Party Exploits the Competing Product independently of the activities under this Agreement and does not use any Licensed Technology (with respect to Licensee as the Change of Control Party), any Licensee Product IP (with respect to Innovent as the Change of Control Party) or any Confidential Information of either Party (with respect to either Party as the Change of Control Party) in the Exploitation of such Competing Product, and (ii) such Change of Control Party and such Acquisition Party institute and enforce commercially reasonable technical and administrative procedures and safeguards designed to ensure that the requirements set forth in the
foregoing clause (i) are met, including by creating “firewalls” to prevent disclosure of non-public plans or non-public information relating to such Licensed Technology or Licensee Product IP, as applicable and the Licensed Products and Confidential Information, to any personnel (including sales teams) of such Acquisition Party (and its Affiliates), who are conducting any activities with respect to the applicable Competing Product (except to senior management or executive personnel in the course of carrying out their management or executive functions).
3.8 Non-Compete: Acquisition of a Third Party by a Party. If either Party or any of its Affiliates merges or consolidates with, or otherwise acquires a Third Party (whether such transaction occurs by way of a sale of assets, merger, consolidation or similar transaction) (an “Acquired Party”) that is engaged in Exploitation of a Competing Product as of the closing of such transaction that would be prohibited by Section 3.6(a) or Section 3.6(b), as applicable, and such merger, consolidation or acquisition does not result in a Change of Control of such Party, then the Acquired Party may continue the Exploitation of such Competing Product for a period not to exceed [***] following the closing of such transaction, and such Party shall not be deemed to be in breach of its obligations set forth in Section 3.6(a) or Section 3.6(b), as applicable, provided that (i) no later than the end of such [***] period, such Party or its Affiliate or its Acquired Party (A) Divests its interest in such Competing Product, or (B) terminates the Exploitation of such Competing Product; and, in either case promptly provides the other Party with written confirmation of such Divestiture or termination, and (ii) during such [***] period, such Party and the Acquired Party implement and enforce “firewall” procedures that would satisfy the requirements of Section 3.7, mutatis mutandis.
3.9 Non-Compete: Distinguishable Competing Product; Option Rights.
(a)Distinguishable Competing Product. Notwithstanding anything to the contrary in Section 3.6(b), if Innovent or any of its Affiliates desires to clinically Develop and/or Commercialize any Competing Product that is a bispecific or multispecific antibody product Targeting CD40L within the Licensee Territory (“Distinguishable Competing Product”), Innovent or such Affiliate may conduct such activities without breaching Section 3.6(b), subject to the terms of this Section 3.9.
(b)Grant of Options. If at any time during the period commencing on the Effective Date and continuing until the third (3rd) anniversary thereof (the “Initial Option Period”), Innovent or any of its Affiliates (i) initiates the development of a Distinguishable Competing Product and (ii) delivers to Licensee the NHP PD/Functional Data generated with respect to such Distinguishable Competing Product, Licensee shall have the option (the “Initial Option”) to obtain an exclusive license to Exploit such Distinguishable Competing Product in the Licensee Territory on the terms set forth in this Section 3.9(b); provided that, if Innovent or such Affiliate delivers to Licensee such NHP PD/Functional Data during the last [***] of the Initial Option Period, the Initial Option Period shall be extended until the date [***] after such delivery. Notwithstanding the foregoing, if, during the Initial Option Period, Innovent or any of its Affiliates initiates the development of a Distinguishable Competing Product but does not generate and deliver to Licensee the NHP PD/Functional Data with respect to such Distinguishable Competing Product, (i) the Initial Option Period with respect to such Distinguishable Competing Product shall automatically extend until the fifth (5th) anniversary of the Effective Date (the “Extended Option Period” and, together with the Initial Option Period, the “Option Period”) and (ii) Licensee shall
have the option (the “Extended Option” and, together with the Initial Option, the “Option”) to obtain an exclusive license to Exploit such Distinguishable Competing Product in the Licensee Territory on the terms set forth in this Section 3.9(b); provided that if Innovent or such Affiliate delivers to Licensee such NHP PD/Functional Data during the last [***] of the Extended Option Period, the Extended Option Period shall be extended until the date [***] after such delivery.
(c)Exercise of Option. Licensee may exercise an Option during the Option Period with respect to a Distinguishable Competing Product by providing written notice of exercise to Innovent within [***] from its receipt of the applicable NHP PD/Functional Data and paying Innovent the applicable Option Exercise Fee. If Licensee (i) fails to exercise any Option within such [***] period or (ii) at any time prior to the expiration of such [***] period, Licensee declines in writing to exercise any Option, then, (A) the Option shall expire with respect to the applicable Distinguishable Competing Product, and (B) the restrictions on Innovent under Section 3.6(b) with respect to the applicable Distinguishable Competing Product shall automatically terminate. For clarity, the Option and the restrictions in Section 3.6(b) shall apply only to the applicable Distinguishable Competing Product and shall not apply to or affect any other Distinguishable Competing Products.
(d)Early Exercise. If at any time during the Initial Option Period, Innovent or any of its Affiliates (i) initiates the development of a Distinguishable Competing Product and (ii) does not provide any NHP PD/Functional Data generated with respect to such Distinguishable Competing Product to Licensee but generates in vivo data for such Distinguishable Competing Product during the Non-Compete Period, Licensee may exercise the Option with respect to such Distinguishable Competing Product at any time during the Extended Option Period but prior to receipt of NHP PD/Functional Data.
(e)Option Exercise Payment. Licensee shall pay to Innovent a one-time, non-refundable upfront payment in the amount of [***] Dollars ($[***]) (the “Option Exercise Fee”) within [***] of Licensee’s exercise of the Option for any Distinguishable Competing Product.
(f)Licensed Rights to Distinguishable Competing Product. Upon Licensee’s exercise of the Option for a Distinguishable Competing Product as set forth in Section 3.9(c) and the payment by Licensee of the corresponding Option Exercise Fee as set forth in Section 3.9(e), (i) such Distinguishable Competing Product will automatically constitute a Licensed Product for purposes of this Agreement, (ii) Licensee’s rights to Exploit such Distinguishable Competing Product shall be included in the license granted to Licensee under Section 3.1 and (iii) Licensee shall have the right to Exploit such Distinguishable Competing Product as a Licensed Product subject to the terms of this Agreement.
3.10 Future Upstream License Agreements.
(a)If Innovent determines, after the Effective Date, that it desires to obtain a license or other rights to any Patent or Know-How of a Third Party that, but for application of this Section 3.10, would be Licensed Technology if it applied to the Licensee Territory, excluding non-exclusive license agreements for licenses of a scope of use within the scope of the license set forth in Section 3.2(b), then Innovent will promptly notify Licensee in writing of such Patent or Know-How (as applicable) of such Third Party. Innovent will not negotiate or obtain any such license or other rights under such Patent or Know-How within the Licensee Territory without Licensee’s prior written consent. Subject to the foregoing, Innovent acknowledges and agrees that if Licensee provides such consent and Innovent obtains a license or other rights to any Patent or Know-How of a Third Party that, but for application of this Section 3.10, would be Licensed Technology then (i) such licenses under Section 3.1 shall be subject and subordinate to all applicable provisions of such upstream license agreements and Licensee shall be responsible for paying to Innovent any royalty, milestone and other license fee amounts thereunder that are reasonably attributable to Licensee’s sublicense thereunder; provided that, Licensee may elect not to receive a sublicense under any such Patent or Know-How and if Licensee makes such election, such Patent or Know-How shall not be sublicensed to Licensee under Section 3.1 unless and until Licensee has agreed to the foregoing obligations and (ii) if the Patents licensed by Innovent from such Third Party Cover the composition of matter or method of use (excluding manufacturing processes, biomarker methods and delivery devices) of the Licensed Compound or Licensed Product(s), then the Innovent’s license agreement with such Third Party will be deemed a Third Party License, and, subject to Section 10.6(c)(v), the applicable portion of any payments due and payable by Licensee to Innovent to such Third Party License shall be creditable against the Royalty Payments payable to Innovent with respect to the applicable Licensed Product(s) during the Royalty Term for such Licensed Product(s) pursuant to Section 10.6(c)(ii).
(b)Except as provided in Section 3.10(a), as between the Parties, only Licensee will have the right to negotiate and obtain the license to the foregoing noticed Patent(s) and/or Know-How within the Licensee Territory, in which case if the Patents licensed by Licensee from such Third Party Cover the composition of matter or method of use (excluding manufacturing processes, biomarker methods and delivery devices) of the Licensed Compound or Licensed Product(s), then the Licensee’s license agreement with such Third Party will be deemed a Third Party License, and, subject to Section 10.6(c)(v), the applicable portion of any payments due and payable by Licensee pursuant to such Third Party License shall be creditable against the Royalty Payments payable to Innovent with respect to the applicable Licensed Product(s) during the Royalty Term for such Licensed Product(s) pursuant to Section 10.6(c)(ii).
ARTICLE 4
REGULATORY AND TECHNOLOGY TRANSFER
4.1 Regulatory and Technology Transfer. The JSC shall coordinate the conduct of the Regulatory and Technology Transfer described in this Article 4.
(a)Transfer Obligations. Innovent shall, in compliance with Applicable Laws, transfer and assign to Licensee (or its designee) any and all Regulatory Submissions for or in respect of any Licensed Product Controlled by Innovent or any of its Affiliates in the Licensee Territory in their original language, including all INDs for the Licensed Products, and provide to Licensee (i) one copy of any and all Regulatory Submissions for or in respect of any Licensed Product Controlled by Innovent or any of its Affiliates in the Innovent Territory in their original language, including all INDs for the Licensed Products, and (ii) one copy of any other Know-How Controlled by Innovent that is necessary or reasonably useful for the Development or Commercialization of the Licensed Compounds and/or Licensed Products in the Licensee Territory other than the Excluded Innovent Know-How and any such Know-How that is included as part of the Innovent Manufacturing Technology (such transfer, the “Regulatory and Technology Transfer”) in accordance with a written plan for such Regulatory and Technology Transfer activities mutually agreed by the Parties (each, a “Regulatory and Technology Transfer Plan”). Licensee shall reimburse Innovent for its (i) Out-of-Pocket Costs and (ii) FTE Costs for any FTEs used to conduct Regulatory and Technology Transfer activities in excess of the Included FTEs, in each case ((i) and (ii)), incurred in the performance of such Regulatory and Technology Transfer activities. Innovent will invoice Licensee for such Out-of-Pocket Costs and FTE Costs following each Calendar Quarter in which such FTE Costs and Out-of-Pocket Costs are incurred.
(b)Purchase of Cell Culture Media. Notwithstanding anything to the contrary herein, Innovent shall not be required to transfer or otherwise disclose the formulation of its proprietary Cell Culture Media to Licensee or any of its designees. Upon Licensee’s written request, Innovent shall, within [***] from the date of its receipt of such request, provide a letter of authorization to the CMO engaged by Innovent to manufacture the Cell Culture Media allowing Licensee to purchase the Cell Culture Media directly from such CMO on the terms and subject to the conditions provided to Licensee by such CMO.
4.2 Technical Support. Promptly following the Effective Date, Innovent shall provide the Regulatory and Technology Transfer pursuant to Section 4.1(a) and, during the first [***] after the Effective Date, Innovent shall make available to Licensee Innovent’s and its Affiliates’ applicable personnel on a reasonable basis to answer questions and provide technical support with respect to any Regulatory Submissions and Know-How transferred to Licensee pursuant to Section 4.1(a) as requested in writing by Licensee (such support, the “Technical Support”). Licensee shall reimburse Innovent for its (a) Out-of-Pocket Costs and (b) FTE Costs for any FTEs used to conduct Technical Support in excess of the Included FTEs, in each case ((a) and (b)), incurred in the performance of such Technical Support. Innovent will invoice Licensee for such Out-of-Pocket Costs and FTE Costs following each Calendar Quarter in which such FTE Costs and Out-of-Pocket Costs are incurred. For clarity, if any Regulatory and Technology Transfer requires the translation of Regulatory Submissions into English as requested by Licensee, Licensee may engage a Third Party to perform such translations, and such translations shall be at Licensee’s cost and expense. Alternatively, Licensee may elect on a case-by-case basis to have Innovent perform such
translations, in which case Licensee shall pay Innovent the FTE Costs for any FTEs used to perform such translations in excess of the Included FTEs; provided that the Parties anticipate that Licensee will generally elect to have Third Parties perform such translations.
ARTICLE 5
DEVELOPMENT
5.1 Responsibilities. As between the Parties, Licensee shall (itself or through its Affiliates or Sublicensees) have the sole right and responsibility, at its sole cost and expense, to conduct all Development of Licensed Products in the Field in the Licensee Territory, except for any non-clinical Development activities conducted by Innovent as expressly provided in Section 3.2(b).
5.2 Diligence.
(a)Licensee shall (itself or through its Affiliates or Sublicensees) use Commercially Reasonable Efforts to Develop and seek Regulatory Approval of at least one (1) Licensed Product for at least two (2) of the Major Markets (including the United States) in at least one (1) Indication.
(b)Licensee shall file an IND for a Licensed Product in the United States within twelve (12) months after the Effective Date; provided that, such twelve (12)-month period shall be extended by any delay that is a Justified Delay.
(c)Licensee’s breach of this Section 5.2 shall be deemed a material breach of this Agreement subject to Licensee’s right to dispute and cure such material breach pursuant to Section 15.4.
5.3 Development Plan. Each Party shall provide the JSC with non-binding, high-level written development plans that includes its anticipated timeline and budget for material Development work (including all Clinical Trials) to be conducted by or on behalf of the applicable Party, its Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) in order to obtain Regulatory Approval of the Licensed Product in its territory (each, a “Development Plan”). Exhibit 5.3 (the “Licensee Development Plan”) sets forth the initial Development Plan for Licensee. Innovent shall provide the JSC with its Development Plan promptly after Innovent has prepared such Development Plan and in any case within [***] after the Effective Date. From time to time during the Term, but not less than [***], each Party will provide the JSC, for its review, with any amendment to its Development Plan.
5.4 Development Reports. Each Party will keep the JSC reasonably informed of the status, progress and results of its Development and regulatory activities with respect to Licensed Compounds and Licensed Products and will update the JSC regarding such status, progress and results not less than [***], including with regard to any Clinical Trial designs, clinical data, Adverse Events, and regulatory communications with Regulatory Authorities with respect to Licensed Products. All updates and reports provided by a Party pursuant to this Section 5.4 will be the Confidential Information of such Party.
5.5 Records. Each Party shall, and shall cause its Affiliates to, and shall require its Sublicensees (or, with respect to Innovent, (sub)licensees) or subcontractors to, maintain complete, current and accurate records in either tangible or electronic form of all material Development activities with respect to the Licensed Products, in each case in accordance with such Person’s reasonable internal documentation and record retention practices. Such records will be maintained in sufficient detail to properly reflect, in good scientific manner, all material work done, and the results of studies and Clinical Trials undertaken and, further, will be at a level of detail appropriate for Patent and regulatory purposes. In addition, such Party will document all non-clinical studies and Clinical Trials of Licensed Products in formal written study reports according to Applicable Laws and applicable national and international guidelines. Upon the written request of either Party, the Parties shall discuss in good faith and may agree on the reasonable scope of records, reports, information and Data to be provided by one Party to the other Party for the other Party’s use for the Development, Manufacture, and Commercialization of the Licensed Products in such other Party’s territory, in each case in accordance with the terms of this Agreement. All records, reports, information and Data provided by a Party pursuant to this Section 5.5 shall be deemed the Confidential Information of such Party.
5.6 Data Exchange and Use. Each Party shall, at its own cost and expense, promptly provide the other Party with copies of all Data (including all Clinical Trial data and supporting documentation, e.g., protocols and case report forms) generated from its Development of the Licensed Compounds and Licensed Products, and shall take all necessary steps, including with respect to any informed consent forms and Regulatory Approvals, that may be reasonably required to ensure that such Data can be delivered to the other Party in compliance with Applicable Laws. For clarity, any such Data will be owned by each Party in accordance with Section 14.1 and shall be subject to the licenses, rights and obligations set forth herein.
ARTICLE 6
COMBINATION CLINICAL TRIALS
6.1 Innovent Combination Clinical Trial.
(a)Innovent shall not conduct any Clinical Trial for the Development of the concomitant or subsequent administration of one or more compounds or products, including Innovent Product(s), in a combination therapy with a Licensed Compound (each, an “Innovent Combination Therapy”) in the Licensee Territory without the prior written consent of Licensee, which consent will not be unreasonably withheld, conditioned or delayed (any such Clinical Trial, an “Innovent Combination Clinical Trial”).
(b)If Innovent proposes to conduct an Innovent Combination Clinical Trial in the Licensee Territory, Innovent shall provide Licensee with a written notice of such proposal. Following any such notice, the Parties shall discuss in good faith the parameters of Innovent’s desired Innovent Combination Clinical Trial and the terms and conditions, if any, under which Licensee would consent to the conduct thereof.
(c)Following Regulatory Approval of an Innovent Combination Therapy, Innovent may Commercialize the Innovent Product included in such Innovent Combination Therapy in the Licensee Territory; provided that, for clarity, Innovent shall not have the right to
Commercialize in the Licensee Territory the Licensed Compound or Licensed Product that is included as part of such Innovent Combination Therapy.
6.2 Licensee Combination Clinical Trial.
(a)Licensee shall not conduct any Clinical Trial for the Development of the concomitant or subsequent administration of one or more compounds or products in a combination therapy with a Licensed Compound (each, a “Licensee Combination Therapy”) in the Innovent Territory without the prior written consent of Innovent, which consent will not be unreasonably withheld, conditioned or delayed (any such Clinical Trial, a “Licensee Combination Clinical Trial”).
(b)If Licensee proposes to conduct a Licensee Combination Clinical Trial in the Innovent Territory, Licensee shall provide Innovent with a written notice of such proposal. Following any such notice, the Parties shall discuss in good faith the parameters of Licensee’s desired Licensee Combination Clinical Trial and terms and conditions, if any, under which Innovent would consent to the conduct thereof.
(c)Following Regulatory Approval of a Licensee Combination Therapy, Licensee may Commercialize the product(s) other than the Licensed Product included in such Licensee Combination Therapy in the Innovent Territory; provided that, for clarity, Licensee shall not have the right to Commercialize in the Innovent Territory the Licensed Compound or Licensed Product that is included as part of such Licensee Combination Therapy.
6.3 Combination Clinical Trial Data. Each Party shall share with the other Party any safety data generated by or on behalf of such Party in connection with the conduct of (a) with respect to Innovent, Innovent Combination Clinical Trials or (b) with respect to Licensee, Licensee Combination Clinical Trials, as applicable, in each case to the extent reasonably necessary for patient safety, pharmacovigilance, or compliance with Applicable Laws. Except for such safety data, neither Party shall be obligated under this Agreement to disclose, provide, or grant access to any other data, results, Know-How or other information arising from any such Innovent Combination Clinical Trials (with respect to Innovent) or Licensee Combination Clinical Trials (with respect to Licensee), as applicable.
ARTICLE 7
REGULATORY
7.1 Licensee Territory. Subject to Innovent’s rights under Section 3.2, Licensee shall (itself or through its Affiliates or Sublicensees) have the sole right and responsibility, at its sole cost and expense, to (a) conduct all regulatory activities leading up to and including the obtaining of all Regulatory Approvals for Licensed Products from the applicable Regulatory Authorities on a country-by-country basis in the Licensee Territory and (b) prepare, file for, obtain, hold, and maintain all INDs and Regulatory Approvals and, as applicable, associated pricing and reimbursement approvals for Licensed Products on a country-by-country basis in the Licensee Territory. Licensee will keep Innovent reasonably informed of material regulatory developments related to any Licensed Product in the Licensee Territory, including with respect to material decisions of any Regulatory Authority in the Licensee Territory regarding any Licensed Product.
7.2 Innovent Territory. Subject to Licensee’s rights under Section 3.1(b), Innovent shall (itself or through its Affiliates or (sub)licensees) have the sole right, at its sole cost and expense, to (a) conduct all regulatory activities leading up to and including the obtaining of all Regulatory Approvals for Licensed Products from the applicable Regulatory Authorities on a region-by-region basis in the Innovent Territory, and (b) prepare, file for, obtain, hold and maintain all INDs and Regulatory Approvals and, as applicable, all associated pricing and reimbursement approvals for Licensed Products on a region-by-region basis in the Innovent Territory. Innovent will keep Licensee reasonably informed of material regulatory developments related to any Licensed Product in the Innovent Territory, including with respect to material decisions of any Regulatory Authority in the Innovent Territory regarding any Licensed Product.
7.3 Provision of Regulatory Submissions. Each Party will promptly notify the other Party in writing of any material Regulatory Submission or any material comment or material correspondence for any Licensed Product submitted to or received from any Regulatory Authority in its respective territory and will provide the other Party with copies thereof as soon as reasonably practicable.
7.4 Notice of Meetings and Regulatory Actions. Each Party will provide the other Party with written notice of any material meeting or discussion with any Regulatory Authority in such Party’s territory related to any Licensed Product as promptly as possible and no later than [***] after receiving notice thereof. At the notifying Party’s request, subject to Section 7.5, the other Party will reasonably cooperate with the notifying Party in preparing for any such meeting or discussion. If any Regulatory Authority takes, or gives notice of its intent to take, any regulatory action with respect to any Licensed Product, then such Party will notify the other Party of such actual or proposed action within [***] after receipt of such notice (or, if action is taken without notice, within [***] of such Party becoming aware of such action).
7.5 Cooperation. Each Party will reasonably cooperate with the other Party in obtaining any Regulatory Approvals for the Licensed Products in the other Party’s territory; provided that, to the extent that Licensee provides a written request to Innovent to provide Licensee Regulatory Assistance pursuant to this Section 7.5 (“Regulatory Assistance”), Innovent will use Commercially Reasonable Efforts to provide such Regulatory Assistance. Licensee shall reimburse Innovent for its (i) Out-of-Pocket Costs and (ii) FTE Costs for any FTEs used to conduct Regulatory Assistance in excess of the Included FTEs, in each case ((i) and (ii)), incurred in the performance of such Regulatory Assistance. Innovent will invoice Licensee for such Out-of-Pocket Costs and FTE Costs following each Calendar Quarter in which such FTE Costs and Out-of-Pocket Costs are incurred.
7.6 No Harmful Actions. If either Party reasonably believes that the other Party is taking or intends to take any action with respect to a Licensed Product that is reasonably likely to have a material adverse impact upon the regulatory status of such Licensed Product within such Party’s territory, then such Party will have the right to bring the matter to the attention of the JSC for good faith discussion.
7.7 Notification of Threatened Action. Each Party will, within [***], notify the other Party in writing of any information it receives regarding any threatened or pending action, inspection or communication by any Third Party that would reasonably be expected to affect the
safety or efficacy claims with respect to any Licensed Products or the continued marketing of any Licensed Products. Upon receipt of such notice, the Parties will promptly consult with each other in an effort to arrive at a mutually acceptable and appropriate action to take in order to address such matter.
7.8 Rights of Reference.
(a)By Licensee. Licensee (on behalf of itself and its Affiliates) hereby grants to Innovent, free of charge, a fully-paid up, royalty-free right of reference to all Regulatory Submissions pertaining to the Licensed Products submitted to any Regulatory Authority by or on behalf of Licensee or its Affiliates or Sublicensees (and all Data contained or referenced therein), with the right to grant further rights of reference to Innovent’s Affiliates or (sub)licensees with respect to such Licensed Products. Innovent and its Affiliates (and any (sub)licensee to whom it grants a further right of reference) may use this right of reference to such Regulatory Submissions solely for the purpose of seeking, obtaining and maintaining Regulatory Approvals of (i) such Licensed Products in the Innovent Territory or (ii) an Innovent Combination Therapy containing such Licensed Product(s). At Innovent’s written request, Licensee shall promptly provide Innovent with copies of material Regulatory Submissions (including Data contained or referenced therein to the extent not previously provided to Innovent) subject to this right of reference.
(b)By Innovent. Innovent (on behalf of itself and its Affiliates) hereby grants to Licensee, free of charge, a fully-paid up, royalty-free, right of reference to all Regulatory Submissions pertaining to the Licensed Products submitted to any Regulatory Authority by or on behalf of Innovent or its Affiliates or (sub)licensees (and all Data contained or referenced therein), with the right to grant further rights of reference to Licensee’s Affiliates or Sublicensees. Licensee and its Affiliates (and any Sublicensee to whom it may grant a further right of reference) may use this right of reference to Innovent’s Regulatory Submissions in the Field solely for the purpose of seeking, obtaining and maintaining Regulatory Approvals of (i) the Licensed Products in Field in the Licensee Territory or (ii) a Licensee Combination Therapy containing such Licensed Products. At Licensee’s written request, Innovent shall promptly provide Licensee with copies of material Regulatory Submissions (including Data contained or referenced therein to the extent not previously provided to Licensee) subject to this right of reference.
7.9 Adverse Events Reporting.
(a)Pharmacovigilance Agreement. No later than the date of the first IND submission for the first Licensed Product, Licensee and Innovent will negotiate and execute an agreement with respect to the worldwide safety and pharmacovigilance procedures to be used by the Parties with respect to the Licensed Products, such as safety data sharing and exchange, Adverse Events reporting and prescription events monitoring (as amended, the “Pharmacovigilance Agreement”). Such Pharmacovigilance Agreement will describe the coordination of collection, investigation, reporting, and exchange of information concerning Adverse Events or any other significant safety issue and product quality and product complaints involving Adverse Events in each case, with respect to Licensed Products sufficient to permit each Party, its Affiliates, and its Sublicensees (or, with respect to Innovent, (sub)licensees) to comply with Applicable Laws. The Pharmacovigilance Agreement will be promptly updated if required by changes in Applicable Laws. Each Party hereby agrees to comply with its respective obligations
under the Pharmacovigilance Agreement and to cause its Affiliates, Sublicensees (or, with respect to Innovent, (sub)licensees) to comply with such obligations.
(b)Adverse Events. Each Party will be responsible for complying with all Applicable Laws governing Adverse Events for all Clinical Trials of any Licensed Product performed by or on behalf of such Party.
(c)Global Safety Database. Licensee will hold and control the global safety database for each Licensed Product in accordance with the terms of the Pharmacovigilance Agreement. Each Party will provide the other Party with any information of which such Party becomes aware concerning any Adverse Event experienced by a subject or patient being administered the applicable Licensed Product, including any such information received by either Party from any Third Party (subject to receipt of any required consents from such Third Party). It is understood that each Party and its Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) has the right to disclose such information if disclosure is reasonably necessary to comply with Applicable Laws or the requirements of any applicable Regulatory Authority. Notwithstanding the foregoing, Innovent may hold and control a safety database for each Licensed Product in the Innovent Territory at Innovent’s sole cost. Innovent will be responsible for providing information from the Innovent Territory for inclusion in the global safety database, and Licensee will be responsible for providing information from the Licensee Territory for inclusion in the global safety database.
7.10 Remedial Actions. Each Party and its Affiliates will (and will use reasonable efforts to cause its Sublicensees (or (sub)licensees in the case of Innovent) to) inform the other Party immediately (and promptly confirm such communication by written notice) if such Party or its Affiliate or Sublicensee (or (sub)licensee, as applicable) obtains information indicating that any Licensed Product may be subject to any recall, recovery, corrective action or other regulatory action by any Governmental Authority (a “Remedial Action”). The Parties will assist each other in gathering and evaluating such information as is reasonably necessary to determine the necessity of conducting a Remedial Action with respect to a Licensed Product in the Licensee Territory or Innovent Territory, as applicable. Each Party shall have sole discretion with respect to any matter relating to any Remedial Action for any Licensed Product in its territory. In the event that a Party determines that any Remedial Action with respect to any Licensed Product in its territory should be commenced or is required by any Regulatory Authority having jurisdiction over the matter, such Party will control and coordinate all efforts necessary to conduct such Remedial Action in its territory and shall be responsible for the cost and expense of such Remedial Action.
7.11 Safety and Regulatory Audits. Each Party will notify the other Party with respect to any inspection of such Party or its Affiliates or Sublicensees (or, with respect to Innovent, (sub)licensees) (including Clinical Trial sites) by any Governmental Authority directed to any Licensed Product (a) no later than [***] after such Party receives notice of such inspection or (b) within [***] after the completion of any such inspection that is conducted by any Governmental Authority without prior notice. To the extent required by Applicable Laws, each Party will permit Governmental Authorities outside of its territory to conduct inspections of such Party or its Affiliates or Sublicensees (or, with respect to Innovent, (sub)licensees) (including Clinical Trial sites) relating to any Licensed Product, and will ensure that all such Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) permit such inspections. Following any such
regulatory inspection related to any Licensed Product that is reasonably expected to have a material impact on the Development or Commercialization of such Licensed Product in the other Party’s territory, each Party will provide the other Party with an unredacted copy of any finding, notice, or report provided by any Governmental Authority in connection with such inspection (or any portion of such inspection that is related to such Licensed Product) within [***] of such Party receiving the same.
ARTICLE 8
MANUFACTURING AND SUPPLY
8.1 Clinical and Commercial Supply.
(a)Responsibility. Subject to the remainder of this Section 8.1, Licensee shall be responsible (itself or through its Affiliate, Sublicensees or CMO) for Manufacturing and supplying Licensed Products for Development (including use in Clinical Trials) and Commercialization by Licensee and its Affiliates and Sublicensees in the Licensee Territory, and for non-clinical Development by Licensee and its Affiliates and Sublicensees in the Innovent Territory.
(i)Supply Agreement. Within [***] of the Effective Date (or such longer period as may be mutually agreed upon by the Parties), the Parties will negotiate in good faith and enter into a clinical supply agreement for the Manufacture and clinical supply of Licensed Compounds and Licensed Products by Innovent (itself or through its Affiliate, its (sub)licensees or CMO) to Licensee and its Affiliates or Sublicensees for Development use in the Licensee Territory on commercially reasonable terms (as may be amended in accordance with its terms, the “Supply Agreement”). The Supply Agreement will include terms consistent with the principles set forth on Exhibit 8.1(b) (“Supply Agreement Material Terms”) and other customary terms for the supply of pharmaceutical products for Development use. In connection with the Supply Agreement, the Parties shall enter into a quality agreement (the “Quality Agreement”) governing the quality aspects of the supply of Licensed Products.
(ii)Initial Supply by Innovent. Notwithstanding that the Supply Agreement has not yet been executed, at Licensee’s reasonable request, Innovent will supply Licensee with all of Licensee’s requirements for the preclinical and clinical Development of the Licensed Compounds and Licensed Products set forth on Exhibit 8.1(b) under the heading “Initial Supply” pursuant to the Supply Agreement Material Terms.
(c)Manufacturing Technology Transfer to Licensee. Upon Licensee’s written request following the Effective Date, including for purposes of engaging an alternative CMO (but subject to Section 8.1(d)), the Parties will prepare a mutually agreed plan pursuant to which Innovent will (subject to Section 4.1(b)) perform a one-time technology transfer with respect to the then-current Innovent Manufacturing Technology (the “Manufacturing Technology Transfer Plan”) to enable Licensee or its Affiliate or any Sublicensee or CMO designated by Licensee or its Affiliate or Sublicensee to Manufacture the Licensed Products for Development and Commercialization purposes. The Manufacturing Technology Transfer Plan will
describe the Innovent Manufacturing Technology to be transferred, including the anticipated timelines for completing such transfers. Subject to the terms of the Manufacturing Technology Transfer Plan, Innovent will use Commercially Reasonable Efforts to (i) transfer all Innovent Manufacturing Technology specified in the Manufacturing Technology Transfer Plan to Licensee or its Affiliate, Sublicensee or CMO, as applicable, and (ii) provide reasonable technical support and assistance to Licensee or such Affiliate, Sublicensee or CMO with respect to the implementation of the Manufacturing process for the Licensed Products for up to [***] following completion of such transfer (“Manufacturing Support”) (clause (i) and (ii), the “Manufacturing Technology Transfer”); provided that Licensee shall pay Innovent the FTE Costs (calculated at Innovent’s FTE Rates) and any Out-of-Pocket Costs incurred by Innovent in providing any Manufacturing Support requested by Licensee, to the extent such FTE Costs are in excess of the Included FTEs. Innovent will invoice Licensee for such FTE Costs and Out-of-Pocket Costs following each Calendar Quarter in which such FTE Costs and Out-of-Pocket Costs have been incurred.
(d)Innovent Cell Line Agreement. The Parties acknowledge and agree that the Innovent Manufacturing Technology includes certain Patents and Know-How Controlled by Innovent pursuant to the Existing Upstream License Agreement. If Licensee practices such Patents and Know-How in connection with the Manufacture of any Licensed Product by or on behalf of Licensee (or its Affiliates or Sublicensees) pursuant to Section 3.1, then Licensee shall be responsible for all royalties owed by Innovent to [***] on Net Sales (as defined in the Existing Upstream License Agreement) of such Licensed Product by Licensee or its Affiliates or Sublicensees, which royalties will constitute [***] percent ([***]%) of such Net Sales if such Licensed Product is manufactured by [***] or any of its Affiliates, [***] percent ([***]%) of such Net Sales if such Licensed Product is manufactured by Innovent or any of its Affiliates or Strategic Partners (as defined in the Existing Upstream License Agreement), or [***] percent ([***]%) of such Net Sales if such Licensed Product is manufactured by a CMO other than [***]o r any of its Affiliates or Innovent or any of its Affiliates or Strategic Partners (as defined in the Existing Upstream License Agreement). In accordance with Section [***] of the Existing Upstream License Agreement, such royalty payments shall be reduced on a country-by-country basis by [***] percent ([***]%) following expiration of applicable [***] Patents. In addition, if Licensee practices such Patents and Know-How in connection with the Manufacture of any Licensed Product and Licensee or any of its Affiliates obtains any supply of any Licensed Product from a CMO other than [***] or any of its Affiliates or Innovent or any of its Affiliates or Strategic Partners (as defined in the Existing Upstream License Agreement), then Licensee shall be obligated to pay directly to [***] an annual fee of [***] dollars ($[***]) or, if Innovent or any of its Affiliates or (sub)licensees also obtains supply of such Licensed Product from a CMO other than [***] or any of its Affiliates or Innovent or any of its Affiliates or Strategic Partners (as defined in the Existing Upstream License Agreement), a pro rata portion of such annual fee) as set forth in the Existing Upstream License Agreement. Innovent shall not, and shall cause its Affiliates not to, modify or amend the terms of the Existing Upstream License Agreement in any manner that would reduce Licensee’s rights under the Innovent Manufacturing Technology or increase Licensee’s payment obligations under this Section 8.1(d).
(e)Right of First Negotiation to be Secondary Manufacturer of Licensee. Licensee hereby grants to Innovent (on behalf of its Affiliate [***]) a right of first negotiation to be a secondary manufacturer (“Secondary Manufacturer”) of Licensed Compound and Licensed Product for Development and for Commercialization purposes in the Licensee Territory as set forth below in this Section 8.1(e). If, at any time during the Term, Licensee wishes to enter into an engagement with a CMO (other than the CMO at whose facility the Manufacturing Technology Transfer was implemented under Section 8.1(d)) for the Manufacture and supply of drug substance for the Licensed Compounds and Licensed Products for clinical Development or Commercialization use, then prior to entering into any binding agreement with such CMO (i) Licensee shall notify Innovent in writing and (ii) Licensee shall negotiate in good faith with Innovent for up to [***] (the “Negotiation Period”) the terms and conditions of a definitive agreement under which Innovent’s Affiliate [***] would become Licensee’s Secondary Manufacturer for the drug substance for the Licensed Compounds and Licensed Products. If the Parties are unable to agree on the terms of such definitive agreement within the Negotiation Period, then Licensee may execute agreements with any CMO for the Manufacture and supply of drug substance for the Licensed Compounds and Licensed Products for clinical Development or Commercialization use. Notwithstanding the foregoing, the right of negotiation granted under this Section 8.1(e) applies solely to Licensee and shall not apply to any Sublicensee or acquirer of Licensee; provided that, upon Innovent’s request, each such Sublicensee or acquirer will, if such entity wishes to enter into a new Manufacturing and supply arrangement with a Third Party CMO, engage in a good-faith discussion with [***] regarding the potential engagement of [***] to Manufacture and supply drug substance for the Licensed Compounds and Licensed Products for Development and Commercialization purposes in the Licensee Territory.
(f)Stability Testing Program. As further set forth in the Quality Agreement, Innovent shall maintain stability testing programs and conduct all required stability studies (including those arising from process or formulation changes) in accordance with cGMP.
ARTICLE 9
COMMERCIALIZATION; MEDICAL AFFAIRS
9.1 Responsibilities. Licensee (itself or through its Affiliates or Sublicensees) will have the sole right and responsibility for the Commercialization of Licensed Products in the Field in the Licensee Territory, at its sole cost and expense. Innovent (itself or through its Affiliates or (sub)licensees) will have the sole right and responsibility for the Commercialization of Licensed Products in the Field in the Innovent Territory, at its sole cost and expense.
9.2 Commercialization Diligence. Licensee shall (itself or through its Affiliates or Sublicensees) use Commercially Reasonable Efforts to Commercialize at least one (1) Licensed Product in at least one (1) Indication in at least two (2) of the Major Markets (including the United States) in which Regulatory Approval for such Licensed Product was obtained.
9.3 Commercialization Plan. No later than [***] before the anticipated date of the submission of the first MAA for the Licensed Product in the Licensee Territory, Licensee shall submit to the JSC (or a joint Commercialization subcommittee established by the JSC), for its review and discussion, a written Commercialization plan that sets forth the high-level timeline and high-level summary of the major Commercialization activities planned for the Licensed Product
in Licensee Territory for the [***] period beginning on the date of submission of such MAA (the “Commercialization Plan”). Thereafter, from time to time, but no less than [***], Licensee will provide the JSC, for its review, with any material updates or amendments to the Commercialization Plan. Notwithstanding the foregoing, in the event Licensee grants a sublicense or undergoes a Change of Control, neither Licensee nor any Sublicensee or acquirer of Licensee shall thereafter have any obligation under this Section 9.3 to provide any Commercialization Plan to the JSC or Innovent.
9.4 Commercialization Reports. During the Term, Licensee will keep the JSC reasonably informed of its and its Affiliates’ Commercialization activities with respect to the Licensed Product in the Licensee Territory. Licensee will, from time to time no less than [***], provide the JSC with a high-level summary of its and its Affiliates significant Commercialization activities. Notwithstanding the foregoing, in the event Licensee grants a sublicense or undergoes a Change of Control, neither Licensee nor any Sublicensee or acquirer of Licensee shall thereafter have any obligation under this Section 9.4 to inform or update either the JSC or Innovent regarding its or its Affiliates Commercialization activities with respect to the Licensed Product.
9.5 Records. Licensee shall, and shall cause its Affiliates to, and shall require its Sublicensees or subcontractors to, maintain complete, current and accurate records in either tangible or electronic form of all material Commercialization activities with respect to the Licensed Products, in each case in accordance with its reasonable internal documentation and record retention practices.
9.6 Product Trademarks.
(a)Licensee will have the right to brand the Licensed Products in the Licensee Territory using trademarks, logos and trade names that it determines appropriate for the Licensed Products (such Licensed Product-specific trademarks, logos, and trade names, the “Licensee Product Marks”; provided that Licensee Product Marks shall not include any company names or logos of Innovent or its Affiliates, the use of which is addressed in Section 11.4). Licensee may not use any trademark Controlled by Innovent or its Affiliates (including their corporate names) to brand the Licensed Products without Innovent’s prior written consent. Licensee shall ensure that no Licensee Product Mark is confusingly similar to any Innovent Product Mark or any company name or logo of Innovent or any of its Affiliates or (sub)licensees. Licensee will own all rights in the Licensee Product Marks in the Licensee Territory and shall have the sole right to register and maintain the Licensee Product Marks in the Licensee Territory.
(b)Innovent will have the right to brand the Licensed Products in the Innovent Territory using trademarks, logos and trade names that it determines appropriate for the Licensed Products (such Licensed Product-specific trademarks, logos, and trade names, the “Innovent Product Marks”; provided that Innovent Product Marks shall not include any company names or logos of Licensee or any of its Affiliates or Sublicensees, the use of which is addressed in Section 11.4). Innovent shall ensure that no Innovent Product Mark is confusingly similar to any Licensee Product Mark or any company name or logo of Licensee or any of its Affiliates or Sublicensees. Innovent will own all rights in the Innovent Product Marks in the Innovent Territory and shall have the right to register and maintain the Innovent Product Marks in the Innovent Territory.
(c)To the extent requested by a Party and commercially practicable, the Parties will cooperate in discussing, developing and implementing a global branding strategy for the Licensed Products. If the Parties do not agree upon a global branding strategy for a Licensed Product, each Party will have the right in its sole discretion to brand such Licensed Product in its territory in any manner that it determines appropriate (subject in all cases to Section 9.6(a) and Section 9.6(b)). Upon the reasonable written request of a Party, the other Party shall provide any information related to, for Licensee, the Licensee Product Marks and, for Innovent, the Innovent Product Marks, to the requesting Party to the extent reasonably necessary for the requesting Party to exercise its right and perform its obligations as contemplated under this Agreement.
9.7 No Diversion. Each of Innovent and Licensee hereby covenants and agrees that (a) it will not, and will ensure that its Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) will not, directly or indirectly, promote, market, distribute, import, sell or have sold any Licensed Product, including via internet or mail order, outside its respective territory; (b) it will not, and will ensure that its Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) will not: (i) unless otherwise agreed by the Parties in writing, establish or maintain any branch, warehouse or distribution facility for any Licensed Products in any country or region outside its territory, (ii) engage in any advertising or promotional activities relating to any Licensed Products that are directed primarily to customers or other purchaser or users of any Licensed Products located in any country or region outside its territory, (iii) solicit orders for any Licensed Products from any prospective purchaser located in any country or region outside its territory, or (iv) sell or distribute any Licensed Products to any Person in such Party’s territory who, to such Party’s knowledge, intends to sell or has in the past sold any Licensed Products in any country or region outside its territory; (c) if such Party or any of its Affiliates or Sublicensees (or, with respect to Innovent, (sub)licensees) receives any order for any Licensed Products from a prospective purchaser reasonably believed to be located in a region or country outside its territory, then such Party will, and will ensure that its Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) will, not accept such order and will promptly refer that order to the other Party; (d) it will not, and will ensure that its Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) will not, deliver or tender (or cause to be delivered or tendered) any Licensed Products into a country or region outside its territory; and (e) it will not, and will ensure that its Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) will not, knowingly restrict or impede in any manner the other Party’s exercise of its exclusive rights to Commercialize any Licensed Products in such other Party’s territory; provided that the foregoing shall not restrict either Party’s Development or Manufacturing (including packaging and labeling) rights with respect to Licensed Products under this Agreement.
9.8 Medical Affairs. Each Party will be solely responsible, at its sole cost and expense, for conducting medical affairs activities with respect to Licensed Products in its respective territory, and with respect to Innovent Combination Therapies and Licensee Combination Therapies, as applicable, worldwide, including (a) communications with key opinion leaders, (b) participation in medical education, symposia and advisory boards (to the extent related to medical affairs or clinical guidance), (c) preparation of publications, congress presentations and posters and published manuscripts, (d) any activities performed in connection with patient registries and post-approval trials, and (e) obtaining educational grants and research grants, conducting investigator-initiated studies and making charitable donations, in each case, to the extent related to the promotion, marketing, sale or other Commercialization of Licensed Products. Each Party will conduct all such medical affairs activities in accordance with Applicable Laws.
ARTICLE 10
PAYMENTS
10.1 Upfront Payment. In partial consideration of the rights granted by Innovent to Licensee hereunder, Licensee will pay to Fortvita USA a one-time, non-refundable and non-creditable payment of thirty-five million Dollars ($35,000,000) within [***] after the Effective Date.
10.2 IND Milestone Payment. In partial consideration of the rights granted by Innovent to Licensee hereunder, subject to Section 10.3(d), Licensee will pay Fortvita USA a one-time, non-refundable and non-creditable preliminary payment of [***] Dollars ($[***]) upon the acceptance of an IND filing for the first Licensed Product in the United States.
10.3 Development and Regulatory Milestones.
(a)Development and Regulatory Milestone Payments. In partial consideration of the rights granted by Innovent to Licensee hereunder, upon the first achievement by or on behalf of Licensee or any of its Affiliates or Sublicensees of each of the events set forth below (each such event, a “Development and Regulatory Milestone Event”), Licensee will pay to Fortvita USA the following corresponding one-time, non-refundable and non-creditable milestone payments (each such payment, a “Development and Regulatory Milestone Payment”):
|
|
|
|
Development and Regulatory Milestone Events |
Development and Regulatory Milestone Payments |
1. |
[***] |
$[***] |
2. |
[***] |
$[***] |
3. |
[***] |
$[***] |
4. |
[***] |
$[***] |
5. |
[***] |
$[***] |
6. |
[***] |
$[***] |
7. |
[***] |
$[***] |
8. |
[***] |
$[***] |
9. |
[***] |
$[***] |
10. |
[***] |
$[***] |
11. |
[***] |
$[***] |
|
|
|
|
Development and Regulatory Milestone Events |
Development and Regulatory Milestone Payments |
12. |
[***] |
$[***] |
13. |
[***] |
$[***] |
|
Total Development and Regulatory Milestone Payments |
$[***] |
(b)Achievement and payment of Development and Regulatory Milestones. Licensee will promptly (but in any event within [***]) notify Fortvita USA in writing of the first achievement of each Development and Regulatory Milestone Event with respect to a Licensed Product in the Licensee Territory. Thereafter, Fortvita USA will send Licensee an invoice for the corresponding Development and Regulatory Milestone Payment, and Licensee will pay such Development and Regulatory Milestone Payment within [***] after receipt of such invoice. Each Development and Regulatory Milestone Payment will be payable only once on the first occurrence of the corresponding Development and Regulatory Milestone Event in the Licensee Territory for the first achievement by or on behalf of Licensee or any of its Affiliates or Sublicensees, regardless of the number of times the Development and Regulatory Milestone Event is achieved or the number of Licensed Products that achieve the applicable Development and Regulatory Milestone Event. In no event will the aggregate Development and Regulatory Milestone Payments payable under Section 10.3(a) exceed [***] Dollars ($[***]).
(c)[***] Development Milestones.
(i)For purposes of Development and Regulatory Milestone Event [***] set forth in Section 10.3(a), if [***], Development and Regulatory Milestone Event [***] shall be deemed achieved and the corresponding Development and Regulatory Milestone Payment shall be deemed due and payable after the [***]. For purposes of Development and Regulatory Milestone Events [***] set forth in Section 10.3(a), if [***], Development and Regulatory Milestone Event [***], as applicable, shall be deemed achieved and the corresponding Development and Regulatory Milestone Payment(s) shall be deemed due and payable following [***]. If, at any time, the achievement of a later Development and Regulatory Milestone Event has occurred with respect to the first Licensed Product [***], and any preceding Development and Regulatory Milestone Event for such first Licensed Product [***] for such Indication have not yet been achieved, become due, or been paid, then each such skipped Development and Regulatory Milestone Event will become due and payable concurrently with such subsequent Development and Regulatory Milestone Event that has been achieved for such first Licensed Product in such country for such Indication.
(ii)For purposes of any [***] Development and Regulatory Milestone Event set forth in Section 10.3(a), [***].
(d)Research Cost Deductions. In the event guidance received by Licensee from the FDA or any Applicable Laws in the United States require Licensee to regenerate any data provided by Innovent to Licensee hereunder in order to file Licensee’s first IND for a Licensed Product in the United States, then (i) Licensee will provide Innovent with written notice, which shall include the data Licensee is required to regenerate, and (ii) the Parties will discuss and agree, such agreement not to be unreasonably withheld, conditioned or delayed, upon a written plan that will describe the activities to be conducted in order to regenerate such data, which plan will include an estimated budget of the internal and external costs and expenses expected to be incurred by or on behalf of Licensee in the performance of such activities (each, an “Additional Data Plan”). Subject to the foregoing, Licensee may deduct from any Milestone Payment(s) or Royalty Payment(s), owed under this Agreement an amount equal to [***] percent ([***]%) of the internal and external costs and expenses incurred by Licensee and its Affiliates in generating or regenerating such data, to the extent included in the Additional Data Plan.
10.4 Distinguishable Competing Product Milestones.
(a)Additional Development and Regulatory Milestone Payments. For each Distinguishable Competing Product for which Licensee exercises its Option and which is deemed to be a Licensed Product for purposes of this Agreement, upon the first achievement by or on behalf of Licensee or any of its Affiliates or Sublicensees of each of the events set forth below (each such event, an “Additional Development and Regulatory Milestone Event”), Licensee will pay to Fortvita USA the following corresponding one-time, non-refundable and non-creditable milestone payments (each such payment, an “Additional Development and Regulatory Milestone Payment”):
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|
Additional Development and Regulatory Milestone Events for Distinguishable Competing Products that are Licensed Products |
Additional Development and Regulatory Milestone Payments |
[***] |
$[***] |
[***] |
$[***] |
Total Additional Development and Regulatory Milestone Payments for Distinguishable Competing Products that are Licensed Products |
$[***] |
(b)Achievement and payment of Additional Development and Regulatory Milestones. Licensee will promptly (but in any event within [***]) notify Fortvita USA in writing of the first achievement of each Development and Regulatory Milestone Event with respect to a Distinguishable Competing Product that is a Licensed Product in the Licensee Territory. Thereafter, Fortvita USA will send Licensee an invoice for the corresponding Additional Development and Regulatory Milestone Payment, and Licensee will pay such Additional Development and Regulatory Milestone Payment within [***] after receipt of such invoice. Each Additional Development and Regulatory Milestone Payment will be payable only once on the first occurrence of the corresponding Additional Development and Regulatory Milestone Event in the Licensee Territory for the first achievement by or on behalf of Licensee or any of its Affiliates or
Sublicensees, regardless of the number of times the Additional Development and Regulatory Milestone Event is achieved or the number of Licensed Products that achieve the applicable Additional Development and Regulatory Milestone Event. In no event will the aggregate Additional Development and Regulatory Milestone Payments payable under Section 10.4(a) exceed [***] Dollars ($[***]).
10.5 Sales Milestones.
(a)Sales Milestone Payments. In partial consideration of the rights granted by Innovent to Licensee herein, Licensee will pay to Fortvita USA the following one-time, non-refundable and non-creditable milestone payments (each such payment, a “Sales Milestone Payment”) for the first achievement by Licensee and its Affiliates and Sublicensees of the corresponding Annual Net Sales thresholds in the Licensee Territory set forth below (each such event, a “Sales Milestone Event”):
|
|
Sales Milestone Events based upon Annual Net Sales of all Licensed Products in the Licensee Territory |
Sales Milestone Payments |
Annual Net Sales ≥ $[***] |
$[***] |
Annual Net Sales ≥ $[***] |
$[***] |
Annual Net Sales ≥ $[***] |
$[***] |
Annual Net Sales ≥ $[***] |
$[***] |
Annual Net Sales ≥ $[***] |
$[***] |
Total Sales Milestone Payments |
$[***] |
(b)Achievement and payment of Sales Milestones. Licensee will notify Fortvita USA in writing of the first achievement of each Sales Milestone Event concurrently with the delivery of the royalty report for the Calendar Quarter during which such first achievement occurs. Each Sales Milestone Payment will be payable only once on the first occurrence of the corresponding Sales Milestone Event for the Annual Net Sales of all Licensed Products in the Licensee Territory, and no amounts would be due for subsequent or repeated achievements of any Sales Milestone Event, regardless of whether a Licensed Product is approved for use in different presentations, formulations, dosages, route of administration or as a combination product. In no event will the aggregate Sales Milestone Payments payable under Section 10.5(a) exceed [***] Dollars ($[***]). The Sales Milestone Payments are cumulative, such that, if the Annual Net Sales for Licensed Products in a given Calendar Year in the Licensee Territory exceed more than one applicable Sales Milestone Event threshold, then all corresponding Sales Milestone Payments for each achieved Sales Milestone Event that has not been previously achieved will be payable.
10.6 Royalties.
(a)Royalty Payment. Subject to the remainder of this Section 10.6, for each Licensed Product, Licensee will pay to Fortvita USA tiered royalties calculated by multiplying the applicable royalty rate set forth in the table below by the corresponding amount of incremental
Annual Net Sales of such Licensed Product in the Licensee Territory in a Calendar Year (a “Royalty Payment”). The tiered royalty rates on Annual Net Sales will be as set forth below:
|
|
Portion of Annual Net Sales of each Licensed Product in the Licensee Territory in a given Calendar Year |
Royalty Rate |
$[***] to $[***] |
[***]% |
Greater than $[***] and up to $[***] |
[***]% |
Greater than $[***] and up to $[***] |
[***]% |
Greater than $[***] and up to $[***] |
[***]% |
Greater than $[***] |
[***]% |
(b)Royalty Term. The Royalty Payments will be payable on a Licensed Product-by-Licensed Product and country-by-country basis in the Licensee Territory from the First Commercial Sale of such Licensed Product in such country until the latest to occur of: (i) eleven (11) years after the date of the First Commercial Sale of such Licensed Product in such country, (ii) the expiration of the last-to-expire Valid Claim within the Licensed Patents in such country Covering the composition of matter of the Licensed Compound contained in such Licensed Product, or (iii) the expiration of Regulatory Exclusivity for such Licensed Product in such country (the “Royalty Term”). After the end of the Royalty Term for any Licensed Product in a given country in the Licensee Territory, Net Sales of such Licensed Product in such country shall be excluded from the calculation of Annual Net Sales for purposes of this Section 10.6.
(i)Absence of Valid Claims. On a Licensed Product-by-Licensed Product, country-by-country, and Calendar Quarter-by-Calendar Quarter basis, if at any time during such Calendar Quarter there is no Valid Claim within the Licensed Patents in such country Covering the composition of matter of the Licensed Compound contained in such Licensed Product, the Royalty Payment due on the Net Sales of such Licensed Product in such country for such Calendar Quarter will be reduced by [***] percent ([***]%).
(ii)Third Party Payments. Without limiting Licensee’s rights under Section 13.2, if, on a Licensed Product-by-Licensed Product, country-by-country, and Calendar Quarter-by-Calendar Quarter basis, Licensee or any of its Affiliates or Sublicensees obtains one or more licenses under one or more Third Party Patents that Cover the composition of matter or method of use (excluding manufacturing processes, biomarker methods and delivery devices) of such Licensed Product or the Licensed Compound that is incorporated into such Licensed Product (each such agreement, other than the Existing Upstream License Agreement, a “Third Party License”), then either (A) [***] percent ([***]%), if such Third Party License is for Third Party Patent(s) other than formulation technology Patent(s) or (B) [***] percent ([***]%), if such Third Party License is for Third Party Patent(s) that are formulation technology Patent(s), of any royalties, milestones, or other amounts paid by Licensee (or its Affiliate or Sublicensee) under such Third Party License (or sublicense thereunder) with respect to such Licensed Product in such country shall be creditable against the Royalty Payments payable to Fortvita USA with respect to
such Licensed Product. If any portion of such creditable amount cannot be credited against Royalty Payments for an applicable Calendar Quarter, such portion shall be carried forward and credited against Royalty Payments for subsequent Calendar Quarter(s), in each case subject to the limitation set forth in Section 10.6(c)(v).
For clarity, the Existing Upstream License Agreement shall not be a Third Party License for purposes of this Section 10.6(c)(ii).
(iii)Inflation Reduction Act. Following the date on which an IRA Subject Product is designated as a “selected drug” by the Secretary of the U.S. Department of Health and Human Services and Licensee or any of its Affiliates or Sublicensees is therefore required to negotiate a maximum fair price that shall apply to sales of such IRA Subject Product in the United States during any Calendar Quarter within the price applicability period as specified by the Inflation Reduction Act of 2022, then the Royalty Payments due under Section 10.6(a) for Net Sales of such Subject Product in the United States during such Calendar Quarter will be reduced by a percentage equal to the percentage by which the selling price of such Licensed Product in the United States is decreased as a result of such designation and the ensuing maximum fair price (as defined in Section 1191(c)(3) of the Social Security Act) negotiation(s) pursuant to the Inflation Reduction Act. Any adjustment of royalties pursuant to this Section 10.6(c)(iii) shall apply after and in addition to any other adjustments to royalties pursuant to this Section 10.6(c). By way of example only, if a Licensed Product is subject to negotiation with the U.S. government and such negotiation results in a [***] percent ([***]%) decrease in the price of such Licensed Product in the U.S. and the royalty rate initially payable to Fortvita USA on given Net Sales in the U.S. before any reduction by virtue of this Section 10.6(c)(iii) is [***] percent ([***]%), then the royalty rate payable to Fortvita USA would be reduced by virtue of this Section 10.6(c)(iii) by [***] percent ([***]%), to a royalty rate of [***] percent ([***]%) of such Net Sales.
(iv)Biosimilar Competition. If, at any time during the Royalty Term for a given Licensed Product in a given country in the Licensee Territory, (A) a Biosimilar Product with respect to such Licensed Product receives Regulatory Approval and is launched in such country (the Calendar Quarter in which the sale of such Biosimilar Product first occurs in such country, as applicable, the “Launch Quarter”) and (B) in any Calendar Quarter after the Launch Quarter in such country, the Net Sales of the applicable Licensed Product in such country are less than [***] percent ([***]%) of the average Net Sales of such Licensed Product in such country in the [***]consecutive Calendar Quarters immediately prior to the Launch Quarter, then the Royalty Payments due under Section 10.6(a) for such Calendar Quarter will be reduced by [***] percent ([***]%).
(v)Royalty Floor. Notwithstanding any provision to the contrary set forth in the foregoing Sections 10.6(c)(i)-10.6(c)(iv), with respect to any Licensed Product, country, and Calendar Quarter, the operation of Sections 10.6(c)(i) through (iv), individually or in combination, will not reduce the Royalty Payments that are due and payable by Licensee by more than [***] percent ([***]%) of the Royalty Payments otherwise due and payable to Fortvita USA with respect to such Licensed Product in such country during such Calendar Quarter under Section 10.6(a).
(d)Royalty Reports. Following the First Commercial Sale of a Licensed Product for which Royalty Payments are due pursuant to this Section 10.6, and continuing for so long as Royalty Payments are due hereunder, Licensee will, within [***] after the end of each Calendar Quarter, provide Fortvita USA with a royalty report (in a template agreed to by the Parties) showing the following, on a Licensed Product-by-Licensed Product basis:
(i)the Net Sales of Licensed Products sold by Licensee and its Affiliates and Sublicensees during such Calendar Quarter, including a high-level breakdown (by category) of deductions taken in accordance with the definition of Net Sales;
(ii)the Royalty Payments in Dollars payable hereunder with respect to such Net Sales, with supporting calculations showing the applicable royalty rate applied and any royalty reductions taken pursuant to Section 10.6(c);
(iii)the rate of exchange with supporting calculations, determined in accordance with Section 10.7(b), used by Licensee in determining the amount of Dollars payable hereunder; and
(iv)a description of any Sales Milestone Event that has been achieved in such Calendar Quarter.
(e)Royalty Payment. After the receipt of each royalty report provided by Licensee under Section 10.6(d), Fortvita USA will issue to Licensee an invoice for the amount of Royalty Payments set forth therein. Licensee will pay to Fortvita USA the Royalty Payments for each Calendar Quarter within [***] after the receipt of the corresponding invoice from Fortvita USA. If no Royalty Payments are due for any Calendar Quarter following commencement of the reporting obligation, then Licensee will so report.
10.7 Payment.
(a)Mode of Payment. All payments made under this Agreement will be made in Dollars and will be paid by electronic transfer in immediately available funds to such bank account in the United States as designated in writing by Fortvita USA and will be free and clear of any transfer fees or charges.
(b)Currency Exchange Rate. The rate of exchange to be used in computing the amount of currency equivalent in Dollars for calculating Net Sales in a Calendar Quarter (for purposes of the Royalty Payment calculation and determining whether a Sales Milestone Event has been achieved) will be made at the average actual foreign currency exchange rate for the month in which the expense is incurred or sale is made accordance to the exchange rates as published by The Wall Street Journal for such period, or such other source as the Parties may agree in writing.
(c)Payment Timeline. Except as otherwise provided in this Agreement, all payments to be made by one Party to the other Party under this Agreement will be due within [***] following such Party’s receipt of an invoice from the other Party.
10.8 Audits.
(a)Licensee and its Affiliates will keep, and will require its Sublicensees to keep (all in accordance with GAAP, or in the case of Sublicensees, such other similar accounting principles as are then used by the applicable Sublicensee), for a period of not less than [***] from the end of the Calendar Year to which they pertain, complete and accurate records in sufficient detail to properly reflect Net Sales for purposes of the Royalty Payments and to determine whether any Milestone Payment is due and payable hereunder.
(b)Upon Fortvita USA’s written request, Licensee will permit, and will requires its Affiliates and Sublicensees to permit (each of Licensee and its applicable Affiliate or Sublicensee, an “Audited Party”), an independent certified public accounting firm of internationally recognized standing selected by Fortvita USA and reasonably acceptable to Licensee, at Fortvita USA’s expense, to have access during normal business hours upon reasonable prior written notice to the Audited Party to such records of the Audited Party as may be reasonably necessary to audit and verify the accuracy of all payments made to Fortvita USA under this Agreement, including the basis for the calculation of such payments, for any Calendar Year ending not more than the preceding [***]. Such audits may not be conducted more frequently than [***] and no accounting period of the Audited Party may be subject to such audit more than [***]. If such accounting firm concludes that an underpayment by Licensee to Fortvita USA has occurred, then Licensee will pay the amount of such underpayment to Fortvita USA within [***] after receipt of an invoice therefor following the date such accounting firm’s written report is delivered to the Parties showing such underpayment. If such accounting firm concludes that an overpayment by Licensee to Fortvita USA was made, then such overpayment will be credited against any future payment due to Innovent hereunder (or if there is no future payment due, then Fortvita USA will promptly refund such overpayment to Licensee). The accounting firm will provide to each Party a copy of the report at the same time, which report will include the methodology and calculations used to determine its findings. Fortvita USA will bear the full cost of such audit unless such audit concludes that there was an underpayment by Licensee to Fortvita USA of more than [***]% of the amount otherwise payable for that audited period, in which case Licensee will pay the reasonable fees and expenses charged by the accounting firm for such inspection.
(c)Fortvita USA will treat all financial information that is subject to audit under this Section 10.8 in accordance with the confidentiality and non-use provisions of Article 11, and, prior to commencing such audit, will cause its accounting firm to enter into a confidentiality and non-use agreement with the Audited Party obligating such accounting firm to treat all such financial information in confidence pursuant to such confidentiality and non-use provisions of this Agreement. Such accounting firm will not disclose Confidential Information of the Audited Party to Fortvita USA, except to the extent such disclosure is necessary to verify the accuracy of the financial reports furnished by Licensee and the amount of payments to Fortvita USA under this Agreement.
10.9 Interest. Licensee will pay interest on any amounts payable to Fortvita USA that are overdue under this Agreement from the day payment was initially due at [***] percent ([***]%) plus the prime or equivalent rate per annum quoted by The Wall Street Journal on the first Business Day after such payment is due, computed on the basis of a year of three hundred and sixty five (365) days, calculated from the due date until the date of payment; provided that in no
case will such interest rate exceed the highest rate permitted by Applicable Laws. The payment of such interest will not foreclose a Party from exercising any other rights it may have as a result of such overdue payment.
10.10 Taxes.
(a)Income Tax. Each Party will be responsible for its own indirect and direct taxes, including the income taxes on its business and, any other taxes incurred by such Party in connection with its business and with performing its obligations hereunder.
(b)Withholding Tax. If Licensee is required by Applicable Laws to withhold any Taxes, then Licensee will (i) make such deduction and withholding; (ii) pay to the relevant Governmental Authority the amount withheld; and (iii) promptly forward to Innovent an official receipt (or certified copy) or other available documentation to evidence such payment to such authorities. For clarity, Licensee’s remittance of such withheld Taxes to the appropriate Governmental Authority, together with payment to Innovent of the remaining amount owed under this Agreement, shall constitute full satisfaction of the applicable payment due to Innovent. In the event that a Governmental Authority determines or otherwise notifies Licensee (including through any tax bill, assessment, notice or notification, regardless of form, which bill, assessment, notice or notification shall constitute conclusive evidence for purposes of the indemnity set forth below that Innovent owes the Withholding Amount (as defined below) to Licensee, irrespective of any defenses or claims for refund or other relief that Innovent may have vis-à-vis the Governmental Authority with respect to such obligation) that a payment made by Licensee to Innovent pursuant to this Agreement should have been subject to withholding or similar (or to additional withholding or similar) taxes, and Licensee remits such withholding or similar taxes to the Governmental Authority, including any interest and penalties that may be imposed thereon (together with the tax paid and any and all costs of collection thereof, including all of Licensee’s reasonable and documented out-of-pocket fees, costs and expenses of bringing any necessary dispute resolution claim therefor and including Licensee’s reasonable attorney fees and reasonable and documented costs and expenses of enforcing any award (including any pre-award interest) obtained, the “Withholding Amount”), Innovent shall fully indemnify and hold harmless Licensee from and against any such Withholding Amount, and Licensee shall have the right (x) to invoice Innovent for the Withholding Amount ,which invoice Innovent shall pay in full within [***] of receipt thereof, (y) to pursue reimbursement against Innovent by any available remedy and (z) to offset the Withholding Amount against future payment obligations of Licensee under this Agreement. Such indemnity and hold harmless obligations, and Licensee’s rights to remedies with respect thereto, shall survive any expiration or termination of this Agreement for a period extending for [***] beyond the expiration of any applicable statute of limitations that applies to the applicable tax obligation. Notwithstanding the foregoing, if Innovent prevails in any such dispute resolution brought by Licensee, Licensee shall reimburse Innovent for Innovent’s reasonable and documented out-of-pocket fees, costs and expenses of defending against such claim, including Innovent’s reasonable attorney fees. Notwithstanding anything to the contrary in this Agreement, in the event a Party redomiciles, assigns its rights or obligations under Section 17.4 of this Agreement, and/or any other action (each, a “Tax Action” and such Party, the “Acting Party”), and, as a result of such Tax Action, the amount of tax required to be withheld under this Section 10.10 in respect of a payment to the other Party (the “Non-Acting Party”) is greater than the amount of such tax that would have been required to have been withheld absent such Tax Action,
then any such amount payable to the Non-Acting Party shall be adjusted to take into account such withholding taxes as may be necessary so that, after making all required withholdings or credits (including calculating the credibility of any withheld tax), the Non-Acting Party receives an amount equal to the sum it would have received had no such Tax Action occurred. The obligation to adjust payments pursuant to the preceding sentence shall not apply, however, to the extent such increased withholding tax (i) would not have been imposed but for a Tax Action taken by the Party receiving the payment subject to withholding under this Section 10.10 or (ii) is attributable to the failure by the Non-Acting Party to comply with the requirements of this Section 10.10. For purposes of this Section 10.10, a “redomiciliation” shall include a reincorporation or other action resulting in a change in tax residence of the applicable Party or its assignee.
(c)Indirect Taxes. Notwithstanding any provision to the contrary set forth in this Agreement, all amounts stated herein are exclusive of any transfer, documentary, sales use, stamp, registration, consumption, goods and services, VAT, or other similar Taxes (each an “Indirect Tax”). In the event that any Indirect Tax is imposed under Applicable Laws with respect to the transactions, payments or the related transfer of rights or other property pursuant to the terms of this Agreement, Licensee shall pay such Indirect Taxes. If Fortvita USA bears any Indirect Tax directly, Licensee shall promptly reimburse Fortvita USA for such Tax.
(d)Cooperation. The Parties will reasonably cooperate with each other in good faith in accordance with Applicable Laws to minimize any Taxes in connection with this Agreement, including by claiming any exemption from any required Taxes or withholdings (or additional Taxes or double taxation) and seeking any refund of Taxes paid or withheld, under any Applicable Laws or regulation or treaty from time to time in force. Fortvita USA will provide Licensee with any Tax forms or other documentation that may be reasonably necessary in order for Licensee not to withhold Tax or to withhold Tax at a reduced rate under an applicable bilateral income Tax treaty after receiving the written or electronic notification of request. Fortvita USA shall provide to Licensee at least [***] prior to the due date of the first payment under this Agreement an appropriate and properly completed Internal Revenue Service Form W‑9.
10.11 Upstream Costs. Except as set forth under Section 8.1(d), Innovent shall bear and be responsible for all financial obligations that Innovent owes to Third Parties pursuant to any written agreement pursuant to which Innovent or its Affiliates has Control of any Licensed Technology from a Third Party as of the Effective Date, including any such amounts that Innovent owes in connection with the grant to Licensee under this Agreement of the licenses to Develop and Commercialize Licensed Compounds and Licensed Products.
ARTICLE 11
CONFIDENTIALITY; PUBLICATION
11.1 Confidential Information. Except as expressly provided in this Agreement, each Party agrees that, during the Term and for [***] thereafter (or, with respect to Confidential Information that is a trade secret of the Disclosing Party, until such trade secret no longer qualifies as a trade secret under Applicable Law), such Party (the “Receiving Party”) will keep confidential and will not publish or otherwise disclose and will not use for any purpose, other than as expressly provided for in this Agreement, any information furnished to it by or on behalf of the other Party (the “Disclosing Party”) pursuant to this Agreement or under the Confidentiality Agreement
(subject to clauses (a)-(d) below, “Confidential Information”), whether before or after the Effective Date, and whether in written, electronic, oral, visual, graphic or any other form. The Receiving Party may use the Disclosing Party’s Confidential Information only to the extent required to exercise its rights or perform its obligations under this Agreement. The Receiving Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own that is of similar nature and value, but no less than reasonable care, to ensure that its and its Affiliates’ employees, agents, consultants and other representatives (“Representatives”) do not publish or disclose or make any unauthorized use of the Confidential Information of the Disclosing Party. The Receiving Party will promptly notify the Disclosing Party upon discovery of any unauthorized use or disclosure of the Disclosing Party’s Confidential Information by the Receiving Party, its Affiliates or their respective Representatives. Notwithstanding any provision to the contrary set forth in this Agreement, the terms of this Agreement and all Joint Inventions will be deemed the Confidential Information of both Parties, and each Party will be deemed to be the Receiving Party and Disclosing Party with respect thereto. Notwithstanding the foregoing, “Confidential Information” will not include information that the Receiving Party can prove by competent evidence:
(a)was already known by the Receiving Party prior to the time of receiving such information from the Disclosing Party, as evidenced by its pre‑existing written records;
(b)is, as of the Effective Date, or thereafter becomes, generally known or available to the public, other than through any act or omission of the Receiving Party in breach of this Agreement;
(c)was subsequently lawfully disclosed to the Receiving Party by a Third Party without breaching any obligation such Third Party may have to the Disclosing Party; or
(d)is independently discovered or developed by the Receiving Party, independently of the activities undertaken by the Receiving Party pursuant to this Agreement and without the use of or reference to Confidential Information furnished by the Disclosing Party, as evidenced by the Receiving Party’s contemporaneously maintained written records.
11.2 Permitted Disclosures. Notwithstanding the provisions of Section 11.1, the Receiving Party may disclose Confidential Information of the Disclosing Party as expressly permitted by this Agreement, or if and to the extent such disclosure is reasonably necessary in the following instances:
(a)filing or Prosecuting the Patents as permitted by this Agreement;
(b)subject to Section 11.3(a), prosecuting or defending litigation as permitted by this Agreement;
(c)subject to Section 11.3(a), complying with a valid order of a court of competent jurisdiction or other Governmental Authority, or other judicial or administrative process, or if in the reasonable opinion of the Receiving Party’s legal counsel, such disclosure is otherwise required by Applicable Laws, in each case, other than disclosure of the terms of this Agreement to a Securities Regulator;
(d)subject to Section 11.3(b), disclosure of the terms of this Agreement pursuant to Applicable Laws of the United States Securities and Exchange Commission, the Hong Kong Stock Exchange, or any national securities exchange on which the Receiving Party’s or any of its Affiliates’ securities are traded (each, a “Securities Regulator”);
(e)disclosure in regulatory filings that the Receiving Party has the right to make under this Agreement; provided that the Receiving Party uses reasonable efforts to secure confidential treatment of such Confidential Information at least as diligent as such Party would use to protect its own Confidential Information, but in no event less than reasonable efforts;
(f)disclosure to the Receiving Party’s Affiliates and its and its Affiliates’ respective Representatives, and the Receiving Party’s Sublicensees (or, with respect to Innovent, (sub)licensees), in each case, who have a need to know such information in order for such Receiving Party, its Affiliate or Sublicensee (or, with respect to Innovent, (sub)licensees) to exercise its rights or fulfill its obligations under this Agreement; provided in each case, that any such Affiliate, Representative or Sublicensee (or, with respect to Innovent, (sub)licensee) agrees to be bound by terms of confidentiality and non-use with respect to such Confidential Information at least as stringent as those set forth in this Article 11; and
(g)disclosure of the existence and applicable terms of this Agreement and the status, history and results of the Exploitation of one or more Licensed Compounds or Licensed Products, in each case, to actual or bona fide potential investors, acquirers, licensors, Sublicensees (or, in the case of Innovent, (sub)licensees), lenders, and other financial or commercial partners, and their respective attorneys, accountants, banks, investors, and advisors, solely for the purpose of evaluating or carrying out or performing an actual or potential investment, acquisition, license, sublicense, debt transaction, royalty financing, or collaboration; provided that, in each such case, on the condition that such Persons are bound by obligations of confidentiality and non-use with respect to such Confidential Information at least as stringent as those set forth in this Agreement or otherwise customary for such type and scope of disclosure and that any such disclosure is limited to the maximum extent practicable for the particular context in which it is being disclosed.
11.3 Confidential Treatment.
(a)Generally. Notwithstanding the foregoing, in the event the Receiving Party is required to make a disclosure of the Disclosing Party’s Confidential Information pursuant to Section 11.2(b) or Section 11.2(c), it will, except where prohibited by Applicable Laws or judicial or administrative process, (i) give reasonable advance notice to the Disclosing Party of such required disclosure, (ii) use reasonable efforts to secure confidential treatment of such information, which efforts shall be at least as diligent as the Receiving Party would use to protect its own Confidential Information of similar nature and value, and (iii) cooperate with any lawful efforts by the Disclosing Party, at the Disclosing Party’s request and expense, to contest such disclosure,
to obtain a protective order for the Confidential Information required to be disclosed, or to secure other confidential treatment of such Confidential Information. In the event that no such protective order or other remedy is obtained, then the Receiving Party will furnish only that portion of the Disclosing Party’s Confidential Information that the Receiving Party is advised by legal counsel is legally required to be disclosed. Disclosure by the Receiving Party of Confidential Information in accordance with Section 11.2(b) or Section 11.2(c) will not, in and of itself, cause the information so disclosed to cease to be treated as Confidential Information under this Agreement, except to the extent that, by virtue of disclosure by the Receiving Party in full compliance with this Section 11.3, such information becomes generally known or available. In any event, the Receiving Party agrees to take all reasonable action to avoid disclosure of the Disclosing Party’s Confidential Information hereunder.
(b)Securities Filings. In the event the Receiving Party is required to disclose of the terms of this Agreement pursuant to Applicable Laws of a Securities Regulator pursuant to Section 11.2(d), such Party will, within a reasonable time prior to any such filing (and to the extent possible at least [***] prior to any such filing), (i) provide the other Party with a copy of this Agreement showing any provisions hereof as to which such Party proposes to request confidential treatment, (ii) provide the other Party with an opportunity to comment on any such proposed redactions and to suggest additional redactions, and (iii) take such Party’s reasonable comments into consideration before making such disclosure; provided that each Party will ultimately have the right to disclose to any Securities Regulator any information that such Party determines, on the advice of legal counsel, is reasonably required by Applicable Laws; provided further, that the Parties will use their reasonable efforts to file redacted versions of this Agreement with any Securities Regulator that are consistent with redacted versions previously filed with any other Securities Regulator(s).
11.4 Use of Names. Subject to Section 11.6, neither Party nor any of its Affiliates will mention or otherwise use any company name, logo or trademark of the other Party or any of its Affiliates in any publication, press release, marketing and promotional material or other form of publicity in connection with this Agreement or activities hereunder without the prior written approval of such other Party; provided that such consent will not be required for a Party’s use of the other Party’s company name and logo to identify such other Party as a collaborator on such first Party’s website, in public presentations or pursuant to any of the permitted disclosures set forth in Section 11.2 and Section 11.6(b).
11.5 Publication of Licensed Product Information. Each Party recognizes that the publication, such as by public oral presentation, manuscript or abstract, of the results of Development activities, including Clinical Trials, with respect to the Licensed Products may be beneficial to both Parties, provided such publications are subject to reasonable controls to protect Confidential Information of each Party. Accordingly, each Party will have the right to review and comment on any material proposed for publication or public oral or visual presentation by the other Party that includes Confidential Information of such Party or data generated from the Development of the Licensed Products under this Agreement. The Party desiring to make any such publication will provide the other Party with a written copy of the proposed publication in reasonably sufficient time prior to publication to allow the other Party to comment upon such announcement prior to publication. With respect to any manuscripts proposed for publication, the other Party will respond with comments as soon as practicable to the other Party but in no event later than [***] from the
date of delivery to such Party. With respect to public oral presentation materials, abstracts, and posters, the other Party will respond with comments as soon as practicable to the other Party but in no event later than [***] from the date of delivery to such Party. Each Party will comply with the other Party’s request to delete such other Party’s Confidential Information in any such proposed publication. In addition, if any such publication contains patentable subject matter to which the non-publishing Party has any ownership or license rights, then, at the non-publishing Party’s request, the publishing Party will either delete the patentable subject matter from such publication or delay any submission for publication or other public disclosure for an additional period of up to [***] so that appropriate Patent applications may be prepared and filed.
11.6 Public Announcements.
(a)The Parties have agreed upon the content of and timing for the release of a joint press release substantially in the form attached hereto as Exhibit 11.6 (the “Initial Press Release”). Except as may be expressly permitted under Section 11.2, Section 11.5 or this Section 11.6, neither Party nor any of either Party’s Affiliates will make any public announcement concerning this Agreement, its subject matter or the transactions described herein without first obtaining the approval of the other Party and the Parties’ mutual agreement as to the nature, text and timing of such announcement, which approval and agreement will not be unreasonably withheld, conditioned or delayed. The Party desiring to make any such a public announcement will provide the other Party with a written copy of the proposed announcement in reasonably sufficient time prior to public release to allow such other Party to comment on such announcement prior to public release. In the case of press releases or other public communications required to be made by Applicable Law, judicial order or stock exchange or quotation system rule, the Party making such press release or public announcement will provide to the other Party a copy of the proposed press release or public announcement in written or electronic form upon such advance notice as is practicable under the circumstances for the purpose of allowing the notified Party to review and comment upon such press release or public announcement. Under such circumstances, the announcing Party will not be obligated to delay making any such press release or public communication beyond the time required by Applicable Law. For clarity, neither Party will be required to seek the permission of the other Party to publicly disclose any information regarding the terms of this Agreement or any amendment hereto that has already been publicly disclosed by either Party in accordance with the terms of this Agreement; provided that such information remains accurate and the most current information with respect to the applicable subject matter as of such time.
(b)Notwithstanding Section 11.6(a), each Party and its Affiliates and Sublicensees (or, with respect to Innovent, (sub)licensees) shall have the right, subject to Sections 11.1 through 11.3 and Section 11.5, to make public statements, press releases, and other public disclosures regarding the Exploitation of one or more Licensed Compounds or Licensed Products, including the status, history and results of such Exploitation, without the other Party’s prior approval. To the extent such public statements, press releases, and other public disclosures include any disclosure of Confidential Information of the other Party beyond the status, history and results of Exploitation by the announcing Party, the announcing Party shall provide the other Party with a draft of the proposed public statement, press release, or other public disclosure prior to making such public statement, press release, or other public disclosure. The other Party shall respond promptly and in any event no later than [***] after receipt of such draft, or earlier if required by
Applicable Law. If the reviewing Party does not provide written comment during such time period, the announcing Party and its Affiliates or its or their Sublicensees (or (sub)licensees) shall have the right to proceed with the public statement, press release, or other public disclosure. If requested by the reviewing Party during such time period, the announcing Party or its Affiliates or its or their Sublicensees (or (sub)licensee) shall, as applicable, delete from such proposed public statement, press release, or other public disclosure any Confidential Information of the reviewing Party beyond the status, history and results of Exploitation by the announcing Party.
11.7 Prior Non-Disclosure Agreements. Upon execution of this Agreement, the terms of this Article 11 will supersede any prior non-disclosure, secrecy or confidentiality agreement between the Parties, including the Confidentiality Agreement. Any information disclosed under such prior agreements by or on behalf of Innovent will be deemed disclosed by Innovent under this Agreement, and any information disclosed under such prior agreements by or on behalf of Licensee will be deemed disclosed by Licensee under this Agreement.
ARTICLE 12
REPRESENTATIONS, WARRANTIES, AND COVENANTS
12.1 Representations and Warranties of Each Party. Each Party represents and warrants to the other Party as of the Effective Date that:
(a)it is a company or corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is incorporated or organized, and has full corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as contemplated in this Agreement, including the right to grant the licenses granted by it hereunder;
(b)(i) it has the organizational power and authority and the legal right to enter into this Agreement and perform its obligations hereunder; (ii) it has taken all necessary organizational action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; and (iii) this Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, and binding obligation of such Party that is enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium, and other similar laws affecting creditors’ rights generally and by general principles of equity;
(c)it is not a party to any agreement that would prevent it from granting the rights granted to the other Party under this Agreement or performing its obligations under this Agreement;
(d)all consents, approvals and authorization from all Governmental Authorities or other Third Parties required to be obtained by such Party in connection with execution of this Agreement have been obtained;
(e)to its knowledge, neither it nor any of its Affiliates, or its or its Affiliates’ directors, officers, employees, distributors, agents, representatives, sales intermediaries or other Third Parties acting on behalf of such Party or any of its Affiliates:
(i)has taken any action in violation of any applicable anti-corruption law, including the U.S. Foreign Corrupt Practices Act (15 U.S.C. § 78 dd-1 et seq.); or
(ii)has corruptly, offered, paid, given, promised to pay or give, or authorized the payment or gift of anything of value, directly or indirectly, to any Public Official, for the purposes of: (A) influencing any act or decision of any Public Official in his or her official capacity; (B) inducing such Public Official to do or omit to do any act in violation of his or her lawful duty; (C) securing any improper advantage; or (D) inducing such Public Official to use his or her influence with a government, governmental entity, or commercial enterprise owned or controlled by any government (including state-owned or controlled veterinary or medical facilities) in obtaining or retaining any business whatsoever; and
(f)none of the officers, directors, or employees of such Party or of any of its Affiliates or agents acting on behalf of such Party or any of its Affiliates, in each case, that are employed or reside outside the U.S., are themselves Public Officials.
12.2 Additional Representations and Warranties of Innovent. Innovent represents and warrants to Licensee that, as of the Effective Date:
(a)Innovent Controls the Licensed Technology and has the legal authority or exclusive right (whether by ownership, license or otherwise) under the Licensed Technology to grant all rights and licenses to Licensee as purported to be granted pursuant to this Agreement. Without limiting the foregoing, (i) Innovent Suzhou solely owns all rights, title and interests in and to the Innovent Platform Technology, including the Innovent Platform Patents and Innovent Platform Know-How, and (ii) Fortvita USA solely owns all rights, title and interests in and to the Licensed Product Specific Patents;
(b)Exhibit 1.102 sets forth a complete and accurate list of all Licensed Patents existing as of the Effective Date, indicating the owner(s) of such Licensed Patents. Except as set forth on Exhibit 1.102, neither Innovent nor any of its Affiliates owns or Controls any Patent that is necessary to Develop, Manufacture, or Commercialize any Licensed Product in the Licensee Territory or that is a Patent in the Licensee Territory that is or has been practiced by Innovent/ to Develop, Manufacture, or Commercialize any Licensed Product in the Licensee Territory or the Innovent Territory;
(c)Innovent has not granted any right or license to any Third Party under any Licensed Technology that conflicts with or limits the scope of the rights or licenses granted to Licensee hereunder;
(d)Neither Innovent nor any of its Affiliates has granted any lien or security interest on any of the Licensed Technology, and the Licensed Technology is free and clear of any mortgage, pledge, claim, security interest, covenant, easement, encumbrance, lien, or charge of any kind, in each case that would conflict or limit any of the rights granted to Licensee hereunder;
(e)The Existing Upstream License Agreement is the only agreement existing as of the Effective Date between Innovent or any of its Affiliates, on the one hand, and any Third Party, on the other hand, pursuant to which Innovent or any of its Affiliates Controls any Licensed Technology (excluding ordinary course services agreements and vendor agreements that may include licenses ancillary to commercially available research tools, reagents or services) and, other than the Patents and Know-How licensed under the Existing Upstream License Agreement, Innovent or its Affiliates is the sole and exclusive owner of all Licensed Technology. The Existing Upstream License Agreement is in full force and effect and none of Innovent, its Affiliates nor, to Innovent’s knowledge, any Third Party that is a party to the Existing Upstream License Agreement is or has been in material breach of, or sent or received notice alleging any material breach of, the Existing Upstream License Agreement;
(f)Innovent, its Affiliates, and its and their employees, and to Innovent’s Knowledge, its and their consultants and contractors, in each case, involved in any activities related to any Licensed Compound are not, and have not been, debarred or disqualified by any Regulatory Authority as of the Effective Date, and have complied in all material respects with all Applicable Laws in connection with conducting all Development and Manufacturing of the Licensed Compounds as of the Effective Date;
(g)Neither Innovent nor any of its Affiliates has received any written notice or threat in writing from any Third Party asserting or alleging that any activities with respect to any Licensed Compound by or on behalf of Innovent or its Affiliates prior to the Effective Date infringed, misappropriated, or otherwise violated any intellectual property rights of such Third Party;
(h)To Innovent’s Knowledge, the practice of the Licensed Technology as contemplated under this Agreement does not (i) infringe any claim of any issued Patent of any Third Party (without regard to actual or alleged infringement under 35 USC §271(e)(1) and comparable provisions under applicable Law outside the United States, including any safe harbor, research exemption, government or executive declaration of urgent public health need, or any similar right available at law or in equity that otherwise exempts actual or alleged infringing activity), or (ii) misappropriate any Know-How of any Third Party;
(i)No claim or action has been brought against Innovent or any of its Affiliates or, to Innovent’s Knowledge, threatened, by any Third Party relating to any of the Licensed Technology;
(j)To Innovent’s Knowledge, the Licensed Patents have been properly maintained and are not invalid or unenforceable, in whole or in part;
(k)To Innovent’s Knowledge, no interference, opposition, cancellation or other protest proceeding, nor any litigation proceeding or inter partes review, post grant review, or covered business methods review, has been filed against a Licensed Patent; and
(l)There are no legal claims, judgments or settlements against or owed by Innovent or its Affiliates, or pending or, to Innovent’s Knowledge, threatened, legal claims or litigation against Innovent or any of its Affiliates, in each case, relating to antitrust, anti-competition, anti-bribery or corruption violations, including under any Anti-Corruption Laws.
12.3 Additional Representations and Warranties of Licensee. Licensee represents and warrants to Innovent that as of the Effective Date:
(a)there are no legal claims, judgments or settlements against or owed by Licensee or its Affiliates, or pending or, to Licensee’s or its Affiliates’ knowledge, threatened, legal claims or litigation against Licensee or any of its Affiliates, in each case, relating to antitrust, anti-competition, anti-bribery or corruption violations, including under any Anti-Corruption Laws; and
(b)Licensee, its Affiliates, and its and their employees, and to Licensee’s knowledge, its and their consultants and contractors, that would be involved in its activities hereunder with respect to any Licensed Compound or Licensed Product are not, and have not been, debarred or disqualified by any Regulatory Authority.
12.4 Covenants.
(a)Each Party covenants to the other Party that, in the course of performing its obligations or exercising its rights under this Agreement, it will, and will cause its Affiliates and (sub)licensees to, comply with the terms of this Agreement, all Applicable Laws, including as applicable, cGMP, GCP, GLP, and GSP standards, and will not employ or engage any party who has been debarred by any Regulatory Authority, or, to such Party’s knowledge, is the subject of debarment proceedings by a Regulatory Authority.
(b)Each Party will not grant any right to, or enter into any agreement with, any Third Party that is in conflict with the rights granted to the other Party under this Agreement and will not take any action that would prevent it from granting the rights granted to the other Party under this Agreement or that would otherwise conflict with or adversely affect the rights granted to the other Party under this Agreement.
(c)Innovent and its Affiliates will not waive any of their respective rights under, or (except as otherwise agreed by Licensee in advance in writing) amend or terminate, the Existing Upstream License Agreement in any manner that conflicts with or limits the scope of any of the rights or licenses granted to Licensee under this Agreement. Without limiting the foregoing, Innovent shall, as soon as practicable, furnish Licensee with copies of each amendment of the Existing Upstream License Agreement (or any portion thereof) solely to the extent that such amendment relates to the rights and obligations of Licensee under this Agreement. Innovent and its Affiliates will not breach any provision of the Existing Upstream License Agreement.
(d)Compliance with Anti-Corruption Laws. Each Party hereby covenants to the other Party that:
(i)it will not, in the performance of this Agreement, perform any actions that are prohibited by local and other anti-corruption laws (including the provisions of the
U.S. Foreign Corrupt Practices Act, the U.K. Anti-Bribery Law, and the Anti-Corruption Act of Greater China, collectively “Anti-Corruption Laws”) that may be applicable to such Party to this Agreement;
(ii)it will not, in the performance of this Agreement, directly or indirectly, make any payment, or offer or transfer anything of value, or agree or promise to make any payment or offer or transfer anything of value, to a government official or government employee, to any political party or any candidate for political office or to any other Third Party with the purpose of influencing decisions related to either Party or its business in a manner that would violate Anti-Corruption Laws;
(iii)it will, on request by the other Party, verify in writing that, to such Party’s knowledge, there have been no violations of Anti-Corruption Laws by such Party or persons employed by or subcontractors used by such Party in the performance of this Agreement, or will provide details of any exception to the foregoing; and
(iv)it will maintain records (financial and otherwise) and supporting documentation related to the subject matter of this Agreement in order to document or verify compliance with the provisions of this Section 12.4(d) and upon request of the other Party, upon reasonable advance notice, will provide a Third Party auditor mutually acceptable to the Parties with access to such records for purposes of verifying compliance with the provisions of this Section 12.4(d) Acceptance of a proposed Third Party auditor may not be unreasonably withheld, conditioned or delayed by either Party. It is expressly agreed that the costs related to the Third Party auditor will be fully paid by the Party requesting the audit, and that any auditing activities may not unduly interfere with the normal business operations of the Party subject to such auditing activities. The audited Party may require the Third Party auditor to enter into a reasonable confidentiality agreement in connection with such an audit.
(e)Compliance with Export Control Laws. Each Party hereby covenants to the other Party that:
(i)it will conduct its activities under this Agreement in compliance with applicable export controls and trade and economic sanctions laws and regulations (collectively, “Export Controls”); and
(ii)it shall not, directly or indirectly, export, reexport, transfer, divert, or release any materials, technology, or software (each an “item”) to any prohibited country, territory, entity, individual, or for any prohibited end-use, unless authorized pursuant to Export Controls.
12.5 NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY. ALL SUCH REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.
ARTICLE 13
INDEMNIFICATION
13.1 By Licensee. Licensee will indemnify, defend and hold harmless Innovent and its Affiliates, and their directors, officers, employees and agents (individually and collectively, the “Innovent Indemnitee(s)”), from and against all losses, liabilities, damages and expenses (including reasonable attorneys’ fees and costs) (individually and collectively, “Losses”) incurred by them in connection with any claims, demands, actions or other proceedings by any Third Party (individually and collectively, “Claims”) arising after the Effective Date to the extent arising from any of the following, as applicable: (a) the Exploitation of any Licensed Compound or Licensed Product by or under the authority of Licensee, (b) the negligence or willful or intentional misconduct of Licensee or any of its Affiliates, Sublicensees or any other Licensee Indemnitee, or (c) Licensee’s breach of this Agreement, including any of its representations, warranties, or covenants hereunder; in each case (a) through (c), except to the extent such Losses arise from, are based on, or result from any activity or occurrence for which Innovent is obligated to indemnify the Licensee Indemnitees pursuant to Section 13.2.
13.2 By Innovent. Innovent will indemnify, defend and hold harmless Licensee and its Affiliates, and their directors, officers, employees and agents (individually and collectively, the “Licensee Indemnitee(s)”), from and against all Losses incurred by them in connection with any Claims to the extent arising from any of the following, as applicable: (a) the Exploitation of any Licensed Compound by or under the authority of Innovent (other than by or on behalf of Licensee), (b) the negligence or willful or intentional misconduct of Innovent or any of its Affiliates, (sub)licensees (other than Licensee), sublicensees or other Innovent Indemnitee, or (c) Innovent’s breach of this Agreement, including any of its representations, warranties, or covenants hereunder; in each case (a) through (c) above, except to the extent such Losses arise from, are based on, or result from any activity or occurrence for which Licensee is obligated to indemnify the Innovent Indemnitees pursuant to Section 13.1.
13.3 Procedure. A Party that intends to claim indemnification under Section 13.1 or Section 13.2, as applicable (the “Indemnitee”) with respect to any Claim will: (a) notify the other Party (the “Indemnitor”) in writing of such Claim as soon as reasonably practicable after it receives notice of such Claim (it being understood that the Indemnitee’s failure to deliver written notice of such Claim to the Indemnitor within a reasonable time after the Indemnitee receives notice of such Claim, will relieve the Indemnitor of its indemnification obligations under Section 13.1 or Section 13.2, as applicable, with respect to such Claim only to the extent such failure is prejudicial to the Indemnitor’s ability to defend such Claim); (b) permit the Indemnitor to assume direction and control of the defense of the Claim (including the right to settle the claim solely for
monetary consideration) using counsel reasonably satisfactory to the Indemnitee; and (c) cooperate fully with the Indemnitor and its legal representatives in the investigation and defense of the Claim, as requested by the Indemnitor (at the expense of the Indemnitor). If the Indemnitor does not assume control of such defense within [***] after receiving notice of the Claim from the Indemnitee, then the Indemnitee will control such defense and, without limiting the Indemnitor’s indemnification obligations, the Indemnitor will reimburse the Indemnitee for all documented costs, including reasonable attorney fees, incurred by the Indemnitee in defending itself within [***] after receipt of any invoice therefor from the Indemnitee. The Party not controlling such defense may participate therein at its own expense. The Party controlling such defense will keep the other Party advised of the status of such Claim and the defense thereof and will consider recommendations made by the other Party with respect thereto. The Indemnitee will not agree to any settlement of such Claim without the prior written consent of the Indemnitor, which will not be unreasonably withheld, delayed or conditioned. The Indemnitor will not agree to any settlement of such Claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnitee from all liability with respect thereto, that imposes any liability or obligation on the Indemnitee or that acknowledges fault by the Indemnitee; in each case, without the prior written consent of the Indemnitee.
13.4 Insurance. Licensee, at its own expense, will obtain and maintain, during the Term and for [***] thereafter, reasonable insurance, including commercial general liability insurance and product liability insurance, at levels adequate to cover its obligations hereunder and consistent with industry standards. Licensee will furnish to Innovent on request certificates issued by the insurance company setting forth the amount of its liability insurance. It is understood that such insurance will not be construed to create a limit of Licensee’s liability with respect to its indemnification obligations under this Article 13 or otherwise. Commercial insurance will be obtained from reputable and financially secure insurance carriers having a minimum A.M. Best rating (or equivalent) of A-. Licensee will ensure continuity of coverage for claims which may be presented during the [***] period following the expiration or termination of this Agreement.
13.5 LIMITATION OF LIABILITY. SUBJECT TO AND WITHOUT LIMITING (A) OBLIGATIONS WITH RESPECT TO THIRD PARTY CLAIMS IN CONNECTION WITH THE INDEMNIFICATION OBLIGATIONS OF EACH PARTY WITH RESPECT TO CLAIMS UNDER SECTION 13.1 OR SECTION 13.2, (B) LIABILITY AS A RESULT OF A BREACH OF ARTICLE 11, (C) LIABILITY FOR BREACH OF ANY COVENANTS UNDER SECTION 3.6, OR (D) A PARTY’S LIABILITY FOR INFRINGEMENT OR MISAPPROPRIATION OF THE OTHER PARTY’S INTELLECTUAL PROPERTY RIGHTS, INCLUDING ANY INTELLECTUAL PROPERTY RIGHTS LICENSED TO THE OTHER PARTY, NEITHER PARTY OR ANY OF ITS AFFILIATES WILL BE LIABLE TO THE OTHER PARTY UNDER ANY CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, MULTIPLIED OR CONSEQUENTIAL DAMAGES OR FOR LOST PROFITS (EVEN IF DEEMED DIRECT DAMAGES) ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
ARTICLE 14
INTELLECTUAL PROPERTY
14.1 Ownership.
(a)Background Rights. As between the Parties, each Party will retain all rights, title, and interests in and to all Know-How, Patents, and other intellectual property, Controlled by such Party as of the Effective Date or become Controlled by such Party outside of its performance of activities under, or otherwise independently of, this Agreement. Without limiting the foregoing, as between the Parties, Innovent and its Affiliates will remain the sole and exclusive owner of all Licensed Technology, including Innovent Platform Technology.
(b)Inventions. Ownership of all Inventions will be allocated based on inventorship, as determined in accordance with the rules of inventorship under the U.S. patent laws. A Party will own all Inventions that are invented, discovered, generated, conceived, reduced to practice, or made solely by it, its Affiliates, or its or its Affiliates’ employees, agents or independent contractors (“Sole Inventions”). The Parties will jointly own all Inventions that are made jointly by a Party (including its Affiliate, or its or its Affiliate’s employees, agents or independent contractors) together with the other Party (including such other Party’s Affiliates, or its or its Affiliate’s employees, agents or independent contractors) (“Joint Inventions”; Patents claiming the Joint Inventions are referred to herein as “Joint Patents”). Subject to the licenses granted by each Party to the other Party under this Agreement, and subject to Section 3.6, each Party will own an undivided equal interest in all Joint Inventions and Joint Patents, without a duty of accounting or an obligation to seek consent from the other Party, for the exploitation or license of the Joint Inventions or Joint Patents (including the right to practice, license, sublicense, assign, transfer and otherwise exploit such Party’s interest in Joint Inventions and Joint Patents for any and all purposes on a worldwide basis without restriction), and each Party hereby waives any right it may have under the laws of any jurisdiction to require any such accounting or consent.
14.2 Disclosure of Inventions.
(a)Licensee will promptly disclose to Innovent all Inventions constituting improvements to Licensed Technology, including all invention disclosure or other similar documents submitted to Licensee or its Affiliates by its or its Affiliates’ employees, agents, or independent contractors relating to such Inventions, and will also promptly respond to reasonable requests from Innovent for additional information relating to such Inventions. Licensee shall (and shall cause all its Affiliates to) cause all of its employees, agents or independent contractors who perform activities for Licensee under this Agreement to be under an obligation to assign to Licensee (or its Affiliates) their rights in and to any such Inventions.
(b)Innovent will promptly disclose to Licensee all Inventions constituting improvements to Licensee Product IP and/or any Inventions constituting Licensed Technology, including all invention disclosure or other similar documents submitted to Innovent or its Affiliates by its or its Affiliates’ employees, agents, or independent contractors relating to such Inventions, and will also promptly respond to reasonable requests from Licensee for additional information relating to such Inventions. Innovent shall (and shall cause all its Affiliates to) cause all of its employees, agents or independent contractors who perform activities for Innovent under this
Agreement to be under an obligation to assign to Innovent (or its Affiliates) their rights in and to any such Inventions.
14.3 Prosecution.
(a)Licensee Product IP. As between the Parties, Licensee shall have the sole and exclusive right, at Licensee’s option, using counsel of Licensee’s choice and at Licensee’s sole cost and expense, to prosecute all Patents Covering or disclosing Licensee Product IP (“Licensee Product Patents”) worldwide. Licensee will (A) keep Innovent reasonably informed of progress with regard to the Prosecution of the Licensee Product Patents in the Innovent Territory; (B) provide to Innovent copies of all material patent office submissions and correspondence with respect to the Licensee Product Patents in the Innovent Territory; and (C) provide Innovent a reasonable opportunity to comment with respect to the Licensee Product Patents in the Innovent Territory and Licensee will consider incorporating any timely comments in good faith.
(b)Licensee Controlled Patents. As between the Parties, Licensee shall have the first right, but not the obligation, to Prosecute all Licensed Product Specific Patents and Joint Patents in the Licensee Territory that specifically claim a Licensed Compound (collectively, the “Licensee Controlled Patents”) using counsel of Licensee’s choice and at Licensee’s sole cost and expense. Licensee will (A) keep Innovent reasonably informed of progress with regard to the Prosecution of the Licensee Controlled Patents; (B) provide to Innovent copies of all material patent office submissions and correspondence with respect to the Licensee Controlled Patents; and (C) provide Innovent a reasonable opportunity to comment thereon, and Licensee will consider incorporating any timely comments in good faith.
(c) Innovent Step-in Rights. In the event that Licensee intends to abandon or cease the Prosecution of any Licensee Controlled Patent (other than for the purpose of abandoning and refiling in the normal course of Prosecution), Licensee will provide reasonable prior written notice to Innovent of such intention to abandon or cease such Prosecution (which notice will be given no later than [***] prior to the next deadline for any action that must be taken with respect to any such Licensee Controlled Patent in the relevant patent office). In such case, at Innovent’s request, Innovent shall have the right, but not the obligation, to assume responsibility for Prosecution of such Licensee Controlled Patent. Upon such assumption, Innovent shall control the Prosecution of such Licensee Controlled Patent subject to the same terms and conditions set forth in this Section 14.3(b) as applicable to Licensee, at Innovent’s cost and expense.
(d)Innovent Controlled Patents. As between the Parties, without limiting Section 14.3(d), Innovent shall have the first right, but not the obligation, to Prosecute all (i) Joint Patents in the Innovent Territory (ii) all Licensed Patents (other than Licensed Product Specific Patents) worldwide and (iii) all Licensed Product Specific Patents in the Innovent Territory ((i) through (iii), the “Innovent Controlled Patents”) and at Innovent’s sole cost and expense. Innovent will (A) keep Licensee reasonably informed of progress with regard to the Prosecution of such Innovent Controlled Patents; (B) provide to Licensee copies of all material patent office submissions and correspondence with respect to the Innovent Controlled Patents; and (C) provide
Licensee a reasonable opportunity to comment thereon, and Innovent will consider incorporating any timely comments in good faith.
(e)Licensee Step-in Rights. If Innovent intends to abandon or cease the Prosecution of any Joint Patent in any region, Innovent will provide reasonable prior written notice to Licensee of such intention to abandon or cease such Prosecution (which notice will be given no later than [***] prior to the next deadline for any action that must be taken with respect to any such Joint Patent in the relevant patent office in such region in the Innovent Territory). In such case, at Licensee’s request, Licensee shall have the right, but not the obligation, to assume responsibility for Prosecution of such Joint Patent in such region. Upon such assumption, Licensee shall control the Prosecution of such Joint Patent in such region subject to the same terms and conditions set forth in this Section 14.3(e) as applicable to Innovent, at its cost and expense.
(f)Innovent Platform Technology. As between the Parties, Innovent shall have the exclusive right, but not the obligation, to Prosecute all Innovent Platform Patents anywhere in the world, using counsel of Innovent’s choice and at Innovent’s sole cost and expense.
(g)Cooperation. Each Party will select and engage a law firm or patent agent to handle the Prosecution activities under Sections 14.3(a) through 14.3(d) and cooperate with the other Party in connection with all activities relating to the Prosecution of the Licensed Patents, Joint Patents, and Licensee Product Patents undertaken by such other Party pursuant to this Section 14.3, including: (i) executing all papers and instruments, or requiring its employees or contractors, to execute such papers and instruments, so as to effectuate the ownership of Inventions set forth in Section 14.1, and Patents claiming such Inventions, and to enable the other Party to Prosecute the Licensed Patents, Joint Patents or Licensee Product Patents as permitted by this Section 14.3; and (ii) promptly informing the other Party of any matters coming to such Party’s attention that may affect the other Party’s Prosecution of any Licensed Patent, Joint Patent or Licensee Product Patent. Each Party will also promptly provide to the other Party all information reasonably requested by such other Party with regard to such Party’s activities pursuant to this Section 14.3.
14.4 Defense of Third Party Infringement Claims.
(a)If any Party, becomes the subject of a Third Party’s claim or assertion of infringement of the Patents of such Third Party relating to the Exploitation of any Licensed Compound or Licensed Product (each, a “Third Party Infringement Claim”), the Party first becoming aware of the Third Party Infringement Claim will promptly notify the other Party in writing.
(b)Innovent will have the sole right to control the defense of any Third Party Infringement Claim within the Innovent Territory (including involving the alleged infringement of a Third Party Patent relating to Innovent’s activities) at its own expense and by counsel of its own choice, and Licensee will have the right (but not the obligation), at its own expense, to be represented in any such action by counsel of its own choice.
(c)Subject to Innovent’s rights with respect to Innovent Platform Technology, Licensee will have the sole right to control the defense of any Third Party Infringement Claim within the Licensee Territory (including involving the alleged infringement of a Third Party Patent
related to Licensee’s activities) at its own expense and by counsel of its own choice, and Innovent will have the right (but not the obligation), at its own expense, to be represented in any such action by counsel of its own choice.
(d)Neither Party will enter into any settlement of any Third Party Infringement Claim: (a) in a manner that would diminish the rights or interests of the other Party with respect to the Licensed Products (and, in the case of Innovent, the Innovent Platform) without the prior written consent of such other Party, which will not be unreasonably withheld; or (b) that would impose any cost, obligation, or liability on the other Party, or admit the invalidity or unenforceability of any Patent that is Controlled by the other Party, without such other Party’s prior written consent, which may be withheld in such other Party’s sole discretion. This Section 14.4 shall not limit or exclude either Party’s rights to indemnification pursuant to Article 13.
14.5 Enforcement.
(a)Notice. Each Party will promptly notify the other Party in writing of any alleged or threatened infringement of any Licensed Patent, or Joint Patent of which it becomes aware or of any action or threatened action seeking a declaratory judgment of non‑infringement of a Licensed Patent or Joint Patent of which it becomes aware (“Infringement”).
(i)As between the Parties, Licensee will have the first right, but not the obligation, to bring and control any other action or proceeding regarding any alleged or threatened Infringement that involves the Licensed Product Specific Patents in the Licensee Territory (“Product Infringement”), at its own expense and by counsel of its own choice. Licensee will keep Innovent reasonably informed of the status and progress of such action or proceeding. In addition, Licensee shall provide Innovent with drafts of all material papers to be filed with the court or patent office, as applicable, in connection with such action or proceeding to the extent permitted by Applicable Laws or any protective or confidentiality order entered by such court or patent office (excluding any information that is confidential to a Third Party), and shall consider in good faith all timely reasonable comments thereto by Innovent before filing such papers. Innovent shall be entitled to separate representation in such matter by counsel of its own choice and at its own expense.
(ii)If (A) Licensee elects not to commence an action or proceeding with respect to a Product Infringement that Licensee has the first right to bring and control pursuant to Section 14.5(b)(i), or settle or otherwise secure the abatement of any such Product Infringement, or (B) Licensee fails to commence any such action or proceeding with respect to a Product Infringement pursuant to Section 14.5(b)(i) within (1) [***] following a written request by Innovent to do so, or (2) [***] before the time limit, if any, set forth in the Applicable Laws for the filing of such action or proceeding, whichever comes first, then Innovent will have the right to bring and control any such action or proceeding, at its own expense and by counsel of its own choice, and Licensee will have the right, at its own expense, to be represented in any such action by counsel of its own choice. In such event and to the extent time permits, promptly after Licensee’s notice to Innovent that it does not elect to commence any such action or proceeding, the Parties shall meet to discuss in good faith the reasons for Licensee’s decision not to commence
such action or proceeding. Innovent will keep Licensee reasonably informed of the status and progress of such action or proceeding. In addition, Innovent shall provide Licensee with drafts of all material papers to be filed with the court or patent office (excluding any information that is confidential to a Third Party), as applicable, to the extent permitted by Applicable Laws or any protective or confidentiality order entered by such court or patent office, and shall consider in good faith all timely reasonable comments thereto by Licensee before filing such papers. Licensee shall be entitled to separate representation in such matter by counsel of its own choice and at its own expense.
(iii)As between the Parties, Innovent will have the first right, but not the obligation, to bring and control any alleged or threatened Product Infringement that involves (A) the Innovent Platform Patents worldwide or (B) Licensed Product Specific Patents in the Innovent Territory, in each case, at its own expense and by counsel of its own choice.
(iv)If any alleged or threatened Product Infringement involves any Joint Patent, the Parties will discuss in good faith and agree upon the appropriate allocation between the Parties of the responsibility to bring and control any other action or proceeding regarding such Product Infringement.
(c)Other Infringement. As between the Parties, (i) Innovent shall have the sole right, but not the obligation, to bring and control any other action or proceeding regarding alleged or threatened Infringement of any Licensed Patent that is not a Product Infringement, at its own expense and by counsel of its own choice, and (ii) the Parties shall jointly determine which Party, if either, shall bring and control any other action or proceeding regarding alleged or threatened Infringement of a Joint Patent that is not a Product Infringement, and the Parties’ respective responsibilities for the expense thereof.
(d)Cooperation. In the event a Party brings an infringement action in accordance with this Section 14.5, the other Party will cooperate fully, at the enforcing Party’s request and expense, including, if required to bring such action, the furnishing of a power of attorney or being named as a party. The enforcing Party will not enter into any settlement or compromise of any action under this Section 14.5: (i) in a manner that would diminish the rights or interests of the other Party with respect to the Licensed Products (and, in the case of Innovent, the Innovent Platform) without the written consent of such other Party, which will not be unreasonably withheld, conditioned or delayed; (ii) that would impose any cost or liability on the other Party without the written consent of such other Party; or (iii) that would admit the invalidity or unenforceability of any Patent that is Controlled by the other Party, without such other Party’s prior written consent, which may be withheld in such other Party’s sole discretion.
(e)Recoveries. Except as otherwise agreed by the Parties in connection with a cost-sharing arrangement, any recovery as a result of any action or proceeding pursuant to Section 14.5, whether by way of settlement or otherwise, will first be used to reimburse the enforcing Party for its documented, Out-of-Pocket Costs (including court, attorneys’ and professional fees) incurred in connection with such action or proceeding, and then to reimburse the other Party for its documented, Out-of-Pocket Costs (including court, attorneys’ and professional fees) incurred in connection with such action or proceeding (to the extent not previously reimbursed by the enforcing Party), and any remainder of the recovery after reimbursement of the litigation costs and
expenses of the Parties, will be retained by the enforcing Party; provided that, any recoveries retained by Licensee in connection with the enforcement of Licensed Product Specific Patents or Joint Patents that involves Product Infringement in the Licensee Territory shall be deemed Net Sales for the purpose of Section 10.6.
(f)Patent Marking. Each Party will mark (or cause to be marked) the Licensed Products marketed and sold in such Party’s respective territory hereunder with appropriate Patent numbers or indicia to the extent required by Applicable Laws.
14.6 Patent Listing. Licensee shall have the sole and exclusive right to make all patent listings (such as the FDA Orange Book, Purple Book and any foreign equivalent) of any Licensee Controlled Patents with respect to any Licensed Product in the Licensee Territory. Innovent shall have the sole and exclusive right to make all patent listings of any Innovent Controlled Patent with respect to any Licensed Product in the Innovent Territory and of any Innovent Platform Patents worldwide.
14.7 Patent Term Extension. As between the Parties, with respect to each Licensed Product, Licensee shall have the sole right to apply for any patent term extensions (including supplementary protection certificates) in the Licensee Territory for the Licensee Controlled Patents and Innovent shall have the sole right to apply for any patent term extensions (including supplementary protection certificates) in the Innovent Territory for the Innovent Controlled Patents. If Licensee, with respect to a Licensed Product, wishes Innovent to apply for patent term extensions for an Innovent Controlled Patent, Licensee shall promptly notify Innovent in writing, in which case the Parties will discuss such proposal within [***] after such notice is received by Innovent; provided that Innovent, after considering Licensee’s request in good faith, shall have the right to decline any such request to apply for a patent term extension (including a supplementary protection certificates) for an Innovent Controlled Patent. Innovent shall have the sole right to apply for any patent term extensions (including supplemental protection certificates) worldwide for any Innovent Platform Patents.
14.8 CREATE Act. It is the Parties’ intention that this Agreement is a “joint research agreement” as that phrase is defined in 35 U.S.C. § 102(c) as amended by the Cooperative Research and Technology Enhancement (CREATE) Act, including the provisions of 35 U.S.C. § 102(b)(2)(c). The Parties agree to cooperate and to take reasonable actions to maximize the protections available for Licensed Compounds and Licensed Products under such safe harbor provisions.
ARTICLE 15
TERM AND TERMINATION
15.1 Term and Expiration.
(a)Term. The term of this Agreement will be effective as of the Effective Date, and will continue in effect until the expiration of the last Royalty Term with respect to all Licensed Products in any country in the Licensee Territory (the “Term”).
(b)Effect of Expiration of Royalty Term. On a Licensed Product-by-Licensed Product and country-by-country basis, upon the expiration of the Royalty Term for a given Licensed Product in a given country in the Licensee Territory, the licenses granted by Innovent to Licensee under Section 3.1 of this Agreement in such country with respect to such Licensed Product will become fully paid-up, perpetual, irrevocable, sublicensable (through multiple tiers) and royalty-free. Such licenses shall remain exclusive or non-exclusive as set forth in Section 3.1 until the later of (i) the date that is [***] after the end of the Calendar Quarter in which the first sale of the first Biosimilar Product by a Third Party with respect to such Licensed Product occurs in such country, or (ii) the end of the first Calendar Quarter in which the Net Sales of such Licensed Product in such country are less than [***] percent ([***] %) of the average Net Sales of such Licensed Product in such country in the two consecutive Calendar Quarters immediately prior to the Calendar Quarter in which the first sale of such first Biosimilar Product by a Third Party occurs in such country. Thereafter, such licenses granted by Innovent to Licensee under Section 3.1 of this Agreement in such country with respect to such Licensed Product will convert to non-exclusive, fully paid-up, perpetual, irrevocable, sublicensable (through multiple tiers) and royalty-free.
15.2 Termination for Mutual Agreement. This Agreement may be terminated in its entirety at any time by the Parties’ mutual written agreement.
15.3 Termination for Convenience. Licensee may terminate this Agreement in its entirety upon ninety (90) days’ prior written notice to Innovent at any time prior to a First Commercial Sale, and upon one hundred and fifty (150) days’ prior written notice to Innovent at any time following a First Commercial Sale.
15.4 Termination for Material Breach.
(a)If either Party believes that the other Party is in material breach of this Agreement, then the non-breaching Party may deliver notice of such material breach to the other Party (“Breach Notice”). The allegedly breaching Party shall have [***] from the receipt of the Breach Notice (the “Cure Period”) to cure such material breach. If such breach is not susceptible of cure within the original [***] of the Cure Period, but such breach is reasonably susceptible of cure within [***] and the allegedly breaching Party is using Commercially Reasonable Efforts to cure such Breach, then such Cure Period shall be extended for an additional [***]. If the Party receiving notice of material breach fails to cure that material breach within the Cure Period, then the Party delivering the notice of material breach may terminate this Agreement in its entirety upon written notice to the other Party. Notwithstanding the foregoing, the foregoing Cure Period shall not apply to breach of Section 5.2(b), and Innovent shall have the right to terminate this Agreement immediately upon written notice to Licensee if Licensee breaches Section 5.2(b).
If the allegedly breaching Party reasonably and in good faith disagrees as to whether there has been a material breach of this Agreement, such allegedly breaching Party may provide the other Party with written notice of such disagreement within [***] following receipt of the Breach Notice. Following a timely notice of disagreement, (i) the other Party will not have the right to terminate this Agreement under Section 15.4(a) unless and until it has been determined, in accordance with Article 16, that the allegedly breaching Party has materially breached this Agreement and such breaching Party fails to cure such breach within the period for cure determined in such dispute resolution, (ii) during the pendency of such dispute resolution process, the relevant Cure Period with respect to such alleged material breach will be tolled from the date the allegedly breaching Party provides the other Party with notice of such Dispute until the resolution of such Dispute in accordance with Article 16, provided that for any Dispute regarding payment, such tolling of the Cure Period will only apply with respect to the payment of the disputed amounts and not with respect to any undisputed amounts, and (iii) during the pendency of such dispute resolution process, all of the terms and conditions of this Agreement will remain in effect, and the Parties will continue to perform all of their respective obligations under this Agreement.
(b)Termination for Insolvency. Each Party has the right to terminate this Agreement in its entirety upon delivery of written notice to the other Party in the event that (i) such other Party files in any court or agency pursuant to any statute or regulation of any jurisdiction a petition in bankruptcy or insolvency or for reorganization under the United States Bankruptcy Code or other similar Applicable Laws or similar arrangement for the benefit of creditors or for the appointment of a receiver or trustee of such other Party or its assets, (ii) such other Party is served with an involuntary petition against it in any insolvency proceeding and such involuntary petition has not been stayed or dismissed within [***] of its filing, or (iii) such other Party makes an assignment of substantially all of its assets for the benefit of its creditors.
15.5 Termination for Certain Licensee Actions.
(a)Termination for Cessation of Development or Commercialization in the Licensee Territory. A Shelving Event shall constitute a material breach of this Agreement. Upon the occurrence of a Shelving Event, Innovent may terminate this Agreement subject to the notice and cure provisions of Section 15.4.
(b)Termination for Patent Challenge. Except to the extent unenforceable under Applicable Law, if Licensee or its Affiliates or Sublicensees contests or Assists a Third Party in contesting the scope, validity, or enforceability of any Licensed Patent anywhere in the world in any court, tribunal, arbitration proceeding, or other proceeding, including the U.S. Patent and Trademark Office and the U.S. International Trade Commission (a “Patent Challenge”), then Innovent shall have the right to terminate this Agreement on [***] written notice to Licensee. Innovent shall have no right to terminate this Agreement pursuant to this Section 15.5(b) if: (i) Licensee or its Affiliate or Sublicensee is challenging the validity, enforceability, or patentability of the applicable Licensed Patent as part of a defense or counterclaim against a claim that Licensee or its Affiliate or Sublicensee is infringing such Licensed Patent; (ii) such proceedings are commenced or Assisted by a Sublicensee, and (A) such Sublicensee withdraws such challenge within [***] after being requested to do so by Innovent in writing, or (B) Licensee or its Affiliate terminates such Sublicensee’s sublicense hereunder within [***] after Innovent notifies Licensee in writing of such proceeding; (iii) such proceedings are commenced or Assisted by an Affiliate
of Licensee that first becomes such an Affiliate as a result of an acquisition of all or any part of Licensee or any of its Affiliates, where such new Affiliate was participating in such proceedings prior to such acquisition and where such new Affiliate withdraws such challenge within [***] after being requested to do so by Innovent in writing; (iv) Licensee is responding to a court request, subpoena, or order, or an administrative agency request or order, or the applicable proceedings are initiated by a patent office and not at the instigation of Licensee or any of its Affiliates or Sublicensees; or (v) Licensee or its applicable Affiliate or Sublicensee is merely making arguments that distinguish the inventions claimed in a Patent controlled by Licensee or its applicable Affiliate or Sublicensee from those claimed in any Licensed Patent in the ordinary course of ex parte prosecution of such Patents.
15.6 Licensee Alternative to Termination. If Licensee has the undisputed right under Section 15.4(a) to terminate this Agreement as a result of the material breach of this Agreement by Innovent of any of the following Sections: 3.1 (License Grant to Licensee); 3.6(b) (Innovent Non-Compete); 4.1 (Technology Transfer); 8.1(b)(ii) (Initial Supply by Innovent); 12.1(a), 12.1(b), 12.1(c) or 12.1(d) (Representations and Warranties of Each Party); 12.2(a), 12.2 (c), 12.2(d), 12.2(e), 12.2(g), 12.2(h) or 12.2(i) (Additional Representations and Warranties of Innovent); or 12.4(a), 12.4(b) or 12.4(c) (Covenants), that has a material adverse impact on the value of the rights and licenses granted to Licensee under this Agreement, then Licensee may, in lieu of such termination, elect for this Agreement to remain in full force and effect by notifying Innovent of such election within [***] of the end of the applicable Cure Period. If Licensee makes such election, then all Licensee’s payment obligations under Article 10 on and after the date of such election shall be reduced by [***] percent ([***]%). Licensee’s exercise of such remedy shall be its sole and exclusive remedy, and Innovent’s sole liability, for damages or other harm caused by the material breach by Innovent giving rise to Licensee’s termination right.
15.7 Effects of Termination. Upon the termination (but not expiration) of this Agreement for any reason, the provisions of this Section 15.7 will apply.
(a)Termination of Licenses. All rights and licenses granted by Innovent to Licensee herein will immediately terminate and will revert back to Innovent, and all sublicenses of such rights and licenses granted by Licensee will terminate, except as provided in this Section 15.7. In addition to the foregoing:
(b)Reversion License. Upon any termination of this Agreement, Innovent may, by written request to Licensee delivered within [***] after the effective date of such termination, either elect to (i) receive a non-exclusive license, or (ii) negotiate with Licensee for an exclusive license from Licensee, in each case under the Grant-Back Technology solely to Exploit Terminated Product(s) (the “Reversion License”), in each case subject to the terms set forth in Section 15.7(c).
(c)Reversion Terms. If Innovent timely elects to receive a non-exclusive Reversion License under Section 15.7(b), such Reversion License shall be fully paid-up and royalty-free. If Innovent timely notifies Licensee of its desire to receive an exclusive Reversion License under Section 15.7(b), the Parties will negotiate in good faith for a period of [***] following the effective date of such election to agree on commercially reasonable financial terms for such exclusive Reversion License (the “Reversion Terms”); provided that, in determining the
amount of consideration payable by Innovent to Licensee pursuant to the Reversion Terms, the Parties will take into account, among other things, (i) the stage of Development or Commercialization of the Terminated Products in the Licensee Territory, (ii) the scope of the Grant-Back Technology subject to the Reversion License, and (iii) the relative value of the Know-How and Patents included in the Grant-Back Technology that is subject to the Reversion License and any other Patents and Know-How that are necessary to Exploit the Terminated Products in the Licensee Territory. If the Parties are unable to agree upon such Reversion License terms within [***] after the effective date of termination, then the Reversion Terms shall be determined through binding baseball arbitration in accordance with the procedure set forth in Exhibit 15.7(c). Innovent acknowledges and agrees that if the licenses granted by Licensee to Innovent under Section 15.7(b) and this Section 15.7(c) with respect to Grant-Back Technology constitute sublicenses under upstream license agreements between Licensee or any of its Affiliates, on the one hand, and Third Party licensors, on the other hand, and Innovent provides a written request to Licensee to include such sublicenses as part of the Reversion License then such licenses under Section 15.7(b) and this Section 15.7(c) shall be subject and subordinate to all applicable provisions of such upstream license agreements and Innovent shall be responsible for paying to Licensee any royalty, milestone and other license fee amounts thereunder reasonably attributable to Innovent’s sublicense thereunder; provided that, (i) Innovent may elect not to receive a sublicense under any such Grant-Back Technology and such Grant-Back Technology shall not be sublicensed to Innovent under Section 15.7(b) or this Section 15.7(c) unless and until Innovent has agreed to the foregoing obligations and (ii) if Innovent provides a written request to Licensee to include such sublicenses as part of the Reversion License but the Parties are unable to agree upon the royalty, milestone and other license fee amounts thereunder reasonably attributable to Innovent’s sublicense (“Reversion Sublicense Terms”), then such matter shall be determined through binding baseball arbitration in accordance with the procedure set forth in Exhibit 15.7(c).
(d)Inventory. Upon termination of this Agreement in its entirety, Licensee and its Affiliates and its or their Sublicensee(s) will have the right to sell or otherwise dispose of all inventory of Terminated Products in all countries then in its stock for up to [***], subject to the milestone and royalty payments due under this Agreement and any other applicable provisions of this Agreement. If, after such [***] period, Licensee and its Affiliates and its or their Sublicensee(s) have any remaining inventory of Terminated Products, Innovent will have the right to purchase in its sole discretion such Terminated Products at Licensee’s cost of goods, as calculated on a consistent basis according to Licensee’s then-current accounting standards. If Innovent declines to purchase such remaining Terminated Products, Licensee and its Affiliates and its or their Sublicensee(s) will destroy such remaining inventory of Terminated Products at Licensee’s sole cost and expense.
(e)Sublicenses. As of the effective date of termination, unless otherwise agreed to by Innovent in writing (in its sole discretion), all sublicenses (including through multiple tiers) then in effect with any Sublicensee shall be terminated automatically.
(f)Return of Confidential Information. Upon termination of this Agreement in its entirety, at the Disclosing Party’s election, the Receiving Party will return (at Disclosing Party’s expense) or destroy all tangible materials comprising, bearing, or containing any Confidential Information of the Disclosing Party that are in the Receiving Party’s or its Affiliates’ or Sublicensees’ possession or control and provide written certification of such destruction (except to the extent any information is the Confidential Information of both Parties or to the extent that the Receiving Party has the continuing right to use the Confidential Information under this Agreement); provided that the Receiving Party may retain one copy of such Confidential Information for its legal archives and with respect to Innovent, Innovent may retain copies of such Confidential Information in order to exercise its rights under the Reversion License. Notwithstanding anything herein to the contrary, the Receiving Party will not be required to destroy electronic files containing such Confidential Information that are made in the ordinary course of its business information back-up procedures pursuant to its electronic record retention and destruction practices that apply to its own general electronic files and information.
15.8 Other Remedies. Termination or expiration of this Agreement for any reason will not constitute a waiver or release of, or otherwise be deemed to prejudice or adversely affect, any rights, remedies or claims, whether for damages or otherwise, that a Party may have hereunder or that may arise out of or in connection with such termination or expiration.
15.9 Survival. Termination or expiration of this Agreement will not affect any rights or obligations of the Parties under this Agreement that have accrued prior to the date of termination or expiration. The following provisions will survive the termination or expiration of this Agreement for any reason: Articles 1, Article 11, 13, 16, 17, and Sections 3.1(c), 3.1(d), 3.1(e), 3.2(x), 3.2(y), 3.2(z), 5.5, 10.8, 10.10, 12.5, 14.1, 15.1, 15.7, 15.8 and 15.9.
ARTICLE 16
DISPUTE RESOLUTION
16.1 General. Except for any matter subject to resolution in accordance with Section 2.2(e)(iii), the Parties agree that any claim, dispute or controversy between the Parties or any of their Affiliates arising from, relating to or in connection with this Agreement, including with respect to its formation, applicability, breach, termination, enforcement, interpretation or validity (a “Dispute”), will be resolved in accordance with this Article 16.
16.2 Construction. Except where the context expressly requires otherwise, (a) the use of any gender herein will be deemed to encompass references to either or both genders, and the use of the singular will be deemed to include the plural (and vice versa), (b) the words “include”, “includes” and “including” will be deemed to be followed by the phrase “without limitation”, (c) the word “will” will be construed to have the same meaning and effect as the word “shall”, (d) any definition of or reference to any agreement, instrument or other document herein will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (e) any reference herein to any person will be construed to include the person’s successors and assigns, (f) the words “herein”, “hereof” and “hereunder”, and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (g) all references herein to Sections or Exhibits will be construed to
refer to Sections or Exhibits as described in this Agreement, (h) the word “notice” means notice in writing (whether or not specifically stated), (i) provisions that require that a Party, the Parties or any committee hereunder “agree”, “consent” or “approve” or the like will require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (j) references to any specific law, rule or regulation, or section or other division thereof, will be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation, and (k) the term “or” will be interpreted in the inclusive sense commonly associated with the term “and/or” where applicable.
16.3 Escalation. Either Party, through the delivery of written notice, may refer any Dispute to the Senior Executives for attempted resolution. In the event the Senior Executives are unable to resolve such Dispute within [***] following the delivery of such written notice, then, upon the written request of either Party to the other Party (“Dispute Referral”), the Dispute will be subject to further resolution in accordance with Section 16.4 or Section 16.5, as applicable.
16.4 Arbitration.
(a)General. If either Party delivers a Dispute Referral under Section 16.3 for a matter that is subject to arbitration under this Section 16.4, the Dispute will be submitted by the Parties for final resolution by arbitration under the Rules of Arbitration of the International Chamber of Commerce (ICC) (the “ICC Rules”) in effect at the time of the arbitration, except as modified herein. Any disputes concerning the propriety of the commencement of the arbitration or the scope or applicability of this Agreement to arbitrate will be finally settled by the arbitral tribunal. The arbitration will be conducted by a tribunal of three arbitrators. Within the time provided in the ICC Rules, each Party will nominate one arbitrator with appropriate experience, and the two Party-nominated arbitrators will nominate a third arbitrator with appropriate experience, who will serve as the chairperson of the tribunal, within [***] of the second arbitrator’s confirmation or appointment. The seat of arbitration will be New York and the language of the proceedings, including all communications, will be English.
(b)Binding Decision. The arbitral award will be final and binding on the Parties and the Parties undertake to carry out any award without delay. Judgment on the award may be entered in any court of competent jurisdiction. The Parties will make reasonable efforts to require the arbitral tribunal to render its final award within [***] from the date on which the ICC Secretariat transmits the arbitration file to the arbitral tribunal. The arbitral tribunal will resolve the Dispute by applying the provisions of this Agreement and the governing law set forth in Section 17.1.
(c)Interim Measures. By agreeing to arbitration, the Parties do not intend to deprive any court of its jurisdiction to issue, at the request of a Party, a pre-arbitral injunction, pre-arbitral attachment or other order of interim relief to avoid irreparable harm, maintain the status quo, preserve the subject matter of the Dispute, or aid the arbitration proceedings and the enforcement of any award, including after constitution of the arbitral tribunal. Without prejudice to such provisional or interim remedies in aid of arbitration as may be available under the jurisdiction of a competent court, the arbitral tribunal has full authority to grant provisional or interim remedies and to award damages for the failure of any Party to the dispute to respect the arbitral tribunal’s order to that effect.
(d)Waiver of Jury Trial. EACH PARTY HERETO WAIVES ANY RIGHT TO TRIAL OF ANY ISSUE BY JURY.
(e)Limitation of Damages. The arbitral tribunal is authorized to award compensatory damages, but is not authorized to (i) award non-economic damages, (ii) award punitive damages or any other damages expressly excluded under this Agreement, or (iii) reform, modify or materially change this Agreement or any other agreements contemplated hereunder. Each Party will bear its own attorneys’ fees, costs, and disbursements arising out of the arbitration, and will pay an equal share of the fees and costs of the administrator and the arbitrators; provided that the arbitrators will be authorized to determine whether a Party is the prevailing Party, and if so, to award to that prevailing Party reimbursement for any or all of its reasonable attorneys’ fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges, and travel expenses), or the fees and costs of the administrator and the arbitrators.
(f)Confidentiality. The existence, content, and results of an arbitration will be treated as Confidential Information of both Parties. Except as required by Applicable Law, including any disclosure or filing reasonably necessary to comply with the rules and regulations of any Securities Regulator, or as necessary for recognition and enforcement of the arbitral decision and award, neither a Party nor an arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of the Parties. Any documents submitted to the arbitrators will be kept confidential and will not be disclosed, except that any such documents may be disclosed (i) as necessary in connection with any action to enforce or collect the award or (ii) to the extent discoverable or admissible in any action arising out of or in connection with this Agreement. The Parties do not consent to the ICC publishing any form of an award or of an order issued by the arbitral tribunal.
16.5 Certain Disputes. Notwithstanding any provision to the contrary set forth in Section 16.4, in the event of a Dispute with respect to (a) the validity, scope, enforceability or ownership of any Patent or other intellectual property rights, or (b) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory, and such Dispute is not resolved in accordance with Section 16.3, such Dispute will not be submitted to an arbitration proceeding in accordance with Section 16.4, unless otherwise agreed by the Parties in writing, and instead, either Party may initiate litigation in a court of competent jurisdiction.
ARTICLE 17
MISCELLANEOUS
17.1 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York, without reference to any rules of conflict of laws that may result in the application of the laws of a different jurisdiction.
17.2 Force Majeure. Neither Party will be held liable to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in performing any obligation under this Agreement to the extent such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, fire, floods, pandemics, epidemics, quarantines, or other acts of God or any other deity (or orders of any Governmental Authority related to any of the foregoing), or acts, omissions or delays in acting by any Governmental Authority. The affected Party will notify the other Party of such force majeure circumstances as soon as reasonably practical, the JSC will review and discuss any such matter and the affected Party will promptly undertake Commercially Reasonable Efforts necessary to cure such force majeure circumstances.
17.3 Performance by Affiliates. Notwithstanding any provision to the contrary set forth in this Agreement, each Party will have the right to perform any or all of its obligations and exercise any or all of its rights under this Agreement through any Affiliate. Each Party hereby guarantees the performance by its Affiliates of its obligations under this Agreement and will cause its Affiliates to comply with the provisions of this Agreement in connection with such performance. Any breach by a Party’s Affiliate of any of such Party’s obligations under this Agreement will be deemed a breach by such Party, and the other Party may proceed directly against such Party without any obligation to first proceed against such Party’s Affiliate.
17.4 Assignment. Neither Party may assign this Agreement without the other Party’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed); except that (a) either Party may make such an assignment without such consent to a Third Party successor to all or substantially all of the business or assets of such Party to which this Agreement relates (whether by merger, sale of stock, sale of assets or otherwise), and (b) either Party may assign this Agreement without such consent to an Affiliate. Any attempted assignment or transfer in violation of this Section 17.4 (Assignment) will be null and void. Subject to the foregoing, this Agreement will be binding on and inure to the benefit of the Parties and their respective successors and permitted assigns.
17.5 Severability. If any one or more of the provisions contained in this Agreement is held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affects the substantive rights of the Parties. The Parties will in such an instance use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.
17.6 Notices. All notices which are required or permitted hereunder will be in writing and sufficient if delivered personally, sent by email or facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized
overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
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If to Innovent: |
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Innovent Biologics (Suzhou) Co., Ltd. |
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168 Dongping Street |
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Suzhou Industrial Park |
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Jiangsu 215123, China |
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Attention: [***] |
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With a copy (which shall not constitute notice) to: |
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Innovent Biologics (Suzhou) Co., Ltd. |
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Attention: General Counsel |
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E-mail: [***] |
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with a copy (which shall not constitute notice) to: |
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Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. |
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One Financial Center |
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Boston, MA 02111 |
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Attn: [***] |
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[***] |
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If to Licensee: |
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Spero Therapeutics, Inc. |
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675 Massachusetts Avenue, 14th Floor |
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Cambridge, Massachusetts 02139 |
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United States |
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Attention: Chief Executive Officer |
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E-mail: [***] |
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with copies (which shall not constitute notice) to: |
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Spero Therapeutics, Inc. |
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Attention: Head of Legal |
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E-mail: [***] |
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Wilmer Cutler Pickering Hale and Dorr LLP |
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60 State Street |
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Boston, MA 02109 |
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United States |
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Attn: Steven D. Barrett |
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steven.barrett@wilmerhale.com |
or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such notice will be deemed to have been given: (a) when delivered if personally delivered; (b) if sent by email, upon electronic confirmation of receipt; (c) on the Business Day after dispatch if sent by nationally recognized overnight courier; or (d) on the fifth Business Day following the date of mailing if sent by mail.
17.7 Entire Agreement; Amendments. The Agreement contains the entire understanding of the Parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, with regard to the subject matter hereof (including the licenses granted hereunder), including the Confidentiality Agreement, are superseded by the terms of this Agreement. Neither Party is relying on any representation, promise, or warranty not expressly set forth in this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representatives of both Parties hereto. To the extent there is any conflict between the terms of this Agreement and the terms of the Pharmacovigilance Agreement, the Supply Agreement or a Quality Agreement (each, an “Ancillary Agreement”), the terms of such Ancillary Agreement will control solely with respect to the primary subject matter thereof, and the terms of this Agreement will control otherwise.
17.8 Headings. The captions to the several Sections hereof are not a part of this Agreement, but are merely for convenience to assist in locating and reading the Sections of this Agreement.
17.9 Independent Contractors. It is expressly agreed that Innovent and Licensee will be independent contractors and that the relationship between the two Parties will not constitute a partnership, joint venture or agency. Neither Innovent nor Licensee has the authority to make any statements, representations or commitments of any kind, or to take any action, which will be binding on the other Party, without the prior written consent of the other Party. Nothing contained in this Agreement shall be deemed or construed by the Parties, any of their Affiliates or any Third Party to treat the relationship between the Parties contemplated by this Agreement as a partnership, joint venture or other business entity under Treasury Regulations Section 301.7701 1(a)(2) (or any corresponding provision under state, local or non U.S. tax law) (an “Entity”). No Party (or successor or assignee) intends, for Tax purposes, on reporting the relationships established by this Agreement as an Entity, including either (a) making any disclosure that the relationships established by this Agreement may give rise to an Entity (whether on a U.S. Internal Revenue Service Form 8275 or otherwise) or (b) withholding any amounts from payments made to the other Party pursuant to Section 1446 of the Code (or any corresponding provision under state, local or non U.S. tax law), unless required by a Governmental Authority on audit or other examination. Notwithstanding the foregoing, if the arrangement between the Parties as contemplated by this Agreement is determined to constitute an Entity under Applicable Law (as determined based on the opinion (on a “should” basis) of a nationally recognized law or accounting firm) or by a Governmental Authority on audit or other examination, the Party that is aware of such determination shall provide notice to the other Party regarding such treatment and the Parties will reasonably cooperate with one another to satisfy any tax filing or reporting obligation arising as a result of such determination, including by providing any information, forms or other certifications necessary to satisfy such obligations.
17.10 Waiver. The waiver by either Party of any right hereunder, the failure of the other Party to perform, or a breach by the other Party will not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party, whether of a similar nature or otherwise. No waiver shall be binding unless in writing and signed by the waiving Party.
17.11 Waiver of Rule of Construction. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement will be construed against the drafting Party will not apply.
17.12 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Each Party will be entitled to rely on the delivery of executed electronic or PDF copies of counterpart execution pages of this Agreement and such electronic or PDF copies will be legally effective to create a valid and binding agreement among the Parties.
17.13 Language. This Agreement is in the English language only, which language will be controlling in all respects, and all versions hereof in any other language will be for accommodation only and will not be binding upon the Parties. All communications and notices to be made or given pursuant to this Agreement, and any dispute or other proceeding related to or arising hereunder, will be in the English language.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.
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Innovent Biologics (Suzhou) Co., Ltd. |
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Spero Therapeutics, Inc. |
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By: |
/s/ De-chao Michael Yu |
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By: |
/s/ Esther Rajavelu |
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Name: De-chao Michael Yu |
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Name: |
Esther Rajavelu |
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Title: Director |
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Title: |
Chief Executive Officer and |
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President |
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Fortvita Biologics (USA), Inc. |
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By: |
/s/ De-chao Michael Yu |
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Name: |
De-chao Michael Yu |
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Title: |
Director |
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[Signature Page to Collaboration and License Agreement]
89
Exhibit 8.1(b)
Supply Agreement Material Terms
The Supply Agreement to be negotiated and entered into by and between Licensee and Innovent pursuant to Section 8.1(b) of this Agreement will contain, among others, the key terms provided in the table below. In this table, capitalized terms have the meanings set forth in this Agreement.
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Category |
Key Terms |
Supply for Licensee Territory |
Subject to the terms of the Supply Agreement, Innovent, itself or through its Affiliates or its CMO(s) (“Supplier”), will Manufacture Licensed Compounds and Licensed Products for use by Licensee and its Affiliates and Sublicensees in Development (including use in Clinical Trials) in and for the Licensee Territory. Licensee will purchase, and Innovent will supply, such quantities of Licensed Compounds and Licensed Products required by Licensee and its Affiliates and Sublicensees for such Development (including use in Clinical Trials) in the Licensee Territory. |
Delivery: |
Deliveries of Licensed Compounds and Licensed Products in unlabeled bottles to Licensee will be made FCA (INCOTERMS 2020) [***]. Licensee or its Affiliates or Sublicensees will be responsible for packaging and labeling Licensed Products for use in Clinical Trials in accordance with Applicable Laws at their own expense. Supplier will supply Licensed Products released for delivery by Supplier in accordance with the procedures to be set forth in the Quality Agreement, including any required documentation (e.g., certificate of analysis), or, with respect to any supply prior to execution of the Quality Agreement, in accordance with Innovent’s standard procedures. |
Specifications: |
The specifications for Licensed Products supplied pursuant to the Supply Agreement will be set forth in the Quality Agreement entered into in connection with the Supply Agreement, or, with respect to any supply prior to execution of the Quality Agreement, such specifications as the Parties have agreed in writing (the “Specifications”). |
Warranty: |
Supplier will warrant that, as of the delivery date (to be defined in Supply Agreement), the Licensed Products (a) conform to the Specifications and other quality requirements set out in the Supply Agreement and the Quality Agreement, as applicable, (b) are not adulterated or misbranded, and (c) are free and clear of any security interest, lien or other encumbrance. |
Price: |
The price of Licensed Compounds Licensed Products will be [***]% of Supplier’s Cost of Goods for such Licensed Compounds and Licensed Products supplied for Development purposes. Supplier will invoice Licensee for the price of Licensed Compounds and Licensed Products concurrently with delivery, which invoices shall be payable within [***] after receipt of |
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Category |
Key Terms |
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invoice. The Parties acknowledge that, as of the Effective Date, Innovent’s current estimate of Cost of Goods for the supply of Licensed Compounds and Licensed Products under this Exhibit 8.1(b), is set forth below: |
USD $ |
Batch size/
Specification |
COGS range |
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COGS per batch |
[***] |
[***] |
[***] |
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[***] |
[***] |
[***] |
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[***] |
[***] |
[***] |
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COGS per vial |
[***] |
[***] |
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Notes: 1. Provided COGS are estimated based on current BOM and process specifications; 2. Outsourced pricing is based on current quotation and subject to fluctuation based on sales volume; 3. The COGS will vary with different capacity utilization rates; 4. The COGS are not committed and are not used for CDMO service. “Cost of Goods” means, in respect of the Licensed Compound or Licensed Product, the fully absorbed cost as calculated in a manner consistent with Applicable Accounting Standards, including the costs of materials and other resources consumed, direct labor, quality assurance costs, equipment maintenance costs, and other costs variable with production, plus an appropriate allocation of the indirect labor, relevant depreciation and amortization, facilities’ utilities, insurance, fixed overhead and other fixed costs, and freight into or between sites in the supply chain, in each case specifically allocable to the Licensed Compound or Licensed Product, but excluding any profit made by Innovent or any of its Affiliates through the application of transfer pricing. To the extent that Licensed Product is sourced from a CMO, COGS shall include the actual invoiced price paid by Innovent to such CMO for the Manufacture of such Licensed Product. |
Forecast: |
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Category |
Key Terms |
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Item |
Initial Supply |
Timeline (Product Released and available for Shipment to Licensee) |
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1 |
[***] |
[***] |
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2 |
[***] |
[***] |
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3 |
[***] |
[***] |
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4 |
[***] |
[***] |
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5 |
[***] |
[***] |
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Other Support Services: |
To the extent the Parties agree on any Manufacturing support services to be provided by Supplier, the Parties will detail such services in the Supply Agreement. |
Governing Law: |
The Supply Agreement will be governed by the laws of the State of New York, without reference to any rules of conflict of laws that may result in the application of the laws of a different jurisdiction. |
Additional Terms: |
The Supply Agreement will contain other reasonable and customary terms and conditions typical for supply from licensors to licensees, to be negotiated by the Parties, including procedures for acceptance and rejection of Licensed Products, indemnification and term and termination. |
Exhibit 15.7(c)
Procedures Applicable to Disagreements With Respect to Reversion Terms or Reversion Sublicense Terms
If the Parties are unable to agree upon the Reversion Terms and/or Reversion Sublicense Terms within [***] after the effective date of termination, then either Party shall have the right, upon written notice to the other Party (such notice, a “Baseball Arbitration Notice”), to refer such matter to an independent (i.e., not a current or former employee, officer, director, consultant or subcontractor of either Party or any of its Affiliates), impartial and conflict-free Third Party arbitrator who shall have at least [***] of experience in the biopharmaceutical industry and relevant subject matter expertise (a “Baseball Arbitrator”). The Baseball Arbitrator shall be mutually agreed to by the Parties; provided that if the Parties are unable to agree on a Baseball Arbitrator within [***] (or such other time period as may be agreed by the Parties) after a Party provides the other Party the Baseball Arbitration Notice, then each Party shall select one Baseball Arbitrator and those two Baseball Arbitrators will select the one Baseball Arbitrator within [***] thereafter. The Parties shall use their best efforts to cause the Baseball Arbitrator (mutually agreed by the Parties or selected by the two Baseball Arbitrators selected by the Parties, as applicable) to be selected and retained within [***] after a Party provides the other Party the Baseball Arbitration Notice.
Each Party shall submit to the Baseball Arbitrator (a) its proposal for the Reversion Terms and/or Reversion Sublicense Terms within [***] after the selection of the Baseball Arbitrator (“Proposed Resolution”) and (b) such other information as may be requested by the Baseball Arbitrator within [***] after such request. Each Party’s Proposed Resolution, and any additional information provided to the Baseball Arbitrator by such Party, shall be simultaneously provided to the other Party.
The Baseball Arbitrator will be instructed to select one or the other of the two Proposed Resolutions submitted by the Parties no later than [***] after the receipt of each Party’s Proposed Resolution (or if one Party does not submit its Proposed Resolution, then [***] after receipt of the submitted Proposed Resolution) and to select the Proposed Resolution that is most reasonable under the circumstances. The Baseball Arbitrator shall select only one of the Proposed Resolutions (without making any changes to such Proposed Resolution) and shall render such Proposed Resolution as the Baseball Arbitrator’s final decision. Notwithstanding anything to the contrary in this Agreement, the Baseball Arbitrator shall not have the authority to render any decision other than selecting one Proposed Resolution submitted by a Party pursuant to this Exhibit 15.7(c). The Baseball Arbitrator shall promptly notify the Parties of its determination in writing, and such decision shall be final and binding on the Parties. Each Party shall bear the costs and expenses of its Baseball Arbitrator and the costs and expenses of any Baseball Arbitrator agreed to by the Parties or selected by their Baseball Arbitrators shall be shared equally (50/50).
Certain identified information has been excluded from the exhibit by marking such portions with brackets (“[***]”) because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential.
NEITHER THIS DEBT INSTRUMENT NOR THE NOTES ISSUED IN CONNECTION HEREWITH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THE FOLLOWING INFORMATION IS PROVIDED PURSUANT TO TREAS. REG. SECTION 1.1275-3: THIS DEBT INSTRUMENT IS ISSUED WITH ORIGINAL ISSUE DISCOUNT. HOLDERS CAN OBTAIN INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE, AND YIELD TO MATURITY OF THIS DEBT INSTRUMENT BY CONTACTING THE TREASURER OF ISSUER AT: 675 Massachusetts Avenue, 14th Floor, Cambridge, MA 02139
NOTE PURCHASE AND GUARANTY AGREEMENT
Dated as of July 8, 2026
Between
SPERO SPV, LLC,
as Issuer,
SPERO HOLDINGS SPV, LLC,
as Holdings
and
HCR SPERO SPV, LLC,
as Purchaser Representative,
TABLE OF CONTENTS
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Article I CERTAIN DEFINITIONS |
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Section 1.01 |
Definitions |
1 |
Section 1.02 |
Certain Interpretations |
25 |
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Article II THE NOTES; PURCHASE AND SALE |
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Section 2.01 |
Purchase and Sale of Notes |
26 |
Section 2.02 |
[Reserved] |
26 |
Section 2.03 |
Purchase Price and Delivery |
26 |
Section 2.04 |
No Right to Reborrow or Reissue |
26 |
Section 2.05 |
Protective Advances |
27 |
Section 2.06 |
Representations and Warranties of Purchasers |
27 |
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Article III REPAYMENT |
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Section 3.01 |
Amortization; Scheduled Maturity Date |
28 |
Section 3.02 |
Mandatory and Voluntary Prepayments |
29 |
Section 3.03 |
Increased Cost |
29 |
Section 3.04 |
Illegality |
30 |
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Article IV INTEREST; EXPENSES; MAKING OF PAYMENTS |
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Section 4.01 |
Interest Rate |
31 |
Section 4.02 |
Application of Payments |
33 |
Section 4.03 |
Quarterly Payment Certificates |
34 |
Section 4.04 |
Interest on Late Payments |
35 |
Section 4.05 |
Administration and Enforcement Expenses |
35 |
Section 4.06 |
Making of Payments |
35 |
Section 4.07 |
Setoff or Counterclaim |
35 |
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Article V TAXES |
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Section 5.01 |
Taxes |
36 |
Section 5.02 |
Receipt of Payment |
38 |
Section 5.03 |
Other Taxes |
38 |
Section 5.04 |
Refunds |
38 |
Section 5.05 |
Registered Obligation |
38 |
Section 5.06 |
No Partnership. |
39 |
Section 5.07 |
Tax Treatment |
39 |
Section 5.08 |
Mitigation |
39 |
Section 5.09 |
Survival |
39 |
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Article VI CLOSING CONDITIONS |
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Section 6.01 |
Conditions Precedent to the Purchase of the Note |
40 |
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Article VII REPRESENTATIONS AND WARRANTIES |
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Section 7.01 |
Note Parties Representations and Warranties |
42 |
Section 7.02 |
Note Parties’ Representations and Warranties as to the Company, Etc |
53 |
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Article VIII AFFIRMATIVE COVENANTS |
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Section 8.01 |
Maintenance of Existence |
64 |
Section 8.02 |
Use of Proceeds |
64 |
Section 8.03 |
Financial Statements and Information |
65 |
Section 8.04 |
Books and Records |
67 |
Section 8.05 |
Governmental Authorizations |
67 |
Section 8.06 |
Compliance with Laws and Contracts |
67 |
Section 8.07 |
Plan Assets |
68 |
Section 8.08 |
Maintenance of Insurance |
68 |
Section 8.09 |
Notices |
68 |
Section 8.10 |
Tax Status of Issuer |
69 |
Section 8.11 |
Waiver of Stay, Extension or Usury Laws |
69 |
Section 8.12 |
Intellectual Property |
70 |
Section 8.13 |
[Reserved.] |
71 |
Section 8.14 |
[Reserved.] |
71 |
Section 8.15 |
[Reserved.] |
71 |
Section 8.16 |
Security Documents; Further Assurances |
71 |
Section 8.17 |
Information Regarding Collateral |
72 |
Section 8.18 |
Additional Collateral; New License Arrangement |
72 |
Section 8.19 |
Performance of GSK Agreement |
74 |
Section 8.20 |
Amendment of GSK Agreement |
74 |
Section 8.21 |
Enforcement of GSK Agreement |
75 |
Section 8.22 |
Approval of Assignments of License Agreement |
76 |
Section 8.23 |
[Reserved.] |
76 |
Section 8.24 |
Acknowledgment and Agreement by Purchaser Representative; Limitation of Issuer’s and the Company’s Duties and Obligations |
76 |
Section 8.25 |
Compliance with Permits |
77 |
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Article IX NEGATIVE COVENANTS |
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Section 9.01 |
Activities of Note Parties |
77 |
Section 9.02 |
Merger; Disposition of Assets |
79 |
Section 9.03 |
Liens |
79 |
Section 9.04 |
Investment Company Act |
79 |
Section 9.05 |
Limitation on Additional Indebtedness |
79 |
Section 9.06 |
Limitation on Transactions with Affiliates |
80 |
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Section 9.07 |
ERISA |
80 |
Section 9.08 |
Dividends and Distributions |
80 |
Section 9.09 |
Limitation on Investments |
80 |
Section 9.10 |
Sanctions; Anti-Corruption Laws |
81 |
Section 9.11 |
Organizational Documents; Certain Amendments |
81 |
Section 9.12 |
[Reserved] |
81 |
Section 9.13 |
Accounts and Payment Instructions |
81 |
Section 9.14 |
Tax Covenant |
81 |
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Article X EVENTS OF DEFAULT |
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Section 10.01 |
Events of Default |
81 |
Section 10.02 |
Default Remedies |
81 |
Section 10.03 |
Right of Set-off; Sharing of Set-off |
82 |
Section 10.04 |
Rights Not Exclusive |
82 |
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Article XI INDEMNIFICATION |
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Section 11.01 |
Losses |
82 |
Section 11.02 |
Assumption of Defense; Settlements |
83 |
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Article XII PURCHASER REPRESENTATIVE |
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Section 12.01 |
Appointment; Authorization |
84 |
Section 12.02 |
Duties |
84 |
Section 12.03 |
Reliance |
84 |
Section 12.04 |
Indemnification by Purchasers |
84 |
Section 12.05 |
Non-Reliance |
84 |
Section 12.06 |
Successor Purchaser Representative |
85 |
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Article XIII MISCELLANEOUS |
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Section 13.01 |
Assignments |
85 |
Section 13.02 |
Successors and Assigns |
86 |
Section 13.03 |
Notices |
86 |
Section 13.04 |
Entire Agreement |
87 |
Section 13.05 |
Modification |
87 |
Section 13.06 |
No Delay; Waivers; etc |
87 |
Section 13.07 |
Severability |
87 |
Section 13.08 |
Determinations |
87 |
Section 13.09 |
Replacement of Note |
87 |
Section 13.10 |
Governing Law |
87 |
Section 13.11 |
Jurisdiction |
87 |
Section 13.12 |
Waiver of Jury Trial |
88 |
Section 13.13 |
Waiver of Immunity |
88 |
Section 13.14 |
Nonliability of Purchasers and Purchaser Representative |
88 |
Section 13.15 |
Limitation on Rights of Others |
88 |
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Section 13.16 |
Survival |
89 |
Section 13.17 |
Confidentiality |
89 |
Section 13.18 |
Patriot Act Notification |
89 |
Section 13.19 |
Electronic Execution; Counterparts |
90 |
Section 13.20 |
Limited Recourse; Disposition of Excluded GSK Proceeds |
90 |
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Article XIV GUARANTY |
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Section 14.01 |
Guaranty of Obligations |
90 |
Section 14.02 |
Payment by Holdings |
90 |
Section 14.03 |
Liability of Holdings Absolute |
91 |
Section 14.04 |
Waivers by Holdings |
92 |
Section 14.05 |
Holdings Rights of Subrogation, Contribution, etc |
93 |
Section 14.06 |
Subordination of Other Obligations |
93 |
Section 14.07 |
Continuing Guaranty |
93 |
Section 14.08 |
Authority of Holdings or Issuer |
94 |
Section 14.09 |
Financial Condition of Issuer |
94 |
Section 14.10 |
Bankruptcy, etc |
94 |
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Exhibits |
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Exhibit A |
Form of Assignment and Acceptance |
Exhibit B |
Form of Equity Contribution Agreement |
Exhibit C |
Form of Issuer Contribution Agreement |
Exhibit D |
[Reserved] |
Exhibit E |
[Reserved] |
Exhibit F |
[Reserved] |
Exhibit G |
[Reserved] |
Exhibit H |
Form of Security Agreement |
Exhibit I |
[Reserved] |
Exhibit J |
Issuer’s Wiring Instructions |
Exhibit K |
[Reserved] |
Exhibit L |
Forms of Tax Certificates |
Exhibit M |
[Reserved] |
Exhibit N |
Form of Note |
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Schedules |
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Schedule I |
Licensed Products |
Schedule 2.01 |
Note Commitments |
Schedule 7.01(g) |
Note Party Proceedings |
Schedule 7.01(k) |
Note Party and Company Broker’s Fees |
Schedule 7.01(m)(i) |
Listed Patents |
Schedule 7.01(m)(iv) |
Listed Patents – Validity and Enforceability |
Schedule 7.01(r)(x) |
Material Contracts – Audits |
Schedule 7.02(g) |
Company Proceedings |
Schedule 7.02(k) |
Company Broker’s Fees |
Schedule 7.02(o)(ix) |
Material Contracts – Audits |
Schedule 7.02(v) |
Insurance |
This NOTE PURCHASE AND GUARANTY AGREEMENT dated as of July 8, 2026, is entered into by and between SPERO SPV, LLC, a Delaware limited liability company, as issuer (“Issuer”) and a wholly owned subsidiary of SPERO HOLDINGS SPV, LLC, a Delaware limited liability company (“Holdings”), HCR SPERO SPV, LLC, as purchaser representative (“Purchaser Representative”), and the Purchasers from time to time party hereto.
Capitalized terms not otherwise defined herein shall have the meanings set forth in, or by reference in, Article I below.
RECITALS
WHEREAS, Issuer has requested that the Purchasers purchase the Notes from Issuer on the Closing Date and each Purchaser is willing to purchase the Notes on the Closing Date, on the terms and subject to the conditions set forth herein;
WHEREAS, Spero Therapeutics, Inc., a Delaware corporation (together with its permitted successors or assigns, the “Company”) has entered into the Exclusive License Agreement, dated as of September 21, 2022, with GlaxoSmithKline Intellectual Property (No. 3) Limited, as amended by Amendment 1 to Exclusive License Agreement, dated as of July 4, 2023, as further amended by the Waiver and Release Agreement, dated as of September 27, 2023, as further amended by Amendment 2 to Exclusive License Agreement, dated as of December 20, 2023, as further amended by the Data Transfer Agreement, dated as of March 7, 2024, as further amended by Amendment 3 to Exclusive License Agreement, dated as of March 4, 2024, as further amended by the Side Letter, dated as of May 10, 2024, as further amended by Amendment 4 to Exclusive License Agreement, dated as of October 28, 2024, and as may be further amended from time to time in accordance with Section 8.20 of this Agreement (the “GSK Agreement”), pursuant to which, among other things, the Company granted GSK an exclusive license to develop, manufacture and commercialize the Licensed Product in the Territory, and GSK is obligated to make certain milestone payments and royalty payments to the Company thereunder;
WHEREAS, the Company has formed each of Holdings and Issuer as a special purpose vehicle for the purpose of, among other things, receiving the GSK Proceeds from the Licensee under the GSK Agreement, and Issuer will use the proceeds of the sale of the Notes to acquire, directly or indirectly, the right to receive such GSK Proceeds from the Company; and
NOW, THEREFORE, in consideration of the mutual promises of the Parties, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by the Parties as follows:
Article I
CERTAIN DEFINITIONS
Section 1.01 Definitions. As used herein:
“Account Bank” means (a) initially, [***], or (b) such other bank or financial institution approved by Issuer and Purchaser Representative that satisfies the requirements of Section 4.01(e)(ii).
“Accreted Principal” has the meaning set forth in Section 3.01(c).
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. For the purposes of this Agreement, “control” (including, with correlative meaning, the terms “controlling” and “controlled”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning set forth in the preamble hereto.
“Amortization Payments” has the meaning set forth in Section 4.02(b)(v) hereof.
“Anti-Corruption Laws” means all Laws of any jurisdiction applicable to the Company or any of its Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.
“Applicable Law” means, with respect to any Person, all Laws, rules, regulations and orders of Governmental Entities applicable to such Person or any of its properties or assets.
“Applicable Prepayment Premium” means, as of the date of determination, an amount equal to (a) during the period of time from and after the Closing Date up to and including the date that is the [***] anniversary of the Closing Date, an amount equal at [***]% of the principal amount of the Notes outstanding, (b) during the period of time after the date that is the [***] anniversary of the Closing Date up to and including the date that is the [***] anniversary of the Closing Date, an amount equal to [***]% of the principal amount of Notes outstanding and (c) during the period of time after the date that is the [***] anniversary of the Closing Date up to an including the date that is the [***] anniversary of the Closing Date, an amount equal to [***]% of the principal amount of the Notes outstanding.
“Assignee” means (a) the Purchaser Representative or any Purchaser, (b) any Affiliate of the Purchaser Representative or any Purchaser, (c) any other Person administered, advised or managed by the Persons under clause (a) or (b), (d) any other Person (other than a Competitor) regularly engaged in, or established for the purpose of engaging in, investments, financings or other transactions involving debt, equity, royalty, revenue-based, or similar interests or arrangements in healthcare, biopharmaceutical, pharmaceutical, life sciences or related businesses, products, assets or portfolios, including royalty portfolios of the foregoing or (e) any other Person approved by Purchaser Representative and Issuer (each such consent not to be unreasonably withheld, conditioned or delayed).
“Assignment and Acceptance” means a written instrument of assignment in the form set forth in Exhibit A, executed by and between the parties to an assignment under Section 13.01 hereof.
“Bankruptcy Law” means Title 11 of the United States Code entitled “Bankruptcy” and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the U.S. or other applicable jurisdictions (domestic or foreign) from time to time in effect and affecting the rights of creditors generally.
“Bill of Sale” means the Bill of Sale and Assignment Agreement, dated as of the Closing Date, delivered by the Company to Issuer under the Issuer Contribution Agreement with respect to the “Transferred Assets” (as such term is defined in the Contribution Agreement).
“Blocked Account” means any deposit account established and maintained in the United States at the Account Bank and pledged as Collateral pursuant to the terms of the Security Agreement and subject to a Control Agreement that is subject to: (a) prior to the New Account Bank Trigger Date, the “control” of Purchaser Representative within the meaning of Section 9-104 of the UCC and (b) from and after the New Account Bank Trigger Date, the full dominion and “control” of Purchaser Representative within the meaning of Section 9-104 of the UCC.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Purchaser Representative’s Office is located.
“Calendar Quarter” means, for the first calendar quarter, the period beginning on the Closing Date and ending on the last day of the calendar quarter in which the Closing Date falls, and thereafter each successive period of three consecutive calendar months ending on March 31, June 30, September 30 or December 31.
“Capital Stock” of any Person means any and all shares, interests, memberships, ownership interest units, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, and including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, and including, if such Person is a limited liability company, membership interests and any other interest or participation that confers on a Person the right to receive an interest in the profits and losses of, or distributions of property of, such limited liability company, in each case whether outstanding on the date hereof or issued after the date hereof, but excluding any Indebtedness convertible into or exchangeable for such equity.
“Cash Equivalents” means, as at any date, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided, that, the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) Dollar denominated time deposits and certificates of deposit of (i) any domestic commercial bank of recognized standing having capital and surplus in excess of $[***] or (ii) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof (any such bank being an “Approved Bank”), in each case with maturities of not more than [***] from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable or fixed rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within six months of the date of acquisition and (d) repurchase agreements entered into by any Person with a bank or trust company (including Purchaser Representative) or recognized securities dealer having capital and surplus in excess of $[***] for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations.
“Change in Law” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Entity or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Entity; provided, that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the U.S. or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.
“Change of Control” means (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act)) of more than fifty percent (50%) of the equity interests of the Company entitled to vote for members of its board of directors on a fully diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); provided no Change of Control described in this clause (a) shall have occurred and nothing in this Agreement or any other Transaction Documents shall prohibit a Change of Control described in this clause (a) so long as, (i) no Contributor Event of Default or Servicer Termination Event exists immediately before or immediately after giving effect thereto, and (ii) either (A) the Company is the surviving Person after giving effect to such Change of Control and remains obligated under the Transaction Documents to which the Company is a party, or (B) if the Company is not the surviving Person after giving effect to such Change of Control, the acquiror or surviving Person shall expressly assume all obligations of the Company under the Transaction Documents to which the Company is a party, if such assumption does not occur by operation of law, in which case such surviving Person shall succeed to, and be substituted for, the Company under the Transaction Documents to which the Company is a party, (b) at any time, the Company shall cease to own and control, of record and beneficially, directly, one hundred percent (100%) of the aggregate voting and economic power of the Capital Stock of Holdings free and clear of all Liens; and (c) at any time, Holdings shall cease to own and control, of record and beneficially, directly, one hundred percent (100%) of the aggregate voting and economic power of the Capital Stock of Issuer free and clear of all Liens.
“Closing Date” means July 8, 2026.
“Code” means the Internal Revenue Code of 1986.
“Collateral” has the meaning set forth in the Security Agreement.
“Collection Account” means (a) that certain Blocked Account established and maintained by Issuer at the Account Bank for the benefit of Purchaser Representative on behalf of the Purchasers pursuant to Section 4.01(c) and Section 4.01(e)(ii), if applicable, and the Control Agreement, and (b) any successor or replacement Collection Account established in accordance with Section 4.01(e)(i) and subject to a replacement Control Agreement in form and substance satisfactory to Purchaser Representative, in each case, solely for the purpose of receiving remittances of GSK Proceeds and other amounts required to be deposited therein under this Agreement, and making disbursements thereof in accordance with this Agreement and the Control Agreement.
“Collection Account Fees” means any accrued and unpaid wire transfer fees, account control fees, deposit account fees or other banking fees, charges and expenses due and owing to the Account Bank in respect of the Collection Account, the Control Agreement and any other cash management agreements established pursuant to Section 4.01(e)(ii).
“Commercialization” means, on a country-by-country basis, any and all activities with respect to the distribution, marketing, detailing, promotion, selling and securing of reimbursement of the Licensed Products in the Territory, which shall include, as applicable, post-marketing approval studies, post-launch marketing, promoting, detailing, marketing research, distributing, customer service, selling the
Licensed Products, importing, exporting or transporting the Licensed Products for sale, and regulatory compliance with respect to the foregoing.
“Company” has the meaning set forth in the recitals hereto.
“Competitor” means any Person that, directly or indirectly, including through one or more Affiliates, develops, manufactures or markets any other oral antibiotic for treatment of cUTI or any oral dosage formulation of any carbapenem which has the same indication as Orapenem.
“Confidential Information” means any and all technical and non-technical non-public information provided by either Party to the other (including, without limitation, any Notices or other information provided pursuant to Section 8.09), either directly or indirectly, and including any material prepared on the basis of such information, whether in graphic, written, electronic or oral form, and marked or identified at the time of disclosure as confidential, or which by its context would reasonably be deemed to be confidential, including without limitation information relating to a Party’s revenues, net sales, costs, technology, products and services, and any business, financial or customer information relating to a Party. Confidential Information shall not include any information that a Party can demonstrate was: (i) known to the general public at the time of its disclosure to such Party or its Affiliates, or thereafter became generally known to the general public, other than as a result of actions or omissions of the receiving Party, its Affiliates, or anyone to whom the receiving Party or its Affiliates disclosed such portion; (ii) known by the receiving Party or its Affiliates prior to the date of disclosure by the disclosing Party; (iii) disclosed to the receiving Party or its Affiliates on an unrestricted basis from a source unrelated to the disclosing Party and not known by the receiving Party or its Affiliates (after due inquiry) to be under a duty of confidentiality to the disclosing Party; or (iv) independently developed by the receiving Party or its Affiliates by personnel that did not use the Confidential Information of both Parties. For clarity, this Agreement shall supersede the Confidentiality Agreement and the Confidentiality Agreement shall cease to be of any force and effect following the execution of this Agreement; provided, however, that all information falling within the definition of “Confidential Information” set forth in the Confidentiality Agreement shall also be deemed Confidential Information disclosed pursuant to this Agreement, and the use and disclosure of such Confidential Information following the date of this Agreement shall be subject to the provisions of Section 13.17.
“Confidentiality Agreement” means the Confidentiality Agreement, dated as of [***], by and between HealthCare Royalty Management, LLC and the Company.
“Contract” means any contract, agreement, commitment, government bid, instrument, license, sublicense, subcontract, real or personal property lease or sublease, letters of intent, memorandum of understanding, offer letter, note, indenture, mortgage, bond, letter of credit, guarantee, purchase order, or other legally binding business arrangement, whether written or oral, together with any amendments, restatements, supplements or other modifications thereto.
“Contribution” means the sale, transfer, assignment, contribution and conveyance of the Transferred Assets pursuant to the Contribution Agreements.
“Control Agreement” means, with respect to the Collection Account, an account control agreement among Purchaser Representative, the Account Bank and Issuer, effective to grant “control” (as defined under the applicable UCC) over the Collection Account to Purchaser Representative, in form and substance satisfactory to Purchaser Representative; provided, that, from and after the New Account Bank Trigger Date, any reference to a Control Agreement with respect to the Collection Account shall be a Blocked Account pursuant to clause (b) of the definition thereof.
“Contribution Agreements” means the collective reference to the Issuer Contribution Agreement and the Equity Contribution Agreements.
“Contributor Event of Default” has the meaning set forth in the Issuer Contribution Agreement.
“Covered Taxes” means all Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Note Party or the Company under any Note Document, including (for the avoidance of doubt) any Taxes withheld or deducted by GSK, Issuer or any other applicable withholding agent in respect of any GSK Proceeds.
“Default” means any condition or event which constitutes an Event of Default or which, with the giving of notice or the lapse of time or both (in each case to the extent described in the relevant clauses of the definition of Event of Default) would, unless cured or waived become an Event of Default.
“Default Rate” means, for any period for which an amount is overdue, a rate per annum equal for each day in such period to the lesser of (i) [***]% plus the Fixed Interest and (ii) the maximum rate of interest permitted under Applicable Law.
“Designated Jurisdiction” means any country or territory to the extent that such country or territory is, or whose government is, the subject or target of any Sanctions broadly restricting or prohibiting dealings with such country, territory or government.
“Disposition” means the sale, transfer, conveyance, license, sublicense or other disposition (including any sale and leaseback transaction and any issuance of Capital Stock) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith; provided, that, “Disposition” shall not include any Permitted Lien. “Dispose” shall have a correlative meaning.
“Disqualified Capital Stock” of any Person means any class of Capital Stock of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable requires the payment of dividends or distributions in cash, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is [***] after the Scheduled Maturity Date.
“Dollars” or “$” means lawful money of the U.S.
“Drug Application” means an application for Regulatory Authorization to market, sell and distribute a drug or product in a country or region, including (a) a New Drug Application, (b) any corresponding foreign application in any country or jurisdiction in the world, including, with respect to the EEA, an application for a Marketing Authorization filed with the EMA, the MHRA or with the applicable Regulatory Agency of a country in the European Union with respect to the mutual recognition or any other national approval procedure, and (c) all supplements, amendments, variations, extensions and renewals thereof that may be filed with respect to the foregoing.
“EEA” means the European Economic Area and the United Kingdom.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, the United Kingdom, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Record” and “Electronic Signature” have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.
“Equity Contribution Agreement” means the Equity Contribution Agreement by and between the Company and Holdings in the form attached hereto as Exhibit B.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“Event of Default” means the occurrence of any of the events set forth below:
(a) Issuer fails to pay any principal of, or premium on, any Note when the same becomes due and payable, whether on the Scheduled Maturity Date, by acceleration or otherwise;
(b) Except as permitted by Section 4.01, Issuer fails to pay any interest on the Notes (including, without limitation, Fixed Interest; it being understood that compliance with Section 3.01(c) constitutes payment of the Quarterly Interest Shortfall) or make payment of any other amounts payable under this Agreement, in each case within [***] same becomes due and payable, but only to the extent that amounts are then on deposit in the Collection Account or were required to be deposited therein pursuant to Section 4.01(f);
(c) Any representation or warranty of any Note Party in any Note Document to which it is party or in any certificate, financial statement or other document delivered pursuant to any Note Document to Purchaser Representative proves to have been incorrect in any material respect when made or deemed made; provided, that, if the consequences of the failure of such representation or warranty to be true and correct can be cured, such failure continues for a period of [***] without such cure after the earlier of the date any Note Party becomes aware of such failure or the date Purchaser Representative provides Notice of such failure to the Note Parties; provided, further that no cure period shall apply to any failure giving rise to a claim under the Parent Guaranty other than any cure periods set forth in the Parent Guaranty (if any);
(d) Any Note Party fails to perform or observe any covenant or agreement contained in (i) Section 4.01(c)(i) or (c)(iii), Section 4.01(f), Section 8.02, Section 8.07, Section 8.09(a), Section 4.01(e)(ii) or Article IX or (ii) Section 4.03(a) and such failure is not remedied within five (5) Business Days;
(e) Any Note Party fails to perform or observe any other covenant or agreement contained in any Note Document to which it is a party (other than those referred to in the preceding clauses of this definition) if such failure is not remedied on or before the earlier of (i) the [***] after the date on which a Senior Officer of any Note Party has actual Knowledge of such failure and (ii) the [***] after Notice thereof from Purchaser Representative;
(f) A Servicer Termination Event occurs and is continuing;
(g) a Contributor Event of Default occurs and is continuing;
(h) the Company fails to pay, or cause to be paid, the GSK Development Payment when due and payable;
(i) Any uninsured judgment, decree or order in an amount in excess of $[***] shall be rendered against any Note Party and either (i) enforcement proceedings shall have been commenced upon such judgment, decree or order or (ii) such judgment, decree or order shall not have been stayed or bonded pending appeal, vacated or discharged, within [***] from entry;
(j) An Insolvency Event shall occur;
(k) (i) Any of the Note Documents shall cease to be in full force and effect other than in accordance with its terms, (ii) the validity or enforceability of any Note Document is disaffirmed or challenged in writing by any Note Party, the Company or their respective Affiliates or (iii) this Agreement or the Security Agreement shall cease to give Purchaser Representative the rights purported to be created hereby or thereby, including a first priority perfected Lien on the assets of any Note Party that constitute Collateral, subject only to Permitted Liens, other than as a direct result of any action by Purchaser Representative or failure of Purchaser Representative to perform an obligation of Purchaser Representative hereunder;
(l) Any Note Party fails to perform or observe any covenant or agreement contained in any Material Contract to which it is a party and such failure is not cured or waived within any applicable grace period or any Material Contract to which it is a party shall cease to be in full force and effect, and such failure to perform or observe results in a termination of such Material Contract, and any such failure, cessation or termination could reasonably be expected to have a Material Adverse Effect;
(m) The Meiji License Agreement is terminated, cancelled, rescinded, or otherwise ceases to be in full force and effect, in whole or in part. The GSK Agreement is terminated, cancelled, rescinded, or otherwise ceases to be in full force and effect, in whole or in part, in each case prior to the Scheduled Maturity Date and is not replaced in accordance with Section 8.18(b) hereof within [***] after such termination, cancellation, recission or cessation; provided, that, such failure to replace shall not constitute an Event of Default for so long as the Note Parties are engaged in discussions with a Third Party with respect to a New Arrangement, continue to exert commercially reasonable efforts, as measured at the time, to effect such New Arrangement and have a good faith reasonable belief that such discussions will result in the entry into a New Arrangement within a reasonable period of time thereafter;
(n) Any security interest purported to be created by the Security Agreement shall cease to be in full force and effect, or shall cease to give the rights, powers and privileges purported to be created and granted hereunder or thereunder (including a perfected first priority security interest in and Lien on (subject in each case to Permitted Liens and, solely with respect to the continuing first
priority granted to Secured Party under the Note Documents, Permitted Liens entitled to priority under Applicable Law) substantially all of the Collateral (except as otherwise expressly provided herein and therein)) in favor of Purchaser Representative pursuant hereto or thereto (other than as a result of the failure by Purchaser Representative of taking any action required to maintain the perfection of such security interests), or shall be asserted by Issuer not to be a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Agreement) security interest in the Collateral and/or Issuer takes any action that could reasonably be expected to impair Purchaser Representative’s security interest in any of the Collateral (other than granting Permitted Liens or permitting such Permitted Liens to exist);
(o) any Note Party fails to comply in any material respect with the terms of its respective SPV Organizational Documents;
(p) a Change of Control shall occur without the prior written consent of Purchaser Representative;
(q) (i) any material portion of the Collateral, the Transferred Assets, the GSK Proceeds or any other assets of any Note Party is attached, seized, appropriated, levied upon, condemned or otherwise comes into the possession or control of any trustee, receiver, Governmental Entity or other Person acting or purporting to act under authority of Law, or (ii) any order, injunction, writ or decree of any Governmental Entity enjoins, restrains or otherwise prevents any Note Party from conducting any material part of its business or performing any material obligation under any Note Document, in each case under clauses (i) and (ii), if such event could reasonably be expected to have a Material Adverse Effect and continues for [***] after the earlier of (A) the date on which a Senior Officer of Issuer has actual Knowledge thereof or (B) Notice thereof from Purchaser Representative;
(r) The occurrence, as reasonably determined by Purchaser Representative in good faith, of any act of fraud by any Note Party, the Company or any of their respective Affiliates in connection with this Agreement, any other Note Document, the Contribution Agreements, the GSK Agreement, the Transferred Assets, the Collateral, the GSK Proceeds or the transactions contemplated hereby or thereby;
(s) the Company fails to (i) pay all Maintenance Expenses on behalf of the Note Parties when due and payable and to treat such payment, for accounting purposes, as an equity contribution to the capital of Holdings and, as applicable, a subsequent equity contribution by Holdings to the capital of Issuer, or (ii) maintain an unrestricted (except for restrictions arising pursuant to the Control Agreement or the Transaction Documents) cash balance in the Collection Account required under Section 4.01(c)(ii) and such failure is not remedied on or before the earlier of (i) [***] after the date on which a Senior Officer of any Note Party has actual Knowledge of such failure and (ii) [***] after Notice thereof from Purchaser Representative;
“Exchange Act” means the Securities Exchange Act of 1934, and the regulations promulgated thereunder.
“Excluded GSK Proceeds” means, solely to the extent arising, paid or payable after Payment in Full, 35% of the excess, if any, of (i) each payment of GSK Proceeds to which Issuer is entitled over (ii) the associated Meiji Payments, if any, that Issuer or any of its Affiliates is obligated to make.
“Excluded Taxes” means any of the following Taxes imposed in each case on or with respect to a payment to any Purchaser (a) any Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case (x) imposed as a result of such Purchaser being organized under the laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (y) that are Other Connection Taxes, (b) any U.S. federal withholding Tax imposed on amounts payable to or for the account of such Purchaser with respect to an applicable interest in the Notes pursuant to a law in effect on the date on which (i) such Purchaser acquires such applicable interest in the Notes or (ii) such Purchaser changes its lending office, except, in each case, to the extent that (A) such Tax was imposed on Purchaser’s assignor (if any) immediately prior to the assignment to such Purchaser, or was imposed on such Purchaser immediately prior to the change of such Purchaser’s lending office, and (B) such Tax described in (A) was a Covered Tax, (c) any Tax that is attributable to such Purchaser’s failure to comply with Section 5.01(c) and (d) any Tax withheld pursuant to FATCA.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code (or any amended or successor version described above) and any fiscal or regulatory legislation, or official administrative rules or other official administrative guidance adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Entities and implementing such Sections of the Code.
“FDA” means the United States Food and Drug Administration.
“Financial Statements” means, the consolidated balance sheets of the Company, audited at December 31, 2025 and December 31, 2024 and unaudited for the fiscal quarter ended March 31, 2026, and the related consolidated statements of operations and comprehensive loss, cash flows and changes in stockholders’ equity of the Company audited for the years ended December 31, 2025 and December 31, 2024, and unaudited for the fiscal quarter ended March 31, 2026 and in each case the accompanying notes thereto, as filed within Forms 10-K and 10-Q with the SEC.
“Fixed Interest” means interest with respect to the Notes, accruing with respect to the outstanding principal balance thereof, at a rate per annum equal to ten percent (10.0%), payable quarterly in arrears on each Payment Date.
“Foreign Purchaser” means any Purchaser which is not a U.S. Person.
“Governmental Entity” means any government, regulatory or administrative agency or commission, or other governmental agency, authority, instrumentality or body (including a court), whether foreign, federal, state or local, including any applicable Patent Office, the FDA, the European Medicines Agency, the United States National Institutes of Health, United Kingdom’s Medicines and Healthcare products Regulatory Authority or any other governmental authority in any country.
“Governmental Licenses” means all authorizations issuing from a Governmental Entity, including the FDA, based upon or as a result of applications to and requests for approval from a Governmental Entity for the right to Commercialize (as defined in the GSK Agreement) a Licensed Product, which are owned by or licensed to the Company or any Affiliate, acquired by the Company or any Affiliate via assignment, purchase or otherwise or that the Company or any Affiliate is authorized or granted rights under or to.
“GSK” means GlaxoSmithKline Intellectual Property (No. 3) Limited, a company registered under the laws of England and Wales with offices at 980 Great West Road, Brentford, Middlesex TW8 9GS England and a party to the GSK Agreement. If the GSK Agreement is assigned or otherwise transferred by GSK to another Person in accordance with this Agreement, references to GSK hereunder shall be deemed to be references to such other Person.
“GSK Agreement” has the meaning set forth in the recitals hereto.
“GSK Development Payment” means the amounts owed by Issuer to GSK pursuant to Section 4.1(a)(ii) of the GSK Agreement with respect to GSK’s [***] related to the development of Tebipenem Pivoxil Hydrobromide, which amounts are estimated to be USD $[***].
“GSK Payment Notice” means the following notices:
(a) notice from GSK under Section 6.3 of the GSK Agreement of the achievement of a Commercial Milestone Event (as defined in the GSK Agreement);
(b) notice from GSK under Section 6.4 of the GSK Agreement of the achievement of a Sales Milestone Event (as defined in the GSK Agreement); or
(c) any other notice from GSK notifying the Company that payments constituting the Royalty Payments are due, payable or paid under the GSK Agreement.
“GSK Proceeds” means all of Issuer’s (as assignee of the Company pursuant to the Issuer Contribution Agreement) right, title and interest in and to the following:
(a) all amounts due, payable or paid to the Company under Section 6.3 of the GSK Agreement;
(b) all amounts due, payable or paid to the Company under Section 6.4 of the GSK Agreement;
(c) all Royalty Payments;
(d) all amounts due, payable or paid to the Company in respect of any provisions concerning underpayment of or in lieu of the amounts set forth in (a) through (c) above;
(e) all interest that becomes payable in respect of the late payment of any of the amounts referred to in the foregoing clauses (a) through (d) pursuant to Section 6.7(c) of the GSK Agreement;
(f) all accounts (as defined under the UCC) evidencing the rights to the payments and amounts described in this definition; and
(g) all proceeds (as defined under the UCC) of any of the foregoing including any and all proceeds of Transferred Assets;
All of the foregoing amounts shall be determined after giving effect to (a) all GSK Royalty Reductions that are applicable to such amounts, (b) any amounts withheld or additional amounts paid pursuant to Section 6.9 of the GSK License Agreement, and (c) subject to Section 5.01 of this Agreement, deductions for withholding or similar taxes, in each case excluding any Non-Permitted Set-Offs. For the
avoidance of doubt, GSK Proceeds shall include all amounts due, payable or paid to the Company or any of its Affiliates by one or more licensees or sublicensees under any New Arrangement to the extent attributed to the Licensed Products.
“GSK Products” has the meaning given to the term “Product” in Section 1.134 of the GSK Agreement.
“GSK Royalty Reductions” means, with respect to the GSK Agreement, any adjustments, modifications, credits, offsets, reductions or deductions to royalty payments made under Section 6.5 of the GSK Agreement pursuant to Section 6.5(c), Section 6.5(d) or Section 6.5(e) of the GSK Agreement, subject in all cases to the limitation imposed by Section 6.5(f) of the GSK Agreement.
“Guarantee” means, as to any Person: (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part); or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guaranteed Obligations” has the meaning given to such term in Section 14.01.
“Healthcare Laws” means all Laws relating to healthcare regulatory matters, including the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, the Anti-Kickback Statute (42 U.S.C. § 1320a-7b), the Federal False Claims Act (31 U.S.C. §§ 3729-3733), the Foreign Corrupt Practices Act of 1977, HIPAA, and all comparable state and foreign Laws.
“Holdings” has the meaning set forth in the preamble hereto.
“Holdings Organizational Documents” means the certificate of formation and amended and restated operating agreement (or similar documents) of Holdings or the functional equivalent of the foregoing.
“Indebtedness” means, with respect to any Person, all items which, in accordance with GAAP, would be included in determining total liabilities as shown on the liability side of the balance sheet of such Person as of the date as of which such Indebtedness is to be determined, including (i) indebtedness pursuant to an agreement or instrument involving or evidencing money borrowed, the advance of credit, a conditional sale or a transfer with recourse or with an obligation to repurchase (but excluding trade credit and accounts payable in the ordinary course of business), (ii) any capitalized lease, (iii) any obligations with respect to Disqualified Capital Stock, (iv) indebtedness secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on assets owned or acquired by such Person (other than Indebtedness among the Note Parties), whether or not the indebtedness secured thereby has been assumed (but only to the extent of such Lien), (v) net amounts owing pursuant to an interest rate protection agreement, foreign currency exchange agreement or other hedging arrangement, (vi) a reimbursement obligation under a letter of credit issued for the account of such Person, or (vii) all Guarantees. For the avoidance of doubt, the Indebtedness of any Person shall include the Indebtedness of any other entity to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages, penalties, claims and out-of-pocket costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable and documented out-of-pocket fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and whether or not such Indemnitee is required by Applicable Law to be involved therein, and any out-of-pocket fees or expenses actually incurred by Indemnitees in enforcing the indemnity provided herein), whether direct, indirect or consequential, whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations), on common law or equitable cause or on contract or otherwise, imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of this Agreement or the other Note Documents or the transactions contemplated hereby or thereby (including any enforcement of any of the Note Documents (including any sale of, collection from, or other realization upon any of the Collateral)).
“Indemnitee” means Purchaser Representative, any Purchaser and each of their Affiliates and their respective officers, partners, directors, trustees, employees, agents and controlling Persons.
“Independent Manager” means, with respect to any Note Party, an individual who has prior experience as an independent director, independent manager or independent member and at least [***] years of employment experience with one or more nationally recognized companies that provide independent director, independent manager or independent member services in the ordinary course of their respective businesses and that are not Affiliates of any Note Party, the Company or any of their respective Affiliates, and who (a) is duly appointed as an “independent manager” of such Note Party pursuant to Section 18-101(10) of the Delaware Limited Liability Company Act and is entitled to all rights and privileges of such position under the applicable SPV Organizational Documents, (b) is not, and has never been, and will not while serving as Independent Manager be, (i) a member, partner, equityholder, officer, director, manager, employee, attorney or counsel of any Note Party, the Company or any of their respective Affiliates, other than in such Person’s capacity as Independent Manager, or (ii) the owner of any Capital Stock of any Note Party, the Company or any of their respective Affiliates, (c) to the fullest extent permitted by Applicable Law, including Section 18-1101(c) of the Delaware Limited Liability Company Act, is required under the applicable SPV Organizational Documents to consider only the interests of such Note Party, including its creditors, in acting or otherwise voting on any Insolvency Event or any matter requiring the consent of the Independent Manager under the applicable SPV Organizational Documents, (d) is under no fiduciary duty to any Person other than such Note Party and its creditors with respect to any such matter, (e) has been disclosed to Purchaser Representative, together with a brief description of such Person’s prior professional activities and such other information as Purchaser Representative may reasonably request, prior to the effectiveness of such Person’s appointment, and (f) has been approved in writing by Purchaser Representative in its reasonable discretion; provided, that, Holdings and Issuer may have the same Independent Manager as one another.
“Infringement” and “Infringes” mean the infringement, misappropriation, or other violation of any Patents, copyrights, trademarks, know-how, trade secrets, confidential information, and/or other Intellectual Property.
“Initial Search Period” has the meaning set forth in Section 8.18(b).
“Insolvency Event” means the occurrence of any of the following with respect to any Note Party or the Company:
(i) (A) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (x) relief in respect of any Note Party or the Company, or of a substantial part of the property of any Note Party or the Company, under any Bankruptcy Law now or hereafter in effect, (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Note Party or the Company for a substantial part of the property of any Note Party or the Company or (z) the winding-up or liquidation of any Note Party or the Company, which proceeding or petition shall continue undismissed for [***] or (B) an order of a court of competent jurisdiction approving or ordering any of the foregoing shall be entered;
(ii) Any Note Party or the Company shall (A) voluntarily commence any proceeding or file any petition seeking relief under any Bankruptcy Law now or hereafter in effect, (B) apply for the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official itself or for a substantial part of its property, (C) fail to contest in a timely and appropriate manner any proceeding or the filing of any petition described in clause (i) of this definition, (D) file an answer admitting the material allegations of a petition filed against it in any proceeding described in clause (i) of this definition, (E) make a general assignment for the benefit of creditors or (F) wind up or liquidate (except as permitted under this Agreement);
(iii) Any Note Party or the Company shall take any action in furtherance of or for the purpose of effecting, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i) or (ii) of this definition; or
(iv) Any Note Party or the Company shall become unable, admit in writing its inability, or fail generally, to pay its debts as they become due.
“Insurance Providers” means the insurance companies set forth in Schedule 7.02(v) or insurance companies rated at least as high as the ratings given, as of the Closing Date (according to A.M. Best Company, Inc.).
“Intellectual Property” means all intellectual property covering the sale, manufacture, use, importation or marketing of any Licensed Product in such Licensed Product’s Territory, including but not limited to patents, patent applications, trademarks, trademark applications and know-how, necessary for the sale, manufacture, use, importation or marketing of such Licensed Product that is owned, licensed in or controlled (and if controlled, only to the extent of control) by Issuer (after giving effect to the Contribution under the Issuer Contribution Agreement) as of the Closing Date and during term of this Agreement.
“Intercreditor Agreement” means (a) prior to Payment in Full of the Obligations, a subordination agreement, among Purchaser Representative, for the benefit of the Purchasers, the Note Parties and the Monetization Counterparties (or the representatives thereof), in a form reasonably satisfactory to Purchaser Representative, which shall provide, among other things, for the full subordination of the Monetization Counterparties’ payment, lien, enforcement and other rights under the Permitted
Monetization Facility to the prior Payment in Full of the Obligations and (b) an intercreditor agreement, among Purchaser Representative under (and as defined in) the Royalty Purchase Agreement, for the benefit of the Purchasers (as defined in the Royalty Purchase Agreement), Issuer and the Monetization Counterparties (or the representatives thereof), in a form reasonably satisfactory to Purchaser Representative under the Royalty Purchase Agreement; provided, that, no such intercreditor agreement shall be required if the Monetization Counterparty does not take a Lien on any asset of Issuer, including the Collection Account, other than the Excluded GSK Proceeds to which such Monetization Counterparty has rights.
“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) an acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment and without regard to any cash or other property received or returned to the Company and its Subsidiaries with respect thereto.
“In-License” means any license, settlement agreement or other contract or arrangement between a Note Party and any Third Party pursuant to which such Note Party obtains a license or a covenant not to sue or similar grant of rights to Intellectual Property of such Third Party that is necessary for Commercialization activities with respect to the Licensed Products.
“IP Rights” means, collectively, all Drug Applications, all Governmental Licenses, all applications and requests for Governmental Licenses, all Other Intellectual Property, all Patents, all Patent Licenses, all Trademarks, all Trade Secrets, and all Regulatory Authorizations, and all other Intellectual Property, in each case, which are (a) owned or controlled by, issued or licensed to, licensed by, or hereafter acquired or licensed to or by, the Company or any Affiliate, including (but not limited to) the items listed on Schedule 7.01(m)(i) and (b) used in, relating to or necessary for the Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory, including, for the avoidance of doubt, all Intellectual Property licensed to GSK under the GSK Agreement to the extent used in, relating to or necessary for Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory.
“Issuer” shall have the meaning set forth in the preamble hereto.
“Issuer Contribution Agreement” means the Purchase and Sale, Contribution and Servicing Agreement, dated as of the Closing Date, between the Company, Issuer and Holdings, in the form of Exhibit C hereto.
“Issuer’s Organizational Documents” means the certificate of formation and amended and restated operating agreement of Issuer.
“Knowledge” means, with respect to any Note Party or the Company, the actual knowledge after due inquiry of any Senior Officer of the Company; provided, that, due inquiry shall not [***].
“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Entity charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Entity, in each case whether or not having the force of law.
“Licensed Patents” means all Patents that are licensed or sublicensed to the Company which are used in or necessary for the Commercialization of the Licensed Products in the Territory.
“Licensed Product” means (a) the GSK Products, and (b) any “licensed products” (howsoever denominated) under any New Arrangement, including any such product in development or which may be developed by GSK and subject to the GSK Agreement, including those products set forth on Schedule I (as supplemented from time to time in accordance with the terms of this Agreement); provided, that, if the Note Parties shall fail to comply with their obligations under this Agreement to give notice to Purchaser Representative and supplement Schedule I prior to GSK Commercializing any new Licensed Product, any such improperly undisclosed Licensed Product shall be deemed to be included in this definition. For clarity, references in this Agreement to “a” Licensed Product or to “the” Licensed Product(s) refer to any Licensed Product(s) under or with respect the GSK Agreement or New Arrangement.
“Licensee” means GSK.
“Licensee Instruction Letter” has the meaning set forth in Section 4.01(d).
“Licensor” means Issuer (as assignee of the Company pursuant to the Issuer Contribution Agreement).
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“Listed Patents” has the meaning set forth in Section 7.01(m)(i).
“Maintenance Expenses” means all franchise, excise or similar Taxes, filing fees, registration fees, fees, costs and expenses incurred in connection with the Independent Manager of the Note Parties, legal costs and expenses related to amending or otherwise modifying the SPV Organizational Documents or the Note Documents in accordance with this Agreement, and similar amounts of Holdings and Issuer that are due and payable, in each case to the extent necessary to maintain Holdings’s and Issuer’s legal existence, SPV status, compliance with the SPV Organizational Documents or any Material Contracts, good standing and permits, licenses and franchises required or desirable under the Note Documents, other Material Contracts and Applicable Law.
“Marketing Authorization” means, with respect to a Licensed Product, the Regulatory Approval required by Applicable Law to sell such Licensed Product in a country or region, including, to the extent required by Applicable Law for the sale of such Licensed Product, all pricing approvals and government reimbursement approvals.
“Material Adverse Effect” means (a) a material adverse change in the business, operations, properties, results of operations or financial condition of Issuer, taken as a whole; (b) a material adverse effect on the validity or enforceability of the Note Documents taken as a whole or any material provision hereof or thereof; (c) a material adverse effect on the ability of Issuer or the Company to consummate the transactions contemplated by the Note Documents, or on the ability of Issuer or the Company to perform its obligations under the Note Documents to which it is a party, in each case, taken as a whole; (d) a material adverse effect on the rights of Issuer under the GSK Agreement or the Meiji License Agreement or (e) a material adverse effect on the rights or remedies of Purchaser Representative under the Note Documents, taken as a whole.
“Material Contract Counterparty” means a counterparty to any Material Contract.
“Material Contracts” means (a) the GSK Agreement, (b) the Meiji License Agreement, (c) each Contract or other agreement other than the Note Documents or Royalty Purchase Documents to which Issuer is a party involving aggregate payments of more than $[***], whether such payments are being made by or to Issuer, (d) each in-license and each out-license, in each case, of Intellectual Property to which any Note Party is a party, pertaining to Product Development and Commercialization Activities with respect to any Material Product, (e) each Contract (other than the Note Documents or Royalty Purchase Documents) to which Issuer is a party, and that is material to Product Development and Commercialization Activities with respect to any Material Product (including, without limitation, all waivers, amendments, supplements and other modifications thereto) and (f) all other Contracts or agreements to which Issuer is a party that are, individually or in the aggregate, material to the business, assets, properties, liabilities (actual or contingent) or financial condition of Issuer (other than the Note Documents or Royalty Purchase Documents). The Material Contracts as of the date hereof are the GSK Agreement and the Meiji License Agreement.
“Material Other Reports” (i) all material reports (other than the Royalty Reports) or notices relating to the Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory provided by GSK to Issuer, and (ii) the reports and other information received by Issuer pursuant to Sections 2.3(a)(iv), 2.11(c), 3.2(e) (solely with respect to finalized minutes), 4.1(a) (solely with respect to any amendments or modifications to the Development Plan (as defined in the GSK Agreement)), 4.10(b), 4.10(c), 5.3(d), 5.3(e), 5.6, 7.1(c), 7.2(c), 7.2(d), 7.3(a), 7.3(c), 8.4, 10.4(a), 10.8, 11.7(b) and 14.6 of the GSK Agreement.
“Material Product” means (a) the Licensed Product and (b) each other product of Issuer the loss of which could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
“Maximum Lawful Rate” means the highest rate of interest permissible under Applicable Law.
“Meiji” means Meiji Seika Pharma Co., Ltd., a Japanese corporation and a party to the Meiji License Agreement. If the Meiji License Agreement is assigned or otherwise transferred by Meiji to another Person in accordance with and subject to the terms of this Agreement, references to Meiji hereunder shall be deemed to be references to such other Person.
“Meiji License Agreement” means that certain License Agreement, dated as of June 14, 2017, by and between Issuer (as assignee of Spero Therapeutics, Inc. (as successor to Spero OpCo, Inc.) pursuant to the Issuer Contribution Agreement) and Meiji, as supplemented by the Addendum to License Agreement, dated as of June 14, 2017, and as amended by the Amendment to License Agreement, effective as of July 1, 2024, and, to the extent applicable, as assigned, transferred and contributed to Issuer pursuant to the Issuer Contribution Agreement.
“Meiji Payments” means any Royalties (as defined in the Meiji License Agreement) under Section 4.3 of the Meiji License Agreement, in each case, to the extent due and payable by the Company or Issuer during the applicable Calendar Quarter and attributable to payments received under or in respect of the GSK Agreement.
“Modification” has the meaning set forth in Section 8.20.
“Net Sales” has the meaning given to such term in Section 1.114 of the GSK Agreement.
“New Account Bank Trigger Date” means the [***] after the Closing Date, or such later date approved by Purchaser Representative.
“New Arrangement” has the meaning set forth in Section 8.18(b).
“New Arrangement Expenses” has the meaning set forth in Section 8.18(b).
“Non-Permitted Set-Off” means any Set-Off, whether by contract or otherwise, that is exercised by GSK in respect of a claim against any Issuer, Holdings or the Company, including (a) any amounts owed by Issuer, Holdings or the Company to GSK, or (b) any Set-Off taken pursuant to Section 6.6 or Section 11.8 of the GSK Agreement (in each case, other than a GSK Royalty Reduction or a deduction for withholding or similar taxes pursuant to Section 6.9 of the GSK Agreement).
“Notes” means the notes to be issued by Issuer and purchased by each Purchaser in accordance with Section 2.01, and after issuance to each Purchaser, at any time the aggregate principal amount of the Note outstanding at such time, including any Accreted Principal.
“Note Commitment” means, with respect to each Purchaser, the commitment of such Purchaser, if any, to purchase the Notes, which commitment is in the amount set forth opposite such Purchaser’s name on Schedule 2.01, as amended to reflect assignments pursuant to this Agreement. The aggregate amount of the Purchasers’ Note Commitments as of the Closing Date is $105,000,000.
“Note Documents” means this Agreement, the Notes, the Security Agreement, the Parent Guaranty, the Contribution Agreements, the Control Agreement, the Bill of Sale and all other documents delivered in connection herewith or therewith.
“Note Parties” means Issuer and Holdings.
“Notices” means, collectively, notices, consents, approvals, reports, designations, requests, waivers, elections and other communications.
“Obligations” means, without duplication, the Notes, Fixed Interest and all present and future Indebtedness, Taxes, liabilities, obligations, covenants, duties, and debts, owing by Issuer to Purchaser Representative, arising under or pursuant to the Note Documents, including all principal, interest, premium, charges, expenses, fees and any other sums chargeable to Issuer hereunder and under the other Note Documents (and including any interest, fees and other charges that would accrue but for the filing of a bankruptcy action with respect to Issuer, whether or not such claim is allowed in such bankruptcy action).
“Office” means, with respect to Purchaser Representative, its Stamford, Connecticut office, and with respect to any other Purchaser, the office of Purchaser designated as its “Office” in an Assignment and Acceptance, or such other office as may be otherwise designated in writing from time to time by Purchaser to Issuer.
“Organizational Document” means, with respect to any Person, (i) in the case of any corporation, the certificate of incorporation and by-laws (or similar documents) of such Person, (ii) in the case of any limited liability company, the certificate of formation and operating agreement (or similar documents) of such Person (including the Holdings Organizational Documents and Issuer’s Organizational Documents), (iii) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar documents) of such Person, (iv) in the case of any general partnership, the partnership agreement (or similar document) of such Person, and (v) in any other case, the functional equivalent of the foregoing.
“Other Connection Taxes” means, with respect to any Purchaser, Taxes imposed as a result of a present or former connection between such Purchaser and the jurisdiction imposing such Tax (other than any connections arising from such Purchaser having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Note Document, or sold or assigned any interest in the Notes or any Note Document).
“Other Taxes” means all present or future stamp, court, documentary, intangible, recording, filing or similar taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to any of the Note Documents, except for any Taxes imposed with respect to an assignment that are Other Connection Taxes.
“Owned Patents” means all Patents which are owned by a Note Party and which are used in, relating to or necessary for the Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory.
“Parent Guaranty” means that certain Limited Recourse Guaranty, dated as of the Closing Date, made by the Company in favor of HCR SPERO SPV, LLC, in its capacities as Purchaser Representative and RPA Representative.
“Party” and “Parties” means Purchaser Representative, Purchaser and Issuer, individually and collectively.
“Patent” means any and all issued patents and pending patent applications, including without limitation, all provisional applications, substitutions, continuations, continuations-in-part, divisions, and renewals, all letters patent granted thereon, and all patents-of-addition, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms (including regulatory extensions), claiming or covering the Licensed Products, or composition of matter, formulation, or methods of manufacture or use thereof, that are issued or filed on or after the date of this Agreement, including those identified in Schedule 7.01(m)(i), in each such case, which are owned, co-owned or controlled by, issued or licensed to, licensed by, or hereafter acquired or licensed by, Issuer or any Subsidiary.
“Patent Office” means the respective patent office (foreign or domestic) for any patent.
“Patriot Act” means the USA Patriot Act, Public Law No. 107-56.
“Payment Date” means, for each applicable Calendar Quarter, the date that is the last Business Day of the Calendar Quarter immediately following such Calendar Quarter, or if any such day is not a Business Day, on the next succeeding Business Day.
“Payment in Full” means the payment in full in cash in immediately available funds of the Notes and other Obligations (other than contingent indemnification obligations for which no such claims have been made).
“Payments” means due and owing payments of Amortization Payments and Fixed Interest (each under Section 4.02 hereof), including, in each case any default interest, additional interest or prepayment premium charged hereunder.
“Permits” means licenses, certificates, accreditations, Regulatory Authorizations, other authorizations, registrations, permits, consents, clearances and approvals required in connection with the conduct of the Company’s or any Subsidiary’s business or to comply with any Applicable Laws, and those issued by state governments for the conduct of the Company’s or any Subsidiary’s business.
“Permitted Liens” means:
(a) Liens created pursuant to any Note Document or Royalty Purchase Documents;
(b) Liens in favor of a banking or other financial institution arising as a matter of law or under customary contractual provisions encumbering deposits or other funds maintained with such banking or other financial institution (including the right of collection or set off and grants of security interests in deposits and/or securities held by such banking or other financial institution) and that are within the general parameters customary in the banking industry;
(c) Liens securing the claims of attachment, judgment and other similar Liens arising in connection with court proceedings so long as the judgment claims secured thereby do not otherwise constitute an Event of Default under clause (i) of the definition of “Event of Default”;
(d) Liens in connection with the Meiji License Agreement, GSK Agreement, in each case, existing or arising in connection with any provision existing prior to the date of this Agreement, and any New Arrangement or other license replacing the GSK Agreement in accordance with Section 8.18(b);
(e) Liens for ad valorem property Taxes that are not yet due and payable;
(f) Liens in respect of property of the Note Parties imposed by Applicable Law which were incurred in the ordinary course of business and do not secure Indebtedness; and
(g) Liens on the Excluded GSK Proceeds.
“Permitted Royalty Monetization” means any monetization transaction with a Third Party (a “Monetization Counterparty”) involving the sale, transfer, option or collateralization of the Excluded GSK Proceeds, including but not limited to a sale, royalty bond or other royalty financing, synthetic royalty or revenue interest transaction, or monetization transaction; provided, that (a) such transaction shall not contain terms relating to collateral security (if any) or subordination (if any), or other material terms (other than economic terms) that, taken as a whole, are less favorable in any material respect to Issuer than those terms contained in the Transaction Documents (as defined in the Royalty Purchase Agreement) with respect to the Purchased Proceeds (as defined in the Royalty Purchase Agreement), (b) after giving effect to such transaction, no Material Adverse Effect shall have occurred or could reasonably be expected to occur as a result thereof and (c) an Intercreditor Agreement is executed in connection therewith (it being understood and agreed the Monetization Counterparty shall have no right or entitlement to the Excluded GSK Proceeds at any time until Payment in Full, and upon Payment in Full, Issuer acknowledges that compliance with certain other conditions set forth in the definition of “Permitted Royalty Monetization” under (and as defined in) the Royalty Purchase Agreement is required).
“Person” means any natural person, firm, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Entity or any other legal entity, including public bodies, whether acting in an individual, fiduciary or other capacity.
“Plan Assets” means assets of any (i) employee benefit plan (as defined in Section 3(3) of ERISA) subject to the fiduciary responsibility provisions of Title I of ERISA, (ii) plan (as defined in Section 4975(e)(1) of the Code) subject to Section 4975 of the Code or (iii) entity whose underlying assets include assets of any such employee benefit plan or plan by reason of the investment by an employee benefit plan or plan in such entity.
“Prepayment Event Date” means the date of occurrence of a Prepayment Trigger.
“Prepayment Trigger” means the occurrence of both (i) an Event of Default and (ii) unless prohibited by operation of Law, the acceleration of the maturity of the Notes in accordance with the terms of the Note Documents as a result of such Event of Default.
“Privacy Laws” means all Laws applicable to the privacy or security of individually identifiable information of any patient or individual, including without limitation HIPAA, the EU General Data Protection Regulation (EU) 2016/679 (GDPR) and equivalent Laws in other jurisdictions.
“Principal Amount” means, as of any date of determination, and without duplication, the amount equal to the sum of: (i) the original amount of the Note Commitment, plus, (ii) any Accreted Principal accrued as of such date, minus, (iii) any payment in respect of principal as provided for in Section 3.01, 3.02 or 4.02 or otherwise.
“Proceeding” means an action or proceeding brought against a Party as a defendant, for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby.
“Proceeds” means any amounts actually received by any Note Party from a Person (other than any Purchaser) as a result of any settlement or resolution of any actions, suits, proceedings, claims or disputes related to, and to the extent involving GSK Proceeds and serving as a substitute for, the GSK Proceeds pursuant to any New Arrangement, except for any such amounts (a) that are required to be paid to a Licensee under the GSK Agreement or (b) that are otherwise used to reimburse or indemnify a Licensee for costs, expenses, legal fees or other fees relating to such actions, suits, proceedings, claims or disputes.
“Product Development and Commercialization Activities” means, on a country-by-country basis, with respect to the Licensed Product, any combination of research, development, Commercialization, or like activities the purpose of which is to develop or commercialize the Licensed Product.
“Product Distributor” means any Person engaged in any Product Development and Commercialization Activities by or on behalf of the Company or any Subsidiary.
“Product-Specific Patents” has the meaning set forth in Section 8.12(a).
“Prosecute” means preparing, filing, and prosecuting patent applications and maintaining patents, including any reexaminations, reissues, oppositions, inter partes review, and interferences, and defending against any claims of invalidity or unenforceability; and “Prosecution” shall have the correlative meaning.
“Protective Advance” has the meaning set forth in Section 2.05.
“Purchaser” has the meaning set forth in the preamble hereto and includes any successors and assigns under Section 13.01(b).
“Purchaser Representative” has the meaning set forth in the preamble hereto.
“Purchaser Account” means such account of Purchaser Representative maintained at such banking institution as Purchaser Representative may specify in its discretion from time to time in writing to Issuer at least [***] prior to any Payment Date or other date on which payments are to be made to Purchaser Representative pursuant to the Note Documents.
“Purchaser Expense Amount” means the reasonable and documented fees and out-of-pocket expenses of Purchaser Representative incurred in connection with the issuance of the Notes, including legal fees and expenses and expenses incurred in connection with Purchaser Representative’s due diligence investigation, in an aggregate principal amount not to exceed $[***].
“Quarterly Interest Shortfall” has the meaning set forth in Section 3.01(c).
“Quarterly Payment Certificate” has the meaning set forth in Section 4.03.
“Register” means a record of ownership in which Issuer registers by book entry the interests (including any rights to receive payment hereunder) of Purchaser in the Notes and any assignment of any such interest, obligation or right as described in Section 5.05.
“Regulatory Agency” means a Governmental Entity with responsibility for the regulation of the research, development, marketing or sale of drugs or pharmaceuticals in any jurisdiction, including the FDA and the European Medicines Agency.
“Required Purchasers” means Purchasers having aggregate interests in the Notes the amount of which exceeds [***]% of the outstanding Notes, collectively.
“Regulatory Approval” means, with respect to the Licensed Product, any approval, registration, license or authorization by a Regulatory Agency necessary for the commercial manufacture, distribution, marketing, promotion, offer for sale, use, import, export or sale of such Licensed Product in a country or jurisdiction in the Territory.
“Regulatory Authorizations” means all approvals, clearances, notifications, authorizations, orders, exemptions, registrations, designations, certifications, licenses and Permits granted by, submitted to or filed with any Regulatory Agencies, all Marketing Authorizations with respect to the Licensed Product and all orphan drug designations.
“Representative” means, collectively, with respect to any Person, the trustees, directors, board members, members, partners, managers, officers, employees, agents, advisors or other representatives (including attorneys, accountants, consultants, scientists and financial advisors) of such Person.
“Royalty Payments” means all amounts due, payable or paid to Issuer (as assignee of the Company pursuant to the Issuer Contribution Agreement) under Section 6.5 of the GSK Agreement (for clarity, after giving effect to all GSK Royalty Reductions and deductions for withholding or similar taxes pursuant to Section 6.9 of the GSK Agreement applicable thereto, but excluding any Non-Permitted Set-Off), including all such amounts due, paid or payable on deemed Net Sales as set forth in Section 7.3(d) of the GSK Agreement.
“Royalty Purchase Agreement” means that certain Royalty Purchase Agreement, dated as of the date hereof, by and among Issuer and Purchaser Representative.
“Royalty Purchase Documents” has the meaning set forth in the Royalty Purchase Agreement.
“Royalty Reports” means, with respect to the relevant Calendar Quarter, the “Royalty Reports” (as defined in the GSK Agreement as of the date of this Agreement) provided for under Section 6.5(b) of the GSK Agreement for the period thereunder corresponding to such Calendar Quarter, together with relevant supporting documentation.
“Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism Laws imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), the U.S. Department of State, or the U.S. Department of Commerce, (b) the United Nations Security Council, (c) the European Union, (d) His Majesty’s Treasury of the United Kingdom or (e) any other relevant sanctions authority.
“Scheduled Maturity Date” means the ninth anniversary of the Closing Date.
“SEC” means the United States Securities and Exchange Commission.
“SEC Reports” means (A) the Company’s most recently filed Annual Report on Form 10-K and (B) all Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed or furnished (as applicable) by the Company following the end of the most recent fiscal year for which an Annual Report on Form 10-K has been filed, together in each case with any documents incorporated by reference therein or exhibits thereto.
“Secured Party” means the “NPA Secured Party” as defined in the Security Agreement.
“Securities Act” means the Securities Act of 1933, as amended, and the regulations promulgated thereunder.
“Security Agreement” means the Security Agreement, substantially in the form of Exhibit H hereto, between the Note Parties and Purchaser Representative, securing the Obligations of the Note Parties hereunder and the other Note Documents and, in the case of the Security Agreement, the Transaction Documents (as defined in the Royalty Purchase Agreement), as supplemented by any amendments or supplements thereto.
“Senior Officer” means (i) in the case of the Note Parties, the Chief Executive Officer, Chief Financial Officer, Treasurer, Chief Operating Officer, any Senior Vice President or Secretary and (ii) in the case of the Company, the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, any Senior Vice President, Treasurer or Secretary and, in each case, any other Person performing the roles customary for such title or succeeding to the roles of the foregoing officers.
“Servicer Termination Event” has the meaning set forth in the Issuer Contribution Agreement.
“Set-Off” means any set-off, off-set, reduction or similar deduction.
“SPV Organizational Documents” means Issuer’s Organizational Documents and the Holdings Organizational Documents, as amended or otherwise modified from time to time to the extent permitted by the Note Documents.
“Subsidiary” means, with respect to any Person, at any time, any entity of which more than fifty percent (50%) of the outstanding voting stock or other equity interest entitled ordinarily to vote in the election of the directors or other governing body (however designated) is at the time beneficially owned or controlled directly or indirectly by such Person, by one or more such entities or by such Person and one or more such entities.
“Taxes” means all present and future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments or similar fees or other charges imposed by any Governmental Entity, including any related interest, additions to tax or penalties applicable thereto.
“Tebipenem Pivoxil Hydrobromide” means the compound described on Schedule I and any pharmaceutical or biological composition containing tebipenem pivoxil hydrobromide, including any modifications or improvements thereto and any other product that directly competes with or replaces Tebipenem Pivoxil Hydrobromide that may be developed or commercialized by the Company or any of its Subsidiaries, including any products or product candidates that are being developed by the Company or any of its Subsidiaries as of the date of this Agreement.
“Territory” means, with respect to the GSK Agreement, the “GSK Territory” as defined therein (i.e., worldwide, excluding the Excluded Territory (as defined in the GSK Agreement), subject to adjustment pursuant to Section 2.11(c) of the GSK Agreement).
“Third Party” means any Person other than Issuer or its Affiliates.
“Trade Secrets” means any data or information that is not commonly known by or available to the public, and which (a) derives economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other Persons who can obtain economic value from its disclosure or use, and (b) is the subject of efforts that are reasonable under the circumstance to maintain its secrecy.
“Trademarks” means any statutory or common law trademark, service mark, trade name, logo, symbol, trade dress, domain name, corporate name or other indicator of source or origin or identifies the goods and services of one provider from another, and all applications and registrations therefor, together with all of the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications to register in connection therewith, under the Laws of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise, for the full term and all renewals thereof.
“Transaction Documents” means the Note Documents and the SPV Organizational Documents.
“Transferred Assets” has the meaning set forth in the Issuer Contribution Agreement in addition to the Contributed Assets under (and as defined in) the Equity Contribution Agreement.
“UCC” means the Uniform Commercial Code as in effect from time to time in New York; provided, that, if, with respect to any financing statement or by reason of any provisions of Applicable Law, the perfection or the effect of perfection or non-perfection of the security interest or any portion thereof granted pursuant to the Note Documents is governed by the Uniform Commercial Code as in effect in a jurisdiction of the U.S. other than New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of this Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“U.S.” means the United States of America.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 5.01(c)(ii).
“Wire Transfer Forms” has the meaning set forth in Section 4.03(a)(ii).
Section 1.02 Certain Interpretations. Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement:
(a) An accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP.
(b) Words of the masculine, feminine or neuter gender shall mean and include the correlative words of other genders.
(c) The definitions of terms shall apply equally to the singular and plural forms of the terms defined.
(d) “include,” “includes,” and “including” shall be deemed to be followed by the words “without limitation;”
(e) Unless otherwise specified, references to an agreement or other document include references to such agreement or document as from time to time amended, restated, reformed, supplemented or otherwise modified in accordance with the terms thereof (subject to any restrictions on such amendments, restatements, reformations, supplements or modifications set forth herein or in any of the other Transaction Documents) and include any annexes, exhibits and schedules attached thereto.
(f) References to any Applicable Law shall include such Applicable Law as from time to time in effect, including any amendment, modification, codification, replacement or reenactment thereof or any substitution therefor.
(g) References to a Person shall be construed to include such Person’s successors and permitted assigns (subject to any restrictions on assignment, transfer or delegation set forth herein or in any of the other Transaction Documents), and any reference to a Person in a particular capacity excludes such Person in other capacities.
(h) The word “will” shall be construed to have the same meaning and effect as the word “shall”.
(i) The words “hereof,” “herein,” “hereunder” and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision hereof, and Article, Section and Exhibit references herein are references to Articles and Sections of, and Exhibits to, this Agreement unless otherwise specified.
(j) In the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and each of the words “to” and “until” means “to but excluding”.
(k) Where any payment is to be made, any funds are to be applied or any calculation is to be made under this Agreement on a day that is not a Business Day, unless this Agreement otherwise provides, such payment shall be made, such funds shall be applied and such calculation shall be made on the succeeding Business Day, and payments shall be adjusted accordingly.
Article II
THE NOTES; PURCHASE AND SALE
Section 2.01 Purchase and Sale of Notes.
(a) On the terms and subject to the conditions set forth herein, including the conditions set forth in Section 6.01, on the Closing Date, Issuer shall issue, sell and deliver to each Purchaser, and each Purchaser severally, but not jointly, agrees to purchase from Issuer, Notes in an aggregate principal amount equal to the Note Commitment of such Purchaser as set forth on Schedule 2.01 hereto.
Section 2.02 [Reserved].
Section 2.03 Purchase Price and Delivery. On the terms and subject to the conditions set forth herein:
(a) On the Closing Date, Purchaser Representative shall pay the purchase price for the Notes by wire transfer of immediately available funds in Dollars to the account of Issuer designated in writing for such purpose, or to Issuer’s order, in an amount equal to (i) the Note Commitment less (ii) each of (A) the Purchaser Expense Amount as of the Closing Date, (B) an amount equal to 3.0% of the Note Commitment, which shall be retained by Purchaser Representative as original issue discount and (C) the amount required pursuant to Section 6.01(l) to be held in the Collection Account, which such amount shall be funded to the Collection Account on the Closing Date in accordance with the letter of direction delivered to Purchaser Representative pursuant to Section 6.01(q) (i.e., the Notes will be funded on a net basis).
Section 2.04 No Right to Reborrow or Reissue. The Notes are not revolving in nature, and any amount of the Notes repaid, prepaid, redeemed or otherwise retired may not be reborrowed, reissued or reinstated.
Section 2.05 Protective Advances. Notwithstanding any provision of this Agreement or any other Note Document to the contrary, Purchaser Representative shall have the right, but not the obligation, in its sole discretion, and Issuer hereby irrevocably authorizes Purchaser Representative, at any time that Issuer fails to do so within [***] after receipt of prior written notice from Purchaser Representative, to (a) discharge, at Issuer’s expense, any Taxes or Liens affecting any Collateral that have not been paid in violation of any Note Document or that could reasonably be expected to impair Purchaser Representative’s Lien priority in the Collateral, (b) make any other payment for the administration, servicing, maintenance, preservation or protection of the Collateral, the Collection Account or Purchaser Representative’s rights under the Note Documents or (c) make any other payment to the Licensee or any other Person that, if not paid, could reasonably be expected to result in a breach of the GSK Agreement or a Material Adverse Effect (each such advance or payment, a “Protective Advance”). Issuer irrevocably authorizes Purchaser Representative to make any Protective Advance by direct payment of the relevant amount to the applicable payee. Each Protective Advance shall constitute an Obligation, shall bear interest at the Default Rate from the date such Protective Advance is made until paid in full in cash, and shall be reimbursed to Purchaser Representative in accordance with Section 4.02 or otherwise upon demand. No Protective Advance by Purchaser Representative shall be construed as a waiver of any Default or Event of Default or of any right or remedy of Purchaser Representative.
Section 2.06 Representations and Warranties of Purchasers. Each Purchaser, by acceptance of a Note, hereby represents and warrants on the Closing Date as follows:
(a) It is (i) an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act and an “Institutional Account” as defined in FINRA Rule 4512(c) or a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act and (ii) has such knowledge, skill, sophistication and experience in business and financial matters, based on actual participation, that it is capable of evaluating the merits and risks of the purchase and sale of the Notes from Issuer and the suitability thereof for such Purchaser. It is specifically understood and agreed that such Purchaser is acquiring the Notes for the purpose of investment and not with a view towards the sale or distribution thereof within the meaning of the Securities Act and it is acquiring the Notes only for its own account and not for the account of others, or if such Purchaser is subscribing for the Notes as a fiduciary or agent for one or more investor accounts, such Purchaser has full investment discretion over such account, and the full power and authority to make the acknowledgments, representations and agreements herein on behalf of each owner of each such account.
(b) It understands that the Notes will not be registered under the Securities Act by reason of their issuance by Issuer in a transaction exempt from the registration requirements of the Securities Act and that it may have to hold the Notes indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or is exempt from registration or qualification by prospectus.
(c) It (i) is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, incorporation or formation and (ii) has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by it, will constitute valid and legally binding obligations of each Purchaser, enforceable in accordance with their terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(d) Such Purchaser further understands that the exemption from registration afforded by Section 4(a)(2) under the Securities Act depends on the satisfaction of various conditions, and that, if applicable, Section 4(a)(2) may afford the basis for sales only in limited amounts.
(e) Such Purchaser (i) is an institutional account as defined in FINRA Rule 4512(c), (ii) is a sophisticated investor, experienced in investing in equity transactions that are not registered under the Securities Act, and capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities and (iii) has exercised independent judgment in evaluating its participation in the purchase of the Notes.
(f) In making its decision to purchase the Notes such Purchaser has relied solely upon independent investigation made by such Purchaser and Issuer’s representations and warranties in Article VII and covenants contained herein and in the other Note Documents. Such Purchaser acknowledges and agrees that such Purchaser has received, and has had an adequate opportunity to review, such information as such Purchaser deems necessary in order to make an investment decision with respect to the Notes, including with respect to Issuer and the transactions contemplated hereunder. Such Purchaser represents and agrees that such Purchaser and such Purchaser’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as such Purchaser and such undersigned’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Notes and such Purchaser acknowledges that it has reviewed all disclosure documents provided by or on behalf of Issuer in connection with the Note issuance, the Note Documents and the transactions contemplated hereunder.
(g) Such Purchaser has analyzed and considered the risks of an investment in the Notes and determined that the Notes are a suitable investment for such Purchaser and that such Purchaser is able at this time and in the foreseeable future to bear the economic risk of a total loss of such Purchaser’s investment in Issuer. Such Purchaser acknowledges specifically that a possibility of total loss exists.
Article III
REPAYMENT
Section 3.01 Amortization; Scheduled Maturity Date.
(a) If not earlier repaid in full, the unpaid balance of the outstanding Principal Amount of the Notes, together with any accrued and unpaid interest, and all other Obligations then outstanding, shall be due and payable in cash in immediately available funds in Dollars to the Purchaser Account on the Scheduled Maturity Date.
(b) Other than in connection with a voluntary prepayment pursuant to Section 3.02(b) or as set forth in the Parent Guaranty, the outstanding principal balance of the Notes and any interest or premium due with respect thereto shall be repayable solely from GSK Proceeds; provided, that, such amounts may also be repayable from proceeds of Collateral and all other assets of the Note Parties in accordance with the terms of the Note Documents.
(c) If, after giving effect to the application of GSK Proceeds pursuant to Section 4.02(a) and (b) on any Payment Date, the amounts available for application pursuant to Section 4.02(b)(iii) are insufficient to pay all amounts of Fixed Interest due on the Notes for such period (the amount of such shortfall, the “Quarterly Interest Shortfall”), then any such Quarterly Interest Shortfall shall be deemed to have been paid in kind and shall increase the outstanding Principal
Amount of the Notes by an amount equal to the Quarterly Interest Shortfall for the applicable Payment Date (rounded up to the nearest whole dollar) (such increased amount, “Accreted Principal”). Accreted Principal shall thereafter bear interest in accordance with Section 4.01 and otherwise be treated as part of the outstanding Principal Amount of the Notes and the Obligations for all purposes under this Agreement and the other Note Documents. In the event of any repayment, prepayment, redemption or acceleration of the Notes, accrued and unpaid Fixed Interest on the Principal Amount so repaid, prepaid, redeemed or accelerated shall be payable on the date of such repayment, prepayment, redemption or acceleration.
Section 3.02 Mandatory and Voluntary Prepayments.
(a) Mandatory Prepayments. If any Event of Default has occurred and is continuing, then Purchaser Representative may declare the outstanding Principal Amount of the Notes as of the date of the Prepayment Event Date plus any accrued and unpaid interest thereon to be immediately due and payable hereunder, in whole but not in part, to the extent permitted by Law, together, if applicable, with (A) any additional amounts due in respect thereof pursuant to Section 3.02(c), and (B) all other Obligations then outstanding (other than contingent indemnification obligations for which no such claims have been made).
(b) Voluntary Prepayments. Issuer may, at any time upon not less than [***] prior written notice to Purchaser Representative, prepay, in whole but not in part, the Principal Amount of the Notes, plus the Applicable Prepayment Premium and any accrued and unpaid interest thereon, together, if applicable, with (A) any additional amounts due in respect thereof pursuant to Section 3.02(c), and (B) all other Obligations then outstanding (other than contingent indemnification obligations for which no such claims have been made).
(c) In connection with the prepayment in full of the Notes outstanding, any unpaid amounts in respect of such prepaid Notes not consisting of principal, Fixed Interest or the Applicable Prepayment Premium (including, any unpaid amounts for indemnification, default interest, expense reimbursement and other amounts not consisting of principal or interest) shall be immediately due and payable. All Obligations hereunder shall, other than in connection with a voluntary prepayment pursuant to Section 3.02(b) or as set forth in the Parent Guaranty, be repayable solely from GSK Proceeds or, only following the occurrence of a Prepayment Trigger, from proceeds of Collateral and all other assets of the Note Parties in accordance with the terms of the Note Documents.
Section 3.03 Increased Cost.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or obligations owing to, any Purchaser;
(ii) subject any Purchaser to any Taxes (other than (A) Covered Taxes and Other Taxes and (B) Excluded Taxes) with respect to the Notes or other obligations under the Note Documents, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Purchaser any other condition, cost or expense (other than Taxes) affecting this Agreement,
and the result of any of the foregoing shall be to increase the cost to any Purchaser of purchasing, holding or maintaining the Notes, or to reduce the amount of any sum received or receivable by any Purchaser under any Note Document, then, upon written demand of any Purchaser, Issuer shall pay to such Purchaser such additional amount or amounts as will compensate such Purchaser for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Purchaser determines that any Change in Law affecting such Purchaser or the Office of such Purchaser or such Purchaser’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on Purchaser’s capital or on the capital of Purchaser’s holding company, if any, as a consequence of Purchaser Representative’s obligations under this Agreement or its purchase, ownership or holding of the Notes to a level below that which such Purchaser or such Purchaser’s holding company could have achieved but for such Change in Law (taking into consideration such Purchaser’s policies and the policies of such Purchaser’s holding company with respect to capital adequacy), then Issuer shall pay to such Purchaser such additional amount or amounts as will compensate Purchaser Representative or Purchaser Representative’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of any Purchaser setting forth the amount or amounts necessary to compensate Purchaser or its holding company, as the case may be, as specified in clause (a) or (b) of this Section 3.03 and delivered to Issuer shall be conclusive absent manifest error. Issuer shall pay such Purchaser the amount shown as due on any such certificate within [***] after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Purchaser to demand compensation pursuant to the foregoing provisions of this Section 3.03 shall not constitute a waiver of such Purchaser’s right to demand such compensation; provided, that, Issuer shall not be required to compensate any Purchaser pursuant to the foregoing provisions of this Section 3.03 for any increased costs incurred or reductions suffered more than [***] prior to the date that Purchaser notifies Issuer of the Change in Law giving rise to such increased costs or reductions and of such Purchaser’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the [***] period referred to above shall be extended to include the period of retroactive effect thereof).
Section 3.04 Illegality. If any Purchaser determines that any Law has made it unlawful, or that any Governmental Entity has asserted that it is unlawful, for such Purchaser or its Office to purchase, own, hold or maintain any Note or charge or receive interest with respect to any Note, then, on notice thereof by such Purchaser to Issuer, such Purchaser’s obligation to issue, purchase, maintain, fund or charge interest with respect to the Notes or to purchase any Note shall be suspended until Purchaser Representative notifies Issuer that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, Issuer shall, upon demand from Purchaser Representative, repay the Notes in full, together with accrued and unpaid interest, and all other Obligations then outstanding, on the last day permitted by Applicable Law or, if earlier repayment is required by Applicable Law, immediately.
Article IV
INTEREST; EXPENSES; MAKING OF PAYMENTS
Section 4.01 Interest Rate; Collection Account; Payment of GSK Proceeds.
(a) Interest Rate. The outstanding Principal Amount of the Notes shall bear interest at a rate equal to the Fixed Interest, which shall be payable quarterly in arrears in cash on each Payment Date as provided in this Section 4.01. All interest hereunder shall be computed on the basis of a 360 day year of twelve 30-day months.
(b) Interest Generally. Interest on the Notes shall be due and payable quarterly in arrears on each Payment Date. Subject to Section 3.02 above and the priority of payments set forth in Section 4.02, all interest shall be due and payable solely from the GSK Proceeds; provided, that, such interest may also be payable from the proceeds of Collateral and all other assets of the Note Parties in accordance with the terms of the Note Documents or as set forth in the Parent Guaranty.
(c) Establishment of Collection Account; Control Agreement; Maintenance, Collection and other Fees and Expenses.
(i) On or before the Closing Date, Issuer shall (i) establish and maintain at the Account Bank a new, segregated deposit account for the benefit of Purchaser Representative on behalf of the Purchasers (such account, the “Collection Account”), (ii) cause the Collection Account to be pledged as Collateral pursuant to the Security Agreement, and (iii) execute and deliver, together with Purchaser Representative and the Account Bank, a Control Agreement with respect to the Collection Account in form and substance satisfactory to Purchaser Representative providing for Purchaser Representative’s control over the Collection Account and for the receipt and disbursement of all amounts deposited therein in accordance with this Agreement.
(ii) Issuer shall maintain at all times, by receipt of periodic cash equity contributions to the capital of Issuer from the Company pursuant to the Issuer Contribution Agreement (and not, for the avoidance of doubt, cash constituting GSK Proceeds), a minimum unrestricted (except for restrictions arising pursuant to the Control Agreement or the Transaction Documents) cash balance in the Collection Account sufficient to pay all Collection Account Fees and other fees, expenses and charges of the Account Bank anticipated to be due and payable in the next [***] shall become due and payable.
(iii) Prior to the New Account Bank Trigger Date, Issuer shall not direct the Account Bank to transfer funds held in the Collection Account except with the express prior written consent of Purchaser Representative.
(d) Licensee Instruction Letter. On or before the Closing Date, Issuer shall deliver an irrevocable written notice to GSK (such notice, a “Licensee Instruction Letter”) directing GSK to remit all payments owed to Issuer in respect of the GSK Agreement, including all GSK Proceeds, directly to the Collection Account, without deduction, withholding, set-off or counterclaim except to the extent expressly permitted under the GSK Agreement, and specifying the assignment of the GSK Agreement to Issuer. Each Licensee Instruction Letter shall be in the form attached to the Issuer Contribution Agreement or otherwise satisfactory to Purchaser Representative.
(e) Replacement Collection Account; New Account Bank Trigger Date.
(i) Prior to Payment in Full, Issuer shall have no right to terminate the Collection Account without Purchaser Representative’s prior written consent; provided, that, without Purchaser Representative’s consent to the change of location (provided such location is in the U.S.), Issuer may establish a replacement Collection Account with a replacement Account Bank if (A) such replacement Account Bank executes a Control Agreement with respect to such replacement Collection Account effective no later than the date of replacement and in form and substance satisfactory to Purchaser Representative in its sole discretion and (B) on the date of creation of the replacement Collection Account, Issuer delivers a revised Licensee Instruction Letter to GSK directing that all GSK Proceeds be remitted to such replacement Collection Account.
(ii) On or prior to the New Account Bank Trigger Date, (A) Issuer shall establish with the Account Bank a Collection Account (or otherwise modified the terms of the Collection Account in effect on the Closing Date), (B) Issuer and Purchaser Representative shall enter into a Control Agreement (or otherwise amended, modified or replaced the Control Agreement in effect on the Closing Date) with the Account Bank with respect to the Collection Account and (C) Issuer and such other applicable parties required to be party thereto shall have entered into such other cash management, paying agent, escrow arrangement or similar arrangements, in each case in form and substance satisfactory to Purchaser Representative, required by Purchaser Representative to give full effect to the Article IV hereof and any other provisions or definitions of this Agreement reasonably related thereto.
(f) Misdirected Payments. If any Note Party or any of its Affiliates receives any GSK Proceeds, Issuer shall cause such amounts to be remitted to the Collection Account within [***] after receipt, without deduction, withholding, set-off or counterclaim and prior to the payment of any Taxes. If Purchaser Representative receives any payment that does not constitute GSK Proceeds (other than any payment from a Note Party or the Company pursuant to the Note Documents), Purchaser Representative shall remit such amounts to Issuer within [***] after becoming aware of such receipt.
(g) Licensee Offsets. If the Licensee exercises any Non-Permitted Set-Off against any GSK Proceeds (such amount, an “Issuer Offset Obligation”), Issuer shall promptly (and in any event no later than [***] following the payment of the GSK Proceeds affected by such Non-Permitted Set-Off) pay, or cause to be paid, to the Collection Account the amount of such Issuer Offset Obligation. Following such payment, Issuer shall be entitled to any amounts subsequently recovered from the Licensee in respect of such Non-Permitted Set-Off.
(h) Remittances; Trust. All remittances under this Section 4.01 shall be made (i) without set-off or deduction (except as required by Applicable Law) and (ii) by wire transfer of immediately available funds to the Collection Account (if payable to Purchaser Representative) or to the account set forth in Exhibit J (if payable to Issuer), or to such other account as the relevant payee may designate in writing at least [***] prior to any such payment. Each Party shall hold any amounts received by it to which the other Party is entitled under this Section 4.01 in trust, without any right, title or interest therein.
(i) Valid Invoice Issuances. Promptly (and in any event no later than [***]) following the earlier of (i) receipt by the Company from GSK of a GSK Payment Notice that is not also received by Purchaser Representative, (ii) receipt by the Company of notice from the Purchaser’s Representative that a Commercial Milestone Event or Sales Milestone Event (each as defined in the GSK Agreement) giving rise to GSK Proceeds has been achieved, or (iii) the Company
obtaining Knowledge that a Commercial Milestone Event or Sales Milestone Event (each as defined in the GSK License Agreement) giving rise to GSK Proceeds has been achieved but that GSK has not provided a GSK Payment Notice in accordance with the terms of the GSK Agreement, the Company shall issue a Valid Invoice (as defined in the GSK License Agreement) to GSK in respect of the applicable Commercial Milestone Payment or Sales Milestone Payment (each as defined in the GSK License Agreement) pursuant to Section 6.3 or Section 6.4 of the GSK Agreement, as applicable, and provide a copy of such Valid Invoice (along with proof of delivery to GSK) to the Purchaser’s Representative. Promptly (and in any event no later than [***]) following a determination under Section 6.8(b) of the GSK Agreement that additional amounts are owed by GSK to the Company with respect to any GSK Proceeds, the Company shall issue a Valid Invoice (as defined in the GSK Agreement) to GSK in respect of such amounts, and provide a copy of such Valid Invoice (along with proof of delivery to GSK) to Purchaser Representative.
Section 4.02 Application of Payments. On each Payment Date, the GSK Proceeds received in the Collection Account during the immediately preceding Calendar Quarter, together with any other amounts then on deposit in the Collection Account that constitute proceeds of GSK Proceeds, shall be applied by the Account Bank pursuant to the Control Agreement, at the direction of Purchaser Representative, in accordance with the Quarterly Payment Certificate delivered by or on behalf of Issuer, by payment in cash in the following order of priority:
(a) first, to Meiji in satisfaction of any Meiji Payments to the extent then due and payable by the Company or Issuer during such Calendar Quarter pursuant to the Meiji License Agreement.
(b) second, to Purchaser Representative and Purchasers to be applied in the following order:
(i) to Purchaser Representative, an amount equal to any accrued and unpaid fees, expenses and indemnities then due and payable to Purchaser Representative under this Agreement or any other Note Document, including any amounts due under Section 4.05;
(ii) to the relevant Purchasers, an amount equal to all outstanding Protective Advances and all accrued and unpaid interest thereon;
(iii) to Purchasers, an amount equal to all accrued and unpaid Fixed Interest then due and payable on the outstanding Principal Amount of the Notes; provided, that, any Quarterly Interest Shortfall shall be treated as Accreted Principal in accordance with Section 3.01(c);
(iv) to Purchasers, an amount equal to all other Obligations then due and payable to Purchasers under the Note Documents;
(v) to Purchasers, to the extent the GSK Proceeds for the immediately preceding Calendar Quarter exceed the amounts applied pursuant to the foregoing clauses of this Section 4.02 (such excess amount, the “Amortization Payment”), the Amortization Payment shall be applied to repay outstanding principal on the Notes at par until the Notes are repaid in full; and
(c) third, after Payment in Full, to Issuer, any remaining available amounts subject to the Royalty Purchase Agreement and any other document or instrument effecting an assignment of any portion of the GSK Proceeds after Payment in Full.
Section 4.03 Quarterly Payment Certificates.
(a) No later than [***] (or such shorter period agreed to by Purchaser Representative) prior to each Payment Date, Issuer shall, or the Servicer on behalf of Issuer shall, deliver to Purchaser Representative a certificate (each, a “Quarterly Payment Certificate”), in form and substance reasonably satisfactory to Purchaser Representative, certified by a Senior Officer thereof, and setting forth in reasonable detail:
(i) the aggregate amount of GSK Proceeds received in the Collection Account during the immediately preceding Calendar Quarter, together with any other amounts then on deposit in the Collection Account that constitute proceeds of GSK Proceeds;
(ii) the calculation of each amount to be applied on such Payment Date pursuant to each clause of Sections 4.02(a) and Section 4.02(b) and a duly completed wire transfer form or other draft payment instructions and the wire information for each applicable recipient of such amount as is required by the Control Agreement or the Account Bank (the “Wire Transfer Forms”); and
(iii) the cash balance in the Collection Account after giving effect to the application of the payments under Section 4.02 for which such certificate relates.
(b) Purchaser Representative shall have a period of [***] following receipt of each Quarterly Payment Certificate to review such information and notify Issuer and/or the Servicer of any objection thereto (each, a “Payment Objection Notice”). If Purchaser Representative delivers a Payment Objection Notice, (i) Issuer and/or Servicer agree to negotiate in good faith with Purchaser Representative for a period of [***] and (ii) thereafter, the payment amounts to be applied on the applicable Payment Date pursuant to Section 4.02(a) shall be the amounts that Purchaser Representative determines, in its good faith business judgment, to be correct, as set forth in such Payment Objection Notice, and such Payment Objection Notice shall supersede the applicable Quarterly Payment Certificate and the Wire Transfer Forms for purposes of Purchaser Representative’s payment instructions to the Account Bank under Section 4.02. Each Payment Objection Notice shall set forth in reasonable detail Purchaser Representative’s determination of the applicable payment amounts or other correction and the basis for any variance from the Quarterly Payment Certificate and the Wire Transfer Forms.
(c) Each Quarterly Payment Certificate delivered pursuant to this Section 4.02 shall be accompanied by reasonable supporting documentation, including copies of any Royalty Reports or GSK Payment Notices received during the applicable Calendar Quarter to the extent not previously delivered to Purchaser Representative pursuant to Section 8.03(b).
(d) Notwithstanding anything to the contrary contained herein or in any other Note Document, any delivery, transmission or submission by Purchaser Representative or any Purchaser to the Account Bank of any Quarterly Payment Certificate, Payment Objection Notice, Wire Transfer Forms or related payment instruction, or any designation of, or service by, Purchaser Representative or any Purchaser as the contact for any verbal callback or other confirmation required by the Account Bank in connection therewith, shall be made solely as an accommodation to Issuer and/or the Servicer and in reliance solely on information furnished by or on behalf of
Issuer and/or the Servicer, without any duty to verify, investigate, confirm or authenticate the accuracy, completeness, validity or authorization thereof. Neither Purchaser Representative nor any Purchaser, nor any of their respective officers, employees, representatives or any other Indemnitee, shall have any liability or responsibility whatsoever, whether in contract, tort, equity, statute or otherwise, for any error, omission, inaccuracy, misstatement, unauthorized instruction, misdirection, incorrect payment, failed payment, delayed payment, overpayment, underpayment or non-receipt of funds arising out of or relating to any such certificate, notice, form, information or instruction (other than gross negligence or willful misconduct). To the fullest extent permitted by Applicable Law, Issuer, the Servicer and each other Note Party hereby irrevocably, absolutely and unconditionally waives, releases and agrees not to sue Purchaser Representative, any Purchaser or any of their respective officers, employees, representatives or any other Indemnitee for any claims, demands, actions, losses, liabilities, damages, costs or expenses, whether direct, indirect, consequential or otherwise, known or unknown, accrued or unaccrued, arising out of or relating to any such certificate, notice, form, information, instruction, related submission to the Account Bank or verbal callback or other confirmation with the Account Bank (other than gross negligence or willful misconduct); and no such delivery, transmission, submission, designation or service shall constitute any representation, warranty, certification, confirmation, adoption or approval by Purchaser Representative, any Purchaser or any such Indemnitee, and Issuer, the Servicer and each other Note Party shall remain solely responsible therefor.
Section 4.04 Interest on Late Payments. If any amount payable by Issuer to Purchaser Representative hereunder is not paid when due (whether at stated maturity, by acceleration or otherwise; it being understood that compliance with Section 3.01(c) constitutes payment of the Quarterly Interest Shortfall), interest shall accrue on any such unpaid amounts, both before and after judgment during the period from and including the applicable due date, to but excluding the day the overdue amount is paid in full, at a rate per annum equal to the Default Rate. Interest accruing under this Section 4.04 shall be payable on demand of Purchaser Representative. For the avoidance of doubt, Fixed Interest that is not paid in cash on the date due but that is added to the Principal Amount of the Notes as Accreted Principal in accordance with Section 3.01(c) shall accrue interest at the Fixed Interest from the date at which it is incorporated as Accreted Principal and shall thereafter accrue interest at the Default Rate in the event that the Principal Amount of the Notes generally bears interest at the Default Rate.
Section 4.05 Administration and Enforcement Expenses. Issuer shall on each Payment Date in accordance with Section 4.02 reimburse Purchaser Representative for all reasonable and documented out-of-pocket costs and expenses incurred by Purchaser Representative (including the reasonable fees and expenses of one outside counsel to Purchaser Representative) as a consequence of or in connection with the administration (including any amendment, restatement, amendment and restatement, supplement or other modification of the Note Documents), monitoring, protection or enforcement of the Note Documents, the Collateral or Purchaser Representative’s rights and remedies, including as a result of any Default, Event of Default, Prepayment Trigger, mandatory prepayment, restructuring or workout of the Notes.
Section 4.06 Making of Payments. Notwithstanding anything to the contrary contained herein, any Payment stated to be due hereunder or under any Note on a given day in a specified month shall be made on the next occurring Payment Date.
Section 4.07 Setoff or Counterclaim. Each payment by Issuer or any other Note Party under this Agreement or under any Note shall be made without set-off, deduction, defense, recoupment or counterclaim. Purchaser Representative shall have the right to set off any and all amounts owed by the Note Parties and/or any of their Subsidiaries under the Note Documents as provided in Section 10.03.
Article V
TAXES
Section 5.01 Taxes.
(a) Any and all payments by or on account of any obligation of any Note Party or the Company under any Note Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any applicable withholding agent is required by Applicable Law to make any withholding or deduction of Taxes in respect of any payment by or on account of any obligation of any Note Party or the Company under any Note Document (including (for the avoidance of doubt) any Taxes withheld or deducted by GSK, Issuer or any other applicable withholding agent in respect of any GSK Proceeds), then (i) the applicable withholding agent shall be entitled to make such withholding or deduction and shall timely pay directly to the relevant Governmental Entity the full amount required to be so withheld or deducted and (ii) if any such Tax withheld or deducted is a Covered Tax, the outstanding Principal Amount with respect to the applicable Notes at such time shall be increased by an amount equal to such Covered Tax plus any additional Covered Tax resulting from such increase in the Principal Amount.
(b) If any Covered Taxes are payable or paid by any Purchaser, whether or not such Covered Taxes were correctly or legally imposed or asserted by the relevant Governmental Entity, then the outstanding Principal Amount at such time shall be increased by (i) the amount of such Covered Taxes plus any additional Covered Tax resulting from such increase in the Principal Amount and (ii) the amount of all reasonable expenses arising therefrom or with respect thereto. Such Purchaser shall promptly deliver to Issuer a certificate informing Issuer of any such amounts.
(c) Status of Purchasers.
(i) Any Purchaser that is eligible for an exemption from or reduction of withholding Tax with respect to any payments made under any Note Document shall deliver to Issuer, at the time or times reasonably requested by Issuer, such properly completed and executed documentation reasonably requested by Issuer as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Purchaser, if reasonably requested by Issuer, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by Issuer as will enable Issuer to determine whether or not such Purchaser is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in clauses (A), (B) and (D) of Section 5.01(c)(ii)) shall not be required if in Purchaser’s reasonable judgment such completion, execution or submission would subject such Purchaser to any unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Purchaser.
(ii) Without limiting the generality of the foregoing:
(A) any Purchaser that is a U.S. Person shall deliver to Issuer on or prior to the date on which such Purchaser becomes a Purchaser under this Agreement (and from time to time thereafter upon the reasonable request of Issuer), two duly executed copies of IRS Form W-9 certifying that such Purchaser is exempt from U.S. federal backup withholding tax;
(B) any Foreign Purchaser shall, to the extent it is legally eligible to do so, deliver to Issuer on or about the date on which such Foreign Purchaser becomes a Purchaser under this Agreement (and from time to time thereafter upon the reasonable request of Issuer), whichever of the following is applicable:
(1) in the case of a Foreign Purchaser claiming the benefits of an income tax treaty to which the U.S. is a party, two duly executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax;
(2) two duly executed copies of IRS Form W-8ECI;
(3) in the case of a Foreign Purchaser claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit L-1 to the effect that such Foreign Purchaser is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Issuer within the meaning of Section 871(h)(3)(B) of the Code, a “controlled foreign corporation” related to Issuer as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) two duly executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or
(4) to the extent a Foreign Purchaser is not the beneficial owner, two duly executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit L-2 or Exhibit L-3, IRS Form W-9, or other certification documents from each beneficial owner, as applicable; provided, that, if the Foreign Purchaser is a partnership (and not a participating Purchaser) and one or more direct or indirect partners of such Foreign Purchaser are claiming the portfolio interest exemption, such Foreign Purchaser may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit L-4 on behalf of such direct and/or indirect partner(s);
(C) any Foreign Purchaser shall, to the extent it is legally eligible to do so, deliver to Issuer on or prior to the date on which such Foreign Purchaser becomes a Purchaser under this Agreement (and from time to time thereafter upon the reasonable request of Issuer), two duly executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, together with such supplementary documentation as may be prescribed by Applicable Law or reasonably requested by Issuer to permit Issuer to determine the withholding or deduction required to be made; and
(D) if a payment made to a Purchaser under any Note Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Purchaser were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Purchaser shall deliver to Issuer at the time or times reasonably requested by Issuer such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Issuer as may be necessary for Issuer to comply with its obligations under FATCA and to determine whether such Purchaser has complied with such Purchaser’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(iii) If any form, certification or other documentation previously delivered by any Purchaser expires or becomes obsolete or inaccurate in any respect, such Purchaser shall promptly update such form or certification or promptly notify Issuer in writing of its legal ineligibility to do so. Notwithstanding anything to the contrary, nothing in this Section 5.01(c) shall require any Purchaser to deliver any documentation that any such Purchaser is legally ineligible to provide.
Section 5.02 Receipt of Payment. Promptly after the date of any payment of Taxes by any Note Party or the Company pursuant to this Article V, Issuer shall furnish to Purchaser Representative the original or a certified copy of a receipt evidencing payment thereof or other evidence reasonably satisfactory to Purchaser Representative.
Section 5.03 Other Taxes. Issuer shall timely pay to the relevant Governmental Entity in accordance with Applicable Law any Other Taxes.
Section 5.04 Refunds. If any Purchaser determines, in its sole discretion exercised in good faith, that it has received a refund of any Covered Taxes, it shall promptly notify Issuer of the amount of any such refund (including refunds of any related penalties, interest or other charges imposed by the relevant Governmental Entity and any additional interest paid by the relevant Governmental Entity) calculated net of all out-of-pocket expenses (including Taxes) (such net amount, a “Refund Amount”). If a Refund Amount is received, the outstanding Principal Amount at such time shall be reduced by any such Refund Amount. If Purchaser is required to repay any previously refunded amount to a Governmental Entity, any such payment along with the amount of any related interest, penalties, additions thereto and related reasonable out-of-pocket expenses will increase the outstanding Principal Amount at such time. Notwithstanding anything to the contrary in this Section 5.04, in no event will any Refund Amount reduce the outstanding Principal Amount to the extent it would place Purchaser in a less favorable net after-tax position than Purchaser would have been in if the Covered Taxes giving rise to such refund had not been deducted, withheld or otherwise imposed and added to the outstanding Principal Amount. This Section 5.04 shall not be construed to require any Purchaser to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Issuer or any other Person.
Section 5.05 Registered Obligation.
(a) Issuer shall establish and maintain, at its address referred to in Section 13.03, (i) a Register in which Issuer agrees to register by book entry the interests (including any rights to receive payment hereunder) of Purchaser in the Notes, each of its obligations under this Agreement to participate in the Notes, and any assignment of any such interest, obligation or right, and (ii) accounts in the Register in accordance with its usual practice in which it shall record (1) the names and addresses of Purchaser(s) (and each change thereto pursuant to Sections 13.01 and 13.02), (2) the amount of the Notes described in clause (i) above, (3) the amount of any principal or interest due and payable or paid, and (4) any other payment received and its application to the Notes. The entries in the Register shall be conclusive, in the absence of manifest error, and Issuer and each Purchaser shall treat each person whose name is recorded in the Register as the owner of the Notes for all purposes of this Agreement, notwithstanding notice to the contrary.
(b) Upon surrender of any Note to Issuer for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within [***] thereafter, Issuer shall execute and deliver, at Issuer’s expense, one or more new Notes (as requested by the holder thereof) in exchange
therefor, in an aggregate Principal Amount equal to the unpaid Principal Amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit N. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon.
(c) Notwithstanding anything to the contrary contained in any Note Document or elsewhere, the Notes (including any Note evidencing such Notes) are registered obligations, the right, title and interest of Purchaser and its assignees in and to the Notes shall be transferable only upon notation of such transfer in the Register and no assignment thereof shall be effective until recorded therein. The parties hereto intend that the Notes will be at all times maintained in “registered form” within the meaning of Section 5f.103-1(c) of the U.S. Treasury Regulations, Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations (and any successor provisions).
Section 5.06 No Partnership. This Agreement is not intended to create a partnership, association or joint venture between or among Purchaser Representative and/or Issuer or any Subsidiary. Each Party agrees not to refer to the other as a “partner” or the relationship as a “partnership” or “joint venture.”
Section 5.07 Tax Treatment. For U.S. federal income and applicable state and local and non-U.S. income Tax purposes, each Party and its respective Affiliates shall treat (a) the Notes as indebtedness and (b) Issuer as the beneficial owner of the GSK Proceeds. Each Party and its respective Affiliates shall not take any position that is inconsistent with the foregoing sentence on any Tax return or for any other Tax purpose (including determination of any withholding responsibilities in respect of any amounts payable under any Note Document) unless, in each case, otherwise required by (i) a change in applicable Law after the date hereof or (ii) a good faith resolution of a Tax audit or other administrative or judicial Tax proceeding.
Section 5.08 Mitigation. If the outstanding Principal Amount with respect to any Notes is increased as a result of any Covered Taxes under Section 5.01, then the applicable Purchaser shall (at the request of Issuer) take any steps reasonably requested by Issuer to eliminate or reduce further Covered Taxes to be incurred in the future, provided, that, no Purchaser shall be obligated under this Section 5.08 to undertake any action that would subject such Purchaser to any unreimbursed cost or expense or that would otherwise be disadvantageous to such Purchaser. Issuer will pay all reasonable costs and expenses incurred by any Purchaser in connection with any such actions requested under this Section 5.08.
Section 5.09 Survival. Each party’s obligations under this Article V shall survive any assignment of rights by, or the replacement of, a Purchaser, and the repayment, satisfaction or discharge of all obligations under any Note Document.
Article VI
CLOSING CONDITIONS
Section 6.01 Conditions Precedent to the Purchase of the Note. The obligation of each Purchaser to purchase the Note on the Closing Date shall be subject to the fulfillment, to the sole satisfaction of Purchaser Representative, of all of the following conditions precedent in addition to the conditions specified in Section 2.01(a) and Section 2.03(a):
(a) Issuer shall have executed and delivered to Purchaser Representative the Note, dated the Closing Date.
(b) Purchaser Representative shall have received on or before the Closing Date an executed copy of an opinion of Wilmer Cutler Pickering Hale and Dorr LLP, counsel to the Note Parties and the Company, dated the Closing Date in form and substance reasonably satisfactory to Purchaser Representative.
(c) The Note Parties and the Company shall each have delivered to Purchaser Representative a certificate, dated the Closing Date, of a Senior Officer (the statements in which shall be true and correct on and as of the Closing Date): (i) attaching copies, certified by the Secretary of State of the State of Delaware as of a recent date, of such party’s certificate of incorporation or other organizational documents (together with any and all amendments thereto); (ii) attaching copies, certified by such officer as true and complete, of resolutions of the Board of Directors (or similar governing body) of such party authorizing and approving the execution, delivery and performance by such party of the Note Documents to which it is a party and the transactions contemplated herein and therein; (iii) setting forth the incumbency of the officer of such party who executed and delivered such Note Documents, including therein a signature specimen of each such officer; and (iv) attaching copies, certified by such officer as true and complete, of certificates of the appropriate Governmental Entity of the jurisdiction of formation, stating that such party was in good standing under the Laws of such jurisdiction as of the Closing Date (or a date immediately prior thereto acceptable to Purchaser Representative).
(d) This Agreement, the other Note Documents and the Royalty Purchase Agreement shall have been executed and delivered to Purchaser Representative by each party thereto (other than Purchaser Representative, if applicable), and the Note Parties shall have delivered, or caused to be delivered, such other documents as Purchaser Representative reasonably requested, in each case, in form and substance satisfactory to Purchaser Representative.
(e) The Transaction Documents shall be in full force and effect, including the appointment of an Independent Manager of Issuer and Holdings in accordance with the applicable terms herein and the SPV Organizational Documents.
(f) No event shall have occurred and be continuing that (i) constitutes a Default, Event of Default or Prepayment Trigger or (ii) could reasonably be expected to constitute a Material Adverse Effect (without giving effect to the cure period applicable to a Prepayment Trigger based thereon), in each case both at the time of, and immediately after giving effect to, the issuance and purchase of the Notes on the Closing Date.
(g) There shall not exist any action, suit, investigation or proceeding pending or threatened in any court or before an arbitrator or Governmental Entity that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
(h) All necessary governmental and third-party approvals, notices, consents and filings, including in connection with the Note, the Security Agreement, the Contribution Agreements and the other Note Documents shall have been obtained or made and shall remain in full force and effect.
(i) Issuer shall have delivered to Purchaser Representative certified copies of UCC, United States Patent and Trademark Office and United States Copyright Office, tax and judgment lien searches, or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents that name the Note Parties or the Company as debtor and that are filed in those state and county jurisdictions in which the Note Parties or the Company are organized or maintains its principal place of business and such other searches that Purchaser Representative deems necessary or appropriate, none of which encumber the Transferred Assets covered or intended to be covered by the Note Documents (other than any Permitted Liens and other Liens acceptable to Purchaser Representative).
(j) Purchaser Representative shall have received all UCC financing statements in appropriate form for filing under the UCC, and all other certificates, agreements, instruments, filings, recordings and other actions that are necessary or reasonably requested by Purchaser Representative in order to establish, protect, preserve and perfect the security interest in the assets of the Note Parties constituting Collateral as provided in the Security Agreement as a valid and perfected first priority security interest (subject to Permitted Liens and, solely with respect to the continuing first priority granted to Secured Party under the Note Documents, Permitted Liens entitled to priority under Applicable Law) with respect to such assets shall have been duly effected (or arrangements therefor satisfactory to Purchaser Representative shall have been made).
(k) Purchaser Representative shall have received all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the Patriot Act, including and the information described in Section 13.18.
(l) A portion of the initial purchase price of the Notes in a minimum aggregate amount of $[***] shall be retained in the Collection Account for purposes of supporting all Collection Account Fees and other fees, expenses and charges of the Account Bank.
(m) Purchaser Representative shall have received a certificate signed by a Senior Officer of the Note Parties certifying (i) that the conditions specified in this Section 6.01 have been satisfied, (ii) that the Note Parties (immediately after giving effect to the transactions contemplated hereby and the incurrence of Indebtedness related thereto), taken as a consolidated group, and Issuer, individually, in each case the Note Parties taken as a consolidated group, and Issuer, individually, in each case is Solvent and (iii) that Issuer does not as of the Closing Date have any Disqualified Capital Stock outstanding.
(n) Issuer shall have paid the Purchaser Expense Amount.
(o) Purchaser Representative shall have received such other approvals, opinions, documents or materials as Purchaser may reasonably request.
(p) Issuer shall have delivered to Purchaser Representative a complete IRS Form W-9 certifying its U.S. status and its exemption from U.S. federal backup withholding tax.
(q) Purchaser Representative shall have received a letter of direction signed by a Senior Officer of the Note Parties, instructing and authorizing Purchaser Representative to make the disbursements of the Notes on the Closing Date as set forth therein.
Article VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 Note Parties Representations and Warranties. Each Note Party hereby represents and warrants to Purchaser Representative as of the date of this Agreement (except for any representations and warranties which speak as to a specific date, which representations and warranties shall be made as of the date specified), as follows:
(a) Existence. Each Note Party is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware. Each Note Party has all limited liability company power and authority and all requisite licenses, permits, franchises, authorizations, consents and approvals of Governmental Entities required to (i) own or lease its assets and carry on its business as now conducted and as proposed to be conducted in connection with the transactions contemplated by the Transaction Documents and the GSK Agreement and (ii) execute, deliver and perform its obligations under the Note Documents to which it is a party, except, in each case, as could not reasonably be expected to have (x) a Material Adverse Effect or (y) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds. Each Note Party is duly qualified to transact business and is in good standing in every jurisdiction in which such qualification or good standing is required by Applicable Law (except where the failure to be so qualified or in good standing could not result in, and could not reasonably be expected to have resulted in (a) a Material Adverse Effect, or (b) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds).
(b) No Conflicts. None of the execution and delivery by any Note Party of any of the Note Documents to which it is a party, the performance by any Note Party of the obligations contemplated hereby or thereby or the consummation of the transactions contemplated hereby or thereby will: (i) contravene, conflict with, result in a breach, violation, cancellation or termination of, constitute a default (with or without notice or lapse of time, or both) under, require prepayment under, give any Person the right to exercise any remedy (including termination, cancellation or acceleration) or obtain any additional rights under, or accelerate the maturity or performance of or payment under, in any material respect, (A) any Applicable Law, (B) any judgment, order, writ, decree, permit or license of any Governmental Entity to which Holdings or any of its Subsidiaries or any of their respective assets or properties may be subject or bound, (C) any term or provision of any Contract (other than the GSK Agreement and the Meiji License Agreement) to which Holdings or any of its Subsidiaries is a party or by which Holdings or any of its Subsidiaries or any of their respective assets or properties is bound or committed, (D) any term or provision of any of their respective Organizational Documents or (E) the GSK Agreement and the Meiji License Agreement, except (x) in the case of clause (A) or (C) above where any such event could not reasonably be expected to have (1) a Material Adverse Effect, or (2) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive payments based on the GSK Proceeds and (y) in the case of clause (B) above where any such event could not reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive payments based on the GSK Proceeds; or (ii) except as provided in or contemplated by any of the Transaction Documents, result in or require the creation or imposition of any Lien on the Transferred Assets, the Patents, the Licensed Product or the GSK Proceeds.
(c) Liens. Other than Permitted Liens, no Note Party has granted, nor does there exist, any Lien on the Transferred Assets or the GSK Proceeds (other than Permitted Liens, and, solely with respect to the continuing first priority granted to Secured Party under the Note Documents, Permitted Liens entitled to priority under Applicable Law).
(d) Authorization. Each Note Party has all powers and authority to execute and deliver, and perform its obligations under, the Note Documents to which it is party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of each of the Note Documents to which such Note Party is party and the performance by such Note Party of its obligations hereunder and thereunder have been duly authorized by such Note Party. Each of the Note Documents to which each Note Party is party has been duly executed and delivered by such Note Party. Each of the Note Documents to which each Note Party is party constitutes the legal, valid and binding obligation of such Note Party, enforceable against such Note Party in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.
(e) Security Interests. Upon giving effect to the Contribution (and subject to the terms and conditions thereof) and the Issuer Contribution Agreement, (i) Issuer shall be the exclusive owner of the entire right, title (legal and equitable) and interest in, to and under the Transferred Assets, free and clear of all Liens, other than Permitted Liens; (ii) Issuer shall be entitled to be the sole recipient of all payments in respect of the GSK Proceeds; and (iii) Issuer shall own (or have a license to) all assets that were previously owned (or licensed to) the Company necessary to perform its obligations under the GSK Agreement. The GSK Proceeds constituting Collateral granted to Purchaser Representative on the Closing Date has not been pledged, sold, assigned, transferred, conveyed or granted by Issuer to any other Person, in each case, other than Permitted Liens. Upon granting by Issuer of the security interests in the GSK Proceeds to Purchaser Representative pursuant to the Security Agreement, and the completion of all actions necessary to perfect such security interests, Purchaser Representative shall acquire a first priority security interest (subject to Permitted Liens and, solely with respect to the continuing first priority granted to Secured Party under the Note Documents, Permitted Liens entitled to priority under Applicable Law) in the GSK Proceeds free and clear of all Liens, other than Permitted Liens. Issuer has not caused, and to the Knowledge of Issuer no other Person has caused, the claims and rights of Purchaser Representative created by any Note Document in and to the GSK Proceeds, to be subordinated to any creditor or any other Person.
(f) Consents. The execution and delivery by each Note Party of the Note Documents to which it is party, the performance by such Note Party of its obligations hereunder and thereunder and the consummation of any of the transactions contemplated hereunder and thereunder (including the granting of security interests in the GSK Proceeds to Purchaser Representative) do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Entity or any other Person, except for (i) the filing of any applicable notices under securities laws, (ii) the filings necessary to perfect Liens created by the Note Documents, (iii) those previously obtained and in full force and effect, (iv) consent, filings and registrations in connection with the Contribution as contemplated by the Issuer Contribution Agreement and (v) the Licensee Instruction Letters.
(g) Proceedings. Except as set forth on Schedule 7.01(g), there is no action, suit, arbitration proceeding, claim, citation, summons, subpoena, investigation or other proceeding (whether civil, criminal, administrative, regulatory, investigative or informal, and including by or before a Governmental Entity) pending or, to the Knowledge of such Note Party, threatened in
writing by or against such Note Party or any of its Subsidiaries, at law or in equity, that (i) if adversely determined, could reasonably be expected to have (A) a Material Adverse Effect, or (B) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds, or (ii) challenges or seeks to prevent or delay the consummation of any of the transactions contemplated by any of the Note Documents to which such Note Party is party.
(h) Solvency. Upon consummation of the transactions contemplated by the Note Documents and the application of the proceeds from the Note (a) the present fair saleable value of the properties and assets of, the Note Parties taken as a consolidated group, and Issuer, individually, in each case on a going concern basis will be greater than the sum of its debts, liabilities and other obligations, including contingent liabilities, (b) the present fair saleable value of the properties and assets of, the Note Parties taken as a consolidated group, and Issuer, individually, in each case on a going concern basis will not be less than the amount that would be required to pay its probable liabilities on its existing debts, liabilities and other obligations, including contingent liabilities, as they become absolute and matured, (c), the Note Parties taken as a consolidated group, and Issuer, individually, in each case will generally be able to realize upon its assets and pay its debts, liabilities and other obligations, including contingent obligations, as they become absolute and matured, (d), the Note Parties taken as a consolidated group, and Issuer, individually, in each case will not have unreasonably small capital with which to engage in its business as now conducted, (e), the Note Parties taken as a consolidated group, and Issuer, individually, in each case has not incurred, will not incur and does not have any present plans or intentions to incur debts or other obligations or liabilities beyond its ability to pay such debts or other obligations or liabilities as they become absolute and matured, (f), the Note Parties taken as a consolidated group, and Issuer, individually, in each case will not have become subject to any Insolvency Event and (g), the Note Parties taken as a consolidated group, and Issuer, individually, in each will not have been rendered insolvent within the meaning of any Applicable Law. No step has been taken by any Note Party or, to its Knowledge, any other Person to make Holdings subject to an Insolvency Event (clauses (a) through (g), collectively, “Solvent”).
(i) No Default. No Default, Event of Default or Prepayment Trigger has occurred and is continuing, and no such event will occur upon the issuance of the Notes.
(j) Taxes. Each Note Party has filed (or caused to be filed) all Tax returns and reports required by Applicable Law to have been filed by it and has paid all Taxes required to have been paid by it (including in its capacity as a withholding agent), except any such Taxes that are being contested in good faith by appropriate proceedings, diligently conducted, and for which adequate reserves have been provided in accordance with GAAP. As of the date hereof, there is no unresolved claim by a taxing authority concerning its tax liability for any period for which returns have been filed or were due, other than those contested in good faith by appropriate proceedings and with respect to which adequate reserves have been established and are being maintained in accordance with GAAP.
(k) Broker’s Fees. Except as set forth on Schedule 7.01(k), Neither the Note Parties nor the Company has taken any action that would entitle any person or entity to any commission or broker’s fee in connection with the transactions contemplated by this Agreement.
(l) Investigations. No Note Parties (a) has violated or, is in violation of, or to its Knowledge, is under investigation by a Governmental Entity with respect to, has been threatened to be charged with or been given notice of any violation of, any Applicable Law or any judgment, order, writ, decree, injunction, stipulation, consent order, permit or license granted, issued or
entered by any Governmental Entity and (b) is subject to any judgment, order, writ, decree, injunction, stipulation, consent order, permit or license granted, issued or entered by any Governmental Entity, in each case, that could reasonably be expected to have a material liability to Issuer. Issuer is in compliance with the requirements of all Applicable Laws.
(m) Intellectual Property.
(i) Patents. Schedule 7.01(m)(i) sets forth an accurate and complete list as of the Closing Date of all unexpired issued Patents and pending Patent applications owned or controlled by Issuer or the Company and, that are used in, relating to, or necessary to the Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory (collectively, the “Listed Patents”). Other than as set forth on Schedule 7.01(m)(i) there is no Patent owned or licensed by the Company, its Affiliates, the Note Parties or its Affiliates relating to the Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory. Schedule 7.01(m)(i) specifies with respect to each Listed Patent (i) the jurisdictions in which such Listed Patent is filed, pending, allowed, granted or issued, (ii) the patent number, registration number, or patent application number, as applicable, (iii) the registered owner thereof (iv) the Licensed Product to which such Listed Patent or Listed Patent application relates, (v) the licensor of each Licensed Patent (if different from registered owner), and (vi) the title of such Patent.
(ii) No Litigation. None of the Note Parties nor, the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, that there are any pending or threatened litigations, interferences, reexaminations, oppositions or like Patent Office proceedings involving any of the Patents on Schedule 7.01(m)(i) or challenging the ownership of the rights of the Company in and to the Owned Patents.
(iii) Ownership of the Patents. Company (or the Note Party indicated on Schedule 7.01(m)(i)) is the sole and exclusive owner of the entire right, title and interest in each of the Owned Patents (other than rights granted to GSK pursuant to the GSK Agreement). The Owned Patents are not subject to any encumbrance, Lien or claim of ownership by any Third Party (other than rights granted to GSK pursuant to the GSK Agreement). Company or the Note Parties have a valid license to each of their respective Licensed Patents, in each case pursuant to the terms of the applicable In-License pursuant to which Company or the applicable Note Party has in-licensed such Licensed Patent(s). Each inventor named on the Owned Patents has executed a contract assigning their entire right, title and interest in and to such Patents and the inventions embodied, described and/or claimed therein, to the owner thereof, and each such contract has been duly recorded at the relevant Patent Office (including, as applicable, the United States Patent and Trademark Office). None of the Note Parties nor the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, that (I) the Licensor is not the sole owner of the entire right, title and interest in any of the Patents scheduled beneath such Licensor’s name on Schedule 7.01(m)(i), free and clear of any encumbrances in the applicable Field (as defined in the GSK Agreement) (other than (x) any interest of the Company, Issuer or Purchaser Representative, (y) the GSK Agreement (and any encumbrances referred to therein or contemplated thereby) and (z) any encumbrances arising by operation of Law) or (II) there are any facts that would preclude the Licensor from having clear title as the sole owner to any of the Listed Patents on Schedule 7.01(m)(i) in the applicable Field and Territory (other than as described in clauses (x), (y) and (z) above).
(iv) Validity and Enforceability. Each of the issued Owned Patents and claims therein is valid, enforceable and subsisting. Neither the Company nor the Note Parties, and, to the Knowledge of the Note Parties, no licensor with respect to any Licensed Patent, has received any opinion of counsel that any of the Listed Patents or claims therein is invalid or unenforceable. No issued Listed Patents have lapsed, expired or otherwise been terminated and no Licensed Patent application by the Company or any of the Note Parties or, with respect to any Licensed Patent for which a Patent has not yet issued and to the Knowledge of the Company and the Note Parties, the applicant therefor, have lapsed, expired, been abandoned or otherwise been terminated, other than by operation of law. Except, for the avoidance of doubt, as set forth on Schedule 7.01(m)(iv), none of the Note Parties nor the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, that any of the issued Patents on Schedule 7.01(m)(i) or claims therein are unenforceable or invalid.
To the Knowledge of the Note Parties and the Company, there is at least one valid claim in the Listed Patents in each of the United States, the United Kingdom, France, Germany, Italy and Spain that would be Infringed by the Company’s, Note Parties’ or any Subsidiary’s or GSK’s Commercialization of the Licensed Products but for the Company’s the Note Parties’ and the Subsidiaries’ rights in such Patents.
The Company and the Note Parties and, to the Knowledge of the Note Parties, the applicable licensor with respect to any Licensed Patent, has complied with its duty of candor to each applicable Patent Office with respect to the Listed Patents. To the Knowledge of the Note Parties and the Company, each individual associated with the filing and prosecution of the Listed Patents has complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office.
(i) Inventorship. Each of the Owned Patents correctly identifies each and every inventor of the claims thereof as determined in accordance with the Laws of the jurisdiction in which such Patent was issued or is pending. None of the Note Parties nor the Company:
(1) has received any notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any notice from any other Person, or
(3) otherwise has any Knowledge, that there is a Person who is or claims to be an inventor under any of the Listed Patents on Schedule 7.01(m)(i) who is not a named inventor thereof.
(4) To the Knowledge of the Company and the Note Parties, none of the conception, development and reduction to practice of the inventions claimed in the Listed Patents has constituted or involved the misappropriation of Trade Secrets or other “IP Rights” (used in this instance as defined herein but without regard to whether such “IP Rights” relate to the Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory) or property of any Third Party.
(ii) No Challenges. None of the Note Parties nor the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, of any claim by any Person asserting that the manufacture, importation, sale, offer for sale or use of any of the Licensed Products infringes any Person’s patents or other intellectual property rights. None of the Note Parties nor the Company has obtained any written non-infringement, freedom to operate, clearance or invalidity opinions from outside counsel regarding the infringement or non-infringement of any Person’s unexpired patent rights by any of the Licensed Products.
(iii) No Infringement. None of the Note Parties nor the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, that there is a Person who is engaging in or has engaged in any activity that infringes upon any of the Listed Patents.
There is no pending or, to the Knowledge of the Company and the Note Parties, threatened, opposition, interference, reexamination, injunction, claim, suit, action, citation, summons, subpoena, hearing, inquiry, investigation (by the International Trade Commission or otherwise), complaint, arbitration, mediation, demand, decree or other dispute, disagreement, proceeding, claim or inter partes review (in each case, other than standard patent prosecution before a Patent Office) (collectively, “Disputes”) challenging the legality, validity, enforceability or ownership of any of the Owned Patents. To the Knowledge of the Company and the Note Parties, there are no Disputes by or with any Third Party against the Company or any Note Party involving the Listed Patents. The Owned Patents set forth on Schedule 7.01(m)(i) are not subject to any outstanding injunction, judgment, order, decree, ruling, change, settlement or other disposition of a Dispute. To the Knowledge of the Company and the Note Parties, no Third Party is Infringing any of the issued Listed Patents. Neither the Company nor any Note Party has put any Third Party on notice of any Infringement of any of the issued Listed Patents.
(iv) Infringement Third Party Intellectual Property. To the Knowledge of the Company and the Note Parties, no Third Party’s Patent would be Infringed, limit or prohibit in any material respect Product Development and Commercialization Activities with respect to any Licensed Product. Neither the Company nor the Note Parties have received any notice of any claim by any Third Party asserting that Product Development and Commercialization Activities with respect to any Licensed Product Infringes such Third Party’s Patents. To the Knowledge of the Company and the Note Parties, there are no pending, published patent applications owned by any Third Party, which the Company or the Note Parties do not have the right to use, which if issued, would limit or prohibit in any material respect Product Development and Commercialization Activities by or on behalf of the Company or the Note Parties or Commercialization by GSK with respect to any Licensed Product. To the Knowledge of the Note Parties and the Company, and except as separately disclosed to Purchaser Representative, there is no pending or threatened (in writing) claims that the Commercialization (as defined in the GSK Agreement) of the Licensed Product as currently contemplated Infringes on any Patents or other Intellectual Property rights of any other Person or constitutes misappropriation of any other Person’s Trade Secrets.
(v) Maintenance, etc. There are no unpaid maintenance fees, annuities or other like payments with respect to the Owned Patents. None of the Note Parties nor the Company has received any written notice from Licensee or any other Person to the effect that, and none of the Note Parties nor the Company otherwise has any Knowledge that, Licensee has not paid, or caused to be paid, all required maintenance fees and like payments with respect to the issued Listed Patents on Schedule 7.01(m)(i). None of the Note Parties nor the Company, has received any written notice from any Licensee or its Affiliates to the effect that Licensee believes, or that any other Person has asserted, that any of the Listed Patents on Schedule 7.01(m)(i) have lapsed, expired or otherwise been terminated. To the Knowledge of the Company and the Note Parties, each individual associated with the filing and prosecution of the Listed Patents has complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office, including any duty to disclose to any Patent Office all information known by such individual to be material to patentability of each such Patent, in those jurisdictions where such duties exist. Neither the Company nor any Note Party has filed any disclaimer, other than a terminal disclaimer, or made or permitted any other voluntary reduction in the scope of any of its Owned Patents post issuance.
(vi) Trademarks. Neither the Company nor any Note Party has any owned or exclusively in-licensed Trademarks that are necessary or useful in the development, manufacture or commercialization of Tebipenem Pivoxil Hydrobromide or any Licensed Product in the Field (as defined in the GSK Agreement) in the Territory.
(n) Lending. None of the Note Parties are engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or carrying margin stock, and no portion of the Notes shall be used by the Note Parties for a purpose that violates Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time.
(o) Margin Stock. Issuer is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of the Notes, not more than [***]% of the value of the assets, subject to the provisions of Section 8.01 or Section 8.05 or subject to any restriction contained in any agreement or instrument between Issuer and Purchaser Representative or any Affiliate of Purchaser Representative relating to Indebtedness and within the scope of Section 9.05(e) will be margin stock.
(p) Private Placement. Neither Issuer nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy the Notes or any similar securities from, or otherwise approached or negotiated in respect thereof with, any Person other than Purchaser Representative, which has been offered the Notes at a private sale for investment. Neither Issuer nor anyone acting on its behalf has, with respect to the Notes, engaged in any form of “general solicitation or general advertising,” as defined under Rule 502(c) of the Securities Act. Issuer has provided Purchaser Representative an opportunity to discuss with Issuer’s and the Company’s management Issuer’s and the Company’s business, management, financial affairs and the terms and conditions of the offering of the Notes. Neither Issuer nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of section 5 of the Securities Act or to the registration requirements of any securities or blue sky Laws of any applicable jurisdiction, including the jurisdiction that governs Issuer’s or the Company’s internal affairs.
(q) GSK Agreement.
(i) After giving effect to the Contribution, the representations and warranties set forth in Section 7.02(o) are true and correct with respect to Issuer and the Note Parties, the GSK Agreement, the Transferred Assets and the GSK Proceeds, mutatis mutandis, as if references therein to the Company were references to Issuer or the applicable Note Party, references to Material Contracts included the GSK Agreement and Meiji License Agreement to the extent applicable, and references to the GSK Proceeds applied to the rights and assets contributed or otherwise transferred to Issuer pursuant to the Contribution.
(r) Material Contracts.
(i) As of the Closing Date, Issuer is not a party to any Material Contract (other than the Transaction Documents and, after giving effect to the Contribution thereof under the Contribution Agreement, the GSK Agreement and the Meiji License Agreement). The Note Parties have provided to Purchaser Representative true, correct and complete copies of (A) all Royalty Reports, (B) all notices and, to the Knowledge of each Note Party, correspondence, delivered to the Company or any Note Party by GSK or by the Company or any Note Party to GSK pursuant to, or relating to, the GSK Agreement, and (C) all notices and, to the Knowledge of each Note Party, correspondence delivered to the Company or any Note Party by Meiji or by the Company or any Note Party to Meiji pursuant to, or relating to, the Meiji License Agreement, in each case of clauses (B) and (C) that could reasonably be expected to have an adverse effect, in any material
respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds.
(ii) Neither the Company nor any Note Party nor, to the Knowledge of any Note Party, any Material Contract Counterparty, is in breach or default of any Material Contract and no circumstances or grounds exist that would, upon the giving of notice, the passage of time or both, give rise (A) to a claim by the Company, any Note Party or any Material Contract Counterparty of a breach of any Material Contract, or (B) to a right of rescission, termination (excluding the mere existence of GSK’s right to terminate the GSK Agreement pursuant to Section 11.2 of the GSK Agreement), revision, or Set-Off, by any Person, in, to or under any Material Contract. Neither the Company nor any Note Party has received from, or delivered to, any Material Contract Counterparty, any notice alleging a breach or default under any Material Contract, which breach or default has not been cured as of the date hereof. Neither the Company nor any Note Party has (1) given notice to a Material Contract Counterparty of the termination of any Material Contract (whether in whole or in part) or any notice to a Material Contract Counterparty expressing any intention to terminate any Material Contract, and neither the Company nor any Note Party has received from any Material Contract Counterparty any notice of termination of any Material Contract, whether in whole or in part, or any notice expressing any intention to terminate any Material Contract. To the Knowledge of the Note Parties, there are no facts, circumstances or events that would reasonably be expected to result in the termination of the Material Contract in accordance with its terms.
(iii) Each Material Contract is a valid and binding obligation of the Company or the applicable Note Party that is party thereto and, to the Knowledge of the Note Parties, of the applicable Material Contract Counterparty, enforceable against each of the Company or such Note Party, as applicable, and, to the Knowledge of the Note Parties, each applicable Material Contract Counterparty in accordance with its terms, except as may be limited by general principles of equity (regardless of whether considered in a proceeding at law or in equity) and by applicable bankruptcy, insolvency, moratorium and other similar laws of general application relating to or affecting creditors’ rights generally. Neither the Company nor any Note Party has received any notice from any Material Contract Counterparty or any other Person challenging the validity or enforceability of any Material Contract, including, with respect to the GSK Agreement, the obligation of GSK to pay any amounts constituting GSK Proceeds thereunder. Neither the Company nor any Note Party, nor to the Knowledge of the Note Parties any other Person, has delivered or intends to deliver any notice to the Company, any Note Party or any Material Contract Counterparty challenging the validity or enforceability of any Material Contract, including, with respect to the GSK Agreement, the obligation of GSKto pay any amounts constituting GSK Proceeds under the GSK Agreement.
(iv) Neither the Company nor any Note Party has granted any material written waiver or, to the Knowledge of the Note Parties, any other material waiver, under any Material Contract, or released any Material Contract Counterparty, in whole or in part, from any of its material obligations under any Material Contract, except, in each case, to the extent set forth in the applicable Material Contract.
(v) There are no settlements, covenants not to sue, consents, judgments, orders or similar obligations which (A) restrict the rights of the Company, any Note Party or GSK from using any Intellectual Property relating to the research, development, manufacture, production, use or other Commercialization of the Licensed Products (in order to accommodate any Intellectual Property of any Third Party or otherwise), or (B) permit any Third Party (other than GSK pursuant to the GSK Agreement) to use the IP Rights.
(vi) The security interests granted by Issuer pursuant to the Security Agreement in its rights in the Material Contracts are not prohibited by the terms of such Material Contracts after giving effect to applicable law.
(vii) The Company and each applicable Note Party have made all payments to the respective Material Contract Counterparty due, owing and required under each Material Contract as of the date hereof, other than the Company’s obligation under Section 4.1(a)(ii) of the GSK Agreement to make a payment to GSK for GSK’s [***] related to the development of Tebipenem Pivoxil Hydrobromide. The Company has received from GSK all amounts owed to the Company under the GSK Agreement prior to the date hereof and, as of the Closing Date, no payments are past due and owing by GSK to the Company pursuant to the GSK Agreement related to or involving any Licensed Product. The amount of the “Commercial Milestone Payment” (as defined in the GSK Agreement) for the “First Commercial Sale Milestone” (as defined in the GSK Agreement), after taking into account the reductions with respect thereto set forth in Section 6.3 of the GSK Agreement, is $[***].
(viii) Neither the Company nor any Note Party has consented to any assignment by any Material Contract Counterparty of any of its rights or obligations under any Material Contract, and, to the Knowledge of the Note Parties, no Material Contract Counterparty has assigned any Material Contract or any of its rights or obligations thereunder to any Person. Except as contemplated by the Transaction Documents or the Royalty Purchase Agreement, neither the Company nor any Note Party has assigned, in whole or in part, or granted any Lien upon or security interest with respect to, any Material Contract, the Transferred Assets, the Collateral or the GSK Proceeds.
(ix) Neither the Company nor any Note Party has notified any Person of any claims for indemnification under any Material Contract, nor has the Company or any Note Party received any claims for indemnification under any Material Contract. Except as set forth on Schedule 7.01(r)(ix), neither the Company nor any Note Party has exercised any review or audit rights pursuant to any Material Contract, including the GSK Agreement.
(x) To the Knowledge of the Note Parties, GSK has not granted, and the Company has not received any notice that GSK has granted, a sublicense to any Person.
(xi) Except as provided in the GSK Agreement (including Section 6.5(c) of the GSK Agreement as set forth below) or the applicable Material Contract, neither the Company nor any Note Party is a party to any agreement providing for or permitting any sharing of or providing for or permitting any Royalty Reduction, or permitting any Set-Off against the GSK Proceeds. GSK has not exercised, and, to the Knowledge of the Company, GSK has not had the right to exercise, and no event or condition exists that, upon notice or passage of time, or both, would permit GSK to exercise, any GSK Royalty Reduction, Royalty Reduction or Set-Off against the GSK Proceeds or any other amounts payable by GSK under the GSK Agreement. To the Knowledge of the Note Parties, there are no Third Party Patents that would provide a basis for a GSK Royalty Reduction or Royalty Reduction. The [***] percent ([***]%) reduction to royalty rates in Section 6.5(c) of the GSK Agreement applies with respect to a given “Product” (as defined in the GSK Agreement) in a given country in the Territory only if both of the following conditions are true at the applicable point during the applicable “Royalty Term” (as defined in the GSK Agreement): (i) such Product is not covered by a “Valid Claim” (as defined in the GSK Agreement) of any “Spero Patent” (as defined in the GSK Agreement) in such country; and (ii) the “Regulatory Exclusivity Period” (as defined in the GSK Agreement), if any, for such Product in such country has expired. There are no
compulsory licenses granted or, to the Knowledge of the Note Parties, threatened to be granted, with respect to the IP Rights.
(xii) To the Knowledge of the Note Parties, no step has been taken or is intended by any Material Contract Counterparty, or any other Person to make any Material Contract Counterparty subject to any bankruptcy, insolvency, liquidation, dissolution or reorganization proceeding.
(xiii) Other than the Material Contracts, there are no Contracts between the Company, Issuer or any of their respective Affiliates, on the one hand, and any Material Contract Counterparty, on the other hand, that (A) relate to the Commercialization of any Licensed Product or (B) could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Note Party has (1) received any written notice of any dispute from any Material Contract Counterparty for resolution pursuant to any Material Contract or (2) given any written notice of any dispute to a Material Contract Counterparty for resolution pursuant to any Material Contract, in each case of clauses (1) and (2) that could reasonably be expected to adversely affect in any material respect the value of the GSK Proceeds.
(s) Capital Stock. No Capital Stock has been issued by Issuer other than the Capital Stock issued to Holdings that is subject to the pledge to Purchaser Representative under the Security Agreement.
(t) Office of Each Note Party. The chief place of business, the chief executive office and each office where Issuer keeps its records regarding the GSK Proceeds are, as of the date hereof, each located at 675 Massachusetts Avenue, 14th Floor, Cambridge, Massachusetts 02139.
(u) UCC Representations. No Note Party (or any predecessor by merger or otherwise) has, within the five-year period preceding the date hereof, had a name that differs from its name as of the date hereof.
(v) Data Privacy. To the extent that any Note Party has access to any Personal Information (as defined under Applicable Law), the Note Parties are in material compliance with all applicable Privacy Laws and maintains information security processes that (a) include safeguards for the security, privacy, confidentiality and integrity of transactions and confidential or proprietary data, (b) are designed to protect against unauthorized access to the systems and data of the Note Parties and (c) have been in compliance with all applicable Privacy Laws in all material respects. No Note Party has received written notice of any claim that it has suffered a breach of Personal Information as defined under Applicable Law, except to the extent any such breach could not be reasonably likely, either individually or in the aggregate, to have a Material Adverse Effect.
(w) ERISA Compliance. Except as could not reasonably be expected to have a Material Adverse Effect: (i) each employee benefit plan (as defined in Section 3(3) of ERISA), if any, maintained or contributed to by any Note Party is in compliance with the applicable provisions of ERISA, the Code and other Applicable Laws; (ii) there are no pending or, to the Knowledge of the Note Parties, threatened claims, actions or lawsuits, or action by any Governmental Entity, with respect to any such plan that could reasonably be expected to have a Material Adverse Effect; and (iii) no prohibited transaction or violation of the fiduciary responsibility rules with respect to any such plan has occurred that has had or could reasonably be expected to have a Material Adverse Effect.
(x) Sanctions; Anti-Corruption Laws.
(i) No Note Party nor any director, officer, employee nor, to the Knowledge of any Note Party, any agent, Affiliate or Representative thereof, is an individual or entity that is, or is owned or controlled by one or more individuals or entities that are (A) currently the subject or target of any Sanctions, (B) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets, or any similar list enforced by any other relevant Sanctions authority or (C) located, organized or resident in a Designated Jurisdiction. Each Note Party has conducted its business in compliance with all applicable Sanctions and has instituted and maintained policies and procedures designed to promote and achieve compliance with such Sanctions.
(ii) Each Note Party and its directors, officers, employees and, to the Knowledge of Issuer, agents, Affiliates and Representatives have conducted their business in compliance with Anti-Corruption Laws and have instituted and maintained policies and procedures reasonably designed to promote and achieve compliance with such Laws. No Note Party nor any director, officer, employee nor, to the Knowledge of such Note Party, any agent, Affiliate or Representative thereof has, directly or indirectly, made, offered, promised or authorized any payment or provision of anything of value to or for the benefit of any “foreign official” (as such term is defined in the FCPA) for the purpose of influencing any official act or decision or securing any improper advantage.
(iii) To the extent applicable, each Note Party is in compliance with the requirements of the Patriot Act.
(y) Disclosure. No report, financial statement, certificate or other information furnished (whether written or oral) by or on behalf of any Note Party to Purchaser Representative in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Note Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any fact necessary to make the statements therein, when taken as a whole and in the light of the circumstances under which they were made, not misleading in any material respect; provided, that, with respect to financial projections, estimates, budgets or other forward-looking information, each Note Party represents only that such information was prepared in good faith based upon assumptions believed by such Note Party to be reasonable at the time such information was delivered to Purchaser Representative.
(z) Sufficiency of Collateral. The Collateral comprises all material rights and assets relating to the Licensed Products, now owned or hereafter acquired, that are owned by Issuer.
(aa) Affected Financial Institution. Issuer is not an Affected Financial Institution.
Section 7.02 Note Parties’ Representations and Warranties as to the Company, Etc. Each Note Party hereby represents and warrants to Purchaser Representative as of the date of this Agreement (except for any representations and warranties which speak as to a specific date, which representations and warranties shall be made as of the date specified), as follows:
(a) [Reserved.]
(b) Existence. The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and has all powers and authority, and all
requisite licenses, permits, franchises, authorizations, consents and approvals of all Governmental Entities required to own or lease its assets and conduct its business as now conducted, except, in each case, as could not reasonably be expected to have (i) a Material Adverse Effect or (ii) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds. The Company is duly qualified to transact business and is in good standing in every jurisdiction in which such qualification or good standing is required by Applicable Law (except where the failure to be so qualified or in good standing would not result in, and could not reasonably be expected to have (a) a Material Adverse Effect, or (b) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds).
(c) No Conflicts. None of the execution and delivery by the Company of any of the Transaction Documents to which the Company is party, the performance by the Company of the obligations contemplated hereby or thereby or the consummation of the transactions contemplated hereby or thereby will: (i) contravene, conflict with, result in a breach, violation, cancellation or termination of, constitute a default (with or without notice or lapse of time, or both) under, require prepayment under, give any Person the right to exercise any remedy (including termination, cancellation or acceleration) or obtain any additional rights under, or accelerate the maturity or performance of or payment under, in any respect, (A) any Applicable Law, (B) any judgment, order, writ, decree, permit or license of any Governmental Entity to which the Company or any of its Subsidiaries or any of their respective assets or properties may be subject or bound, (C) any term or provision of any Contract (other than the GSK Agreement and the Meiji License Agreement) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective assets or properties is bound or committed, (D) any term or provision of any of the organizational documents of the Company or any of its Subsidiaries or (E) the GSK Agreement and the Meiji License Agreement, except (x) in the case of clause (A) or (C) above where any such event could not reasonably be expected to have (1) a Material Adverse Effect, or (2) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive payments based on the GSK Proceeds and (y) in the case of clause (B) above where any such event could not reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive payments based on the GSK Proceeds; or (ii) except as provided in or contemplated by any of the Transaction Documents, result in or require the creation or imposition of any Lien on the Transferred Assets, the Patents, the Licensed Product or the GSK Proceeds.
(d) Liens. Except pursuant to, or as contemplated by, the Transaction Documents, the Company has not granted, nor does there exist, any Lien on the Transferred Assets, the Patents or the GSK Proceeds.
(e) Authorization. The Company has all powers and authority to execute and deliver, and perform its obligations under, the Transaction Documents to which it is party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of each of the Transaction Documents to which the Company is party and the performance by the Company of its obligations hereunder and thereunder have been duly authorized by the Company. Each of the Transaction Documents to which the Company is party has been duly executed and delivered by the Company. Each of the Transaction Documents to which the Company is party constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.
(f) Consents. The execution and delivery by the Company of the Transaction Documents to which the Company is party, the performance by the Company of its obligations hereunder and thereunder and the consummation of any of the transactions contemplated hereunder and thereunder (including granting of security interests in the GSK Proceeds to Purchaser Representative) do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Entity or any other Person, except for (i) the filing of any applicable notices under securities laws, (ii) the filings necessary to perfect Liens created by the Note Documents, (iii) those previously obtained and in full force and effect, (iv) consents, filings and registrations in connection with the transactions contemplated by the Contribution Agreements (including the Contribution as contemplated by the Issuer Contribution Agreement) and (v) the Licensee Instruction Letters.
(g) Proceedings. Except as set forth on Schedule 7.02(g), there is no action, suit, arbitration proceeding, claim, citation, summons, subpoena, investigation or other proceeding (whether civil, criminal, administrative, regulatory, investigative or informal, and including by or before a Governmental Entity) pending or, to the Knowledge of the Company, threatened in writing by or against the Company or any of its Subsidiaries, at law or in equity, that (i) if adversely determined, could reasonably be expected to have (A) a Material Adverse Effect, or (B) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds, or (ii) challenges or seeks to prevent or delay the consummation of any of the transactions contemplated by any of the Transaction Documents to which the Company is party.
(h) Solvency. Upon consummation of the transactions contemplated by the Transaction Documents and the application of the proceeds from the Note (a) the present fair saleable value of the Company’s properties and assets will be greater than the sum of its debts, liabilities and other obligations, including contingent liabilities, (b) the present fair saleable value of the properties and assets of the Company and its Subsidiaries, taken as a whole, will not be less than the amount that would be required to pay its probable liabilities on its existing debts, liabilities and other obligations, including contingent liabilities, as they become absolute and matured, (c) the Company will be generally able to realize upon its assets and pay its debts, liabilities and other obligations, including contingent obligations, as they become absolute and matured, (d) the Company will not have unreasonably small capital with which to engage in its business as now conducted, (e) the Company has not incurred, will not incur and does not have any present plans or intentions to incur debts or other obligations or liabilities beyond its ability to pay such debts or other obligations or liabilities as they become absolute and matured, (f) the Company will not have become subject to any Insolvency Event and (g) the Company will not have been rendered insolvent within the meaning of any Applicable Law. No step has been taken by the Company or, to its Knowledge, any other Person to make the Company subject to an Insolvency Event.
(i) [reserved].
(j) Taxes. The Company has timely filed (or caused to be filed) all Tax returns and reports required by Applicable Law to have been filed by it and has paid all Taxes required to be paid by it (including in its capacity as a withholding agent), except any such Taxes that are being contested in good faith by appropriate proceedings, diligently conducted, and for which adequate reserves in accordance with GAAP or where any such failure to file or pay could not reasonably be expected to have, individually or in the aggregate, (a) a Material Adverse Effect, or (b) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds
or the right of Purchaser Representative to receive the GSK Proceeds. None of the payments received by the Company or Issuer in respect of the GSK Proceeds has been, and under current Law, none of such payments to be received will be, subject to any withholding Tax or Other Tax and, except for claiming benefits as a qualified resident under the income tax treaty between the United States and United Kingdom, neither the Company nor Issuer was ever required or requested to establish any entitlement to treaty benefits in order to avoid or minimize any such withholdings or deductions. GSK Proceeds paid to the Company and Issuer have qualified for benefits under the income tax treaty between the United States and United Kingdom. Since formation, Issuer has been treated as an entity separate from its owner for U.S. federal income tax purposes.
(k) Broker’s Fees. Except as disclosed on Schedule 7.02(k), the Company has not taken any action that would entitle any person or entity to any commission or broker’s fee in connection with the transactions contemplated by this Agreement.
(l) Investigations. None of the Company or any of its Subsidiaries (a) has violated or is in violation of, or, to the Knowledge of the Company, is under investigation by a Governmental Entity with respect to or has been threatened to be charged with or been given notice of any violation of, any Applicable Law or any judgment, order, writ, decree, injunction, stipulation, consent order, permit or license granted, issued or entered by any Governmental Entity or (b) is subject to any judgment, order, writ, decree, injunction, stipulation, consent order, permit or license granted, issued or entered by any Governmental Entity, in each case of (a) and (b), that could reasonably be expected to result in (i) a Material Adverse Effect, or (ii) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the payments based on GSK Proceeds. Each of the Company and any Subsidiary of the Company is in compliance with the requirements of all Applicable Laws, a breach of any of which could reasonably be expected to have a Material Adverse Effect.
(m) Intellectual Property.
(i) Patents. Schedule 7.01(m)(i) sets forth an accurate and complete list as of the Closing Date of all Listed Patents. Other than as set forth on Schedule 7.01(m)(i) there is no Patent owned or licensed by the Company, its Affiliates, the Note Parties or its Affiliates relating to the Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory. Schedule 7.01(m)(i) specifies with respect to each Listed Patent (i) the jurisdictions in which such Listed Patent is filed, pending, allowed, granted or issued, (ii) the patent number, registration number, or patent application number, as applicable, (iii) the registered owner thereof (iv) the Licensed Product to which such Listed Patent or Listed Patent application relates, (v) the licensor of each Licensed Patent (if different from registered owner), and (vi) the title of such Patent.
(ii) No Litigation. None of the Note Parties nor, the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, that there are any pending or threatened litigations, interferences, reexaminations, oppositions or like Patent Office proceedings involving any of the Patents on Schedule 7.01(m)(i) or challenging the ownership of the rights of the Company in and to the Owned Patents.
(iii) Ownership of the Patents. Company (or the Note Party indicated on Schedule 7.01(m)(i)) is the sole and exclusive owner of the entire right, title and interest in each of the Owned Patents (other than rights granted to GSK pursuant to the GSK Agreement). The Owned Patents are not subject to any encumbrance, Lien or claim of ownership by any Third Party (other than rights granted to GSK pursuant to the GSK Agreement). Company or the Note Parties have a valid license to each of their respective Licensed Patents, in each case pursuant to the terms of the applicable In-License pursuant to which Company or the applicable Note Party has in-licensed such Licensed Patent(s). Each inventor named on the Owned Patents has executed a contract assigning their entire right, title and interest in and to such Patents and the inventions embodied, described and/or claimed therein, to the owner thereof, and each such contract has been duly recorded at the relevant Patent Office (including, as applicable, the United States Patent and Trademark Office). None of the Note Parties nor the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, that (I) the Licensor is not the sole owner of the entire right, title and interest in any of the Patents scheduled beneath such Licensor’s name on Schedule 7.01(m)(i), free and clear of any encumbrances in the applicable Field (as defined in the GSK Agreement) (other than (x) any interest of the Company, Issuer or the Purchaser, (y) the GSK Agreement (and any encumbrances referred to therein or contemplated thereby) and (z) any encumbrances arising by operation of Law) or (II) there are any facts that would preclude the Licensor from having clear title as the sole owner to any of the Listed Patents on Schedule 7.01(m)(i) in the applicable Field and Territory (other than as described in clauses (x), (y) and (z) above).
(iv) Validity and Enforceability. Each of the issued Owned Patents and claims therein is valid, enforceable and subsisting. Neither the Company nor the Note Parties, and, to the Knowledge of the Note Parties, no licensor with respect to any Listed Patent, has received any opinion of counsel that any of the Listed Patents or claims therein is invalid or unenforceable. No issued Listed Patents have lapsed, expired or otherwise been terminated and no Listed Patent application by the Company or any of the Note Parties or,
with respect to any Licensed Patent for which a Patent has not yet issued and to the Knowledge of the Company and the Note Parties, the applicant therefor, have lapsed, expired, been abandoned or otherwise been terminated, other than by operation of law. Except, for the avoidance of doubt, as set forth on Schedule 7.01(m)(iv), none of the Note Parties nor the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, that any of the issued Patents on Schedule 7.01(m)(i) or claims therein are unenforceable or invalid.
To the Knowledge of the Note Parties and the Company, there is at least one valid claim in the Listed Patents in each of the United States, the United Kingdom, France, Germany, Italy and Spain that would be Infringed by the Company’s, Note Parties’ or any Subsidiary’s or GSK’s Commercialization of the Licensed Products but for the Company’s the Note Parties’ and the Subsidiaries’ rights in such Patents.
The Company and the Note Parties and, to the Knowledge of the Note Parties, the applicable licensor with respect to any Licensed Patent, has complied with its duty of candor to each applicable Patent Office with respect to the Listed Patents. To the Knowledge of the Note Parties and the Company, each individual associated with the filing and prosecution of the Listed Patents has complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office.
(i) Inventorship. Each of the Owned Patents correctly identifies each and every inventor of the claims thereof as determined in accordance with the Laws of the jurisdiction in which such Patent was issued or is pending. None of the Note Parties nor the Company:
(1) has received any notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any notice from any other Person, or
(3) otherwise has any Knowledge, that there is a Person who is or claims to be an inventor under any of the Listed Patents on Schedule 7.01(m)(i) who is not a named inventor thereof.
To the Knowledge of the Company and the Note Parties, none of the conception, development and reduction to practice of the inventions claimed in the Listed Patents has constituted or involved the misappropriation of Trade Secrets or other “IP Rights” (used in this instance as defined herein but without regard to whether such “IP Rights” relate to the Commercialization (as defined in the GSK Agreement) of the Licensed Products in the Territory) or property of any Third Party.
(ii) No Challenges. None of the Note Parties nor the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, of any claim by any Person asserting that the manufacture, importation, sale, offer for sale or use of any of the Licensed Products infringes any Person’s patents or other intellectual property rights. None of the Note Parties nor the Company has obtained any written non-infringement, freedom to operate, clearance or invalidity opinions from outside counsel regarding the infringement or non-infringement of any Person’s unexpired patent rights by any of the Licensed Products.
(iii) No Infringement. None of the Note Parties nor the Company:
(1) has received any written notice from any Licensee or its Affiliates to the effect that (A) such Licensee believes or (B) any other Person has asserted,
(2) has received any written notice from any other Person, or
(3) otherwise has any Knowledge, that there is a Person who is engaging in or has engaged in any activity that infringes upon any of the Listed Patents.
There is no pending or, to the Knowledge of the Company and the Note Parties, threatened, opposition, interference, reexamination, injunction, claim, suit, action, citation, summons, subpoena, hearing, inquiry, investigation (by the International Trade Commission or otherwise), complaint, arbitration, mediation, demand, decree or other dispute, disagreement, proceeding, claim or inter partes review (in each case, other than standard patent prosecution before a Patent Office) (collectively, “Disputes”) challenging the legality, validity, enforceability or ownership of any of the Owned Patents. To the Knowledge of the Company and the Note Parties, there are no Disputes by or with any Third Party against the Company or any Note Party involving the Listed Patents. The Owned Patents set forth on Schedule 7.01(m)(i) are not subject to any outstanding injunction, judgment, order, decree, ruling, change, settlement or other disposition of a Dispute. To the Knowledge of the Company and the Note Parties, no Third Party is Infringing any of the issued Listed Patents. Neither the Company nor any Note Party has put any Third Party on notice of any Infringement of any of the issued Listed Patents.
(iv) Infringement Third Party Intellectual Property. To the Knowledge of the Company and the Note Parties, no Third Party’s Patent would be Infringed, limit or prohibit in any material respect Product Development and Commercialization Activities with respect to any Licensed Product. Neither the Company nor the Note Parties have received any notice of any claim by any Third Party asserting that Product Development and Commercialization Activities with respect to any Licensed Product Infringes such Third Party’s Patents. To the Knowledge of the Company and the Note Parties, there are no pending, published patent applications owned by any Third Party, which the Company or the Note Parties do not have the right to use, which if issued, would limit or prohibit in any material respect Product Development and Commercialization
Activities by or on behalf of the Company or the Note Parties or Commercialization by GSK with respect to any Licensed Product. To the Knowledge of the Note Parties and the Company, and except as separately disclosed to Purchaser Representative, there is no pending or threatened (in writing) claims that the Commercialization (as defined in the GSK Agreement) of the Licensed Product as currently contemplated Infringes on any Patents or other Intellectual Property rights of any other Person or constitutes misappropriation of any other Person’s Trade Secrets.
(v) Maintenance, etc. There are no unpaid maintenance fees, annuities or other like payments with respect to the Owned Patents. None of the Note Parties nor the Company has received any written notice from Licensee or any other Person to the effect that, and none of the Note Parties nor the Company otherwise has any Knowledge that, Licensee has not paid, or caused to be paid, all required maintenance fees and like payments with respect to the issued Listed Patents on Schedule 7.01(m)(i). None of the Note Parties nor the Company, has received any written notice from any Licensee or its Affiliates to the effect that Licensee believes, or that any other Person has asserted, that any of the Listed Patents on Schedule 7.01(m)(i) have lapsed, expired or otherwise been terminated. To the Knowledge of the Company and the Note Parties, each individual associated with the filing and prosecution of the Listed Patents has complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office, including any duty to disclose to any Patent Office all information known by such individual to be material to patentability of each such Patent, in those jurisdictions where such duties exist. Neither the Company nor any Note Party has filed any disclaimer, other than a terminal disclaimer, or made or permitted any other voluntary reduction in the scope of any of its Owned Patents post issuance.
(vi) Trademarks. Neither the Company nor any Note Party has any owned or exclusively in-licensed Trademarks that are necessary or useful in the development, manufacture or commercialization of Tebipenem Pivoxil Hydrobromide or any Licensed Product in the Field (as defined in the GSK Agreement) in the Territory.
(n) Lending. The Company and its Subsidiaries (including the Note Parties) are not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock, and no portion of the Note shall be used by the Company for a purpose that violates Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time. Following the application of the proceeds of the Notes, not more than [***]% of the value of the assets, subject to the provisions of Section 9.02 or Section 9.03 or subject to any restriction contained in any agreement or instrument between Issuer and Purchaser Representative or any Affiliate of Purchaser Representative relating to Indebtedness will be margin stock.
(o) Material Contracts.
(i) As of the Closing Date, the Company has provided to Purchaser Representative true, correct and complete copies of each Material Contract, including true, correct and complete copies of the GSK Agreement and the Meiji License Agreement. The Company has provided to Purchaser Representative true, correct and complete copies of (A) all Royalty Reports, (B) all notices and, to the Knowledge of each Note Party, correspondences delivered to the Company or any Note Party by GSK or by the Company or any Note Party to GSK pursuant to, or relating to, the GSK Agreement, and (C) all notices and, to the Knowledge of each Note Party, correspondences delivered to the Company or any Note Party by Meiji or by the Company or any Note Party to Meiji pursuant to, or relating to, the Meiji License Agreement, in each case of clauses (B) and (C) that could reasonably be expected to have an adverse effect, in any material respect,
including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds.
(ii) Neither the Company nor any Note Party nor, to the Knowledge of the Company, any Material Contract Counterparty, is in breach or default of any Material Contract and no circumstances or grounds exist that would, upon the giving of notice, the passage of time or both, give rise (A) to a claim by the Company, any Note Party or any Material Contract Counterparty of a breach of any Material Contract, or (B) to a right of rescission, termination (excluding the mere existence of GSK’s right to terminate the GSK Agreement pursuant to Section 11.2 of the GSK Agreement), revision, or Set-Off, by any Person, in, to or under any Material Contract. Neither the Company nor any Note Party has received from, or delivered to, any Material Contract Counterparty, any notice alleging a breach or default under any Material Contract, which breach or default has not been cured as of the date hereof. Neither the Company nor any Note Party has (1) given notice to a Material Contract Counterparty of the termination of any Material Contract (whether in whole or in part) or any notice to a Material Contract Counterparty expressing any intention to terminate any Material Contract, and neither the Company nor any Note Party has received from any Material Contract Counterparty any notice of termination of any Material Contract, whether in whole or in part, or any notice expressing any intention to terminate any Material Contract. To the Knowledge of the Company, there are no facts, circumstances or events that would reasonably be expected to result in the termination of the Material Contract in accordance with its terms.
(iii) Each Material Contract is a valid and binding obligation of the Company or the applicable Note Party that is party thereto and, to the Knowledge of the Company, of the applicable Material Contract Counterparty, enforceable against each of the Company or such Note Party, as applicable, and, to the Knowledge of the Company, each applicable Material Contract Counterparty in accordance with its terms, except as may be limited by general principles of equity (regardless of whether considered in a proceeding at law or in equity) and by applicable bankruptcy, insolvency, moratorium and other similar laws of general application relating to or affecting creditors’ rights generally. Neither the Company nor any Note Party has received any notice from any Material Contract Counterparty or any other Person challenging the validity or enforceability of any Material Contract, including, with respect to the GSK Agreement, the obligation of GSK to pay any amounts constituting GSK Proceeds thereunder. Neither the Company nor any Note Party, nor to the Knowledge of the Company any other Person, has delivered or intends to deliver any notice to the Company, any Note Party or any Material Contract Counterparty challenging the validity or enforceability of any Material Contract, including, with respect to the GSK Agreement, the obligation of GSKto pay any amounts constituting GSK Proceeds under the GSK Agreement.
(iv) Neither the Company nor any Note Party has granted any material written waiver or, to the Knowledge of the Company, any other material waiver, under any Material Contract, or released any Material Contract Counterparty, in whole or in part, from any of its material obligations under any Material Contract, except, in each case, to the extent set forth in the applicable Material Contract.
(v) There are no settlements, covenants not to sue, consents, judgments, orders or similar obligations which (A) restrict the rights of the Company, any Note Party or GSK from using any Intellectual Property relating to the research, development, manufacture, production, use or other Commercialization of the Licensed Products, (in order to accommodate any Intellectual Property of any Third Party or otherwise), or (B) permit any Third Party (other than GSK pursuant to the GSK Agreement) to use the IP Rights.
(vi) The security interests granted by Issuer pursuant to the Security Agreement in its rights in the Material Contracts are not prohibited by the terms of such Material Contracts after giving effect to applicable law.
(vii) The Company and each applicable Note Party have made all payments to the respective Material Contract Counterparty due, owing and required under each Material Contract as of the date hereof, other than the Company’s obligation under Section 4.1(a)(ii) of the GSK Agreement to make a payment to GSK for GSK’s [***] related to the development of Tebipenem Pivoxil Hydrobromide. The Company has received from GSK all amounts owed to the Company under the GSK Agreement prior to the date hereof and, as of the Closing Date, no payments are past due and owing by GSK to the Company pursuant to the GSK Agreement related to or involving any Licensed Product. The amount of the “Commercial Milestone Payment” (as defined in the GSK Agreement) for the “First Commercial Sale Milestone” (as defined in the GSK Agreement), after taking into account the reductions with respect thereto set forth in Section 6.3 of the GSK Agreement, is $[***].
(viii) Neither the Company nor any Note Party has consented to any assignment by any Material Contract Counterparty of any of its rights or obligations under any Material Contract, and, to the Knowledge of the Company, no Material Contract Counterparty has assigned any Material Contract or any of its rights or obligations thereunder to any Person. Except as contemplated by the Transaction Documents or the Royalty Purchase Agreement, neither the Company nor any Note Party has assigned, in whole or in part, or granted any Lien upon or security interest with respect to, any Material Contract, the Transferred Assets, the Collateral or the GSK Proceeds.
(ix) Neither the Company nor any Note Party has notified any Person of any claims for indemnification under any Material Contract, nor has the Company or any Note Party received any claims for indemnification under any Material Contract. Except as set forth on Schedule 7.02(o)(ix), neither the Company nor any Note Party has exercised any review or audit rights pursuant to any Material Contract, including the GSK Agreement.
(x) To the Knowledge of the Company, GSK has not granted, and the Company has not received any notice that GSK has granted, a sublicense to any Person.
(xi) Except as provided in the GSK Agreement (including Section 6.5(c) of the GSK Agreement as set forth below) or the applicable Material Contract, neither the Company nor any Note Party is a party to any agreement providing for or permitting any sharing of or providing for or permitting any right of counterclaim, credit, reduction or deduction by contract or otherwise (a “Royalty Reduction”),, or permitting any Set-Off against the GSK Proceeds. GSK has not exercised, and, to the Knowledge of the Company, GSK has not had the right to exercise, and no event or condition exists that, upon notice or passage of time, or both, would permit GSK to exercise, any GSK Royalty Reduction, Royalty Reduction or Set-Off against the GSK Proceeds or any other amounts payable by GSK under the GSK Agreement. To the Knowledge of the Company, there are no Third Party Patents that would provide a basis for a GSK Royalty Reduction or Royalty
Reduction. The [***] percent ([***]%) reduction to royalty rates in Section 6.5(c) of the GSK Agreement applies with respect to a given “Product” (as defined in the GSK Agreement) in a given country in the Territory only if both of the following conditions are true at the applicable point during the applicable “Royalty Term” (as defined in the GSK Agreement): (i) such Product is not covered by a “Valid Claim” (as defined in the GSK Agreement) of any “Spero Patent” (as defined in the GSK Agreement) in such country; and (ii) the “Regulatory Exclusivity Period” (as defined in the GSK Agreement), if any, for such Product in such country has expired. There are no compulsory licenses granted or, to the Knowledge of the Company, threatened to be granted, with respect to the IP Rights.
(xii) To the Knowledge of the Company, no step has been taken or is intended by any Material Contract Counterparty, or any other Person to make any Material Contract Counterparty subject to any bankruptcy, insolvency, liquidation, dissolution or reorganization proceeding.
(xiii) Other than the Material Contracts, there are no Contracts between the Company, Issuer or any of their respective Affiliates, on the one hand, and any Material Contract Counterparty, on the other hand, that (A) relate to the Commercialization of any Licensed Product or (B) could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Note Party has (1) received any written notice of any dispute from any Material Contract Counterparty for resolution pursuant to any Material Contract or (2) given any written notice of any dispute to a Material Contract Counterparty for resolution pursuant to any Material Contract, in each case of clauses (1) and (2) that could reasonably be expected to adversely affect in any material respect the value of the GSK Proceeds.
(p) [Reserved].
(q) [Reserved.]
(r) Financial Statements.
The Financial Statements of the Company are complete and accurate in all material respects, were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and present fairly in all material respects, in accordance with applicable requirements of GAAP, the consolidated financial position and the consolidated financial results of the operations of the Company and its Subsidiaries as of the dates and for the periods covered thereby and the consolidated statements of cash flows of the Company and its Subsidiaries for the periods presented therein. Since December 31, 2025, there has been no Material Adverse Effect.
(s) [Reserved].
(t) No Investment Company. None of the Note Parties nor the Company (or any of its Subsidiaries) are an “investment company,” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940.
(u) Regulation of Licensed Products. Tebipenem Pivoxil Hydrobromide is a Licensed Product. To the Knowledge of the Company, GSK is in compliance with its material obligations to seek, obtain and maintain Regulatory Authorizations for the Licensed Product in the Territory, and neither the FDA nor any other Regulatory Agency has stated that it is not likely to approve or is likely to withdraw approval of the Licensed Product.
(v) Insurance. The Company has the products-completed operations liability, property and casualty, commercial general liability, and umbrella liability insurance policies with the coverages and limits set forth on Schedule 7.02(v) carried with the Insurance Providers also set forth therein, and the Note Parties are covered under such policies in accordance with the requirements under the GSK Agreement, any New Arrangement (if applicable) and the Meiji License Agreement.
(w) Beneficial Ownership. The Company does not beneficially own or control more than 10% of the outstanding voting stock or any other equity interest entitled ordinarily to vote in the election of the directors or other governing body (however designated) of any Person that is not a wholly owned Subsidiary.
(x) [Reserved.]
(y) Disclosure. The Company has disclosed to Purchaser Representative all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect or an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds. No report, financial statement, certificate or other information furnished (whether written or oral) by or on behalf of the Company or any the Subsidiaries to Purchaser Representative in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Note Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any fact necessary to make the statements therein, when taken as a whole and in the light of the circumstances under which they were made, not misleading in any material respect; provided, that, with respect to financial projections, estimates, budgets or other forward-looking information, each Note Party represents only that such information was prepared in good faith based upon assumptions believed by the Note Parties and the Company to be reasonable at the time such information was delivered.
Article VIII
AFFIRMATIVE COVENANTS
The Note Parties covenant and agree with Purchaser Representative that, until Payment in Full:
Section 8.01 Maintenance of Existence. Each Note Party shall at all times (a) preserve, renew and maintain in full force and effect its legal existence and good standing as a limited liability company under the Laws of the jurisdiction of its organization; (b) not change its name or its chief executive office as set forth herein without having given Purchaser Representative the notice thereof required under Section 8.17; and (c) use commercially reasonable and diligent efforts to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
Section 8.02 Use of Proceeds. Each Note Party shall use the net proceeds of the Notes received by it to acquire assets from the Company pursuant to the Issuer Contribution Agreement, to fund operating expenses of the Note Parties and for such other purposes as are permitted under the SPV Organizational Documents and this Agreement.
Section 8.03 Financial Statements and Information.
(a) On or before the [***] after the close of each quarter of each fiscal year (the “Quarterly Reporting Date”), Issuer shall furnish to Purchaser Representative a duly completed certificate of a Senior Officer of Issuer, which certificate shall include (i) a statement that such officer has no Knowledge, except as specifically stated, of any condition, event or act which constitutes a Default, Event of Default or Prepayment Trigger.
(b) Promptly (and in any event no later than [***]) following receipt by the Company, Holdings or Issuer from GSK of a GSK Payment Notice or a Royalty Report, Issuer shall notify Purchaser Representative in writing and provide to Purchaser Representative a complete copy of such GSK Payment Notice or Royalty Report, as applicable. In addition, Issuer shall, promptly upon receipt thereof, forward or cause to be forwarded to Purchaser copies of all other Notices, reports, updates and other data or written information (i) pertaining to the GSK Proceeds and other Transferred Assets (ii) relating to the Commercialization of the Licensed Product in the Territory, (iii) received from Meiji pursuant to, or relating to, the Meiji License Agreement to the extent relating to the Licensed Product, Intellectual Property, the GSK Proceeds or other Transferred Assets, (iv) received from the Licensee or any Third Party which relate to events or circumstances that could reasonably be expected to have a Material Adverse Effect, or (v) received from any Person that relate to the Intellectual Property and that could reasonably be expected to have a Material Adverse Effect, or that Purchaser Representative reasonably requests.
(c) On each Quarterly Reporting Date, Issuer shall deliver or cause to be delivered to Purchaser Representative (i) a listing of all Material Contracts entered into, amended or terminated during such quarter, (ii) a true copy of all Material Other Reports received during such quarter and (iii) to the extent not previously provided to Purchaser Representative pursuant to Section 8.03(b), any Royalty Report.
(d) Neither Company nor any Note Party shall, without first consulting the Purchaser, cause an inspection or audit of GSK’s books and records to be conducted pursuant to and in accordance with Section 6.8(b) of the GSK License Agreement except in connection with inspections or audits requested by the Purchaser under this Agreement. From time to time, but not more frequently than [***], the Purchaser may request the Company and the Note Parties to, and the Company and the Note Parties shall, cause an inspection or audit of GSK’s books and records in respect of the GSK Proceeds and proceeds thereof to be conducted pursuant to and in accordance with Section 6.8(b) of the GSK Agreement. If, following any such inspection or audit, GSK disagrees with the independent certified public accounting firm’s calculations, the Company and the Note Parties shall, at the direction of the Purchaser, work with GSK to resolve such disagreement; provided, that the Company and the Note Parties shall not resolve any such disagreement without the prior written consent of the Purchaser. If GSK and the Company, at the direction of the Purchaser, are unable to reach a mutually acceptable resolution, then at the direction of the Purchaser, the Company shall submit the dispute to the second accounting firm in accordance with Section 6.8(b) of the GSK Agreement. For the purposes of exercising the Purchaser’s rights pursuant to this Section 8.03(d) in respect of the GSK Agreement, the Company shall appoint such accounting firm of nationally recognized standing as the Purchaser shall select for such purpose (it being understood and agreed that any such accounting firm shall, pursuant to Section 6.8(b) of the GSK Agreement be reasonably acceptable to GSK). The Company, the Note Parties and the Purchaser agree that [***] percent ([***]%) of the expenses of, and amounts payable to GSK as a result of any inspection or audit carried out at the request of the Purchaser pursuant to this Section 8.03(d) that would otherwise be borne by the Company pursuant to the GSK Agreement shall instead be borne and paid directly by the Purchaser; provided, that, if the Company pays such costs
and expenses directly, such costs expenses shall be reimbursed to the Company by the Purchaser promptly on demand, including such reasonable fees and expenses of such accounting firm as are to be borne by the Company pursuant to Section 6.8(b) of the GSK Agreement together with [***] percent ([***]%) of the Company’s out-of-pocket costs and expenses incurred in connection with such inspection or audit; provided, that for the avoidance of doubt, any audit caused by the Company without complying with the consultation requirements in the first two sentences of this Section 8.03(d) shall not be deemed to be carried out at the request of Purchaser Representative and the Purchaser shall have no obligation to reimburse the Company, pursuant to this sentence, for any fees, costs or expenses incurred by the Company in connection therewith. The Company shall, to the extent not prohibited by obligations of confidentiality contained in the GSK Agreement pursuant to which an inspection or audit in respect of the GSK Proceeds is conducted, promptly (but in no event later than [***]) furnish to the Purchaser any inspection or audit report prepared in connection with such inspection or audit. In the event that any inspection or audit conducted pursuant to this Section uncovers that the amounts actually paid to the Purchaser for any period in respect of the GSK Proceeds and proceeds thereof were greater than the amounts that should have been paid to the Purchaser for such period in respect of the GSK Proceeds and proceeds thereof, the Purchaser shall cause the amount of such overpayment to be paid to GSK promptly (but in no event later than [***]) after delivery to the Purchaser, pursuant to this Section, of the applicable inspection or audit report or certificate, as the case may be, showing such overpayment. In the event that any inspection or audit conducted pursuant to this Section uncovers that the amounts actually paid to the Purchaser for any period in respect of the GSK Proceeds and proceeds thereof were less than the amounts that should have been paid to the Purchaser for such period in respect of the GSK Proceeds and proceeds thereof, the Company shall cooperate and provide assistance as reasonably requested by the Purchaser to cause the amount of such underpayment to be paid to the Purchaser by GSK in accordance with the timeframe set forth in the GSK Agreement promptly after delivery to the Purchaser, pursuant to this Section, of the applicable inspection or audit report or certificate, as the case may be, showing such underpayment.
(e) In the event that any inspection or audit conducted pursuant to Section 8.03(d) uncovers that the amounts actually paid to Purchaser Representative for any period in respect of the Purchased Proceeds and proceeds thereof were greater than the amounts that should have been paid to Purchaser Representative for such period in respect of the Purchased Proceeds and proceeds thereof, Purchaser Representative shall cause the amount of such overpayment to be paid to GSK promptly (but in no event later than [***]) after delivery to Purchaser Representative, pursuant to Section 8.03(d), of the applicable inspection or audit report or certificate, as the case may be, showing such overpayment. In the event that any inspection or audit conducted pursuant to Section 8.03(d) uncovers that the amounts actually paid to Purchaser Representative for any period in respect of the Purchased Proceeds and proceeds thereof were less than the amounts that should have been paid to Purchaser Representative for such period in respect of the Purchased Proceeds and proceeds thereof, the Note Parties shall cooperate and provide assistance as reasonably requested by Purchaser Representative to cause the amount of such underpayment to be paid to Purchaser Representative by GSK in accordance with the timeframe set forth in the GSK Agreement promptly after delivery to Purchaser Representative, pursuant to Section 8.03(d), of the applicable inspection or audit report or certificate, as the case may be, showing such underpayment.
(f) Purchaser Representative and its Representatives shall have the right, at the expense of Issuer, from time to time, not more than [***], during normal business hours and upon at least [***] prior written notice to Issuer (provided, that, after the occurrence and during the continuance of an Event of Default, Purchaser Representative shall have the right, as often, at such times and with such prior notice, as Purchaser Representative determines in its reasonable
discretion), to visit the offices and properties of the Note Parties and the Company where books and records relating or pertaining to the GSK Proceeds and the Transferred Assets are kept and maintained (or, at Purchaser Representative’s option, to conduct a meeting by telecommunications), to discuss, with officers of the Note Parties and the Company, the business, operations, properties and financial and other condition of GSK and the Company, to discuss the GSK Agreements and the Licensed Products, to discuss the Royalty Reports and Material Other Reports, to verify compliance with the provisions of the Note Documents regarding receipt and application of the GSK Proceeds and, upon physical visits, to inspect and make extracts from and copies of the books and records of Note Parties and relating or pertaining to GSK Proceeds and the Transferred Assets. Issuer shall also participate in a [***] with Purchaser Representative at Purchaser Representative’s reasonable request.
(g) (i) Promptly (and in any event within [***]) of any request, deliver such current bank statements and other information relating to all deposit accounts and securities accounts of Issuer and (ii) at the request of Purchaser Representative, provide Purchaser Representative with read-only online access to all deposit accounts (including, without limitation, the Collection Account) and securities accounts of Issuer.
(h) Promptly, such additional information regarding the business, financial or corporate affairs of Issuer or compliance with the terms of the Note Documents, as Purchaser Representative may from time to time reasonably request.
(i) All written information supplied by or on behalf of the Note Parties to Purchaser Representative pursuant to this Section 8.03 shall be accurate and complete in all material respects as of its date or the date so supplied when taken as a whole and in light of the circumstance under which they are supplied. For the avoidance of doubt, no Note Party makes representations or warranties regarding the accuracy or completeness of any information it receives from a Third Party that it is required to furnish to Purchaser Representative pursuant to this Section 8.03, unless to the Knowledge of such Note Party such information is inaccurate or incomplete in any material respect, in which case the Note Parties shall specify such inaccuracy or incompleteness.
Section 8.04 Books and Records. The Note Parties shall keep proper books, records and accounts in which entries in conformity with sound business practices and all requirements of Law applicable to it shall be made of all dealings and transactions in relation to its business, assets and activities and as shall permit the preparation of the consolidated financial statements of the Note Parties in accordance with GAAP.
Section 8.05 Governmental Authorizations. The Note Parties shall obtain, make and keep in full force and effect all authorizations from and registrations with Governmental Entities that may be required for the validity or enforceability against Issuer of this Agreement and the other Note Documents to which it is a party.
Section 8.06 Compliance with Laws and Contracts.
(a) The Note Parties shall comply with all Applicable Laws, including all Healthcare Laws, and all orders, writs, injunctions and decrees applicable to it or its business or property, and perform its obligations under all Material Contracts, if any, relative to the conduct of its business, except where the failure to comply or perform would not reasonably be expected to have a Material Adverse Effect. Issuer shall use commercially reasonable efforts to take all actions necessary to enforce its rights under each Material Contract, and perform all of its material obligations under
each Material Contract, except to the extent that failure to do so would not reasonably be expected to result in a Material Adverse Effect.
(b) Issuer shall at all times comply with the margin requirements set forth in Section 7 of the Exchange Act and any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.
Section 8.07 Plan Assets. Issuer shall not take any action that causes its assets to be deemed to be Plan Assets at any time.
Section 8.08 Maintenance of Insurance. The Note Parties shall maintain, or cause the Company to maintain on behalf of the Note Parties, with financially sound and reputable insurance companies, (i) insurance policies required to be maintained under any Material Contract and (ii) insurance with respect to its properties and business against loss or damage of the kinds customarily carried by companies engaged in similar businesses and owning similar properties, of such types and in such amounts as are customarily carried under similar circumstances by such other companies. The Note Parties shall cause Purchaser Representative and its successors and assigns to be named as lender’s loss payee or mortgagee as its interest may appear, and additional insured with respect to any such insurance providing liability coverage or coverage in respect of any Transferred Assets, and cause each provider of any such insurance to agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Purchaser Representative, that it will give Purchaser Representative [***] prior written notice before any such policy or policies shall be adversely altered or canceled.
Section 8.09 Notices.
(a) Issuer shall, promptly after an officer of any Note Party becomes aware thereof, give written Notice to Purchaser Representative of each Default, Event of Default or Prepayment Trigger and each other event that has had or would reasonably be expected to have a Material Adverse Effect; provided, that, in any of the foregoing situations where Issuer knows a press release or other public disclosure is to be made, Issuer shall use all commercially reasonable efforts to provide such information to Purchaser Representative as early as possible but in no event later than simultaneously with such release or other public disclosure.
(b) Issuer shall promptly give written Notice to Purchaser Representative upon receiving notice, or an officer otherwise becomes aware, of any default or event of default under any Material Contracts.
(c) Issuer shall, promptly (and in any event within [***]) after an officer of any Note Party becomes aware thereof, give written Notice to Purchaser Representative of any litigation or proceedings to which Issuer is a party or which would reasonably be expected to have a Material Adverse Effect.
(d) Issuer shall, promptly after an officer of any Note Party becomes aware thereof, give written Notice to Purchaser Representative of any litigation, proceeding, audit or regulatory action relating to the GSK Agreement, the Meiji License Agreement, the Transaction Documents or any of the transactions contemplated therein, or relating to any Licensed Product, the GSK Proceeds or other Transferred Assets.
(e) Issuer shall, promptly after an officer of any Note Party becomes aware thereof, give written Notice to Purchaser Representative of the occurrence of any Material Adverse Effect.
(f) Issuer shall, promptly after receipt of any written notice from a Licensee pursuant to the GSK Agreement of an event which has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, provide a copy of such notice to Purchaser Representative together with a summary of Issuer’s intended response to Licensee.
(g) Issuer shall, promptly (and in any event within [***]) give written Notice to Purchaser Representative of any material change in accounting policies or financial reporting practices by any Note Party.
(h) Issuer shall, promptly (and in any event within [***]) after an officer of any Note Party becomes aware thereof, give written Notice to Purchaser Representative of any act of infringement of any Intellectual Property included in the Transferred Assets which could reasonably be expected to materially impair Issuer’s ability to generate revenue from such Intellectual Property.
(i) [reserved].
(j) Issuer shall promptly (and in any event within [***]) after an officer of any Note Party becomes aware thereof, give written Notice to Purchaser Representative after the receipt or Knowledge of a notice of resignation of the Independent Manager of Issuer.
(k) Issuer shall promptly (and in any event within [***]) give written Notice to Purchaser Representative after an officer of any Note Party becomes aware of the imposition of any Covered Tax or the assertion by any Governmental Entity that any Covered Tax may be imposed.
Section 8.10 Payment of Taxes. Issuer will timely (i) file required all U.S. federal, state, local and non-U.S. income tax returns and all other material tax returns and reports and (ii) pay all U.S. federal, state, local and non-U.S. income Taxes and all other material Taxes levied or imposed upon it or its properties, income or assets (including in its capacity as a withholding agent) except those which will be contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves will be established in accordance with GAAP or where such Taxes, individually or in the aggregate, are less than $[***] and such failure would not have an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds.
Section 8.11 Waiver of Stay, Extension or Usury Laws. Notwithstanding any other provision of this Agreement or the other Note Documents, if at any time the rate of interest payable by any Person under the Note Documents exceeds the Maximum Lawful Rate, then, so long as the Maximum Lawful Rate would be exceeded, such rate of interest shall be equal to the Maximum Lawful Rate. If at any time thereafter the rate of interest so payable is less than the Maximum Lawful Rate, such Person shall continue to pay interest at the Maximum Lawful Rate until such time as the total interest received from such Person is equal to the total interest that would have been received had Applicable Law not limited the interest rate so payable. In no event shall the total interest received by Purchaser Representative under this Agreement and the other Note Documents exceed the amount which Purchaser Representative could lawfully have received, had the interest due been calculated from the Closing Date at the Maximum Lawful Rate. Without limiting the foregoing, no Note Party will at any time, to the extent that it may lawfully not do so, insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension Law or other
law that would prohibit or forgive Issuer from paying all or any portion of the principal of or premium, if any, or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Agreement; and, to the extent that it may lawfully do so, each Note Party hereby expressly waives all benefit or advantage of any such Law and expressly agrees that it will not hinder, delay or impede the execution of any power herein granted to Purchaser Representative, but will suffer and permit the execution of every such power as though no such Law had been enacted.
Section 8.12 Intellectual Property.
(a) To the extent required or permitted by the GSK Agreement and subject to Section 8.12(b) below, the Note Parties shall, at the Note Parties’ expense, diligently file, prosecute and maintain the IP Rights in the Territory in the event that (i) any Note Party has the sole right to or the first right to file, prosecute or maintain an IP Right in the Territory, or (ii) any Note Party has the back-up or second right under a Material Contract to, following any Material Contract Counterparty’s decision not to exercise its first right to, file, prosecute or maintain any IP Right in the Territory, including payment of maintenance fees or annuities.
(b) To the extent required or permitted by the GSK Agreement, the Note Parties shall, at the Note Parties’ expense, in the event that (x) any Note Party has the sole right to or the first right to enforce or defend any IP Right in the Territory, or (x) any Note Party has the back-up or second right under a Material Contract to, following any Material Contract Counterparty’s decision not to exercise its first right to, enforce or defend any IP Right in the Territory, (A) diligently enforce the applicable IP Rights in the Territory against third party infringement, in any jurisdiction, provided that there shall be no obligation to enforce IP Rights in the Territory unless the failure to enforce would reasonably be expected to have adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds, (B) diligently defend the applicable IP Rights in the Territory against any claims of invalidity or unenforceability, in any jurisdiction, and (C) when available in respect of any applicable Licensed Product in the Territory, obtain Patents and any corrections, substitutions, reissues and reexaminations thereof and obtain Patent term extensions and any other forms of Patent term restoration in any country in the Territory. If Issuer determines that it is not commercially reasonable to act in respect of matters contemplated by the foregoing clauses (B) and (C) with respect to a particular IP Right in a particular country in the Territory, Issuer shall provide advance written notice thereof to Purchaser Representative and shall consult with Purchaser Representative with respect thereto; provided, that Purchaser Representative’s prior written consent, not to be unreasonably withheld, is required to relieve the Note Parties of their obligation to act in accordance with the foregoing sentence with respect to a particular IP Right in a particular country in the Territory. Issuer shall promptly (but in any event within [***]) provide to the Purchaser Representative a copy of any written notice or other documentation received in connection with any legal action, suit or other proceeding relating to the IP Rights, regardless of whether such legal action, suit or other proceeding occurs inside or outside of the Territory.
(c) Issuer shall, except to the extent prohibited by obligations of confidentiality contained in the GSK Agreement, promptly (but in any event within [***]) after receipt thereof, provide to Purchaser Representative a copy of all substantive written notices or other documentation relating to the patentability, enforceability, validity, scope or term of the Patents included in the IP Rights, and shall provide Purchaser Representative with a copy of drafts of any written material proposed to be filed in response thereto.
(d) To the extent required or permitted by the GSK Agreement, the Note Parties shall not disclaim or abandon, or fail to use commercially reasonable efforts necessary or desirable to prevent the disclaimer or abandonment of, any IP Rights in the Territory (and Issuer shall provide written notice to Purchaser Representative if it disclaims or abandons or fails to use commercially reasonable efforts necessary or desirable to prevent the disclaimer or abandonment of any IP Rights outside of the Territory).
(e) To the extent permitted or required under the GSK Agreement, the Note Parties shall diligently defend against any claim or action by any other Person that the Commercialization (as defined in the GSK Agreement) of Licensed Products as currently contemplated in the GSK Agreement, Infringes on any Patents or other Intellectual Property rights of any other Person or constitutes misappropriation of any other Person’s Trade Secrets or other Intellectual Property rights.
(f) The Note Parties shall not exercise and enforce their applicable rights, or fail to exercise or enforce their rights, in respect of any Material Contract, including the GSK Agreement, in any manner that would result in a breach of this Agreement.
Section 8.13 [Reserved.]
Section 8.14 [Reserved.].
Section 8.15 [Reserved.].
Section 8.16 Security Documents; Further Assurances.
(a) Subject to Section 8.16(b), Issuer shall promptly, upon the reasonable request of Purchaser Representative, at Issuer’s expense, (a) execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Note Documents or otherwise deemed by Purchaser Representative reasonably necessary or desirable for the continued validity, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except as permitted by the applicable Note Document, or obtain any consents or waivers as may be necessary or appropriate in connection therewith; (b) deliver or cause to be delivered to Purchaser Representative from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to Purchaser Representative and Purchaser Representative shall reasonably deem necessary to perfect or maintain the Liens on the Collateral pursuant to the Note Documents; and (c) upon the exercise by Purchaser Representative of any power, right, privilege or remedy pursuant to any Note Document which requires any consent, approval, registration, qualification or authorization of any Governmental Entity execute and deliver all applications, certifications, instruments and other documents and papers that Purchaser Representative may require. In addition, subject to Section 8.16(b), Issuer shall promptly, at its sole cost and expense, execute and deliver to Purchaser Representative such further instruments and documents, and take such further action, as Purchaser Representative may, at any time and from time to time, reasonably request in order to carry out the intent and purpose of this Agreement and the other Note Documents to which it is a party and to establish and protect the rights, interests and remedies created, or intended to be created, in favor of Purchaser Representative hereby and thereby.
(b) Notwithstanding anything to the contrary herein or in any other Note Document, Issuer shall not have any obligation to (i) perfect or record any security interest or Lien in any intellectual property included in the Collateral in any jurisdiction other than in the U.S. (or to enter into any foreign Law governed charges, debentures, pledges or other security agreements in respect thereof), (ii) obtain any landlord waivers, estoppels or collateral access letters, or (iii) obtain any consent of the Licensee to the assignment and pledge to Purchaser Representative of the rights under the GSK Agreement that are included in the Transferred Assets.
Section 8.17 Information Regarding Collateral. No Note Party shall effect any change (i) in its legal name, (ii) in the location of its chief executive office, (iii) in its identity or organizational structure, (iv) in its federal Taxpayer Identification Number or organizational identification number, if any, or (v) in its jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction), until (A) it shall have given Purchaser Representative not less than [***] prior written notice (in the form of a certificate of a duly authorized Senior Officer of such Note Party), or such lesser notice period agreed to by Purchaser Representative, of its intention so to do, clearly describing such change and providing such other information in connection therewith as Purchaser Representative may reasonably request and (B) it shall have taken all action reasonably satisfactory to Purchaser Representative to maintain the perfection and priority of the security interest of Purchaser Representative in the Collateral, if applicable. Issuer agrees to provide promptly Purchaser Representative with certified SPV’s Organizational Documents reflecting any of the changes described in the preceding sentence. Issuer also agrees to notify promptly Purchaser Representative of any change in the location of any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which any portion of Collateral is located (including the establishment of any such new office or facility).
Section 8.18 Additional Collateral; New License Arrangement.
(a) With respect to any Transferred Assets acquired after the Closing Date by any Note Party that is not already subject to the Lien created by any of the Note Documents or specifically excluded from the requirement to be subject to such Lien in the Note Documents, such Note Party shall promptly (and in any event within [***] after the acquisition thereof) (i) execute and deliver to Purchaser Representative such amendments or supplements to the relevant Note Documents or such other documents as Purchaser Representative shall deem necessary or advisable to grant for its benefit, a Lien on such property subject to no Liens other than Permitted Liens, and (ii) take all actions necessary to cause such Lien to be duly perfected in accordance with all applicable requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by Purchaser Representative. The Note Parties shall otherwise take such actions and execute and/or deliver to Purchaser Representative such documents as Purchaser Representative shall reasonably require to confirm the validity, perfection and priority of the Lien of the Security Agreement on such after-acquired properties.
(b) Without limiting any other rights or remedies Purchaser Representative may have under this Agreement or the Security Agreement, if any Licensee or Issuer terminates the GSK Agreement, or the GSK Agreement otherwise terminates (whether in whole or in part), then, to the extent permitted by the survival provisions of the GSK Agreement and any other applicable provisions of the GSK Agreement, Issuer shall, at Purchaser Representative’s reasonable request and direction and subject to the terms and conditions of the GSK Agreement, cause the Company to (A) prepare any termination and wind-down plan contemplated by Section 11.7(b) of the GSK Agreement, provided, that, Issuer shall cause the Company to provide Purchaser Representative a reasonable opportunity to review and comment on each draft of such plan and any amendments thereto prior to the presentation of such drafts to GSK and to consider Purchaser Representative’s
comments thereon in good faith, (B) exercise its rights under Section 11.7(b)(iv) of the GSK Agreement, if available, to negotiate any reversion license contemplated by such section, provided, that, (1) Issuer shall cause the Company to provide Purchaser Representative a reasonable opportunity to review and comment on such reversion license prior to execution and to consider Purchaser Representative’s comments thereon in good faith and (2) upon Purchaser Representative’s request, Issuer shall cause the Company to furnish a power of attorney to allow Purchaser Representative to negotiate such reversion license on behalf of the Company, and (C) take any other actions with respect to GSK and the GSK Agreement reasonably requested by Purchaser Representative to enable a New Arrangement. Issuer shall use commercially reasonable efforts, at Purchaser Representative’s reasonable request, in consultation and cooperation with Purchaser Representative, for a period of [***] (or such shorter period as Issuer and Purchaser Representative shall agree) (the “Initial Search Period”), to locate, negotiate and secure a license of the Intellectual Property with respect to the applicable Licensed Product for such Third Party to engage in Commercialization of the applicable Licensed Product for any purpose that GSK would have been permitted to engage in Commercialization of such Licensed Product under the GSK Agreement (any such license, a “New Arrangement”); provided, that, the counterparty to such New Arrangement shall be reasonably acceptable to Issuer; provided further that Purchaser Representative shall have the right to consent in writing to any New Arrangement, which approval shall not be unreasonably withheld or delayed. Such New Arrangement shall (i) become effective not earlier than the effective date of the applicable termination, (ii) expire not later than the last day of the applicable royalty term under the GSK Agreement (and, if such termination is only in part in respect of the applicable Licensed Product in a particular country, the applicable royalty term shall be such term that is applicable under the GSK Agreement for such Licensed Product in such country), (iii) include terms, conditions and limitations not materially more onerous to Issuer or the Company than those contained in the GSK Agreement with respect to the obligations and costs imposed on Issuer or the Company and not materially less favorable with respect to the rights and remedies of Issuer or the Company, including with respect to disclaimers of liability, intellectual property ownership and control and indemnification, and (iv) provide, for no additional consideration from Purchaser Representative (other than, for clarity, the costs and expenses described in this Section 8.18(b)), that (A) Purchaser Representative shall have the same rights as those acquired under the GSK Agreement pursuant to this Agreement and (B) all payments and other consideration (including any upfront fees) thereunder (to the extent that such payments or other consideration would have constituted GSK Proceeds under the GSK Agreement) be made by the other party to such New Arrangement directly to the Collection Account; provided, that, all such payments and other consideration (including any upfront fees) made by the other party to such New Arrangement shall be deemed to be GSK Proceeds hereunder for purposes of determining the GSK Proceeds for the applicable Calendar Quarter(s). Issuer shall, and shall cause the Company to, consult with Purchaser Representative and reasonably consider any comments from Purchaser Representative with respect to the negotiation of any New Arrangement. Issuer agrees to undertake in connection with any New Arrangement such obligations and liabilities, if any, as are comparable to the obligations and liabilities it currently has under the GSK Agreement; provided, that, in no event shall Issuer have any Obligation in connection with the New Arrangement to renegotiate the GSK Agreement. Issuer shall not pay (or enter into any agreement to pay) any upfront costs, fees or expenses to a Third Party in connection with Issuer’s efforts to locate, negotiate and secure a New Arrangement (“New Arrangement Expenses”) without the prior written consent of Purchaser Representative. In no event shall Issuer be required to incur any Obligation of any kind with respect to, and any directions provided by Purchaser Representative under this Section 8.18 shall not include any direction regarding, the Prosecution, maintenance, enforcement or defense of the Intellectual Property. If Purchaser Representative does not consent to such New Arrangement Expenses, Purchaser Representative may, upon written notice to Issuer, terminate the Initial Search Period. If Issuer or the Company is unable to secure a New Arrangement within the Initial Search
Period, Purchaser Representative may, at Purchaser Representative’s option and sole cost and expense, continue efforts to locate, negotiate and secure a New Arrangement on behalf of Issuer or the Company; provided, that, Issuer shall have the right to consent in writing to any New Arrangement, which approval shall not be unreasonably withheld or delayed. Issuer shall use commercially reasonable efforts, at Purchaser Representative’s request and sole cost and expense (including Purchaser Representative’s payment of Issuer’s reasonable attorney’s fees, if any, in connection therewith) to provide cooperation and assistance to Purchaser Representative in connection with Purchaser Representative’s efforts pursuant to the foregoing sentence. Should Issuer, the Company or Purchaser Representative identify any New Arrangement that satisfies the foregoing requirements, Issuer shall, and shall cause the Company to, use commercially reasonable efforts to promptly duly execute and deliver a new license agreement effecting such New Arrangement. In the event Issuer enters into a New Arrangement, references in this Agreement to the GSK Proceeds and the GSK Agreement shall be deemed to be references to any new royalty or other payments and the new license agreement entered into under the New Arrangement, and references to a Licensee shall be deemed to be references to the other party to such New Arrangement. All amounts payable to Issuer, the Company or any of their Affiliates under any New Arrangement that constitute GSK Proceeds or other amounts intended to replace, succeed to or be substantially equivalent to the GSK Proceeds shall remain subject to this Agreement and the other Note Documents. Following the execution of any New Arrangement, the Parties shall negotiate in good faith and use commercially reasonable efforts to enter into such amendments to this Agreement and the other Note Documents as may be reasonably necessary to reflect the terms of such New Arrangement and to preserve, to the greatest extent practicable, the economic benefit of the GSK Proceeds and Purchaser Representative’s rights hereunder; provided, that, pending the effectiveness of any such amendment, this Agreement shall be interpreted and applied in a manner that gives effect to the Parties’ intent that Purchaser Representative continue to receive the benefit of the GSK Proceeds attributable to such New Arrangement. Subject to Section 4.02(b), all costs and expenses (including attorneys’ fees and expenses) incurred by a Note Party or the Company complying with this Section 8.18(b) (including, without limitation, any New Arrangement Expenses consented to by Purchaser Representative), shall be borne by Purchaser Representative and shall be payable by Purchaser Representative upon demand of Issuer.
Section 8.19 Performance of GSK Agreement. Issuer agrees that it shall (i) perform and comply with in all material respects its obligations under the GSK Agreement, (ii) not breach the GSK Agreement in any respect materially adverse to the interests of Purchaser Representative hereunder and (iii) use commercially reasonable efforts to cure any such breach by Issuer of the GSK Agreement.
Section 8.20 Amendment of GSK Agreement. Issuer shall provide Purchaser Representative a copy of any proposed amendment, supplement, modification or waiver (each, a “Modification”) of any provision of the GSK Agreement as soon as practicable (and in any event not less than [***]) prior to the date Issuer proposes to execute such Modification. Issuer shall not, without the prior written consent of Purchaser Representative, execute or agree to execute any proposed Modification of the GSK Agreement if such Modification would reasonably be expected to (a) adversely affect in any material respect the value of the GSK Proceeds (it being understood and agreed that any proposed Modification to the provisions of the GSK Agreement governing the amount or calculation of the GSK Proceeds or the procedures for payment of the GSK Proceeds shall be deemed, for purposes of this Section 8.20, to have such an effect), or (b) have adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds. Promptly (and in any event within [***]) following receipt by Issuer of a fully executed Modification of the GSK Agreement, Issuer shall furnish a copy of such Modification to Purchaser Representative. For clarity, Modifications to the GSK Agreement relating solely to patents and patent applications that do not relate to the Licensed Products
in the Territory shall be deemed not to have an adverse effect and shall not require prior written consent of Purchaser Representative.
Section 8.21 Enforcement of GSK Agreement.
(a) Licensee’s Breaches. Promptly (and in any case within [***]) after (i) receiving written notice from GSK, including any notice written terminating the GSK Agreement (in whole or in part), alleging any breach of or default under the GSK Agreement by the Company related to the GSK Proceeds or the proceeds thereof, or any other material breach or default, or asserting the existence of any facts, circumstances or events that, alone or together with other facts, circumstances or events, would reasonably be expected (with or without the giving of notice or passage of time, or both) to give rise to a breach of or default under the GSK Agreement by the Company or a Note Party related to the GSK Proceeds or proceeds thereof or the right to terminate the GSK Agreement (in whole or in part) by GSK; or (ii) Company or a Note Party otherwise has Knowledge of any fact, circumstance or event that, alone or together with other facts, circumstances or events, would reasonably be expected (with or without the giving of notice or passage of time, or both) to give rise to a breach of or default under the GSK Agreement by the Company or a Note Party related to the GSK Proceeds or the proceeds thereof, or any other material breach or default, or the right to terminate the GSK Agreement (in whole or in part) by GSK, in each case the Company and Issuer shall (A) (x) give written notice thereof to Purchaser Representative and provide Purchaser Representative with a written summary of all material details thereof, (y) to the extent not prohibited by obligations of confidentiality contained in the GSK Agreement, include a copy of any written notice received from GSK, and (z) in the case of any such breach or default or alleged breach or default by the Company or a Note Party, describe in reasonable detail any corrective action the Company and the Note Parties propose to take in respect of such breach or default; and (B) in the case of any such breach or default or alleged breach or default by the Company or a Note Party, use commercially reasonable efforts to cure such breach or default and give written notice to Purchaser Representative upon curing such breach or default; provided, however, that if the Company and the Note Parties fail to promptly cure any such breach or default, without limiting any other rights it may have, Purchaser Representative, for the benefit of Purchaser Representative, shall, upon written notice to the Company and the Note Parties and to the extent permitted by the GSK Agreement, be entitled to take any and all actions Purchaser Representative considers reasonably necessary to promptly cure such breach or default, and the Company and Note Parties shall cooperate with Purchaser Representative for such purpose and reimburse Purchaser Representative, promptly (but in no event later than [***]) following demand, for all reasonable and documented out-of-pocket costs and expenses incurred by Purchaser Representative in connection therewith.
(b) Enforcement of GSK Agreement. Issuer and Purchaser Representative shall consult with each other regarding any breach referred to in Section 8.21(a) and as to the timing, manner and conduct of any enforcement of the applicable Licensee’s obligations under the GSK Agreement relating thereto.
(i) Enforcement. Issuer may, and if requested in writing by Purchaser Representative within [***] after receipt of notice of such breach pursuant to Section 8.21(a), shall, proceed in consultation with Purchaser Representative, to use commercially reasonable efforts to enforce compliance by any Licensee with the relevant provisions of the GSK Agreement and to use commercially reasonable efforts to exercise such rights and remedies relating to such breach as shall be available to Issuer, whether under the GSK Agreement or by operation of Applicable Law.
(ii) Lead Counsel; Costs of Enforcement. In connection with any enforcement of a Licensee’s obligations under the GSK Agreement in respect of any breach referred to in Section 8.21(a) (regardless of whether such enforcement is initiated by Issuer as a result of a written request from Purchaser Representative or initiated by Issuer in the absence of any such request), the lead counsel selected by Issuer shall be such counsel as Purchaser Representative shall recommend for such purpose (as long as such counsel is reasonably acceptable to Issuer). Subject to Section 4.02(b), all costs and expenses of enforcement under this Section 8.21 shall be borne by Purchaser Representative, and any costs and expenses incurred by Issuer or Company complying with this Section 8.21, shall be borne by Purchaser Representative and shall be payable by Purchaser Representative upon demand of Issuer; provided, that, all such amounts paid by Purchaser Representative shall be reimbursable to Purchaser Representative in accordance with Section 4.02.
Section 8.22 Approval of Assignments of License Agreement.
(a) Assignments by the Licensee. Promptly (and in any event within [***]) following receipt by any Note Party or the Company of a written request from a Licensee for consent to assign the GSK Agreement (in whole or in part) pursuant to the GSK Agreement, if applicable, Issuer shall provide notice thereof to Purchaser Representative. Issuer and Purchaser Representative shall consult with each other regarding whether to grant such consent, and Issuer shall not grant or withhold such consent without the prior written consent of Purchaser Representative (such consent of Purchaser Representative not to be unreasonably withheld or delayed). Notwithstanding anything to the contrary contained in this Section 8.22, and for the avoidance of doubt, no consent of Purchaser Representative shall be required in connection with any assignment by a Licensee to which Issuer does not have a consent under the GSK Agreement, including an assignment by such Licensee to a wholly owned Affiliate or in connection with a Change of Control (subject to meeting the requirements of the GSK Agreement).
(b) Assignments by Issuer. Issuer may not assign the GSK Agreement (in whole or in part) without the prior written consent of Purchaser Representative (such consent not to be unreasonably withheld or delayed); provided, that, no such consent shall be required in connection with (i) any assignment, sale or transfer of Issuer’s right, title and interest in and to substantially all of the assets of Issuer related to, or necessary to perform Issuer’s obligations in respect of, the GSK Agreement and (ii) any assignment to an Affiliate, in which case Issuer shall remain responsible for the performance of this Agreement by such Affiliate.
(c) Copies of Assignments. Promptly (and in any event no later than [***]) following Issuer’s, or the Company’s, as applicable, receipt of any fully executed assignment of the GSK Agreement by the applicable Licensee or Issuer, Issuer shall furnish a copy of such assignment to Purchaser Representative.
Section 8.23 [Reserved.]
Section 8.24 Acknowledgment and Agreement by Purchaser Representative; Limitation of Issuer’s and the Company’s Duties and Obligations.
(a) Notwithstanding any provision of this Agreement (including other provisions of this Article VIII) to the contrary, nothing contained in this Agreement shall obligate Issuer or the Company to take any action, or omit to take any action, that (i) would conflict with, violate or cause a violation of, contravene or cause a default under, the GSK Agreement or any Applicable Law or any judgment binding upon, or any guidelines or policies of, Issuer or the Company, (ii) would otherwise, in the judgment of Issuer or the Company (exercised reasonably), adversely affect in
any material respect Issuer or the Company, including by means of exposing Issuer or the Company to material liability (whether in relation to the transactions contemplated by the GSK Agreement, the GSK Agreement or otherwise), or (iii) would, or would involve any disclosure that would, result in the loss or waiver of any attorney-client privilege available to Issuer or the Company; provided, that, Issuer and the Company shall use their commercially reasonable efforts to implement arrangements that would permit such action, omission or disclosure while preserving such privilege.
Section 8.25 Compliance with Permits. In connection with all Product Development and Commercialization Activities by or on behalf of Issuer or any Subsidiary for each Licensed Product, Issuer or such Subsidiary shall comply, and shall use commercially reasonable efforts to cause each Third Party engaging in such activities on behalf of the Company or any Subsidiary to comply, in all material respects with all Permits.
Article IX
NEGATIVE COVENANTS
Each of the Note Parties covenants and agrees with Purchaser Representative that, until Payment in Full:
Section 9.01 Activities of Note Parties.
(a) Neither Note Party shall (i) enter into any Material Contract (other than those in existence on the Closing Date, in connection with a Permitted Royalty Monetization or New Arrangement) without the consent of Purchaser Representative (such consent not to be unreasonably withheld or delayed) or (ii) amend, modify, waive or terminate (other than expiration in accordance with its terms) any provision of, or permit or agree to the amendment, modification, waiver or termination (other than expiration in accordance with its terms) of any provision of, any of the SPV Organizational Documents or Material Contracts (other than the GSK Agreement, which is governed by Section 8.20 hereof), without the consent of Purchaser Representative (such consent not to be unreasonably withheld or delayed), if the related amendment, modification, waiver or termination could reasonably be expected to have an adverse effect, in any material respect, on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds. No Note Party shall establish or acquire any Subsidiaries.
(b) No Note Party shall:
(i) fail to hold itself out to the public and all other persons as a legal entity separate from the owners of its Capital Stock and from any other Person;
(ii) commingle its assets with assets of any other Person;
(iii) fail to conduct its business only in its own name, nor fail to comply with all organizational formalities necessary to maintain its separate existence;
(iv) fail to maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person nor have its assets listed on any financial statement of any other Person; provided, however, that the Note Parties and their assets may be included in a consolidated financial statement of its Affiliates in conformity with applicable
provisions of GAAP (provided, that, such assets shall also be listed on such Note Party’s own separate balance sheet);
(v) fail to pay its own liabilities and expenses only out of its own funds; provided, that, the foregoing shall not prohibit the payment of any liabilities and expenses by the Company on behalf of the Note Parties so long as such payments are subject to reimbursement or are otherwise recorded as capital contributions;
(vi) enter into any transaction with an Affiliate except transactions permitted by Section 9.06 of this Agreement;
(vii) issue any securities of any kind except as contemplated by this Agreement and the other Transaction Documents;
(viii) fail to correct any known misunderstanding regarding its separate identity and not identify itself as a department or division of any other Person;
(ix) fail to maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, that the foregoing shall not require the holders of its Capital Stock to make additional capital contributions to any Note Party;
(x) fail to cause the Representatives of such Note Party to act at all times with respect to such Note Party consistently and in furtherance of the foregoing and in the best interests of such Note Party;
(xi) make any payment or distribution of assets with respect to any obligation of any other Person other than as required or permitted by the Transaction Documents or under trade or commercial agreements entered into in the ordinary course of business;
(xii) engage in any business activity other than (A) entering into and performing its obligations under or with respect to the Transaction Documents, the Material Contracts, any agreement entered into in connection with any Permitted Royalty Monetization, any New Arrangement entered into in accordance with this Agreement and all documents, instruments or agreements executed and delivered in connection with the foregoing, (B) owning, holding, managing, maintaining and otherwise dealing with the Transferred Assets, the Collateral, the GSK Proceeds, the Collection Account, the Excluded GSK Proceeds or any Permitted Royalty Monetization or any documents related thereto, the Material Contracts and any New Arrangement entered into in accordance with this Agreement, (C) issuing, paying and repaying the Notes and incurring, paying and discharging the Obligations and any other liabilities permitted under the Transaction Documents, and (D) engaging in any activities ancillary or incidental to the foregoing;
(xiii) fail to timely file any Tax returns or timely pay any Taxes as may be required under Law (including in its capacity as withholding agent) except for Taxes contested in good faith by appropriate proceedings, diligently conducted, and for which adequate reserves are maintained in accordance with GAAP or where such Taxes, individually or in the aggregate, are less than $[***] and such failure would not have an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of Purchaser Representative to receive the GSK Proceeds;
(xiv) fail to have at least one (1) Independent Manager at all times;
(xv) without the unanimous consent of the holders of its Capital Stock and its Independent Manager, file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation, receivership or reorganization statute, make an assignment for the benefit of creditors, admit in writing its inability to pay its debts as they become due, seek or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for it or for all or any substantial part of its property, or take any action in furtherance of any Insolvency Event; or
(xvi) fail to do or cause to be done all things reasonably necessary to observe all limited liability company formalities and preserve its existence and good standing, including maintaining the independent-manager and bankruptcy-remote governance provisions required by its SPV Organizational Documents.
(c) No Note Party shall issue any Capital Stock in certificated form.
Section 9.02 Merger; Disposition of Assets
(a) No Note Party shall merge or consolidate with or into (whether or not a Note Party is the surviving Person) any other Person and no Note Party will sell, convey, assign, transfer, lease, sublease, license, sublicense or otherwise Dispose of all or substantially all of its assets to any Person in a single transaction or series of related transactions.
(b) No Note Party shall sell, assign, convey, transfer, lease, sublease, license, sublicense or otherwise Dispose of (including by way of merger or consolidation) any right, title or interest in or to all or any part of its business, assets or property of any kind whatsoever, whether tangible or intangible, whether now owned or hereafter acquired, other than (i) pursuant to a New Arrangement, (ii) pursuant to the Note Documents, (iii) pursuant to any Permitted Royalty Monetization, or (iv) with the prior written consent of Purchaser Representative (in its sole discretion). In furtherance of the foregoing, the Note Parties shall not sell, assign, convey, transfer, lease, sublease, license, sublicense or otherwise Dispose of any right, title or interest in or to the GSK Agreement (other than in connection with any Permitted Royalty Monetization), the Meiji License Agreement and the Patents licensed to Issuer (as assignee of the Company pursuant to the Issuer Contribution Agreement) pursuant thereto.
Section 9.03 Liens. The Note Parties shall not, and shall cause the Company not to, create or suffer to exist any Lien on or with respect to Collateral, except for Permitted Liens. The Note Parties shall not, and shall cause the Company not to, create or suffer to exist any Lien on or with respect to the GSK Agreement licensed to Issuer pursuant thereto, except for Permitted Liens and, solely with respect to the continuing first priority granted to Secured Party under the Note Documents, Permitted Liens entitled to priority under Applicable Law.
Section 9.04 Investment Company Act. Neither the Company nor any of its Subsidiaries shall be or become an investment company subject to registration under the Investment Company Act of 1940.
Section 9.05 Limitation on Additional Indebtedness. The Note Parties shall not, directly or indirectly, incur or suffer to exist any Indebtedness; provided, that, Issuer (and, in the case of clause (a), Holdings) may incur:
(a) Indebtedness under this Agreement and the other Transaction Documents;
(b) to the extent constituting Indebtedness, Contractual Obligations under Control Agreement, Services Agreement, Meiji License Agreement, GSK Agreement and any New Arrangement related thereto, and any agreement entered into in connection with the any Permitted Royalty Monetization;
(c) all taxes, assessments and governmental charges levied upon a Note Party or upon its income, profits or property, solely to the extent timely paid or otherwise appropriately contested in good faith by appropriate proceedings, diligently conducted, and for which adequate reserves are maintained in accordance with GAAP;
(d) to the extent constituting Indebtedness, all costs and expenses of the Independent Manager or other Maintenance Expenses (it being understood that Company shall be required to pay such items in accordance with the Issuer Contribution Agreement); and
(e) Indebtedness consisting of the financing of insurance premiums with the providers of such insurance or their affiliates in the ordinary course of business.
Section 9.06 Limitation on Transactions with Affiliates. The Note Parties shall not, directly or indirectly, enter into any transaction or series of related transactions or participate in any arrangement (including any purchase, sale, lease or exchange of assets or the rendering of any service) with any Affiliate other than any transaction entered into in connection with any Permitted Royalty Monetization or in the ordinary course of business of Issuer upon fair and reasonable terms no less favorable to the Note Parties than it would obtain in a comparable arm’s-length transaction with a Third Party (it being agreed by the Parties that the Transaction Documents and the transactions contemplated or required thereby, including the use of proceeds thereof, shall be deemed to comply with this requirement).
Section 9.07 ERISA.
(a) The Note Parties shall not sponsor, maintain or contribute to, or agree to sponsor, maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) whether or not subject to ERISA, that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Note Parties shall not engage in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or in any transaction that, assuming that no assets of Purchaser Representative are or are deemed to be Plan Assets, would cause any obligation or action taken or to be taken hereunder (or the exercise by Purchaser Representative of any of its rights under the Note, this Agreement or the other Note Documents) to be a non-exempt prohibited transaction under such provisions.
(c) The Note Parties shall not incur any liability with respect to any obligation to provide medical benefits with respect to any person beyond their retirement or other termination of service, other than coverage mandated by Law, that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.08 Dividends and Distributions. The Note Parties will not, directly or indirectly, make any dividends or other distributions (whether in cash, securities or other property) to holders of its Capital Stock.
Section 9.09 Limitation on Investments. Issuer shall not make any Investments except Investments held in the form of cash or Cash Equivalents.
Section 9.10 Sanctions; Anti-Corruption Laws. Issuer shall not, directly or indirectly, use the proceeds of any Notes, or lend, contribute or otherwise make available such proceeds to any Person, to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person of Sanctions or Anti-Corruption Laws.
Section 9.11 Organizational Documents; Certain Amendments. The Note Parties shall not (a) amend, modify, restate or change its Organizational Documents in a manner materially adverse to Purchaser Representative, (b) change its fiscal year, (c) amend, modify or change any of the terms or provisions of any Material Contract without the prior written consent of Purchaser Representative.
Section 9.12 [Reserved].
Section 9.13 Accounts and Payment Instructions.
(a) The Note Parties shall not open any deposit account or securities account other than the Collection Account, without the prior written consent of Purchaser Representative.
(b) Issuer shall not make any change in the instructions to GSK with respect to the deposits of the GSK Proceeds to the Collection Account prior to Payment in Full.
Section 9.14 Tax Status. Issuer shall not take or permit any action that would cause Issuer to cease, for U.S. federal or any applicable state or local income tax purpose, a disregarded entity owned by a U.S. Person.
Article X
EVENTS OF DEFAULT
Section 10.01 Events of Default. If one or more of Events of Default occurs and is continuing, Purchaser Representative shall be entitled to the remedies set forth in Section 10.02.
Section 10.02 Default Remedies. If any Event of Default shall occur and be continuing, Purchaser Representative may, by Notice to Issuer, (a) exercise all rights and remedies available to Purchaser Representative hereunder and under the other Note Documents and Applicable Law (which exercise may be determined in its sole discretion and which such exercise shall not constitute an election of remedies), including enforcement of the security interests created thereby, (b) declare the Notes, all interest thereon, and all other Obligations to be immediately due and payable, whereupon all such amounts shall become immediately due and payable, all without diligence, presentment, demand of payment, protest or further notice of any kind, which are expressly waived by Issuer and (c) declare the obligations of Purchaser Representative hereunder to be terminated, whereupon such obligations shall terminate; provided, however, that if any event of any kind referred to in clause (j) of the definition of “Event of Default” herein occurs as a result of an Insolvency Event of Issuer, all amounts payable hereunder by Issuer shall become immediately due and payable and Purchaser Representative shall be entitled to exercise rights and remedies under the Note Documents and Applicable Law without diligence, presentment, demand of payment, protest or notice of any kind (including any notice by Purchaser Representative of a declaration requiring prepayment of the Notes under Section 3.02, should Purchaser Representative so elect), all of which are hereby expressly waived by Issuer. Each Notice delivered pursuant to this Section 10.02 shall be effective when sent.
Section 10.03 Right of Set-off; Sharing of Set-off.
(a) If any amount payable hereunder is not paid as and when due, Issuer irrevocably authorizes Purchaser Representative (i) to proceed, to the fullest extent permitted by Applicable Law, without prior notice, by right of set-off, bankers’ lien, counterclaim or otherwise, against any assets of Issuer in any currency that may at any time be in the possession of Purchaser Representative or any of its Affiliates, to the full extent of all amounts payable to Purchaser Representative hereunder or (ii) to charge to Issuer’s account with Purchaser Representative or any of its Affiliates the full extent of all amounts payable by Issuer to Purchaser Representative hereunder; provided, however, that Purchaser Representative shall notify Issuer of the exercise of such right promptly following such exercise.
(b) If any Purchaser shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on the Notes or other obligations owed to such Purchaser resulting in such Purchaser’s receiving payment of a proportion of the aggregate amount of the Notes and accrued interest thereon or other obligations owed to such Purchaser greater than its pro rata share thereof as provided herein, then Purchaser receiving such greater proportion shall (a) notify the other Purchasers of such fact, and (b) purchase (for cash at face value) participations in the Notes and such other obligations of the other Purchasers, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by Purchasers ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Notes and other amounts owing them; provided, that, the provisions of this Section 10.03(b) shall (x) not be construed to apply to (A) any payment made by Issuer pursuant to and in accordance with the express terms of this Agreement or (B) any payment obtained by a Purchaser as consideration for the assignment of or sale of a participation in the Notes to any Assignee and (y) only be applicable if there is more than one Purchaser.
Section 10.04 Rights Not Exclusive. The rights provided for herein are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by Law.
Article XI
INDEMNIFICATION
Section 11.01 Losses.
(a) The Note Parties agree to defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold harmless each Indemnitee from and against any and all Indemnified Liabilities, in all cases, arising, in whole or in part, out of or relating to any claim, notice, suit or proceeding commenced or threatened in writing (including, without limitation, by electronic means) by any Person (including any Governmental Entity); provided, that, the Note Parties shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from (i) the gross negligence or willful misconduct of an Indemnitee, (ii) a breach by an Indemnitee of any Note Document, (iii) arise from any claim, action, suit, inquiry, litigation, investigation or proceeding that does not involve an act or omission of any Note Party or the Company and that is brought by an Indemnitee against any other Indemnitee, and (iv) a decline in sales of the Licensed Product due to factors (including an Insolvency Event of GSK) that are not attributable to the acts or omissions of Issuer or its Affiliates that constitute a breach or default under the Transaction Documents. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 11.01 may be unenforceable in whole or in part because they violate any Law or public policy, the Note Parties shall contribute the maximum portion that they are permitted to pay and satisfy under Applicable
Law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. This Section 11.01 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages or similar amounts arising from any non-Tax claim. Amounts owing hereunder shall be payable by Issuer on each Payment Date in accordance with Section 4.02, and shall (other than in connection with a voluntary prepayment pursuant to Section 3.02(b) or as set forth in the Parent Guaranty) be due and payable solely from the GSK Proceeds, or, following the occurrence of a Prepayment Trigger, from proceeds of Collateral and all other assets of Issuer in accordance with the terms of the Note Documents.
(b) To the extent permitted by Applicable Law, no Party shall assert, and each Party hereby waives, any claim against each other Party and such Party’s Affiliates, directors, employees, attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Note Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, the Notes or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
Section 11.02 Assumption of Defense; Settlements. If any Indemnitee is entitled to indemnification under this Article XI with respect to any action or proceeding brought by a Third Party that is also brought against any Note Party or the Company, such Note Party or the Company may assume the defense of such action or proceeding with counsel reasonably satisfactory to such Indemnitee. Upon assumption of such defense, such Indemnitee shall have the right to participate in such action or proceeding and to retain its own counsel, but the Note Parties shall not be liable for any legal expenses of other counsel subsequently incurred by such Indemnitee in connection with the defense thereof unless (i) the Note Parties have otherwise agreed to pay such fees and expenses, (ii) the Note Parties shall have failed to employ counsel reasonably satisfactory to such Indemnitee in a timely manner or (iii) such Indemnitee shall have been advised by counsel that there are actual or potential conflicting interests between any Note Party or the Company, on the one hand, and such Indemnitee, on the other hand, including situations in which there are one or more legal defenses available to such Indemnitee that are different from or additional to those available to such Note Party or the Company; provided, that, the Note Parties shall not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time for such Indemnitees, except to the extent that local counsel, in addition to regular counsel, is required in order to effectively defend against such action or proceeding. No Note Party or the Company shall consent to the terms of any compromise or settlement of any action defended by it without the prior written consent of the affected Indemnitee unless such compromise or settlement (x) includes an unconditional release of such Indemnitee from all liability arising out of such action and (y) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of such Indemnitee. The Note Parties shall not be required to indemnify any Indemnitee for any amount paid or payable by such Indemnitee in the settlement of any action, proceeding or investigation without the written consent of Issuer, which consent shall not be unreasonably withheld, conditioned or delayed.
Article XII
PURCHASER REPRESENTATIVE
Section 12.01 Appointment; Authorization. Each Purchaser hereby appoints HCR SPERO SPV, LLC (or any Affiliate of Purchaser Representative that becomes Purchaser Representative pursuant to the terms hereof) to act on its behalf as Purchaser Representative under the Note Documents and authorizes Purchaser Representative to take such action as Purchaser Representative on its behalf and to exercise such powers under the Note Documents as are delegated to Purchaser Representative by the terms thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of Purchaser Representative and Purchasers, and Issuer shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” or “representative” in this Agreement or in any other Note Document (or any other similar term) with reference to Purchaser Representative is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
Section 12.02 Duties. Purchaser Representative shall not have any duties or obligations except those expressly set forth herein and in the other Note Documents, and its duties hereunder shall be administrative in nature. Neither Purchaser Representative nor any of its Affiliates shall be liable for any action taken or not taken by Purchaser Representative (i) with the consent or at the request of the Required Purchasers or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. In all cases in which the Note Documents do not require Purchaser Representative to take specific action, Purchaser Representative shall be fully justified in using its discretion in failing to take or in taking any action thereunder. Purchaser Representative shall be entitled to assume that no Default or Event of Default exists, and shall be deemed not to have knowledge of any Default or Event of Default, unless and until notice describing such Default is given to Purchaser Representative in writing by Issuer or a Purchaser.
Section 12.03 Reliance. Purchaser Representative shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Purchaser Representative also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. Purchaser Representative may consult with legal counsel (who may be counsel for Issuer), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Section 12.04 Indemnification by Purchasers. The Purchasers shall, on a ratable basis, indemnify Purchaser Representative its Affiliates and their respective officers, partners, directors, trustees, employees, agents and controlling Persons (to the extent not reimbursed by Issuer) upon demand against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from Purchaser Representative’s gross negligence, bad faith or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction) that Purchaser Representative may suffer or incur in connection with the Note Documents or any action taken or omitted by Purchaser Representative hereunder or thereunder.
Section 12.05 Non-Reliance. Each Purchaser acknowledges that it has, independently and without reliance upon Purchaser Representative or any other Purchaser or any of their Affiliates and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Purchaser also acknowledges that it will, independently and without reliance upon Purchaser Representative or any other Purchaser or any of their Affiliates and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Note Document or any related agreement or any document furnished hereunder or thereunder.
Section 12.06 Successor Purchaser Representative. Purchaser Representative may, at any time upon [***] prior notice of its resignation to the Purchasers and Issuer, resign as Purchaser Representative. Upon receipt of any such notice of resignation, the Required Purchasers shall have the right, in consultation with Issuer, to appoint a successor Purchaser Representative. So long as no Event of Default has occurred and is continuing, each such appointment shall be subject to the prior consent of Issuer (such consent not to be unreasonably withheld or delayed). Upon the acceptance of a successor’s appointment as Purchaser Representative hereunder and notice of such acceptance to the resigning Purchaser Representative, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the resigning (or resigned) Purchaser Representative; the resigning Purchaser Representative’s resignation shall become immediately effective and the resigning Purchaser Representative shall be discharged from all of its duties and obligations hereunder and under the other Note Documents. If no such successor shall have been so appointed by the Required Purchasers and shall have accepted such appointment within [***] after the resigning Purchaser Representative gives notice of its resignation, then the resigning Purchaser Representative, from and following the expiration of such [***] period, shall have the exclusive right, upon [***] notice to Issuer and the Purchasers, to make its resignation effective immediately.
Article XIII
MISCELLANEOUS
Section 13.01 Assignments.
(a) Issuer shall not be permitted to assign this Agreement without the prior written consent of all of the Purchasers and any purported assignment in violation of this Section 13.01 shall be null and void.
(b) Any Purchaser may at any time, including without limitation in connection with a transfer of a Note, assign its rights and obligations hereunder, in whole or in part, to an Assignee and any Purchaser may at any time pledge its rights and obligations hereunder to an Assignee.
(c) The parties to each assignment shall execute and deliver to Issuer an Assignment and Acceptance. Upon an assignment pursuant to Section 13.01(b) hereunder, (i) each reference in this Agreement to a “Purchaser” shall be deemed to be a reference to the assignor and the Assignee to the extent of their respective interests, (ii) such Assignee shall be a Purchaser party to this Agreement and shall have all the rights and obligations of a Purchaser and (iii) the assignor shall be released from its obligations hereunder to a corresponding extent of the assignment, and no further consent or action by any party shall be required, but shall continue to be entitled to the benefits of Article V.
(d) In the event there are multiple Purchasers, all payments of principal, interest, fees and any other amounts payable pursuant to the Note Documents shall be allocated on a pro rata basis among Purchasers according to their proportionate interests in the Notes.
(e) Issuer and Purchaser shall, from time to time at the request of the other party hereto, execute and deliver any documents that are necessary to give full force and effect to an assignment permitted hereunder, including a new Note in exchange for the Note held by any Purchaser.
Section 13.02 Successors and Assigns. Subject to the provisions of Section 13.01, this Agreement shall be binding upon, inure to the benefit of and be enforceable by, the parties hereto and their respective permitted successors and assigns.
Section 13.03 Notices. All Notices and other communications under this Agreement to a party hereto shall be in writing and shall be sent by email with PDF attachment, internationally recognized overnight delivery service or personal delivery to the following address of such party, or to such other address as shall be designated from time to time by such party in accordance with this Section 13.03:
(a) If to Issuer:
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c/o Spero Therapeutics, Inc. |
675 Massachusetts Avenue |
14th Floor |
Cambridge, MA 02139 |
Attention: Esther Rajavelu |
Email: [***] |
With a copy (which shall not constitute notice) to: |
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WilmerHale |
60 State Street |
Boston, MA 02109 |
Attention: George W. Shuster Jr.; Nathan J. Moore |
Email: george.shuster@wilmerhale.com; nathan.moore@wilmerhale.com |
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(b) If to Purchaser Representative:
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c/o HCRX Investments HoldCo, L.P. |
300 Atlantic Street, Suite 600 |
Stamford, CT 06901 |
Attention: [***] |
Email: [***]; |
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with a copy (which shall not constitute notice) to: |
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c/o HCRX Investments HoldCo, L.P. |
300 Atlantic Street, Suite 600 |
Stamford, CT 06901 |
Attention: Chief Legal Officer |
Email: [***] |
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with a copy (which shall not constitute notice) to: |
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Sidley Austin, LLP |
2323 Cedar Springs Rd. |
Dallas, Texas 75205 |
Attention: [***] |
Email: [***] |
Any Party may change its address for the receipt of Notices at any time by giving Notice thereof to each other Party. Except as otherwise provided herein, any Notice authorized or required to be given by this Agreement shall be effective when received.
Section 13.04 Entire Agreement. This Agreement, including the Exhibits and Schedules attached to this Agreement, together with the Note Documents, sets forth the entire agreement and understanding between the parties hereto as to the subject matter hereof. All express or implied agreements, promises, assurances, arrangements, representations, warranties and understandings as to the subject matter hereof, whether oral or written, heretofore made are superseded by this Agreement.
Section 13.05 Modification. No Note Document or provision thereof may be waived, amended or modified except, in the case of this Agreement, by an agreement or agreements in writing executed by Issuer, Purchaser Representative and the Required Purchasers or, in the case of any other Note Document, by an agreement or agreements in writing entered into by the parties thereto with the prior written consent of Purchaser Representative. No amendment, modification, waiver or consent shall, unless in writing and signed by Purchaser Representative, in addition to Issuer and the Required Purchasers, affect the rights, privileges, duties or obligations of Purchaser Representative under this Agreement or any other Note Document.
Section 13.06 No Delay; Waivers; etc. No delay on the part of Purchaser Representative in exercising any power or right hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right. No Purchaser shall be deemed to have waived any rights hereunder unless such waiver shall be in writing and signed by such Purchaser.
Section 13.07 Severability. If any term or provision of this Agreement is held to be invalid, illegal or unenforceable by a court, arbitrator or Governmental Entity of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement, which shall remain in full force and effect, and the parties hereto shall replace such term or provision with a new term or provision permitted by Applicable Law and having an economic effect as close as possible to the invalid, illegal or unenforceable term or provision. The holding of a term or provision to be invalid, illegal or unenforceable in a jurisdiction shall not have any effect on the application of such term or provision in any other jurisdiction.
Section 13.08 Determinations. Each determination or calculation by Purchaser Representative hereunder shall, in the absence of manifest error, be conclusive and binding on the Parties.
Section 13.09 Replacement of Note. Upon the loss, theft, destruction, or mutilation of the Note and (a) in the case of loss, theft or destruction, upon receipt by Issuer of indemnity or security reasonably satisfactory to it (except that if the holder of such Note is a Purchaser or any other financial institution of recognized responsibility, the holder’s own agreement of indemnity shall be deemed to be satisfactory) or (b) in the case of mutilation, upon surrender to Issuer of any mutilated Note, Issuer shall execute and deliver in lieu thereof a new Note, dated the Closing Date, in the same Principal Amount.
Section 13.10 Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of New York without regard to the conflicts of Laws principles thereof to the extent that such principles would require or permit the application of the Laws of a jurisdiction other than the State of New York.
Section 13.11 Jurisdiction. Each party hereto irrevocably submits to the exclusive jurisdiction of (a) the courts of the State of New York located in New York County, New York and (b) the U.S. District
Court for the Southern District of New York for the purposes of any suit, action or other proceeding arising out of, relating to or in connection with this Agreement or any transaction contemplated hereby. Each party hereto agrees to commence any action, suit or other proceeding arising out of, relating to or in connection with this Agreement or any transaction contemplated hereby in the U.S. District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the courts of the State of New York located in New York County, New York. Each party hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or other proceeding arising out of, relating to or in connection with this Agreement or any transaction contemplated hereby in (i) the courts of the State of New York located in New York County, New York or (ii) the U.S. District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives, and shall not assert by way of motion, defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement and the transactions contemplated hereby and thereby may not be enforced in or by any of the above-named courts.
Section 13.12 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED UNDER ANY TRANSACTION DOCUMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY TRANSACTION DOCUMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.12.
Section 13.13 Waiver of Immunity. To the extent that any Note Party has or hereafter may be entitled to claim or may acquire, for itself or any of its assets, any immunity from suit, jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, or otherwise) with respect to itself or any of its property, each Note Party hereby irrevocably waives such immunity in respect of its obligations hereunder and under the Notes to the fullest extent permitted by law.
Section 13.14 Nonliability of Purchasers and Purchaser Representative. The relationship between Issuer on the one hand and the Purchasers and Purchaser Representative on the other hand shall be solely that of borrower and lender. Neither Purchaser Representative nor any Purchaser shall have any fiduciary or advisory responsibility to Issuer. Neither Purchaser Representative nor any Purchaser undertakes any responsibility to Issuer to review or inform Issuer of any matter in connection with any phase of Issuer’s business or operations. Neither Purchaser Representative nor any Purchaser shall have any liability with respect to, and Issuer hereby waives, releases and agrees not to sue for, any special, indirect, punitive or consequential damages or liabilities.
Section 13.15 Limitation on Rights of Others. Except for the Indemnitees referred to in Section 11.01, no Person other than a Party shall have any legal or equitable right, remedy or claim under or in respect of this Agreement.
Section 13.16 Survival.
(a) The Obligations of Issuer contained in Sections 4.06, 4.07, Article V, Article XI and this Section 13.16 shall survive the repayment of the Notes, assignment of the Notes by any Purchaser and the cancellation of the Note and the termination of the other obligations of Issuer hereunder.
(b) All representations and warranties by Issuer, whether with respect to Issuer, the Company, any respective Affiliate or any asset or property, contained in this Agreement shall survive the execution, delivery and acceptance thereof by the Parties and the closing of the transactions described in this Agreement and continue in effect until payment of all amounts due to Purchaser Representative under the Note Documents.
Section 13.17 Confidentiality.
(a) Until Payment in Full, and for a period of [***] thereafter, each Party shall maintain in strict confidence all Confidential Information and materials disclosed or provided to it by the other Party, except as approved in writing in advance by the disclosing Party, and shall not use or reproduce the disclosing Party’s Confidential Information for any purpose other than as required to carry out its obligations and exercise its rights pursuant to this Agreement. Notwithstanding the foregoing, the obligations of confidentiality and non-use set forth in this Section 13.17 shall not apply to the extent that the receiving Party or its Affiliates: (a) discloses such Confidential Information solely on a “need to know basis” to its employees, consultants and Affiliates as well as any actual or potential acquirers, merger partners, licensees, permitted assignees, collaborators (including licensees), subcontractors, investment bankers, investors, limited partners, partners, lenders, or other financial partners, and its and their respective directors, employees, contractors and agents, on a confidential basis to the extent requested by an authorized representative of a U.S. or foreign tax authority, or (b) discloses Confidential Information in response to a routine audit or examination by, or a blanket document request from, a Governmental Entity. A Party receiving any such Confidential Information hereunder agrees to institute measures to protect the Confidential Information in a manner consistent with the measures it uses to protect its own most sensitive proprietary and confidential information, which in any event must not be less than a reasonable standard of care. Each Party shall be responsible for the breach of this Section 13.17 by its employees, consultants or Third Parties to whom such disclosure is made pursuant to this Section 13.17. Each Party shall immediately notify the other Party upon discovery of any loss or unauthorized disclosure of the other Party’s Confidential Information.
(b) The obligations of confidentiality and non-use set forth in Section 13.17(a) shall not apply to the extent that the receiving Party or its Affiliates is required to disclose Confidential Information pursuant to: (i) an order of a court of competent jurisdiction; (ii) Applicable Laws; (iii) regulations or rules of a securities exchange; or (iv) requirement of a Governmental Entity.
(c) Effective upon the date hereof, the Confidentiality Agreement shall terminate and be of no further force or effect, and shall be superseded by the provisions of this Section 13.17.
Section 13.18 Patriot Act Notification. Purchaser Representative hereby notifies Issuer, Holdings and the Company that, pursuant to the requirements of the Patriot Act, regulations promulgated thereunder and other Applicable Law, Purchasers may be required to obtain, verify and record information that identifies each Note Party and the Company, including the name and address of each such party and other information that will allow Purchaser to identify each such party in accordance with the Patriot Act. The Company and each Note Party agree to provide, promptly following a request by a Purchaser, all such
documentation and information as such Purchaser reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.
Section 13.19 Electronic Execution; Counterparts. This Agreement, any Note Document and any other Notice, including Notice required to be in writing, may be in the form of an Electronic Record and may be executed using Electronic Signatures. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Copies of executed counterparts transmitted by email with PDF attachment shall be considered original executed counterparts.
Section 13.20 Limited Recourse; Disposition of Excluded GSK Proceeds. For the avoidance of doubt and notwithstanding anything else to the contrary in this Agreement or the other Note Documents (other than with respect to the Parent Guaranty and the obligations of the Company to pay the Maintenance Expenses and to maintain insurance as set forth in the Issuer Contribution Agreement), all Obligations and Guaranteed Obligations shall (other than in connection with a voluntary prepayment pursuant to Section 3.02(b) or as set forth in the Parent Guaranty) be payable hereunder solely from the GSK Proceeds, or, following the occurrence of a Prepayment Trigger, from proceeds of Collateral and all other assets of Issuer in accordance with the terms of the Note Documents (it being understood and agreed that the following sentence does not apply to the separate obligations of the Company pursuant to the Parent Guaranty or the obligation of the Company to pay the Maintenance Expenses and to maintain insurance as set forth in the Issuer Contribution Agreement). For the avoidance of doubt and notwithstanding anything else to the contrary in this Agreement or the other Note Documents, the Note Parties and the Company shall be permitted to enter into and consummate one or more Permitted Royalty Monetization, and no such transfer shall result in a Default or Event of Default hereunder or any other Note Document, in each case so long as such transfer complies with the subordination, intercreditor and other requirements set forth in the definition of Permitted Royalty Monetization.
Article XIV
GUARANTY
Section 14.01 Guaranty of Obligations. Holdings hereby irrevocably and unconditionally guarantees to Purchaser Representative the due and punctual payment in full and performance of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the U.S. Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).
Section 14.02 Payment by Holdings. Holdings hereby agrees, in furtherance of the foregoing and not in limitation of any other right which Purchaser Representative may have at Law or in equity against Holdings by virtue hereof, that upon the occurrence of the failure of Issuer to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the U.S. Bankruptcy Code, 11 U.S.C. § 362(a)), Holdings will upon demand pay, or cause to be paid, in cash, to Purchaser Representative, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Issuer’s becoming the subject of a case under any Bankruptcy Law, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Issuer for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Purchaser Representative as aforesaid.
Section 14.03 Liability of Holdings Absolute. Holdings agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, Holdings agrees as follows:
(a) this Guaranty is a guaranty of payment when due and not of collectability; this Guaranty is a primary obligation of Holdings and not merely a contract of surety;
(b) Purchaser Representative may enforce this Guaranty upon the occurrence and during the continuance of an Event of Default notwithstanding the existence of any dispute between Issuer and any Purchaser Representative with respect to whether such Event of Default has occurred and is continuing;
(c) the obligations of Holdings hereunder are independent of the Obligations of Issuer and the obligations of any other guarantor of the Obligations of Issuer, and a separate action or actions may be brought and prosecuted against such Holdings whether or not any action is brought against Issuer or any such other guarantor and whether or not Issuer is joined in any such action or actions;
(d) payment by Issuer or any other guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Holdings liability for any portion of the Guaranteed Obligations which has not been paid; provided, that, without limiting the generality of the foregoing, if Purchaser Representative is awarded a judgment in any suit brought to enforce any Holdings covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Holdings from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Holdings, limit, affect, modify or abridge any other liability of Holdings hereunder in respect of the Guaranteed Obligations;
(e) any Purchaser Representative, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Holdings liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Purchaser Representative in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Purchaser Representative may have against any such security, in each case, as such Purchaser Representative in its discretion may determine consistent herewith and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of Holdings against Issuer or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Note Documents or Law;
(f) this Guaranty and the obligations of Holdings hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not Holdings shall have had notice or Knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of Law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Note Documents, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Note Documents or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case, whether or not in accordance with the terms hereof or such Note Document or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Note Documents or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as Collateral for Indebtedness other than the Guaranteed Obligations) to the payment of Indebtedness other than the Guaranteed Obligations, even though Purchaser Representative might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) Purchaser Representative’s consent to the change, reorganization or termination of the corporate structure or existence of Issuer and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any Collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims that Issuer may allege or assert against Purchaser Representative in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction, and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of Holdings as an obligor in respect of the Guaranteed Obligations.
Section 14.04 Waivers by Holdings. Holdings hereby waives, to the fullest extent permitted by Law, for the benefit of Purchaser Representative: (a) any right to require any Purchaser, as a condition of payment or performance by Holdings, to (i) proceed against Issuer, any other guarantor of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Issuer, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any deposit account (including, without limitation, the Collection Account) or credit on the books of any Purchaser in favor of Issuer or any other Person, or (iv) pursue any other remedy in the power of any Purchaser whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Issuer or any other guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Issuer or any other guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of Law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Purchaser’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith or gross negligence; (e)(i) any principles or provisions of Law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Holdings obligations hereunder, (ii) the benefit of any statute of limitations affecting such Holdings liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any
Purchaser protect, secure, perfect or insure any security interest or Lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of Default hereunder, or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Issuer or issuances of Notes and notices of any of the matters referred to in Section 13.03 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by Law which limit the liability of or exonerate Holdings or sureties, or which may conflict with the terms hereof.
Section 14.05 Holdings Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall have been paid in full, Holdings hereby waives, to the fullest extent permitted by Law, any claim, right or remedy, direct or indirect, that Holdings now has or may hereafter have against Issuer or any other guarantor or any of its assets in connection with this Guaranty or the performance by Holdings of its obligations hereunder, in each case, whether such claim, right or remedy arises in equity, under contract, by statute, under common Law or otherwise and including (a) any right of subrogation, reimbursement or indemnification that Holdings now has or may hereafter have against Issuer with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Purchaser now has or may hereafter have against Issuer, and (c) any benefit of, and any right to participate in, any Collateral or security now or hereafter held by any Purchaser. In addition, until the Guaranteed Obligations shall have been paid in full, Holdings shall withhold exercise of any right of contribution Holdings may have against any other guarantor of the Guaranteed Obligations. Holdings further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification Holdings may have against Issuer or against any Collateral or security, and any rights of contribution Holdings may have against any such other guarantor, shall be junior and subordinate to any rights any Purchaser may have against Issuer, to all right, title and interest any Purchaser may have in any such Collateral or security, and to any right any Purchaser may have against such other guarantor. If any amount shall be paid to Holdings on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally paid in full, such amount shall be held in trust for Purchaser and shall forthwith be paid over to Purchaser to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.
Section 14.06 Subordination of Other Obligations. Any Indebtedness of Issuer or any other guarantor now or hereafter held by Holdings (the “Obligee Holdings”) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such Indebtedness collected or received by Holdings after an Event of Default has occurred and is continuing shall be held in trust for Purchaser Representative and shall forthwith be paid over to Purchaser Representative to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of Holdings under any other provision hereof. Notwithstanding anything in this Agreement, unless an Event of Default shall then exist, Holdings may receive payments on such Indebtedness.
Section 14.07 Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full. Holdings hereby irrevocably waives, to the fullest extent permitted by Law, any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.
Section 14.08 Authority of Holdings or Issuer. It is not necessary for any Purchaser Representative to inquire into the capacity or powers of Holdings or Issuer or the officers, directors or agent acting or purporting to act on behalf of any of them.
Section 14.09 Financial Condition of Issuer. Issuer may sell additional Notes and the Indebtedness and other Obligations under the Notes and other Note Documents may be continued from time to time, in each case, without notice to or authorization from Holdings regardless of the financial or other condition of Issuer at the time of any such grant or continuation. Purchaser Representative shall not have any obligation to disclose or discuss with Holdings its assessment, or Holdings assessment, of the financial condition of Issuer. Holdings has adequate means to obtain information from Issuer on a continuing basis concerning the financial condition of Issuer and its ability to perform its Obligations under the Note Documents, and Holdings assumes the responsibility for being and keeping informed of the financial condition of Issuer and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Holdings hereby waives, to the fullest extent permitted by Law, and relinquishes any duty on the part of any Purchaser to disclose any matter, fact or thing relating to the business, operations or conditions of Issuer now known or hereafter known by any Purchaser.
Section 14.10 Bankruptcy, etc. (a) So long as any Guaranteed Obligations remain outstanding, Holdings shall not, without the prior written consent of Purchasers, commence or join with any other Person in commencing any bankruptcy, examinership, reorganization or insolvency case or proceeding of or against Issuer or any other guarantor. The obligations of Holdings hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, examinership, insolvency, receivership, reorganization, liquidation or arrangement of Issuer or any other guarantor or by any defense which Issuer or any other guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.
(a) Holdings acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of Law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Holdings and Purchaser Representative that the Guaranteed Obligations which are guaranteed by Holdings pursuant hereto should be determined without regard to any rule of Law or order which may relieve Issuer of any portion of such Guaranteed Obligations. Holdings will permit any trustee in bankruptcy, receiver, examiner, debtor in possession, assignee for the benefit of creditors or similar Person to pay Purchaser Representative, or allow the claim of Purchaser Representative in respect of, any such interest accruing after the date on which such case or proceeding is commenced.
(b) In the event that all or any portion of the Guaranteed Obligations are paid by Issuer, the obligations of Holdings hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Purchaser as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.
[Signature page follows.]
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day and year first above written.
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SPERO SPV, LLC, as Issuer |
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By: |
/s/ Esther Rajavelu |
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Name: Esther Rajavelu |
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Title: Chief Executive Officer, Chief Financial Officer and Treasurer |
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SPERO HOLDINGS SPV, LLC, as Holdings |
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By: |
/s/ Esther Rajavelu |
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Name: Esther Rajavelu |
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Title: Chief Executive Officer, Chief Financial Officer and Treasurer |
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HCR SPERO SPV, LLC, as Purchaser Representative and Purchaser |
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By: |
/s/ Clarke B. Futch |
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Name: Clarke B. Futch |
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Title: Authorized Signatory |
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HCRX Investments Holdco, L.P., as Purchaser |
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By: |
/s/ Clarke B. Futch |
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Name: Clarke B. Futch |
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Title: Chairman & Chief Executive Officer |
Exhibit 10.6
Certain identified information has been excluded from the exhibit by marking such portions with brackets (“[***]”) because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential.
ROYALTY AND MILESTONE PAYMENT INTEREST PURCHASE AND SALE AGREEMENT
by and among
SPERO SPV, LLC,
as the Company,
THE ENTITIES MANAGED BY HEALTHCARE ROYALTY MANAGEMENT, LLC LISTED ON THE SIGNATURE PAGES HERETO, as the Purchasers
and
HCR SPERO SPV, LLC, as the Purchaser Representative
Dated July 8, 2026
TABLE OF CONTENTS
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Page |
ARTICLE I DEFINED TERMS AND RULES OF CONSTRUCTION |
1 |
Section 1.1 |
Defined Terms |
1 |
Section 1.2 |
Other Interpretive Provisions |
19 |
Section 1.3 |
Accounting Terms |
20 |
ARTICLE II PURCHASE, SALE AND ASSIGNMENT OF THE PURCHASED PROCEEDS; CLOSING AND PAYMENT OF PURCHASE PRICE |
20 |
Section 2.1 |
Purchase, Sale and Assignment |
20 |
Section 2.2 |
Purchase Price |
21 |
Section 2.3 |
No Assumed Obligations |
21 |
Section 2.4 |
Excluded Assets |
21 |
ARTICLE III COLLECTION ACCOUNT; PAYMENT PROVISIONS; Taxes |
22 |
Section 3.1 |
Collection Account |
22 |
Section 3.2 |
Payment of GSK Proceeds |
23 |
Section 3.3 |
Payment/Currency Exchange |
26 |
Section 3.4 |
Taxes |
26 |
Section 3.5 |
Mitigation |
28 |
Section 3.6 |
Survival |
29 |
ARTICLE IV CLOSING |
29 |
Section 4.1 |
Closing |
29 |
Section 4.2 |
Closing Deliverables of the Company |
29 |
ARTICLE V REPRESENTATIONS AND WARRANTIES |
30 |
Section 5.1 |
Existence, Qualification and Power; Subsidiaries |
30 |
Section 5.2 |
Authorization; No Contravention |
31 |
Section 5.3 |
Execution and Delivery; Binding Effect |
31 |
Section 5.4 |
No Liens; Title to Purchased Proceeds |
31 |
Section 5.5 |
Governmental and Third Party Authorizations |
31 |
Section 5.6 |
No Material Adverse Effect |
32 |
Section 5.7 |
No Litigation |
32 |
Section 5.8 |
Solvency |
32 |
Section 5.9 |
No Brokers’ Fees |
32 |
Section 5.10 |
Compliance with Laws |
32 |
Section 5.11 |
Investment Company Act |
32 |
Section 5.12 |
Taxes |
32 |
Section 5.13 |
Ownership of the Company |
33 |
Section 5.14 |
Material Contracts |
33 |
Section 5.15 |
Perfection of Security Interests in the Back-up Collateral |
35 |
Section 5.16 |
Names |
36 |
Section 5.17 |
Sanctions Concerns; Anti-Corruption Laws; PATRIOT Act |
36 |
Section 5.18 |
Indebtedness |
36 |
Section 5.19 |
Intellectual Property Matters |
37 |
Section 5.20 |
Compliance of Licensed Products |
39 |
Section 5.21 |
Disclosure |
39 |
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ARTICLE VI COVENANTS |
39 |
Section 6.1 |
Books and Records |
39 |
Section 6.2 |
Notices |
40 |
Section 6.3 |
Preservation of Existence, Etc |
42 |
Section 6.4 |
Compliance with Laws |
42 |
Section 6.5 |
GSK License Agreement |
42 |
Section 6.6 |
Termination of the GSK License Agreement |
44 |
Section 6.7 |
Back-up Collateral Matters |
45 |
Section 6.8 |
Compliance with Material Contracts |
46 |
Section 6.9 |
Audits |
46 |
Section 6.10 |
IP Rights |
48 |
Section 6.11 |
Compliance with Permits |
49 |
Section 6.12 |
Additional Covenants of the Company |
49 |
Section 6.13 |
Payment of Taxes |
50 |
Section 6.14 |
Parent’s Performance on Behalf of the Company |
50 |
ARTICLE VII NEGATIVE COVENANTS |
50 |
Section 7.1 |
Liens |
50 |
Section 7.2 |
Fundamental Changes |
51 |
Section 7.3 |
Organization Documents; Fiscal Year; Legal Name, Jurisdiction of Organization and Form of Organization; Certain Amendments; Subsidiaries |
51 |
Section 7.4 |
Anti-Corruption Laws; Anti-Terrorism Laws |
51 |
Section 7.5 |
Tax Status |
52 |
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF THE PurchaserS and THE PURCHASER REPRESENTATIVE |
52 |
Section 8.1 |
Organization |
52 |
Section 8.2 |
No Conflicts |
52 |
Section 8.3 |
Authorization |
52 |
Section 8.4 |
Governmental and Third Party Authorizations |
52 |
Section 8.5 |
No Litigation |
53 |
Section 8.6 |
No Brokers’ Fees |
53 |
Section 8.7 |
Funds Available |
53 |
Section 8.8 |
Access to Information |
53 |
Section 8.9 |
Tax Status. |
53 |
ARTICLE IX Purchaser Representative |
53 |
Section 9.1 |
Appointment; Authorization |
53 |
Section 9.2 |
Duties |
53 |
Section 9.3 |
Reliance |
54 |
Section 9.4 |
Indemnification by Purchasers |
54 |
Section 9.5 |
Non-Reliance |
54 |
Section 9.6 |
Successor Purchaser Representative |
54 |
ARTICLE X MISCELLANEOUS |
55 |
Section 10.1 |
Amendments; No Waivers |
55 |
Section 10.2 |
Notices |
55 |
Section 10.3 |
No Waiver; Cumulative Remedies; Enforcement |
56 |
Section 10.4 |
Expenses; Indemnity. |
56 |
Section 10.5 |
Payments Set Aside |
59 |
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Section 10.6 |
Assignment |
60 |
Section 10.7 |
Treatment of Certain Information; Confidentiality |
60 |
Section 10.8 |
Counterparts; Effectiveness |
61 |
Section 10.9 |
Survival of Representations and Warranties |
61 |
Section 10.10 |
Severability |
61 |
Section 10.11 |
Governing Law; Jurisdiction; Etc. |
61 |
Section 10.12 |
Waiver of Right to Trial by Jury |
62 |
Section 10.13 |
Electronic Execution; Electronic Records; Counterparts |
63 |
Section 10.14 |
USA PATRIOT Act |
64 |
Section 10.15 |
No Advisory or Fiduciary Relationship |
64 |
Section 10.16 |
Entire Agreement |
64 |
Section 10.17 |
No Third Party Rights |
65 |
Section 10.18 |
Table of Contents and Headings |
65 |
Section 10.19 |
Public Announcement. |
65 |
Section 10.20 |
Specific Performance |
66 |
Section 10.21 |
Limited Recourse; Disposition of Retained Excess Proceeds |
66 |
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Schedule I |
Licensed Products |
Schedule 5.9 |
Brokers’ Fees |
Schedule 5.14(k) |
Material Contracts – Audits |
Schedule 5.16(a) |
Organizational Information |
Schedule 5.16(b) |
Organizational Changes |
Schedule 5.19(a) |
Patents |
Schedule 5.20(c) |
Regulatory Authorizations for Tebipenem Pivoxil Hydrobromide |
Schedule 9.2 |
Purchaser Representative’s Office |
Exhibit A-1 |
Bill of Sale – Purchaser Representative |
Exhibit A-2 |
Bill of Sale – Company |
Exhibit B |
Contribution Agreement |
Exhibit C |
Equity Contribution Agreement |
Exhibit D |
Payment Instruction Letter |
Exhibit E |
Company Account |
Exhibit F-1 |
GSK License Agreement |
Exhibit F-2 |
Meiji License Agreement |
ROYALTY AND MILESTONE PAYMENT INTEREST PURCHASE AND SALE AGREEMENT
This ROYALTY AND MILESTONE PAYMENT INTEREST PURCHASE AND SALE AGREEMENT (this “Agreement”) dated as of July 8, 2026 is by and among SPERO SPV, LLC, a Delaware limited liability company (the “Company”), the entities managed by HEALTHCARE ROYALTY MANAGEMENT, LLC listed on the signature pages hereto (the “Purchasers”) and HCR SPERO SPV, LLC, a Delaware limited liability company (the “Purchaser Representative”), solely in its capacity as agent for, and representative of, the Purchasers. Each of the Company and the Purchasers is referred to in this Agreement as a “Party” and collectively as the “Parties”.
W I T N E S S E T H:
WHEREAS, Spero Therapeutics, Inc., a Delaware corporation (together with its permitted successors or assigns, “Parent”), has formed each of Spero Holdings SPV, LLC, a Delaware limited liability company (“Holdings”), and the Company as special purpose vehicles, and upon the Parties’ entry into this Agreement, Parent owns 100% of the Capital Stock of Holdings and Holdings owns 100% of the Capital Stock of the Company.
WHEREAS, the Company holds certain assets and rights relating to the Licensed Products as a result of the Contribution Agreement and the transactions contemplated therein, which transactions were consummated prior to the Parties’ entry into this Agreement.
WHEREAS, as part of a series of transactions (the “Transaction”), Purchasers are also purchasing certain promissory notes (as amended or otherwise modified from time to time, the “Notes”) from the Company, pursuant to the terms and conditions of a Note Purchase and Guaranty Agreement dated as of the Effective Date (as amended or otherwise modified from time to time, the “NPA”), between the Company (referred to as Issuer in the NPA) and Purchasers.
WHEREAS, immediately following the “Payment in Full” of the Notes in accordance with the terms of the NPA, the Transaction will then include the payment to the Purchasers of the Purchased Proceeds, pursuant to the terms and conditions of this Agreement.
WHEREAS, pursuant to the terms and conditions of this Agreement, as of the Effective Date the Company desires to sell, contribute, assign, transfer, convey and grant to each Purchaser, and each Purchaser desires to purchase, acquire and accept from the Company, the Purchased Proceeds in the respective percentages set forth in the definition of Purchased Proceeds herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations and warranties set forth herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, intending to be legally bound, the Parties hereto covenant and agree as follows:
ARTICLE I
DEFINED TERMS AND RULES OF CONSTRUCTION
Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
“Account Control Agreement” means any account control agreement by and among the Company, the applicable Depositary Bank and the Purchaser Representative.
“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person. For the purposes of this Agreement, “control” (including, with correlative meaning, the terms “controlling” and “controlled”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, a Person shall be deemed to be controlled by another Person if such other Person possesses, directly or indirectly, power to vote ten percent (10%) or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.
“Agreement” has the meaning set forth in the preamble.
“Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act, the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto.
“Applicable Law” means, with respect to any Person, all Laws, rules, regulations and orders of Governmental Authorities applicable to such Person or any of its properties or assets.
“Back-up Collateral” means the “RPA Back-up Collateral” as defined in the Back-up Security Agreement.
“Back-up Collateral Documents” means a collective reference to the Back-up Security Agreement, the Account Control Agreement and such other security documents as may be executed and delivered by the Company pursuant to the terms of Section 6.7.
“Back-up Security Agreement” means the Security Agreement, substantially in the form of Exhibit H to the NPA, between the Note Parties (as defined in the NPA) and Purchaser Representative, securing, with respect to this Agreement, the Back-up Collateral in the event of a recharacterization of the sale hereunder as indebtedness.
“Bankruptcy Event” means the occurrence of any of the following in respect of a Person: (a) such Person shall generally not, shall be unable to, or an admission in writing by such Person of its inability to, pay its debts as they come due or a general assignment by such Person for the benefit of creditors; (b) the filing of any petition or answer by such Person seeking to adjudicate itself as bankrupt or insolvent, or seeking for itself any liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of such Person or its debts under any Applicable Law relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization, examination, relief of debtors or other similar Applicable Law now or hereafter in effect, or seeking, consenting to or acquiescing in the entry of an order for relief in any case under any such Applicable Law, or the appointment of or taking possession by a receiver, trustee, custodian, liquidator, examiner, assignee, sequestrator or other similar official for such Person or for any substantial part of its property; (c) corporate or other entity action taken by such Person to authorize any of the actions set forth in clause (a) or clause (b) above; or (d) without the consent or acquiescence of such Person, the commencement of an action seeking entry of an order for relief or approval of a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar Applicable Law, or the filing of any such petition against such Person, or, without the consent or acquiescence of such Person, the commencement of an action seeking
entry of an order appointing a trustee, custodian, receiver or liquidator of such Person or of all or any substantial part of the property of such Person, in each case where such petition or order shall remain unstayed or shall not have been stayed or dismissed within [***] from entry thereof.
“Bill of Sale – Company” means the Bill of Sale and Assumption Agreement, dated as of the Effective Date, delivered by the Parent to Holdings (and by Holdings to the Company) under the Contribution Agreement with respect to the Transferred Assets, substantially in the form of Exhibit A-2.
“Bill of Sale – Purchaser Representative” means the Bill of Sale and Assumption Agreement, dated as of the Effective Date, delivered by the Company to the Purchaser Representative under this Agreement with respect to the Purchased Proceeds and proceeds thereof, substantially in the form of Exhibit A-1.
“Bills of Sale” means, collectively, the Bill of Sale – Purchaser Representative and the Bill of Sale – Company.
“Blocked Account” means any Deposit Account established and maintained in the United States at the Depositary Bank and pledged as Back-up Collateral pursuant to the terms of the Back-up Security Agreement and subject to an Account Control Agreement that is subject to: (a) prior to the New Depositary Bank Trigger Date, the “control” of Purchaser Representative within the meaning of Section 9-104 of the UCC and (b) from and after the New Depositary Bank Trigger Date, the full dominion and “control” of the Purchaser Representative within the meaning of Section 9-104 of the UCC.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Purchaser Representative’s Office is located.
“Capital Stock” of any Person means any and all shares, interests, memberships, ownership interest units, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, and including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, and including, if such Person is a limited liability company, membership interests and any other interest or participation that confers on a Person the right to receive an interest in the profits and losses of, or distributions of property of, such limited liability company, in each case whether outstanding on the date hereof or issued after the date hereof, but excluding any Indebtedness convertible into or exchangeable for such equity.
“CDA” means the Confidentiality Agreement, dated as of [***], by and between HealthCare Royalty Management, LLC and the Parent, as amended.
“Change of Control” has the meaning set forth in the NPA.
“Closing” has the meaning set forth in Section 4.1.
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.
“Collection Account” means (a) the Blocked Account established and maintained at any Depositary Bank and (b) any successor or replacement Collection Account established in accordance with Section 3.1(b) and subject to a replacement Account Control Agreement in form and substance satisfactory to Purchaser Representative, in each case, solely for the purpose of receiving remittance of the GSK
Proceeds and proceeds therefrom and disbursement thereof as provided herein, and any successor Collection Account entered into in accordance with Section 3.1(a).
“Commercialization” means, on a country-by-country basis any and all activities with respect to the distribution, marketing, detailing, promotion, selling and securing of reimbursement of the Licensed Products in the Territory, which shall include, as applicable, post-marketing approval studies, post-launch marketing, promoting, detailing, marketing research, distributing, customer service, selling the Licensed Products, importing, exporting or transporting the Licensed Products for sale, and regulatory compliance with respect to the foregoing.
“Commercially Reasonable and Diligent Efforts” means, [***]. For the avoidance of doubt, “Commercially Reasonable and Diligent Efforts” shall be determined [***].
“Communication” means this Agreement, any Transaction Document and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to any Transaction Document.
“Company” has the meaning set forth in the preamble.
“Company Account” has the meaning set forth in Section 3.2(g).
“Company Indemnified Parties” has the meaning set forth in Section 10.4(b)(ii).
“Confidential Information” means any and all technical and non-technical non-public information provided by either Party to the other (including, without limitation, any Communication or other information provided pursuant to Section 6.2), either directly or indirectly, and including any material prepared on the basis of such information, whether in graphic, written, electronic or oral form, and marked or identified at the time of disclosure as confidential, or which by its context would reasonably be deemed to be confidential, including without limitation information relating to a Party’s revenues, net sales, costs, technology, products and services, and any business, financial or customer information relating to a Party. Confidential Information shall not include any information that a Party can demonstrate was: (i) known to the general public at the time of its disclosure to such Party or its Affiliates, or thereafter became generally known to the general public, other than as a result of actions or omissions of the receiving Party, its Affiliates, or anyone to whom the receiving Party or its Affiliates disclosed such portion; (ii) known by the receiving Party or its Affiliates prior to the date of disclosure by the disclosing Party; (iii) disclosed to the receiving Party or its Affiliates on an unrestricted basis from a source unrelated to the disclosing Party and not known by the receiving Party or its Affiliates (after due inquiry) to be under a duty of confidentiality to the disclosing Party; or (iv) independently developed by the receiving Party or its Affiliates by personnel that did not use the Confidential Information of both Parties. For clarity, this Agreement shall supersede the CDA and the CDA shall cease to be of any force and effect following the execution of this Agreement; provided, however, that all information falling within the definition of “Confidential Information” set forth in the CDA shall also be deemed Confidential Information disclosed pursuant to this Agreement, and the use and disclosure of such Confidential Information following the date of this Agreement shall be subject to the provisions of Section 10.7.
“Contract” means any contract, agreement, commitment, government bid, instrument, license, sublicense, subcontract, real or personal property lease or sublease, letters of intent, memorandum of understanding, offer letter, note, indenture, mortgage, bond, letter of credit, guarantee, purchase order,
or other legally binding business arrangement, whether written or oral, together with any amendments, restatements, supplements or other modifications thereto.
“Contractual Obligation” means, as to any Person, any obligation of such Person arising under any Contract.
“Contribution” means the sale, transfer, assignment, contribution and conveyance by the Parent of the Transferred Assets to the Company pursuant to the Contribution Agreement.
“Contribution Agreement” means the Purchase and Sale, Contribution and Servicing Agreement, dated as of the Effective Date, among the Parent, Holdings and the Company, in the form of Exhibit B attached hereto.
“Debtor Relief Laws” has the meaning given to “Bankruptcy Law” in the NPA.
“Deposit Account” means a “deposit account” (as defined in Article 9 of the Uniform Commercial Code), investment account, bank account or other account in which funds are held or invested to or for the credit or account of the Company.
“Depositary Bank” means [***], or such other bank or financial institution approved by the Purchaser Representative and the Company, including any successor Depositary Bank appointed pursuant to Section 3.1(b).
“Designated Jurisdiction” means any country or territory to the extent that such country or territory is, or whose government is, the subject or target of any Sanctions broadly restricting or prohibiting dealings with such country, territory or government.
“Disputes” has the meaning set forth in Section 5.19(k).
“Disqualified Capital Stock” of any Person means any class of Capital Stock of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable or requires the payment of dividends or distributions in cash, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is [***] after the Scheduled Maturity Date (as defined in the NPA).
“Dollar” or the sign “$” means United States dollars.
“Drug Application” means an application for Regulatory Authorization to market, sell and distribute a drug or product in a country or region, including (a) a New Drug Application, (b) any corresponding foreign application in any country or jurisdiction in the world, including, with respect to the EEA, an application for a Marketing Authorization filed with the EMA, the MHRA or with the applicable Regulatory Agency of a country in the European Union with respect to the mutual recognition or any other national approval procedure, and (c) all supplements, amendments, variations, extensions and renewals thereof that may be filed with respect to the foregoing.
“EEA” means the European Economic Area and the United Kingdom.
“Effective Date” has the meaning set forth in Section 4.1.
“Electronic Copy” has the meaning set forth in Section 10.13.
“Electronic Record” and “Electronic Signature” have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.
“EMA” means the European Medicines Agency or any successor agency or authority thereto.
“Equity Contribution Agreement” means the Equity Contribution Agreement, dated as of the Effective Date, between Parent and Holdings, in the form of Exhibit C attached hereto.
“Equity Interests” means, with respect to any Person, all of the shares of Capital Stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of Capital Stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of Capital Stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member, membership or trust interests therein and any stock appreciation rights or similar instruments), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“Excluded Liabilities and Obligations” has the meaning set forth in Section 2.3.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a payment to a Recipient or required to be withheld or deducted in respect of a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise taxes, and branch profits taxes, in each case, (i) that are imposed as a result of such Purchaser being organized under the laws of, or having its principal office located in, the jurisdiction imposing such Tax or (ii) that are imposed as a result of another present or former connection between such Purchaser and the jurisdiction imposing such Tax (other than any connections arising from such Purchaser having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Transaction Document, or having sold or assigned any interest in its interests under any Transaction Document), (b) Taxes attributable to such Purchaser’s failure to provide any properly completed and executed documentation reasonably requested by the Company under Section 3.4(e) of this Agreement that such Purchaser is legally eligible to provide and that will permit payments to be made to any Recipient without withholding or at a reduced rate of withholding and (c) any Taxes imposed by the United States, any state thereof or the District of Columbia.
“FCPA” has the meaning set forth in Section 5.17(b).
“FDA” means the U.S. Food and Drug Administration or any successor agency or authority thereto.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, that, if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day.
“First Payment Date” means the first date on which GSK deposits to the Collection Account any Purchased Proceeds under this Agreement.
“Foreign Purchaser” means any Purchaser that is not a U.S. Person.
“Fundamental Representations” means the representations and warranties contained in Section 5.1 (Existence, Qualification and Power; Subsidiaries), Section 5.2 (Authorization; No Contravention), Section 5.3 (Execution and Delivery; Binding Effect), Section 5.4 (No Liens; Title to Purchased Proceeds), Section 5.5 (Governmental and Third Party Authorizations), Section 5.9 (No Brokers’ Fees), Section 5.12 (Taxes), Section 5.13 (Ownership of the Company), Section 5.15 (Perfection of Security Interests in the Back-up Collateral), Section 5.19 (Intellectual Property Matters), and Section 5.20 (Compliance of Licensed Products).
“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, consistently applied and as in effect from time to time.
“Governmental Authority” means any national, supranational, federal, state, county, provincial, local, municipal or other government or political subdivision thereof (including any Regulatory Agency), whether domestic or foreign, and any agency, authority, commission, ministry, instrumentality, regulatory body, court, tribunal, arbitrator, central bank or other Person exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to any such government (including any supra-national bodies such as the European Union or the European Central Bank and including each Patent Office, the FDA, the EMA, the MHRA and any other government authority in any jurisdiction).
“Governmental Licenses” means all authorizations issuing from a Governmental Authority, including the FDA, based upon or as a result of applications to and requests for approval from a Governmental Authority for the right to Commercialize a Licensed Product, which are owned by or licensed to the Company, acquired by the Company via assignment, purchase or otherwise or that the Company is authorized or granted rights under or to.
“GSK” means GlaxoSmithKline Intellectual Property (No. 3) Limited, a company registered under the laws of England and Wales with offices at 980 Great West Road, Brentford, Middlesex TW8 9GS England and a party to the GSK License Agreement. If the GSK License Agreement is assigned or otherwise transferred by GSK to another Person in accordance with this Agreement, references to GSK hereunder shall be deemed to be references to such other Person.
“GSK Development Payment” means the amounts owed by Parent to GSK pursuant to Section 4.1(a)(ii) of the GSK License Agreement with respect to GSK’s [***] related to the development of Tebipenem Pivoxil Hydrobromide, which amounts are estimated to be USD $[***].
“GSK Excess Proceeds” means the excess, if any, of (i) each payment of GSK Proceeds to which the Company is at any time entitled over (ii) the associated Meiji Royalty Payments, if any, that the Company or any of its Affiliates is obligated to make but only to the extent that such excess is not required to be paid by the Company to the Purchasers in respect of the Notes.
“GSK License Agreement” means that certain Exclusive License Agreement, dated as of September 21, 2022, by and between the Company (as assignee of the Parent pursuant to the Contribution Agreement) and GSK, as amended by that certain Amendment 1 to Exclusive License Agreement, dated as
of July 4, 2023, as further amended by the Waiver and Release Agreement, dated as of September 27, 2023, as further amended by that certain Amendment 2 to Exclusive License Agreement, dated as of December 20, 2023, as further amended by that certain Data Transfer Agreement, dated as of March 7, 2024, as further amended by that certain Amendment 3 to Exclusive License Agreement, dated as of March 4, 2024, as further amended by that certain Side Letter, dated as of May 10, 2024, as further amended by that certain Amendment 4 to Exclusive License Agreement, dated as of October 28, 2024, and as may be further amended from time to time in accordance with Section 6.5 of this Agreement.
“GSK Payment Notice” means the following notices:
(a) notice from GSK under Section 6.3 of the GSK License Agreement of the achievement of a Commercial Milestone Event (as defined in the GSK License Agreement);
(b) notice from GSK under Section 6.4 of the GSK License Agreement of the achievement of a Sales Milestone Event (as defined in the GSK License Agreement); or
(c) any other notice from GSK notifying the Company that payments constituting the Royalty Payments are due, payable or paid under the GSK License Agreement.
“GSK Proceeds” means all of the Company’s (as assignee of the Parent pursuant to the Contribution Agreement) right, title and interest in and to the following, excluding, in each case, the Excluded GSK Proceeds (as defined in the NPA):
(a) all amounts due, payable or paid to the Company under Section 6.3 of the GSK License Agreement;
(b) all amounts due, payable or paid to the Company under Section 6.4 of the GSK License Agreement;
(c) all Royalty Payments;
(d) all amounts due, payable or paid to the Company in respect of any provisions concerning underpayment of or in lieu of the amounts set forth in (a) through (c) above;
(e) all interest that becomes payable in respect of the late payment of any of the amounts referred to in the foregoing clauses (a) through (d) pursuant to Section 6.7(c) of the GSK License Agreement;
(f) all accounts (as defined under the UCC) evidencing the rights to the payments and amounts described in this definition; and
(g) all proceeds (as defined under the UCC) of any of the foregoing.
All of the foregoing amounts shall be determined after giving effect to (i) all GSK Royalty Reductions that are applicable to such amounts, (ii) any amounts withheld or additional amounts paid pursuant to Section 6.9 of the GSK License Agreement, and (iii) subject to Section 3.4 of this Agreement, deductions for withholding or similar taxes, in each case excluding any Non-Permitted Set-Offs. For the avoidance of doubt, GSK Proceeds shall include all amounts due, payable or paid to the Company or any of its Affiliates by one or more licensees or sublicensees under any New Arrangement to the extent attributed to the Licensed Products.
“GSK Products” has the meaning given to the term “Product” in Section 1.134 of the GSK License Agreement.
“GSK Royalty Reductions” means, with respect to the GSK License Agreement, any adjustments, modifications, credits, offsets, reductions or deductions to Royalty Payments made under Section 6.5 of the GSK License Agreement pursuant to Section 6.5(c), Section 6.5(d) or Section 6.5(e) of the GSK License Agreement, subject in all cases to the limitation imposed by Section 6.5(f) of the GSK License Agreement.
“Guarantee” means, as to any Person: (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “Primary Obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the Primary Obligor so as to enable the Primary Obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part); or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“HRBR Purchaser” means HRBR 2025-2, LLC, a Delaware limited liability company, as a Purchaser hereunder.
“HCRX Purchaser” means HCRX Investments HoldCo, L.P., a Delaware limited partnership, as a Purchaser hereunder.
“Healthcare Laws” means all Laws relating to healthcare regulatory matters, including the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, the Anti-Kickback Statute (42 U.S.C. § 1320a-7b), the Federal False Claims Act (31 U.S.C. §§ 3729-3733), the Foreign Corrupt Practices Act of 1977, HIPAA, and all comparable state and foreign Laws.
“Holdings” has the meaning set forth in the recitals hereto.
“Indebtedness” means, with respect to any Person, all items which, in accordance with GAAP, would be included in determining total liabilities as shown on the liability side of the balance sheet of such Person as of the date as of which such Indebtedness is to be determined, including (a) indebtedness pursuant to an agreement or instrument involving or evidencing money borrowed, the advance of credit, a conditional sale or a transfer with recourse or with an obligation to repurchase (but excluding trade credit and accounts payable in the ordinary course of business), (b) any capitalized lease, (c) any obligations with respect to Disqualified Capital Stock, (d) indebtedness of a Third Party secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on assets owned or acquired by such Person, whether or not the indebtedness secured thereby has been assumed (but only to the extent of such Lien), (e) net amounts owing pursuant to an interest rate protection agreement,
foreign currency exchange agreement or other hedging arrangement, (f) a reimbursement obligation under a letter of credit issued for the account of such Person, or (g) all Guarantees. For the avoidance of doubt, the Indebtedness of any Person shall include the Indebtedness of any other entity to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Party” has the meaning set forth in Section 10.4(c)(i).
“Indemnified Taxes” means (a) all Taxes, other than any Excluded Taxes, imposed on or with respect to any payment (i) made by or on behalf of any obligation of the Company under any Transaction Document, or (ii) made by or on behalf of GSK in respect of any GSK Proceeds or any underlying royalty payable by GSK, and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Indemnifying Party” has the meaning set forth in Section 10.4(c)(i).
“Information” has the meaning set forth in Section 10.7.
“Infringement” and “Infringes” mean the infringement, misappropriation, or other violation of any Patents, copyrights, Trademarks, Know-How, Trade Secrets, confidential information, and/or other Intellectual Property.
“In-License” means any license, settlement agreement or other Contract or arrangement between the Company and any Third Party pursuant to which the Company obtains a license or a covenant not to sue or similar grant of rights to Intellectual Property of such Third Party that is necessary for Commercialization activities with respect to the Licensed Products.
“Intellectual Property” means all intellectual property covering the sale, manufacture, use, importation or marketing of any Licensed Product in such Licensed Product’s Territory, including but not limited to patents, patent applications, trademarks, trademark applications and Know-How, necessary for the sale, manufacture, use, importation or marketing of such Licensed Product that is owned, licensed in or controlled (and if controlled, only to the extent of control) by the Company (after giving effect to the contribution under the Contribution Agreement) as of the Effective Date and during term of this Agreement.
“Intercreditor Agreement” means an intercreditor agreement, among the Purchaser Representative, for the benefit of the Purchasers, the Company and the Monetization Counterparties (or the representatives thereof), in a form reasonably satisfactory to the Purchaser Representative and giving effect to the applicable Monetization Pro Rata Share of each Monetization Counterparty with respect to any shared Back-up Collateral and proceeds thereof; provided that no intercreditor agreement shall be required if the Monetization Counterparty does not take a pledge of the Company’s Equity Interests or a Lien on any asset of the Company, including the Collection Account, other than the Retained Excess Proceeds to which such Monetization Counterparty has rights.
“IP Rights” means, collectively, all Drug Applications, all Governmental Licenses, all applications and requests for Governmental Licenses, all Other Intellectual Property, all Patents, all Patent Licenses, all Trademarks, all Trade Secrets, and all Regulatory Authorizations, and all other Intellectual Property, in each case, which are (a) owned or controlled by, issued or licensed to, licensed by, or hereafter acquired or licensed to or by, the Company or any Affiliate, including (but not limited to) the items listed on Schedule 5.19(a) and (b) used in, relating to or necessary for the Commercialization of the Licensed Products in the Territory, including, for the avoidance of doubt, all Intellectual Property licensed to GSK
under the GSK License Agreement to the extent used in, relating to or necessary for Commercialization of the Licensed Products in the Territory.
“IRS” means the United States Internal Revenue Service.
“Judgment” means any judgment, order, writ, injunction, citation, award or decree of any nature.
“Know-How” means all non-public information, results and data of any type whatsoever, in any tangible or intangible form (and whether or not patentable), including databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, skill, experience, data and results (including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical study data and results), analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data.
“Knowledge” means, with respect to the Company, the actual knowledge after due inquiry of the Responsible Officers of both the Company and Parent; provided that “due inquiry” shall not [***].
“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and Permits of, and agreements with, any Governmental Authority, in each case, whether or not, having the force of law.
“Licensed Patents” means all Patents that are licensed or sublicensed to the Company which are used in or necessary for the Commercialization of the Licensed Products in the Territory.
“Licensed Products” means (a) the GSK Products, and (b) any “licensed products” (howsoever denominated) under any New Arrangement, including any such product in development or which may be developed by GSK and subject to the GSK License Agreement, including those products set forth on Schedule I (as supplemented from time to time in accordance with the terms of this Agreement); provided, that, if the Company shall fail to comply with its obligations under this Agreement to give notice to the Purchaser Representative and supplement Schedule I prior to GSK Commercializing any new Licensed Product, any such improperly undisclosed Licensed Product shall be deemed to be included in this definition. For clarity, references in this Agreement to “a” Licensed Product or to “the” Licensed Product(s) refer to any Licensed Product(s) under or with respect to the GSK License Agreement or New Arrangement.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“Loss” means any and all Judgments, damages, losses, claims, costs, liabilities and expenses, including reasonable fees and out-of-pocket expenses of counsel.
“Marketing Authorization” means, with respect to a Licensed Product, the Regulatory Authorization required by Applicable Law to sell such Licensed Product in a country or region, including, to the extent required by Applicable Law for the sale of such Licensed Product, all pricing approvals and government reimbursement approvals.
“Material Adverse Effect” means (a) a material adverse change in the business, operations, properties, results of operations or financial condition of the Company, taken as a whole; (b) a material adverse effect on the validity or enforceability of this Agreement and the other Transaction Documents, taken as a whole or any material provision hereof or thereof; (c) a material adverse effect on the ability of the Company to consummate the transactions contemplated by the Transaction Documents, or on the ability of the Company to perform its obligations under the Transaction Documents to which it is a party, in each case, taken as a whole; (d) a material adverse effect on the rights of the Company under the GSK License Agreement or the Meiji License Agreement (with any reduction in the timing, amount or duration of the Purchased Proceeds having such a material adverse effect) or (e) a material adverse effect on the rights or remedies of the Purchasers under the Transaction Documents, taken as a whole.
“Material Contract Counterparty” means a counterparty to any Material Contract.
“Material Contracts” has the meaning set forth in the NPA.
“Meiji” means Meiji Seika Pharma Co., Ltd., a Japanese corporation and a party to the Meiji License Agreement. If the Meiji License Agreement is assigned or otherwise transferred by Meiji to another Person in accordance with this Agreement, the references to Meiji hereunder shall be deemed to be references to such other Person.
“Meiji License Agreement” means that certain License Agreement, dated as of June 14, 2017, by and between the Company (as successor to Spero OpCo, Inc. and as assignee of the Parent pursuant to the Contribution Agreement) and Meiji, as supplemented by that certain Addendum to License Agreement, dated as of June 14, 2017, and as amended by that certain Amendment to License Agreement, effective as of July 1, 2024, and as may be further amended from time to time.
“Meiji Royalty Payments” means any Royalties (as defined in the Meiji License Agreement) under Section 4.3 of the Meiji License Agreement, to the extent due, payable and paid to Meiji by the Company during the Payment Term.
“MHRA” means the United Kingdom’s Medicines and Healthcare products Regulatory Authority.
“Monetization Pro Rata Share” means, with respect to any Monetization Counterparty and any Permitted Royalty Monetization, the percentage obtained by dividing (a) the portion of the Retained Excess Proceeds to which such Monetization Counterparty has rights under such Permitted Royalty Monetization by (b) the aggregate GSK Excess Proceeds from which such Retained Excess Proceeds are derived. For the avoidance of doubt, if a Monetization Counterparty has rights to all Retained Excess Proceeds, the Monetization Pro Rata Share of such Monetization Counterparty shall equal the percentage of GSK Excess Proceeds that does not constitute Purchased Proceeds.
“New Depositary Bank Trigger Date” means the [***] after the Effective Date, or such later date approved by Purchaser Representative (as defined in the NPA).
“New Drug Application” means a New Drug application submitted to the FDA under 21 U.S.C. § 355(b) and all amendments or supplements thereto.
“Non-Permitted Set-Off” means any Set-Off, whether by contract or otherwise, that is exercised by GSK in respect of the GSK Proceeds to the extent affecting Purchased Proceeds, including (a) any amounts owed by the Company to GSK, or (b) any Set-Off taken pursuant to Section 6.6 or Section 11.8 of the GSK License Agreement (in each case, other than a GSK Royalty Reduction or a deduction for withholding or similar taxes pursuant to Section 6.9 of the GSK License Agreement).
“Note Documents” has the meaning set forth in the NPA.
“Obligations” means (a) all obligations, covenants and duties of the Company arising under this Agreement or any other Transaction Document and the obligations of the Company to reimburse or indemnify the Purchaser Representative and Purchasers for any Losses incurred by the Purchaser Representative or the Purchasers in connection with the enforcement of their rights under this Agreement and (b) all costs and expenses incurred in connection with enforcement and collection of the foregoing, including the fees, charges and disbursements of counsel, in each case, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Company of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents with respect to any non-U.S. jurisdiction), and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Other Intellectual Property” means all worldwide Intellectual Property rights, industrial property rights, proprietary rights and common-law rights, whether registered or unregistered, which are not otherwise included in Confidential Information, Governmental Licenses, Other IP Agreements, Patents, Patent Licenses, Trademarks, and Trade Secrets, including, without limitation, all rights to and under all new and useful algorithms, concepts, data (including all clinical data relating to a Licensed Product), databases, designs, discoveries, inventions, Know-How, methods, processes, protocols, chemistries, compositions, formulas, show-how, software (other than commercially available, off-the-shelf software that is not assignable in connection with a Change of Control), specifications for Licensed Products, techniques, technology, trade dress and all improvements thereof and thereto, in each of the foregoing cases, which is owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Other IP Agreements” means any agreement, whether written or oral, providing for the grant of any right under any Confidential Information, Governmental License, application or request for a Governmental License, Trademark, Trade Secret and/or any other Intellectual Property right, to the extent that the grant of any such right is not otherwise the subject of a Patent License.
“Other Taxes” means all present or future stamp, court, documentary, intangible, recording, filing or similar taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to any of the Transaction Documents, except for Taxes imposed with respect to an assignment that are imposed by any jurisdiction as a result of a present or former connection between the Recipient and the jurisdiction imposing such Tax (other than any connections arising from such Purchaser having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Transaction Document, or having sold or assigned any interest in its interests under or any Transaction Document).
“Owned Patents” means all Patents which are owned by the Company and which are used in, relating to or necessary for the Commercialization of the Licensed Products in the Territory.
“Parent” has the meaning set forth in the recitals hereto.
“Patent License” means any agreement, whether written or oral, providing for the grant of any right under any Patent.
“Patent Office” means the respective patent office (foreign or domestic) for any Patents.
“Patents” means any and all issued patents and pending patent applications, including without limitation, all provisional applications, substitutions, continuations, continuations-in-part, divisions, and renewals, all letters patent granted thereon, and all patents-of-addition, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms (including regulatory extensions), claiming or covering the Licensed Products, or composition of matter, formulation, or methods of manufacture or use thereof, that are issued or filed on or after the date of this Agreement, including those identified in Schedule 5.19(a), in each such case, which are owned, co-owned or controlled by, issued or licensed to, licensed by, or hereafter acquired or licensed by, the Company or any Subsidiary.
“Payment Certificate” has the meaning set forth in Section 3.2(c).
“Payment in Full” has the meaning set forth in the NPA.
“Payment Instruction Letter” shall have the meaning set forth in Section 3.1(a).
“Payment Objection Notice” has the meaning set forth in Section 3.2(c).
“Payment Term” means the time period commencing on Payment in Full under the NPA and expiring on the date upon which (a)(i) the Purchaser Representative has received in full cash payments in respect of all Purchased Proceeds payable during the Royalty Term, or (ii) in the case of a termination of the GSK License Agreement, the later of (x) the date upon which the Purchaser Representative has received in full in accordance with Section 6.6(b) the economic benefit of the payments under a New Arrangement that is equivalent to the Purchased Proceeds, and (y) the date upon which there is no longer a Valid Claim of any Product Patent, and (b) any other Obligations payable by the Company under this Agreement.
“Permits” means licenses, certificates, accreditations, Regulatory Authorizations, other authorizations, registrations, permits, consents, clearances and approvals required in connection with the conduct of the Company’s or any Subsidiary’s business or to comply with any Applicable Laws.
“Permitted Royalty Monetization” means any monetization transaction with a Third Party (a “Monetization Counterparty”) involving the sale, transfer, option or collateralization of the Retained Excess Proceeds, including but not limited to a sale, royalty bond or other royalty financing, synthetic royalty or revenue interest transaction, or monetization transaction; provided, that (a) such transaction shall not contain terms relating to collateral security (if any) or subordination (if any), or other material terms (other than economic terms) that, taken as a whole, are less favorable in any material respect to the Company than those terms contained in the Transaction Documents with respect to the Purchased Proceeds; provided, further, that a Monetization Counterparty may be granted collateral security under the Back-Up Security Agreement in (i) a percentage of the Pledged Capital Stock (as defined in the Back-up Security Agreement) equal to such Monetization Counterparty’s Monetization Pro Rata Share, not to exceed thirty-five percent (35%), and (ii) the other Back-up Collateral (other than (x) the portion of the Pledged Capital Stock not pledged to such Monetization Counterparty pursuant to the foregoing clause (i) and (y) the Purchased Proceeds and proceeds of the foregoing) in accordance with such Monetization Counterparty’s Monetization Pro Rata Share, which collateral security shall rank pari passu with the collateral security in such Back-up Collateral granted to the Purchaser Representative, for the benefit of the Purchasers, in the Back-Up Security Agreement, (b) after giving effect to such transaction, no Material Adverse Effect shall have occurred or could reasonably be expected to occur as a result thereof, (c) an Intercreditor Agreement is executed in connection therewith, and (d) the GSK Proceeds continue to be paid in full to the Collection Account and distributed in accordance with finalized Payment Certificates, and the Company and the Monetization Counterparties (or their representatives) have entered into any Account Control Agreement or other paying agent agreement necessary to enable the foregoing.
“Person” means any natural person, firm, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, joint venture, association, company, partnership, Governmental Authority or any other legal entity, including public bodies, whether acting in an individual, fiduciary or other capacity.
“Product Development and Commercialization Activities” means, on a country-by-country basis, with respect to any Licensed Product, any combination of research, development, Commercialization, or like activities the purpose of which is to develop or commercialize such Licensed Product.
“Product Patents” means, collectively, all of the Owned Patents and all of the Licensed Patents and, individually, each such Patent.
“Purchase Price” has the meaning set forth in Section 2.2.
“Purchased Proceeds” means, on any date during the Payment Term, (a) in the case of HRBR Purchaser, [***]% of the GSK Excess Proceeds and (b) in the case of HCRX Purchaser, [***]% of the GSK Excess Proceeds (such percentages in clauses (a) and (b) equaling, in the aggregate, 65.00% of the GSK Excess Proceeds).
“Purchaser” or “Purchasers” means the Persons identified as a “Purchaser” on the signature pages hereto and their successors and assigns.
“Purchaser Indemnified Parties” has the meaning set forth in Section 10.4(b)(i).
“Purchaser Representative” has the meaning set forth in the preamble.
“Purchaser Representative’s Account” means such account of Purchaser Representative maintained at such banking institution as Purchaser Representative may specify in its discretion from time to time in writing to the Company at least [***] prior to any date on which payments are to be made to any Purchaser pursuant to this Agreement.
“Purchaser Representative’s Office” means the Purchaser Representative’s address as set forth on Schedule 9.2 or such other address or account as the Purchaser Representative may from time to time notify the Company and the Purchasers.
“Recipient” means the Purchaser Representative, any Purchaser, and any other recipient of any payment by or on account of any obligation of the Company under any Transaction Document.
“Regulatory Agency” means a Governmental Authority with responsibility for the regulation of the research, development, marketing or sale of drugs or pharmaceuticals in any jurisdiction, including FDA and EMA.
“Regulatory Authorizations” means all approvals, clearances, notifications, authorizations, orders, exemptions, registrations, designations, certifications, licenses and Permits granted by, submitted to or filed with any Regulatory Agencies, all Marketing Authorizations with respect to the Licensed Products and all orphan drug designations.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors, counsel, sub-advisors and representatives of such Person and of such Person’s Affiliates.
“Responsible Officer” means all of the following: (i) the Chief Executive Officer, Chief Financial Officer, Treasurer, Chief Operating Officer, any Senior Vice President and Secretary of the Company; and (ii) the Chief Executive Officer, Chief Financial Officer, Treasurer, Chief Operating Officer, any Senior Vice President and Secretary of Holdings as well as of Parent and, in each case of clauses (i) and (ii), any other Person performing the roles customary for such title or succeeding to the roles of the foregoing officers.
“Retained Excess Proceeds” means all GSK Excess Proceeds that are not Purchased Proceeds.
“Retained Proceeds” means all GSK Proceeds that are not Purchased Proceeds.
“Royalty Payments” means all amounts due, payable or paid to the Company (as assignee of the Parent pursuant to the Contribution Agreement) under Section 6.5 of the GSK License Agreement (for clarity, after giving effect to all GSK Royalty Reductions and deductions for withholding or similar taxes pursuant to Section 6.9 of the GSK License Agreement applicable thereto, but excluding any Non-Permitted Set-Off), including all such amounts due, paid or payable on deemed Net Sales (as defined in the GSK License Agreement) as set forth in Section 7.3(d) of the GSK License Agreement.
“Royalty Reduction” has the meaning set forth in Section 5.14(m).
“Royalty Reports” means “Royalty Report” as defined in Section 6.5(b) of the GSK License Agreement.
“Royalty Term” means “Royalty Term” as defined in Section 1.149 of the GSK License Agreement in effect as of the date of this Agreement.
“Sanction(s)” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and Anti-Terrorism Laws imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC, the U.S. Department of State, or the U.S. Department of Commerce, (b) the United Nations Security Council, (c) the European Union, (d) His Majesty’s Treasury of the United Kingdom or (e) any other relevant sanctions authority.
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Secured Party” means the “RPA Secured Party” as defined in the Back-up Security Agreement.
“Servicer” has the meaning set forth in the Contribution Agreement.
“Set-Off” means any set-off, off-set, reduction or similar deduction.
“Solvent” or “Solvency” means, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the ordinary course of business, (b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (d) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person and (e) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Subsidiary” means, with respect to any Person, at any time, any entity of which more than fifty percent (50%) of the outstanding Voting Stock or other equity interest entitled ordinarily to vote in the election of the directors or other governing body (however designated) is at the time beneficially owned or controlled directly or indirectly by such Person, by one or more such entities or by such Person and one or more such entities.
“Taxes” means any present or future income, excise, stamp, documentary, property or franchise taxes and Other Taxes, fees, duties, levies, imposts, assessments, deductions, withholdings or other similar charges of any nature whatsoever, including any related interest, additions to tax and penalties thereon, imposed by any taxing authority.
“Tebipenem Pivoxil Hydrobromide” means the compound described on Schedule I and any pharmaceutical or biological composition containing tebipenem pivoxil hydrobromide, including any modifications or improvements thereto and any other product that directly competes with or replaces Tebipenem Pivoxil Hydrobromide that may be developed or Commercialized by the Company, including any products or product candidates that are being developed by the Company as of the date of this Agreement.
“Territory” means “GSK Territory” as defined in Section 1.87 of the GSK License Agreement (i.e., worldwide, excluding the Excluded Territory (as defined in the GSK License Agreement), subject to adjustment pursuant to Section 2.11(c) of the GSK License Agreement).
“Third Party” means any Person other than the Company or its Affiliates.
“Third Party Claim” has the meaning set forth in Section 10.4(c)(i).
“Trade Secrets” means any data or information that is not commonly known by or available to the public, and which (a) derives economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other Persons who can obtain economic value from its disclosure or use, and (b) is the subject of efforts that are reasonable under the circumstance to maintain its secrecy.
“Trademarks” means any statutory or common law trademark, service mark, trade name, logo, symbol, trade dress, domain name, corporate name or other indicator of source or origin or identifies the goods and services of one provider from another, and all applications and registrations therefor, together with all of the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications to register in connection therewith, under the Laws of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise, for the full term and all renewals thereof.
“Transaction Documents” means this Agreement, the Note Documents, each Back-up Collateral Document, the Bills of Sale, the Contribution Agreement, the Equity Contribution Agreement and the Payment Instruction Letter.
“Transferred Assets” has the meaning set forth in the Contribution Agreement.
“U.S.” and “United States” mean the United States of America.
“U.S. Person” means any “United States Person” as defined in Section 7701(a)(30) of the Code.
“Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in New York; provided, that, if, with respect to any financing statement or by reason of any provisions of Applicable Law, the perfection or the effect of perfection or non-perfection of the security interest in the Back-up Collateral or any portion thereof granted pursuant to the Back-up Security Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than New York, then “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of this Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection.
“Valid Claim” means a claim of: (a) a granted Patent that: (i) has not expired; (ii) has not been revoked nor held invalid or unenforceable by an administrative agency, court or other government agency of competent jurisdiction in a final and non-appealable decision (or a decision un-appealed within the time limit allowed for appeal) nor admitted to be invalid or unenforceable through reissue, re-examination, or disclaimer or otherwise; (iii) has not been abandoned; and (iv) has not been lost through an interference proceeding, inter partes review, ex partes re-examination or similar proceeding; or (b) a pending patent application that has not been finally rejected by a patent office or other governmental agency of competent jurisdiction in an unappealable decision or a decision that is un-appealed within the time allowed for appeal.
“Voting Stock” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.
“Withholding Agent” means the Company, GSK and any other Person that withholds or deducts amounts in respect of (a) any obligation of the Company under any Transaction Document or (b) the GSK Proceeds.
Section 1.2 Other Interpretive Provisions. With reference to this Agreement and each other Transaction Document, unless otherwise specified herein or in such other Transaction Document:
(a) An accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP. The definitions of terms shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation.” Unless otherwise specified, (i) any definition of or reference to any agreement or other document includes references to such agreement or other document as from time to time amended, restated, reformed, supplemented or otherwise modified in accordance with the terms thereof (subject to any restrictions on such amendments, restatements, reformations, supplements or modifications set forth herein or in any of the other Transaction Document) and includes any annexes exhibits and schedules attached thereto, (ii) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns (subject to any restrictions on assignment, transfer or delegation set forth herein or in any of the other Transaction Documents), and any reference to a Person in a particular capacity excludes such Person in other capacities, (iii) the words “hereto”, “herein,” “hereof” and “hereunder,” and similar terms when used in any Transaction Document, shall refer to such Transaction Document as a whole and not to any particular provision thereof, (iv) all references in any Transaction Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Transaction Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified, extended, restated, replaced or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all real and personal property and tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(b) In the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including;” and each of the words “to” and “until” means “to but excluding;” and the word “through” means “to and including.”
(c) Where any payment is to be made, any funds are to be applied or any calculation is to be made under this Agreement on a day that is not a Business Day, unless this Agreement otherwise provides, such payment shall be made, such funds shall be applied and such calculation shall be made on the succeeding Business Day, and payments shall be adjusted accordingly.
(d) Section headings herein and in the other Transaction Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Transaction Document.
(e) Any reference herein or in any other Transaction Document to a merger, transfer, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
Section 1.3 Accounting Terms.
(a) Generally. Except as otherwise specifically prescribed herein, all accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Company’s most recent audited financial statements (copies of which were delivered to the Purchaser Representative by the Company), except as otherwise specifically prescribed herein.
(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial requirement set forth in any Transaction Document, and either the Company or the Purchaser Representative shall so request, the Purchaser Representative, the Purchasers and the Company shall negotiate in good faith to amend such requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Purchaser Representative); provided, that, until so amended, (i) such requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Company shall provide to the Purchaser Representative and the Purchasers financial statements and other documents required under this Agreement or as requested hereunder setting forth a reconciliation between calculations of such requirement made before and after giving effect to such change in GAAP.
ARTICLE II
PURCHASE, SALE AND ASSIGNMENT OF THE PURCHASED PROCEEDS; CLOSING AND PAYMENT OF PURCHASE PRICE
Section 2.1 Purchase, Sale and Assignment.
(a) Subject to the terms and conditions of this Agreement, on the Effective Date, the Company hereby sells, contributes, assigns, transfers, conveys and grants to the Purchasers, and the Purchasers (in their respective percentages set forth in the definition of Purchased Proceeds) hereby purchase, acquire and accept from the Company, all of the Company’s rights, title and interest in and to the Purchased Proceeds and proceeds thereof, free and clear of any and all Liens, other than those Liens created under the Transaction Documents in favor of the Purchaser Representative, for the benefit of the Secured Parties.
(b) It is the intention of the Parties that the sale, transfer, assignment and conveyance contemplated by this Agreement be, and is, a true, complete, absolute and irrevocable sale, transfer, assignment and conveyance by the Company to the Purchasers of all of the Company’s right, title and interest in and to the Purchased Proceeds and proceeds thereof. None of the Company, the Purchaser
Representative or any of the Purchasers intends the transactions contemplated by this Agreement to be characterized or treated as a loan from the Purchaser Representative or the Purchasers to the Company or as a financing transaction or a borrowing. It is the intention of the Parties that the beneficial interest in and title to the Purchased Proceeds and any “proceeds” (as such term is defined in the UCC) thereof shall not be part of the Company’s estate in the event of the filing of a petition by or against the Company under any Debtor Relief Laws. Each of the Company, the Purchaser Representative and each of the Purchasers hereby waives, to the maximum extent permitted by Applicable Law, any right to contest or otherwise assert in any bankruptcy or insolvency proceeding that this Agreement does not constitute a true, complete, absolute and irrevocable sale, transfer, assignment and conveyance by the Company to the Purchasers of all of the Company’s right, title and interest in and to the Purchased Proceeds and proceeds thereof under Applicable Law, which waiver shall, to the maximum extent permitted by Applicable Law, be enforceable against the Company in any bankruptcy or insolvency proceeding relating to either the Company or such Subsidiary. Accordingly, the Company shall treat the sale, transfer, assignment and conveyance of the Purchased Proceeds and proceeds thereof as a sale of an “account” or a “payment intangible” (as appropriate) in accordance with the UCC, and the Company hereby authorizes the Purchaser Representative to file financing statements (and continuation statements with respect to such financing statements when applicable) naming the Company as the seller and the Purchaser Representative, as agent for the Purchasers, as the purchaser in respect to the Purchased Proceeds and proceeds thereof. Not in derogation of the foregoing statement of the intent of the Parties in this regard, and for the purposes of providing additional assurance to the Purchaser Representative and the Purchasers in the event that, despite the intent of the Parties, the sale, transfer, assignment and conveyance contemplated hereby is hereafter held not to be a sale, the Company shall, prior to the Effective Date, satisfy the obligations set forth Section 6.7 below. Each of the Parties intends to and shall treat the purchase of the Purchased Proceeds as a true sale on its books and records; provided that, notwithstanding any provision in this Agreement or the other Transaction Documents to the contrary, the Company shall not be required to treat the purchase of the Purchased Proceeds as a sale on its books and records to the extent that GAAP requires a different treatment (in which case however the Company’s financial statements will, to the extent that GAAP so requires or permits, contain footnotes or such other description reasonably acceptable to the Purchaser Representative to the effect that the Company has transferred and relinquished all legal title and equitable interests in the Purchased Proceeds).
Section 2.2 Purchase Price. The Parties acknowledge and agree that the purchase price (the “Purchase Price”) to be paid for the sale, transfer, assignment and conveyance of the Purchased Proceeds is One Million Five Hundred Seventy-Five Thousand Dollars ($1,575,000.00).
Section 2.3 No Assumed Obligations. Notwithstanding any provision in this Agreement or any other writing to the contrary, the Purchasers and the Purchaser Representative are not assuming any liability or obligation of the Company or any of the Company’s Affiliates of whatever nature, whether presently in existence or arising or asserted hereafter and whether under the GSK License Agreement, the Meiji License Agreement or otherwise, including the obligation to make the GSK Development Payment. All such liabilities and obligations, including in respect of the GSK License Agreement and the other Material Contracts, shall be retained by and remain liabilities and obligations of the Company or the Company’s Affiliates, as the case may be (the “Excluded Liabilities and Obligations”).
Section 2.4 Excluded Assets. The Purchaser Representative and the Purchasers do not, pursuant to any of the Transaction Documents, purchase, acquire or accept any assets or contract rights of the Company, or any other assets of the Company (including, without limitation, all Retained Proceeds), other than its rights with respect to the Purchased Proceeds and proceeds thereof and, to the extent provided in the Transaction Documents, the Back-up Collateral.
ARTICLE III
COLLECTION ACCOUNT; PAYMENT PROVISIONS; Taxes
Section 3.1 Collection Account.
(a) Establishment of Collection Account; Control Agreement; Maintenance, Collection and Other Fees and Expenses.
(i) On or prior to the Effective Date, the Company shall establish with the Depositary Bank the Collection Account and enter into an Account Control Agreement with the Depositary Bank with respect to the Collection Account; provided that the foregoing requirement shall be deemed satisfied upon compliance by the Company with Section 4.01(c)(i) of the NPA on or before the Effective Date. On the Effective Date, the Company shall deliver instructions to GSK in the form of Exhibit D (the “Payment Instruction Letter”) with respect to the GSK Proceeds and proceeds therefrom, with a copy of the Payment Instruction Letter contemporaneously provided to the Purchaser Representative, which instructions shall direct GSK to remit the GSK Proceeds and proceeds therefrom to the Collection Account; provided that the requirement shall be deemed satisfied upon compliance by the Company with Section 4.01(d) of the NPA. The Payment Instruction Letter shall not be revoked or terminated or amended, modified, supplemented, restated or otherwise altered in any manner without the prior written consent of the Purchaser Representative.
(ii) The Company shall maintain at all times, by receipt of periodic cash equity contributions to the capital of the Company from Parent pursuant to the Equity Contribution Agreement (and not, for the avoidance of doubt, cash constituting GSK Proceeds), a minimum unrestricted (except for restrictions arising pursuant to the Account Control Agreement or the Transaction Documents) cash balance in the Collection Account sufficient to pay all Collection Account Fees (as defined in the Contribution Agreement) and other fees, expenses and charges of the Depositary Bank anticipated to be due and payable in the next [***].
(iii) Prior to the New Depositary Bank Trigger Date, the Company shall not direct the Depositary Bank to transfer funds held in the Collection Account except with the express prior written consent of Purchaser Representative.
(b) Replacement Collection Account; New Depositary Bank Trigger Date.
(i) During the Payment Term, the Company shall have no right to terminate the Collection Account without the Purchaser Representative’s prior written consent; provided that, without the Purchaser Representative’s consent to the change of location of such accounts (provided such location is in the United States), the Company shall have the right from time to time to establish a replacement Collection Account with a replacement Depositary Bank, provided, that such replacement Depositary Bank shall have entered into an Account Control Agreement with and acceptable to the Purchaser Representative with respect to such replacement accounts effective no later than the date of replacement. If the terms of the Account Control Agreement for the Collection Account limit the Depositary Bank’s ability to make distributions of the GSK Proceeds in accordance with finalized Payment Certificates, then the Company shall establish a replacement Collection Account with a replacement Depositary Bank that is able to make such distributions, and any such replacement shall be made in accordance with the preceding sentence. For purposes of this Agreement, any reference to the “Collection Account”, “Depositary Bank” or “Account Control Agreement” shall refer to such replacement Collection Account, Depositary Bank or Account Control Agreement, as the context requires.
(ii) On or prior to the New Depositary Bank Trigger Date, (A) the Company shall establish with the Depositary Bank a Collection Account (or otherwise modify the terms of the Collection Account in effect on the Closing Date), (B) the Company and Purchaser Representative shall enter into an Account Control Agreement (or otherwise amend, modify or replace the Account Control Agreement in effect on the Effective Date) with the Depositary Bank with respect to the Collection Account and (C) the Company and such other applicable parties required to be party thereto shall have entered into such other cash management, paying agent, escrow arrangement or similar arrangements, in each case, in form and substance satisfactory to Purchaser Representative, required by Purchaser Representative to give full effect to Article III hereof and any other provisions or definitions of this Agreement reasonably related thereto.
Section 3.2 Payment of GSK Proceeds.
(a) Promptly (and in any event no later than [***]) following receipt by the Company from GSK of a GSK Payment Notice or a Royalty Report that is not also sent to and received by the Purchaser Representative, the Company shall notify the Purchaser Representative in writing and provide to the Purchaser Representative a complete copy of such GSK Payment Notice or Royalty Report, as applicable.
(b) Promptly (and in any event no later than [***]) following the earlier of (i) receipt by the Company from GSK of a GSK Payment Notice that is not also received by the Purchaser Representative, (ii) receipt by the Company of notice from the Purchaser Representative that a Commercial Milestone Event or Sales Milestone Event (each as defined in the GSK License Agreement) giving rise to GSK Proceeds has been achieved, or (iii) the Company obtaining Knowledge that a Commercial Milestone Event or Sales Milestone Event (each as defined in the GSK License Agreement) giving rise to Purchased Proceeds has been achieved but that GSK has not provided a GSK Payment Notice in accordance with the terms of the GSK License Agreement, the Company shall issue a Valid Invoice (as defined in the GSK License Agreement) to GSK in respect of the applicable Commercial Milestone Payment or Sales Milestone Payment (each as defined in the GSK License Agreement) pursuant to Section 6.3 or Section 6.4 of the GSK License Agreement, as applicable, and provide a copy of such Valid Invoice (along with proof of delivery to GSK) to the Purchaser Representative. Promptly (and in any event no later than [***]) following a determination under Section 6.8(b) of the GSK License Agreement that additional amounts are owed by GSK to the Company with respect to any GSK Proceeds, the Company shall issue a Valid Invoice (as defined in the GSK License Agreement) to GSK in respect of such amounts, and provide a copy of such Valid Invoice (along with proof of delivery to GSK) to the Purchaser Representative.
(c) Promptly (and in any event no later than [***]) following the payment of any GSK Proceeds into the Collection Account, the Company shall, or Parent on behalf of the Company shall, deliver to the Purchaser Representative a certificate (each, a “Payment Certificate”), in form and substance reasonably satisfactory to the Purchaser Representative, certified by a Responsible Officer, and setting forth in reasonable detail:
(i) the aggregate amount of GSK Proceeds received in the Collection Account as a result of such payment, together with any other amounts then on deposit in the Collection Account that constitute proceeds of GSK Proceeds;
(ii) the portion of such GSK Proceeds constituting (1) the associated Meiji Royalty Payments, if any, that the Company or any of its Affiliates is obligated to make, (2) the Purchased Proceeds, and (3) the Retained Excess Proceeds, including reasonable detail supporting such allocation;
(iii) any amounts previously received by the Company, Parent or any of their Affiliates that constitute Purchased Proceeds but were not deposited directly into the Collection Account, together with the status of any remittance thereof to the Collection Account or Purchaser Representative;
(iv) the calculation of each amount to be distributed (1) to Meiji in accordance with the terms of the Meiji License Agreement, (2) to each Purchaser in accordance with the payment mechanics set forth in this Agreement, (3) to Parent, with respect to any Retained Excess Proceeds, if any, that have not been sold to a Third Party in a Permitted Royalty Monetization, and (4) to each Monetization Counterparty, if any, to the extent of such Monetization Counterparty’s rights to any Retained Excess Proceeds; and
(v) the cash balance in the Collection Account after giving effect to the application of such distributions.
The Purchaser Representative shall have a period of [***] following receipt of each Payment Certificate to review such information and notify the Company and/or the Servicer of any objection thereto (each, a “Payment Objection Notice”). If the Purchaser Representative delivers a Payment Objection Notice, (i) the Company and/or Servicer agree to negotiate in good faith with Purchaser Representative for a period of [***] and (ii) thereafter, the amounts constituting the associated Meiji Royalty Payments, if any, that the Company or any of its Affiliates is obligated to make, and the Purchased Proceeds, shall be the amounts that the Purchaser Representative determines, in its good faith business judgment, to be correct, as set forth in such Payment Objection Notice, and such Payment Objection Notice shall supersede the applicable Payment Certificate for purposes of determining such amounts. Each Payment Objection Notice shall set forth in reasonable detail the Purchaser Representative’s determination of such payment amounts or other correction and the basis for any variance from the Payment Certificate. For clarity, with respect to the Retained Excess Proceeds in a Payment Certificate, the Company shall have the sole right to determine the distribution of such amounts as between Parent and each Monetization Counterparty, as applicable. Each Payment Certificate delivered pursuant to this Section 3.2(c) shall be accompanied by reasonable supporting documentation, including copies of any Royalty Reports or GSK Payment Notices that are relevant to the GSK Proceeds that are the subject of such Payment Certificate to the extent not previously delivered to the Purchaser Representative pursuant to Section 3.2(a). A Payment Certificate shall be deemed to be finalized on the date that the Purchaser Representative delivers a Payment Objection Notice to the Company, or if no such Payment Objection Notice is delivered, the earlier of notice from the Purchaser Representative that it has no objection to such Payment Certificate and [***] following receipt by the Purchaser Representative of such Payment Certificate. The Company shall, or Parent on behalf of the Company shall, within [***] following finalization of each Payment Certificate, deliver to the Depositary Bank instructions to distribute the applicable GSK Proceeds in accordance with such Payment Certificate. Notwithstanding anything to the contrary contained herein or in any other Transaction Document, any delivery, transmission or submission by Purchaser Representative or any Purchaser to the Depositary Bank of any Payment Certificate, Payment Objection Notice or related payment instruction, or any designation of, or service by, Purchaser Representative or any Purchaser as the contact for any verbal callback or other confirmation required by the Depositary Bank in connection therewith, shall be made solely as an accommodation to the Company and/or the Servicer and in reliance solely on information furnished by or on behalf of the Company and/or the Servicer, without any duty to verify, investigate, confirm or authenticate the accuracy, completeness, validity or authorization thereof. Neither Purchaser Representative nor any Purchaser, nor any of their respective officers, employees, representatives or any other Purchaser Indemnified Party, shall have any liability or responsibility whatsoever, whether in contract, tort, equity, statute or otherwise, for any error, omission, inaccuracy, misstatement, unauthorized instruction, misdirection, incorrect payment, failed payment, delayed payment, overpayment, underpayment or non-receipt of funds arising out of or relating to any such certificate, notice, form,
information or instruction (other than gross negligence or willful misconduct). To the fullest extent permitted by Applicable Law, the Company, on behalf of itself and the Servicer and Holdings, hereby irrevocably, absolutely and unconditionally waives, releases and agrees not to sue Purchaser Representative, any Purchaser or any of their respective officers, employees, representatives or any other Purchaser Indemnified Party for any claims, demands, actions, losses, liabilities, damages, costs or expenses, whether direct, indirect, consequential or otherwise, known or unknown, accrued or unaccrued, arising out of or relating to any such certificate, notice, form, information, instruction, related submission to the Depositary Bank or verbal callback or other confirmation with the Depositary Bank (other than gross negligence or willful misconduct); and no such delivery, transmission, submission, designation or service shall constitute any representation, warranty, certification, confirmation, adoption or approval by Purchaser Representative, any Purchaser or any such Purchaser Indemnified Party, and the Company, the Servicer and Holdings shall remain solely responsible therefor.
(d) If, notwithstanding the terms of the Payment Instruction Letter and the Account Control Agreements, GSK, any of its Affiliates, any of its sublicensees, or any other Person makes any future payment of the Purchased Proceeds or proceeds therefrom to the Company or any of its Affiliates, then (i) such amount shall be held by the Company (or the Company shall ensure that such amount is held by its Affiliate, as applicable) in trust for the benefit of the Purchaser Representative, for the benefit of the Purchasers, (ii) the Company (or such Affiliate) shall have no right, title or interest whatsoever in such portion of such payment and shall not create or suffer to exist any Lien thereon and (iii) the Company shall (or the Company shall ensure that such Affiliate shall, as applicable) promptly, and in any event no later than [***] following the receipt by the Company (or such Affiliate) of such portion of such payment, shall remit such portion of such payment to the Purchaser Representative’s Account pursuant to Section 3.2(e) in the exact form received with all necessary endorsements.
(e) The Company shall make all payments required to be made by it to each Purchaser pursuant to this Agreement by wire transfer of immediately available funds, without Set-Off or deduction, to the Purchaser Representative’s Account or to such other account designated in writing by the Purchaser Representative for the benefit of such Purchaser.
(f) If, notwithstanding the terms of the Payment Instruction Letter and the Account Control Agreement, GSK, any of its Affiliates, any of its sublicensees or any other Person makes any payment to the Purchaser Representative that does not consist entirely of Purchased Proceeds, then (i) the portion of such payment that does not constitute Purchased Proceeds shall be held by the Purchaser Representative in trust for the benefit of the Company, (ii) the Purchaser Representative shall have no right, title or interest whatsoever in such payment and shall not create or suffer to exist any Lien thereon and (iii) the Purchaser Representative promptly, and in any event no later than [***] following the receipt by the Purchaser Representative of such payment, shall remit such payment to the Company Account pursuant to Section 3.2(g) in the exact form received with all necessary endorsements.
(g) The Purchaser Representative shall make all payments required to be made by it to the Company pursuant to this Agreement by wire transfer of immediately available funds, without Set-Off or deduction to the account set forth on Exhibit E (or to such other account as the Company shall notify the Purchaser Representative in writing from time to time) (the “Company Account”).
(h) If GSK exercises any Non-Permitted Set-Off against any Purchased Proceeds, then the Company shall promptly (and in any event no later than [***] following the payment of the Purchased Proceeds affected by such Non-Permitted Set-Off), make a true-up payment to the Purchaser Representative (for the benefit of the Purchasers) such that Purchaser Representative receives the full amount of such Purchased Proceeds that would have been paid to Purchaser Representative had such Non-Permitted Set-Off not occurred. Notwithstanding anything to the contrary herein, to the extent the Company shall have
made a true-up payment to the Purchaser Representative (for the benefit of the Purchasers) pursuant to this Section 3.2(h) in respect of any Non-Permitted Set-Off, any subsequent payment received from GSK in respect, and to the extent, of such Non-Permitted Set-Off shall not be included in the Purchased Proceeds, and shall be deemed assigned and transferred to the Company without any further action of the Parties hereto, and shall be subject to Section 3.2(f) to the extent paid to the Purchaser Representative or into the Collection Account. For all purposes hereunder, any true-up payment made pursuant to this Section 3.2(h) will be treated as an adjustment to the Purchase Price for U.S. federal and applicable state and local income tax purposes to the fullest extent permitted by Applicable Law.
Section 3.3 Payment/Currency Exchange. All payments made by a Party hereunder shall be made by deposit of U.S. Dollars by wire transfer in immediately available funds into the applicable account.
Section 3.4 Taxes.
(a) All payments by or on account of any obligation of the Company hereunder or under any other Transaction Document to any Recipient shall be made free and clear of and without deduction or withholding for Taxes, except as required by Applicable Law. If any Withholding Agent is required by Applicable Law to make any withholding or deduction of Taxes in respect of any payment by or on account of any obligation of the Company under any Transaction Document, then (i) the applicable Withholding Agent shall be entitled to make such withholding or deduction and shall timely pay directly to the relevant Governmental Authority the full amount required to be so withheld or deducted and (ii) the applicable Withholding Agent shall promptly forward to the Purchaser Representative an official receipt or other documentation reasonably satisfactory to the Purchaser Representative evidencing such payment to such Governmental Authority.
(b) If any withholding or deduction is made by any Withholding Agent in respect of any Indemnified Taxes, the sum payable by the Company shall be increased by such additional amounts as are necessary to ensure that the net amount actually received by the applicable Purchaser (or, in the case of payments made to the Purchaser Representative for its own account, the Purchaser Representative) will equal the full amount such Recipient would have received had no such withholding or deduction for Indemnified Taxes been made (including any such withholdings or deductions applicable to additional sums payable under this Section 3.4).
(c) The Company shall indemnify each Purchaser and the Purchaser Representative within [***] after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to additional amounts payable under Section 3.4(b) or this Section 3.4(c)) payable or paid by such Purchaser or Purchaser Representative or required to be withheld or deducted in respect of a payment to such Purchaser or Purchaser Representative and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Company by a Purchaser (with a copy to the Purchaser Representative), or by the Purchaser Representative on its own behalf or on behalf of a Purchaser, shall be conclusive absent manifest error.
(d) The Company shall timely pay to the relevant Governmental Authority in accordance with Applicable Law any Other Taxes.
(e) Any Purchaser that is legally eligible for an exemption from or reduction of any withholding Tax with respect to any payments made under any Transaction Document shall deliver to the Company and the Purchaser Representative, at the time or times reasonably requested by the Company or
the Purchaser Representative, such properly completed and executed documentation prescribed by Applicable Law or reasonably requested by the Company or the Purchaser Representative as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Purchaser, if reasonably requested by the Company or the Purchaser Representative, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Company or the Purchaser Representative as will enable the Company or the Purchaser Representative to determine whether or not such Purchaser is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 3.4(e)(ii)(A) or (ii)(B) below) shall not be required if in the Purchaser’s reasonable judgment such completion, execution or submission would subject such Purchaser to any unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Purchaser.
(ii) Without limiting the generality of the foregoing:
(A) Any Purchaser that is a U.S. Person shall deliver to the Company and the Purchaser Representative on or prior to the date on which such Purchaser becomes a Purchaser under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Purchaser Representative), two properly completed and duly executed copies of IRS Form W-9 certifying that such Purchaser is exempt from U.S. federal backup withholding tax; and
(B) Any Foreign Purchaser shall, to the extent it is then legally entitled to do so, deliver to the Company and the Purchaser Representative (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Purchaser becomes a Purchaser under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Purchaser Representative), whichever of the following is applicable:
(1) in the case of a Foreign Purchaser claiming the benefits of an income tax treaty to which the United States is a party, two properly completed and duly executed copies of IRS Form W- 8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to such tax treaty;
(2) two properly completed and duly executed copies of IRS Form W-8ECI; and
(3) to the extent a Foreign Purchaser is not the beneficial owner, properly completed and duly executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W- 8BEN-E, IRS Form W-9, or other certification documents from each beneficial owner, as applicable.
(f) If any form or certification provided by any Purchaser pursuant to Section 3.4(e) expires or becomes obsolete or inaccurate in any respect, such Purchaser shall promptly update such form or certification or promptly notify the Purchaser Representative and the Company of its legal ineligibility to do so. Notwithstanding anything to the contrary in this Section 3.4, no Purchaser shall be required to deliver any documentation pursuant to this Section 3.4 that such Person is not legally eligible to deliver.
(g) On or before the date the Purchaser Representative becomes a party to this Agreement, the Purchaser Representative shall provide to the Company, two duly-signed, properly completed copies of IRS Form W-9 or any successor thereto. At any time thereafter, the Purchaser Representative shall provide updated documentation previously provided (or a successor form thereto) when any documentation previously delivered has expired or become obsolete or invalid or otherwise upon the reasonable request of the Company.
(h) If any Party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 3.4 (including by the payment of additional amounts pursuant to this Section 3.4), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 3.4 with respect to the Taxes giving rise to such refund), net of all out- of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 3.4(h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 3.4(h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 3.4(h) the payment of which would place the indemnified party in a less favorable net after-tax position than the indemnified party would have been in if the Taxes subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Taxes had never been paid. This Section 3.4(h) shall not be construed to require any indemnified party to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the indemnifying party or any other Person.
(i) Each Purchaser shall severally indemnify the Purchaser Representative, within [***] after written demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Purchaser (but only to the extent that the Company has not already indemnified the Purchaser Representative for such Indemnified Taxes or Other Taxes and without limiting the obligation of the Company to do so) and any Taxes that are excluded from the definition of Indemnified Taxes attributable to such Purchaser, in each case, that are payable or paid by the Purchaser Representative in connection with any Transaction Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Purchaser by the Purchaser Representative shall be conclusive absent manifest error. Each Purchaser hereby authorizes the Purchaser Representative to set off and apply any and all amounts at any time owing to such Purchaser under any Transaction Document or otherwise payable by the Purchaser Representative to the Purchaser from any other source against any amount due to the Purchaser Representative under this Section 3.4(i).
Section 3.5 Mitigation. If any Purchaser requires the Company to pay any Indemnified Taxes, Other Taxes or additional amounts to such Purchaser or any Governmental Authority for the account of any Purchaser pursuant to Section 3.4, then such Purchaser shall take any steps reasonably requested by the Company to eliminate or reduce further Indemnified Taxes, Other Taxes or additional amounts to be incurred in the future, provided that no Purchaser shall be obligated under this Section 3.5 to undertake any action that would subject such Purchaser to any unreimbursed cost or expense or that would otherwise be disadvantageous to such Purchaser. The Company will pay all reasonable costs and expenses incurred by any Purchaser in connection with any such actions requested under this Section 3.5.
Section 3.6 Survival. All of the Company’s obligations under Section 3.4 shall survive any assignment by a Purchaser, payment of all Obligations and replacement or resignation of the Purchaser Representative.
ARTICLE IV
CLOSING
Section 4.1 Closing. Subject to the terms of this Agreement, the closing of the transactions contemplated hereby (the “Closing”) shall take place remotely (via the exchange of documents and signatures) contemporaneously with the execution and delivery of this Agreement and upon receipt of the deliverables in Section 4.2 or such other time and place as the Parties hereto mutually agree (the “Effective Date”).
Section 4.2 Closing Deliverables of the Company. At the Closing, the Company shall deliver or cause to be delivered to the Purchaser Representative (for the benefit of the Purchasers) the following:
(a) Transaction Documents. Executed counterparts (including by electronic means) of this Agreement, the Note Documents, the Back-up Security Agreement, and the Bills of Sale executed by the parties thereto (in a manner reasonably acceptable to the Purchaser Representative), and the Payment Instruction Letter, executed by the Company, in each case in form and substance satisfactory to the Purchaser Representative.
(b) Organization Documents, Resolutions, Etc. To the extent not previously provided to the Purchaser Representative, each of the following (which shall be originals or electronic copies, in form and substance reasonably satisfactory to the Purchaser Representative and its legal counsel):
(i) copies of the Organization Documents of the Company certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and the other Organization Documents, in each case certified by a secretary or assistant secretary (or, if such entity does not have a secretary or assistant secretary, a Responsible Officer) of the Company to be true and correct as of the Effective Date;
(ii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of the Company as the Purchaser Representative may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Transaction Documents to which the Company is a party; and
(iii) such documents and certifications as the Purchaser Representative may reasonably require to evidence that the Company is duly organized or formed, and is validly existing, in good standing and qualified to engage in business in its state of organization or formation.
(c) Opinions of Counsel. Receipt by the Purchaser Representative of a written legal opinion of Wilmer Cutler Pickering Hale and Dorr LLP, addressed to the Purchaser Representative, dated the Effective Date and in form and substance previously agreed between the Company and the Purchaser Representative.
(d) Lien Searches and Related Matters. Receipt by the Purchaser Representative of the following:
(i) searches of Uniform Commercial Code filings for the Company in the jurisdictions where a filing would need to be made in order to perfect the Purchaser Representative’s back-up security interest in the Back-up Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist on the Back-up Collateral;
(ii) Uniform Commercial Code financing statements for each appropriate jurisdiction as is necessary, in the Purchaser Representative’s sole discretion, (1) to evidence the transfer of the Transferred Assets from the Parent to the Company under the Contribution Agreement, (2) to evidence the transfer of the Purchased Proceeds and proceeds thereof, from the Company to the Purchasers under this Agreement and (3) to perfect the Purchaser Representative’s back-up security interest in the Back-up Collateral;
(iii) searches of ownership of, and Liens on, the Company’s Patents in the appropriate U.S. governmental offices; and
(iv) such Account Control Agreements as shall be necessary to cause the Company to be in compliance with Section 3.1.
(e) Letter of Direction. Receipt by the Purchaser Representative of a satisfactory letter of direction containing funds flow information with respect to the proceeds of the Purchase Price to be paid on the Effective Date.
(f) Other. Such other documents, instruments, reports, statements and information as may be reasonably requested by the Purchaser Representative.
(g) Tax Form. The Company shall provide to the Purchaser Representative a complete IRS Form W-9 certifying its U.S. status and its exemption from U.S. federal backup withholding tax.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Purchaser Representative and the Purchasers as of the Effective Date as follows:
Section 5.1 Existence, Qualification and Power; Subsidiaries. The Company (a) is duly incorporated, organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Transaction Documents to which it is a party, and (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clauses (b)(i) and (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. The Company has no, and has never had any, Subsidiaries.
Section 5.2 Authorization; No Contravention. The execution, delivery and performance by the Company of each Transaction Document to which the Company is party have been duly authorized by all necessary corporate or other organizational action, and do not (a) contravene the terms of any of the Company’s Organization Documents, (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation (other than under the GSK License Agreement and the Meiji License Agreement) to which the Company is a party or affecting the Company or the properties of the Company, (ii) any Contractual Obligation under the GSK License Agreement or the Meiji License Agreement, or (iii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which the Company or its property is subject, or (c) violate, in any material respect, any Law, except (x) in the case of clause (b)(i) or (c) above, where any such event could not reasonably be expected to have either (1) a Material Adverse Effect or (2) an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of the Purchasers to receive the payments based on GSK Proceeds and (y) in the case of clause (b)(iii) above, where any such event could not reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of the Purchasers to receive the payments based on GSK Proceeds.
Section 5.3 Execution and Delivery; Binding Effect. Each of the Transaction Documents to which the Company is party has been duly executed and delivered by the Company. Each of the Transaction Documents to which the Company is party constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.
Section 5.4 No Liens; Title to Purchased Proceeds. None of the property or assets, in each case, that specifically relate to the Licensed Products, including the IP Rights, of the Company is subject to any Lien. Upon the Closing, the Purchasers will have acquired, subject to the terms and conditions set forth in this Agreement, good and marketable title to the Purchased Proceeds and the proceeds thereof, free and clear of all Liens. Prior to the transfer to the Purchasers hereunder, the Company owns the Purchased Proceeds, free and clear of all Liens, and no Affiliate of the Company owns the Purchased Proceeds (or any portion thereof). The Company has not caused, and to the Knowledge of the Company, no other Person has caused, the claims and rights of the Purchasers (or the Purchaser Representative on the Purchasers’ behalf) created by any Transaction Document in and to the Back-up Collateral, to be subordinated to any creditor or any other Person. The Company has not granted, nor does there exist, any Lien on the Transaction Documents.
Section 5.5 Governmental and Third Party Authorizations. The execution and delivery by the Company of the Transaction Documents to which the Company is party, the performance by the Company of its obligations hereunder and thereunder and the consummation of any of the transactions contemplated hereunder and thereunder do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Authority or any other Person, except for applicable filings under U.S. securities laws, the filing of Uniform Commercial Code financing statements, notice to GSK pursuant to Section 14.2(b) of the GSK License Agreement and those previously obtained or made or to be obtained or made on the Effective Date.
Section 5.6 No Material Adverse Effect. Since [***], there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.
Section 5.7 No Litigation. There are no actions, suits, proceedings, claims or Disputes pending or, to the Knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Company or against any of its properties or revenues that (a) purport to affect or pertain to this Agreement or any other Transaction Document, or any of the transactions contemplated hereby or (b) either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.8 Solvency. The Company has determined that, by virtue of its entering into the transactions contemplated by the Transaction Documents to which the Company is party and its authorization, execution and delivery of the Transaction Documents to which the Company is party, the Company’s sale of the Purchased Proceeds and proceeds thereof and the consummation of the other transactions contemplated hereby or thereby is in its own best interests. Both before and after consummation of the transactions contemplated by the Transaction Documents and the application of the proceeds therefrom, the Company is Solvent. No step has been taken or is intended by the Company or, to its Knowledge, any other Person, to make the Company subject to a Bankruptcy Event.
Section 5.9 No Brokers’ Fees. Except as set forth on Schedule 5.9, the Company has not taken any action that would entitle any Person to any commission or broker’s fee in connection with the transactions contemplated by this Agreement.
Section 5.10 Compliance with Laws. Neither the Company nor any of its Affiliates (a) has violated or is in violation of, or, to the Knowledge of the Company, is under investigation by a Governmental Authority with respect to or has been threatened to be charged with or been given notice by a Governmental Authority of any violation of, any Applicable Law or any judgment, order, writ, decree, injunction, stipulation, consent order, permit or license granted, issued or entered by any Governmental Authority or (b) is subject to any judgment, order, writ, decree, injunction, stipulation, consent order, Permit or license granted, issued or entered by any Governmental Authority, in each case, that could reasonably be expected to result in a material liability to the Company.
Section 5.11 Investment Company Act. None of the Company, the Parent or any other Subsidiary of the Parent is or is required to be registered as an “investment company” under the Investment Company Act of 1940.
Section 5.12 Taxes. The Company has timely filed (or caused to be filed) all Tax returns and reports required by Applicable Law to have been filed by it and has paid all Taxes required to be paid by it (including in its capacity as a withholding agent), except any such Taxes that are being contested in good faith by appropriate proceedings, diligently conducted, and for which adequate reserves have been provided in accordance with GAAP or where such Taxes, individually or in the aggregate, are less than $[***] and such failure would not have an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of the Purchasers to receive the Purchased Proceeds. None of the payments received by the Company or Parent in respect of the GSK Proceeds have been and, under current Law, none of such payments to be received will be, subject to any withholding Tax or Other Tax and, except for claiming benefits as a qualified resident under the income tax treaty between the United States and United Kingdom, neither the Company nor Parent was ever required or requested to establish any
entitlement to treaty benefits in order to avoid or minimize any such withholdings or deductions. Included payments paid to the Company and Parent have qualified for benefits under the income tax treaty between the United States and United Kingdom. Since formation, the Company has properly been treated as a disregarded entity for U.S. federal and applicable state and local income tax purposes.
Section 5.13 Ownership of the Company. Parent owns, free and clear of all Liens, 100% of the issued and outstanding Equity Interests of Holdings, and there are no outstanding commitments or other obligations of Parent to issue, and no rights of any Person to acquire, any shares of any Equity Interests of Holdings. Holdings owns, free and clear of all Liens, 100% of the issued and outstanding Equity Interests of the Company, and there are no outstanding commitments or other obligations of the Company to issue, and no rights of any Person to acquire, any shares of any Equity Interests of the Company.
Section 5.14 Material Contracts.
(a) The only Material Contracts, as of the Effective Date, are the Transaction Documents, and, after giving effect to the Contribution thereof under the Contribution Agreement, the GSK License Agreement and the Meiji License Agreement.
(b) Attached as Exhibit F-1 is a true, correct and complete copy of the GSK License Agreement, and attached as Exhibit F-2 is a true, correct and complete copy of the Meiji License Agreement. The Company has provided to the Purchaser Representative true, correct and complete copies of (i) all Royalty Reports, (ii) all notices delivered to the Parent or the Company by GSK or by the Parent or the Company to GSK pursuant to, or relating to, the GSK License Agreement, and (iii) all notices delivered to the Parent or the Company by Meiji or by the Parent or the Company to Meiji pursuant to, or relating to, the Meiji License Agreement, in each case of clauses (ii) and (iii), that could reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchaser Representative to receive the Purchased Proceeds. To the Knowledge of the Company, (x) neither the Company nor any of its Affiliates have delivered to GSK, nor has GSK delivered to the Company or any of its Affiliates, correspondence pursuant to, or relating to, the GSK License Agreement, and (y) neither the Company nor any of its Affiliates have delivered to Meiji, nor has Meiji delivered to the Company or any of its Affiliates, correspondence pursuant to, or relating to, the Meiji License Agreement, in case of clauses (x) and (y), that could reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchasers to receive the Purchased Proceeds.
(c) Neither the Company nor any of its Affiliates nor, to the Knowledge of the Company, any Material Contract Counterparty, is in breach or default of any Material Contract and no circumstances or grounds exist that would, upon the giving of notice, the passage of time or both, give rise (i) to a claim by the Company or any of its Affiliates or any Material Contract Counterparty of a breach or default of any Material Contract, or (ii) to a right of rescission, termination (excluding the mere existence of GSK’s right to terminate the GSK License Agreement pursuant to Section 11.2 of the GSK License Agreement), revision, or Set-Off, by any Person, in, to or under any Material Contract. Neither the Company nor any of its Affiliates has received from, or delivered to, any Material Contract Counterparty, any written notice alleging a breach or default under any Material Contract, which breach or default has not been cured as of the Effective Date. Neither the Company nor any of its Affiliates has (A) given notice to a Material Contract Counterparty of the termination of any Material Contract (whether in whole or in part) or any notice to a Material Contract Counterparty expressing any intention to terminate any Material Contract or (B) received from a Material Contract Counterparty thereto any written notice of termination of any Material Contract (whether in whole or in part) or any written notice from a Material Contract
Counterparty expressing any intention to terminate any Material Contract. To the Knowledge of the Company, there are no facts, circumstances or events that would reasonably be expected to result in the termination of the GSK License Agreement in accordance with its terms.
(d) Each Material Contract is a valid and binding obligation of the Company and, to the Knowledge of the Company, of the applicable Material Contract Counterparty, enforceable against the Company and, to the Knowledge of the Company, each applicable Material Contract Counterparty in accordance with its terms, except as may be limited by general principles of equity (regardless of whether considered in a proceeding at law or in equity) and by applicable bankruptcy, insolvency, moratorium and other similar laws of general application relating to or affecting creditors’ rights generally. Neither the Company nor any of its Affiliates has received any notice from any Material Contract Counterparty or any other Person challenging the validity or enforceability of any Material Contract including, with respect to the GSK License Agreement, the obligation of GSK to pay any amounts constituting GSK Proceeds under the GSK License Agreement. Neither the Company nor any of its Affiliates nor, to the Knowledge of the Company, any other Person, has delivered or intends to deliver any notice to the Company or a Material Contract Counterparty challenging the validity or enforceability of any Material Contract, including, with respect to the GSK License Agreement, the obligation of GSK to pay any amounts constituting GSK Proceeds under the GSK License Agreement.
(e) Neither the Company nor any of its Affiliates has granted any material written waiver or, to the Knowledge of the Company, any other material waiver, under any Material Contract, or released any Material Contract Counterparty, in whole or in part, from any of its material obligations under any Material Contract, except, in each case, to the extent set forth in the applicable Material Contract.
(f) There are no settlements, covenants not to sue, consents, judgements, orders or similar obligations which: (i) restrict the rights of the Company or GSK from using any Intellectual Property relating to the research, development, manufacture, production, use, or other Commercialization of the Licensed Products (in order to accommodate any Third Party Intellectual Property or otherwise), or (ii) permit any Third Parties (other than GSK pursuant to the GSK License Agreement) to use the Company’s IP Rights.
(g) The back-up security interests granted by the Company pursuant to the Back-up Security Agreement in its rights in the Material Contracts are not prohibited by the terms of such Material Contracts after giving effect to applicable law.
(h) The Company has made all payments to the respective Material Contract Counterparty of each Material Contract due, owing and required under each Material Contract as of the date hereof. The Company has received all amounts owed to it under the GSK License Agreement prior to the date hereof. The amount of the “Commercial Milestone Payment” (as defined in the GSK License Agreement) for the “First Commercial Sale Milestone” (as defined in the GSK License Agreement), after taking into account the reductions with respect thereto set forth in Section 6.3 of the GSK License Agreement, is $[***].
(i) The Company has not consented to any assignment by the Material Contract Counterparties to any Material Contract of any of its rights or obligations under any such Material Contract and, to the Knowledge of the Company, no Material Contract Counterparty has assigned any of its rights or obligations under any such Material Contract to any Person. Except as contemplated by the Transaction Documents or the NPA, neither the Company nor any of its Affiliates has assigned, in whole or in part, or granted any Lien upon or security interest with respect to, any Material Contract, the Transferred Assets, the Back-up Collateral or the GSK Proceeds.
(j) The Company has not notified any Person of any claims for indemnification under any Material Contract nor has the Company received any claims for indemnification under any Material Contract.
(k) Except as set forth on Schedule 5.14(k), Neither the Company nor any of its Affiliates has exercised any review or audit rights pursuant to any Material Contract, including the GSK License Agreement.
(l) To the Knowledge of the Company, GSK has not granted (and neither the Company nor any of its Affiliates has received any written notice that GSK has granted) a sublicense to any other Person.
(m) Except as provided in the GSK License Agreement (including Section 6.5(c) of the GSK License Agreement as set forth below) or the Note Documents, neither the Company nor any of its Affiliates is a party to any agreement providing for or permitting any sharing of, or providing for or permitting, any right of counterclaim, credit, reduction or deduction by contract or otherwise (a “Royalty Reduction”) or permitting any Set-Off against, the Purchased Proceeds. GSK has not exercised, and, to the Knowledge of the Company, GSK has not had the right to exercise, and no event or condition exists that, upon notice or passage of time, or both, would permit GSK to exercise, any GSK Royalty Reduction, Royalty Reduction or Set-Off against the Purchased Proceeds or any other amounts payable to GSK under the GSK License Agreement. To the Knowledge of the Company, there are no Third Party Patents that would provide a basis for a GSK Royalty Reduction or Royalty Reduction. The [***] percent ([***]%) reduction to royalty rates in Section 6.5(c) of the GSK License Agreement applies with respect to a given “Product” (as defined in the GSK License Agreement) in a given country in the Territory only if both of the following conditions are true at the applicable point during the applicable “Royalty Term” (as defined in the GSK License Agreement): (i) such Product is not covered by a “Valid Claim” (as defined in the GSK License Agreement) of any Spero Patent (as defined in the GSK License Agreement) in such country; and (ii) the “Regulatory Exclusivity Period” (as defined in the GSK License Agreement), if any, for such Product in such country has expired. There are no compulsory licenses granted or, to the Knowledge of the Company, threatened to be granted, with respect to the IP Rights.
(n) Other than the Material Contracts, there are no Contracts between the Company, Parent or any of their respective Affiliates, on the one hand, and any Material Contract Counterparty, on the other hand, that (i) relate to any Licensed Product or the GSK Proceeds or (ii) could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Affiliates has (A) received any written notice of any dispute from any Material Contract Counterparty for resolution pursuant to any Material Contract or (B) given any written notice of any dispute to a Material Contract Counterparty for resolution pursuant to any Material Contract, in each case of clauses (A) and (B) that could reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchasers to receive the Purchased Proceeds.
Section 5.15 Perfection of Security Interests in the Back-up Collateral. The Back-up Collateral Documents create valid security interests in, and Liens on, the Back-up Collateral purported to be covered thereby, which security interests and Liens will be, upon the timely and proper filings, deliveries, notations and other actions contemplated in the Back-up Collateral Documents perfected security interests and Liens (to the extent that such security interests and Liens can be perfected by such filings, deliveries, notations and other actions) in favor of the Purchaser Representative, for the benefit of the Secured Parties, prior to all other Liens.
Section 5.16 Names. Set forth on Schedule 5.16(a) is the taxpayer identification number and organizational identification number (in each case, or foreign equivalent) of the Company as of the Effective Date. The exact legal name and jurisdiction of organization of the Company is as set forth on the signature pages hereto. Except as set forth on Schedule 5.16(b), the Company has not during the five years preceding the Effective Date, (x) changed its legal name, (y) changed its jurisdiction of organization, or (z) been party to a merger, consolidation or other change in structure.
Section 5.17 Sanctions Concerns; Anti-Corruption Laws; PATRIOT Act.
(a) Sanctions Concerns. None of the Company, nor any Subsidiary, nor any director, officer, employee, or, to the Knowledge of the Company, any agent, Affiliate or representative thereof, is an individual or entity that is, or is owned or Controlled by one or more individuals or entities that are (i) currently the subject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals or Foreign Sanctions Evaders, HMT’s Consolidated List of Financial Sanctions Targets, the Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions, or any similar list enforced by any other relevant Sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction (such Persons, collectively, “Sanctioned Persons”). Neither the Company nor any director, officer, employee, agent, Affiliate, or representative thereof has engaged in any direct or indirect transactions or dealings with Sanctioned Persons. The Company has conducted its business in compliance with all applicable Sanctions and have instituted and maintained policies and procedures designed to promote and achieve compliance with such Sanctions.
(b) Anti-Corruption Laws. The Company and its directors, officers, employees and, to the Knowledge of the Company, agents, Affiliates, or representatives have conducted their business in compliance with the United States Foreign Corrupt Practices Act of 1977 (the “FCPA”), and other similar anti-corruption laws in other jurisdictions, and have instituted and maintained policies and procedures reasonably designed to promote and achieve compliance with such laws. Neither the Company nor any director, officer, employee or, to the Knowledge of the Company, agents, Affiliates, or representatives thereof have, directly or indirectly, made, offered, promised, or authorized any payment or provision of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the FCPA), foreign political party or official thereof, or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority or (iii) securing any improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Company or any of its Affiliates in obtaining or retaining business for or with, or directing business to, any person. Neither the Company nor any directors, officers, employees or, to the Knowledge of the Company, any of its agents, Affiliates, or representatives have made or authorized any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any applicable law, rule or regulation.
(c) PATRIOT Act. To the extent applicable, the Company is in compliance with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto and (ii) the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
Section 5.18 Indebtedness. Neither Holdings nor the Company has any Indebtedness other than pursuant to the Transaction Documents.
Section 5.19 Intellectual Property Matters.
(a) Schedule 5.19(a) sets forth an accurate and complete list of the unexpired issued and pending applications for Product Patents. Other than as set forth on Schedule 5.19(a) there is no Patent owned or licensed by the Company or its Affiliates relating to the Commercialization of the Licensed Products in the Territory. For each Product Patent set forth on Schedule 5.19(a), the Company has indicated: (i) the jurisdictions in which such Product Patent is filed, pending, allowed, granted or issued, (ii) the patent number, registration number, or patent application number, as applicable, (iii) the registered owner thereof (iv) the Licensed Product to which such Product Patent or Product Patent application relates, (v) the licensor of each Licensed Patent (if different from registered owner), and (vi) the title of such Patent.
(b) The Company is the sole and exclusive owner of the entire right, title and interest in each of the Owned Patents (other than rights granted to GSK pursuant to the GSK License Agreement). The Owned Patents are not subject to any encumbrance, Lien or claim of ownership by any Third Party (other than rights granted to GSK pursuant to the GSK License Agreement). Neither the Company nor any of its Affiliates has received any notice of any claim by any Third Party challenging the ownership of the rights of the Company or Parent in and to the Owned Patents.
(c) The Company has a valid license to each of their respective Licensed Patents, in each case pursuant to the terms of the applicable In-License pursuant to which the Company has in-licensed such Licensed Patent(s).
(d) Each inventor named on the Owned Patents has executed a Contract assigning their entire right, title and interest in and to such Patents and the inventions embodied, described and/or claimed therein, to the owner thereof, and each such Contract has been duly recorded at the relevant Patent Office (including, as applicable, the United States Patent and Trademark Office).
(e) No issued Product Patents have lapsed, expired or otherwise been terminated and no Product Patent application by the Company or, with respect to any Licensed Patent for which a Patent has not yet issued and to the Knowledge of the Company, the applicant therefor, have lapsed, expired, been abandoned or otherwise been terminated, other than by operation of law.
(f) There are no unpaid maintenance fees, annuities or other like payments with respect to the Owned Patents.
(g) Each of the Owned Patents correctly identifies each and every inventor of the claims thereof as determined in accordance with the Laws of the jurisdiction in which such Patent was issued or is pending. To the Knowledge of the Company, there is not any Person who is or claims to be an inventor of any of the Owned Patents who is not a named inventor thereof. Neither the Company nor any of its Affiliates has received any notice from any Person who is or claims to be an inventor of any of the Owned Patents who is not a named inventor thereof. To the Knowledge of the Company, no licensor with respect to any Licensed Patent has received any notice from any Person who is or claims to be an inventor of any of the Licensed Patents who is not a named inventor thereof.
(h) Each of the Owned Patents and claims therein is valid, enforceable and subsisting. Neither the Company nor any of its Affiliates nor, to the Knowledge of the Company, any licensor with respect to any Licensed Patent has received any opinion of counsel that any of the Product Patents or claims therein is invalid or unenforceable. Neither the Company nor any of its Affiliates nor, to the Knowledge of the Company, any licensor with respect to any Licensed Patent has received any notice of any claim by any Third Party challenging the validity or enforceability of any of the Product Patents or claims therein.
(i) To the Knowledge of the Company, each individual associated with the filing and prosecution of the Product Patents has complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office.
(j) To the Knowledge of the Company, there is at least one valid claim in the Product Patents in each of the United States, the United Kingdom, France, Germany, Italy and Spain that would be Infringed by the Company’s or any Subsidiary’s, or GSK’s Commercialization of the Licensed Products but for the Company’s and the Subsidiaries’ rights in such Patents.
(k) There is no pending or, to the Knowledge of the Company, threatened, opposition, interference, reexamination, injunction, claim, suit, action, citation, summons, subpoena, hearing, inquiry, investigation (by the International Trade Commission or otherwise), complaint, arbitration, mediation, demand, decree or other dispute, disagreement, proceeding, claim or inter partes review (in each case, other than standard patent prosecution before a Patent Office) (collectively, “Disputes”) challenging the legality, validity, enforceability or ownership of any of the Owned Patents. To the Knowledge of the Company, there are no Disputes by or with any Third Party against the Company, Parent, GSK or Meiji involving the Product Patents. The Owned Patents set forth on Schedule 5.19(a) are not subject to any outstanding injunction, judgment, order, decree, ruling, change, settlement or other disposition of a Dispute.
(l) To the Knowledge of the Company, and except as separately disclosed to Purchaser Representative, there is no pending or threatened (in writing) claims that the Commercialization of the Licensed Product as currently contemplated Infringes on any Patents or other Intellectual Property rights of any other Person or constitutes misappropriation of any other Person’s Trade Secrets.
(m) To the Knowledge of the Company, none of the conception, development and reduction to practice of the inventions claimed in the Product Patents has constituted or involved the misappropriation of Trade Secrets or other “IP Rights” (used in this instance as defined herein but without regard to whether such “IP Rights” relate to the Commercialization of the Licensed Products in the Territory) or property of any Third Party.
(n) Neither the Company nor any of its Affiliates nor, to the Knowledge of the Company, GSK or Meiji has filed any disclaimer, other than a terminal disclaimer, or made or permitted any other voluntary reduction in the scope of any of the Owned Patents post issuance.
(o) To the Knowledge of the Company, no Third Party Patent would be Infringed or limit or prohibit in any material respect Product Development and Commercialization Activities with respect to any Licensed Product. The Company has not received any notice of any claim by any Third Party asserting that Product Development and Commercialization Activities with respect to any Licensed Product Infringes such Third Party’s Patents.
(p) To the Knowledge of the Company, there are no pending, published patent applications owned by any Third Party, which the Company does not have the right to use, which if issued, would limit or prohibit in any material respect Product Development and Commercialization Activities by or on behalf of the Company or Parent or Commercialization by GSK with respect to any Licensed Product.
(q) To the Knowledge of the Company, no Third Party is Infringing any of the issued Product Patents. The Company has not put any Third Party on notice of any Infringement of any of the issued Product Patents.
(r) The Company has no owned or exclusively in-licensed Trademarks that are necessary or useful in the development, manufacture or commercialization of Tebipenem Pivoxil Hydrobromide or any Licensed Product in the Field (as defined in the GSK License Agreement) in the Territory.
Section 5.20 Compliance of Licensed Products.
(a) To the Knowledge of the Company, GSK is in compliance with its material obligations to seek, obtain and maintain Regulatory Authorizations for the Licensed Products in the Territory.
(b) Each of Tebipenem Pivoxil Hydrobromide and Utebzi (tebipenem pivoxil) is a Licensed Product.
(c) To the Knowledge of the Company, Tebipenem Pivoxil Hydrobromide has received Regulatory Authorization for marketing and distribution for the indications and in the countries listed on Schedule 5.20(c).
Section 5.21 Disclosure. The Company has disclosed to the Purchaser Representative and the Purchasers all agreements, instruments and corporate or other restrictions to which it or Parent is subject, and all other matters known to it or Parent, that, either individually or in the aggregate, have had or could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether written or oral) by or on behalf of the Company to the Purchaser Representative or any Purchaser in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Transaction Document (in each case, as modified or supplemented by other information so furnished and when taken as a whole) contains any material misstatement of fact or omits to state any fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; provided, that, with respect to financial projections, estimates, budgets or other forward-looking information, the Company represents only that such information was prepared in good faith based upon assumptions believed by the Company or Parent to be reasonable at the time such information was delivered to the Purchaser Representative (it being understood that such information is as to future events and is not to be viewed as facts, is subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, the Parent and the Parent’s Subsidiaries, that no assurance can be given that any particular projection, estimate, budget or forecast will be realized and that actual results during the period or periods covered by any such projections, estimate, budgets or forecasts may differ significantly from the projected results and such differences may be material).
ARTICLE VI
COVENANTS
During the Payment Term:
Section 6.1 Books and Records. The Company shall keep and maintain, or cause to be kept and maintained, at all times, full and accurate books and records adequate to reflect accurately all financial information received and all amounts paid or received under the GSK License Agreement in respect of the Purchased Proceeds and the proceeds thereof.
Section 6.2 Notices.
(a) Within [***] after receipt by the Company of (i) (x) notice of the commencement by any Third Party of, or (y) written notice from any Third Party threatening to commence, in either case any action, suit, arbitration proceeding, claim, demand, investigation, audit or other proceeding relating to this Agreement, any of the other Transaction Documents, the GSK License Agreement, the Meiji License Agreement, any transaction contemplated hereby or thereby or the Purchased Proceeds or the proceeds thereof (in any case other than any notice contemplated in Section 3.2(a) or Section 6.2(d)), or (ii) any other material written correspondence relating to the foregoing, that, in each case of the foregoing, could reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchasers to receive the Purchased Proceeds, the Company shall (A) notify the Purchaser Representative in writing of the receipt of such notice or correspondence and (B) provide the Purchaser Representative with a written summary of all material details thereof or, to the extent not prohibited by obligations of confidentiality, if any, contained in the GSK License Agreement, if such notice is in writing, furnish the Purchaser Representative with a copy thereof.
(b) Subject to Section 6.5(a), within [***] after receipt by the Company of any material written notice, certificate, offer, proposal, correspondence, report or other communication from GSK or Meiji relating to the GSK License Agreement, the Meiji License Agreement, the IP Rights, the Purchased Proceeds or proceeds thereof or any Licensed Product in the Territory (in any case, other than any notice contemplated by Section 3.2(a), Section 6.2(a) or 6.2(d), and other than any communication that could not reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchasers to receive the Purchased Proceeds), the Company shall (i) notify the Purchaser Representative in writing of the receipt thereof and provide the Purchaser Representative with a written summary of all material details thereof and (ii) to the extent not prohibited by obligations of confidentiality contained in the GSK License Agreement and the Meiji License Agreement, furnish the Purchaser Representative with a copy thereof.
(c) The Company shall provide the Purchaser Representative with written notice within [***] after it obtains Knowledge of any of the following:
(i) the occurrence of any Bankruptcy Event in respect of the Company, Parent or any of its Subsidiaries;
(ii) any breach or default by the Company of or under any material covenant, agreement or other provision of any Transaction Document;
(iii) the Company, GSK, Meiji or any other Third Party receiving any notice of audit or regulatory action by Regulatory Agency (other than routine inquiries) in the Territory relating to any of the Licensed Products or the Purchased Proceeds or proceeds thereof, in each case, that could reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchasers to receive the Purchased Proceeds;
(iv) any representation or warranty made by the Company in this Agreement or any of the other Transaction Documents (or in any certificate delivered by the Company to the Purchaser Representative pursuant to this Agreement) shall prove to be untrue, inaccurate or incomplete in any material respect on the date as of which made;
(v) the occurrence or existence of any change, effect, event, occurrence, state of facts, development or condition that has had, or would reasonably be expected to have, a Material Adverse Effect;
(vi) GSK has failed to prepare, execute, deliver or file any agreements, documents or instruments that are necessary to secure and maintain any Regulatory Authorizations for the relevant Licensed Product (except where GSK’s failure to do so would not reasonably be expected to result in a Material Adverse Effect);
(vii) GSK has withdrawn or abandoned, or failed to take any action necessary to prevent the withdrawal or abandonment of, any Regulatory Authorization for the relevant Licensed Product once obtained (except where such withdrawal or abandonment would not reasonably be expected to result in a Material Adverse Effect); or
(viii) GSK has consented to the withdrawal or abandonment of any Regulatory Authorization for the relevant Licensed Product (except where such withdrawal or abandonment would not reasonably be expected to result in a Material Adverse Effect).
(d) In addition to the Royalty Reports to be delivered to the Purchaser pursuant to Section 3.2(a), the Company shall, on a quarterly basis, provide: (i) all material reports and other material documentation relating to the Commercialization of the Licensed Products in the Territory provided by GSK to the Company and (ii) the reports and other information received by the Company pursuant to Sections 2.3(a)(iv), 2.11(c), 3.2(d), 3.2(e) (solely with respect to finalized minutes), 4.1(a) (solely with respect to any amendments or modifications to the Development Plan (as defined in the GSK License Agreement)), 4.10(b), 4.10(c), 5.3(d), 5.3(e), 5.6, 7.1(c), 7.2(c), 7.2(d), 7.3(a), 7.3(c), 8.4, 10.4(a), 10.8, 11.7 and 14.6 of the GSK License Agreement. Upon the delivery of such reports, other documentation and information by the Company to the Purchaser Representative, either the Company or the Purchaser Representative may reasonably request to hold one videoconference for the purpose of discussing such quarterly update. In addition to the foregoing, the Purchaser Representative shall have the right, no more than [***], to request [***]. Any such videoconference or meeting shall be at a mutually agreeable reasonable date and time and shall include [***] of each of the Parent, the Company and the Purchaser Representative. Each of the Parent, the Company and the Purchaser Representative shall be solely responsible for their own costs and expenses associated with such videoconferences and meetings, including all travel and accommodations.
(e) The Company shall notify the Purchaser Representative in writing not less than [***] prior to any change in, or amendment or alteration of, the Company’s (i) legal name, (ii) form or type of organizational structure or (iii) jurisdiction of organization.
(f) The Company shall notify the Purchaser Representative in writing not more than [***] after becoming aware that any Tax may be required to withheld with respect to any payment under the GSK License Agreement or otherwise to the Purchaser Representative or the Purchasers pursuant to this Agreement.
(g) Promptly (and in any event, within [***]) notify the Purchaser Representative after (i) the Company or any Subsidiary enters into a new Material Contract or amends, supplements or otherwise modifies an existing Material Contract and provide the Purchaser Representative with a true, correct and complete copy of such new Material Contract or such amendment, supplement or modification or (ii) an existing Material Contract is terminated, in whole or in part.
(h) Promptly (and in any event within [***]) notify the Purchaser Representative after the Company has Knowledge of any act of Infringement of any Intellectual Property listed on Schedule 5.19(a) which could reasonably be expected to materially impair GSK’s ability to generate revenue from the Licensed Products which gives rise to GSK’s obligation to pay the Purchased Proceeds in accordance with the terms of the GSK License Agreement.
(i) Each notice pursuant to clauses (a) through (h) of this Section 6.2 shall be accompanied by a statement of a Responsible Officer of the Company setting forth details of the occurrence referred to therein. Each notice pursuant to Section 6.2(c)(ii) shall describe with particularity any and all provisions of this Agreement and any other Transaction Document that have been breached.
Section 6.3 Preservation of Existence, Etc. The Company will:
(a) Preserve, renew and maintain in full force and effect its legal existence under the Laws of the jurisdiction of its organization and its Organization Documents.
(b) Preserve, renew and maintain in full force and effect its good standing under the Laws of the jurisdiction of its organization.
(c) Use Commercially Reasonable and Diligent Efforts to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
Section 6.4 Compliance with Laws. The Company will comply with the requirements of all Laws, including Healthcare Laws, and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted, or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.
Section 6.5 GSK License Agreement.
(a) The Company (i) shall perform and comply with in all material respects its obligations under the GSK License Agreement, (ii) shall not, except with the Purchaser Representative’s consent, (A) forgive, release or compromise any Purchased Proceeds payable by GSK under the GSK License Agreement, or (B) amend, modify, supplement, restate, waive, cancel, rescind or terminate (or consent to any cancellation, rescission or termination of), in whole or in part, any provision of or right under the GSK License Agreement in a manner that would reasonably be expected to have adverse effect, in any material respect, including on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchasers to receive the Purchased Proceeds, (iii) shall not, except with the Purchaser Representative’s consent, enter into any new contract, agreement or legally binding arrangement in respect of the Purchased Proceeds or the Licensed Products in the Territory (including, without limitation, the IP Rights with respect to Commercialization of the Licensed Products in the Territory), and (iv) shall not agree to do any of the foregoing. The Company shall promptly (and in any case within [***] after the occurrence of the applicable event) deliver to the Purchaser Representative (1) copies of all fully-executed or definitive writings related to the matters set forth in clauses (ii), (iii) and (iv) of the immediately preceding sentence.
(b) Except as otherwise expressly set forth in this ARTICLE VI and except as otherwise consented to by the Purchaser Representative, the Company shall not grant or withhold any consent, exercise or waive any right or option, fail to exercise any right or option or deliver to GSK any
notice under the GSK License Agreement, in each case to the extent such action would reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchasers to receive the Purchased Proceeds.
(c) Promptly (and in any case within [***]) after (i) receiving written notice from GSK, including any written notice terminating the GSK License Agreement (in whole or in part), alleging any breach of or default under the GSK License Agreement by the Company related to the Purchased Proceeds or the proceeds thereof, or any other material breach or default, or asserting the existence of any facts, circumstances or events that, alone or together with other facts, circumstances or events, would reasonably be expected (with or without the giving of notice or passage of time, or both) to give rise to a breach of or default under the GSK License Agreement by the Company related to the Purchased Proceeds or proceeds thereof or the right to terminate the GSK License Agreement (in whole or in part) by GSK; or (ii) the Company otherwise having Knowledge of any fact, circumstance or event that, alone or together with other facts, circumstances or events, would reasonably be expected (with or without the giving of notice or passage of time, or both) to give rise to a breach of or default under the GSK License Agreement by the Company related to the Purchased Proceeds or the proceeds thereof, or any other material breach or default, or the right to terminate the GSK License Agreement (in whole or in part) by GSK, the Company shall (A) (x) give written notice thereof to the Purchaser Representative and provide the Purchaser Representative with a written summary of all material details thereof, (y) to the extent not prohibited by obligations of confidentiality contained in the GSK License Agreement, include a copy of any written notice received from GSK, and (z) in the case of any such breach or default or alleged breach or default by the Company, describe in reasonable detail any corrective action the Company proposes to take in respect of such breach or default; and (B) in the case of any such breach or default or alleged breach or default by the Company, use Commercially Reasonable and Diligent Efforts to cure such breach or default and give written notice to the Purchaser Representative upon curing such breach or default; provided, however, that if the Company fails to promptly cure any such breach or default, without limiting any other rights it may have, the Purchaser Representative, for the benefit of the Purchasers, shall, upon written notice to the Company and to the extent permitted by the GSK License Agreement, be entitled to take any and all actions the Purchaser Representative considers reasonably necessary to promptly cure such breach or default, and the Company shall cooperate with the Purchaser Representative for such purpose and reimburse the Purchaser Representative, promptly (but in no event later than [***]) following demand, for all reasonable and documented out-of-pocket costs and expenses incurred by the Purchaser Representative in connection therewith.
(d) Except with respect to the transfer of the Retained Excess Proceeds as permitted hereunder, the Transferred Assets under the Contribution Agreement, with respect to the sale of the Purchased Proceeds to the Purchasers as provided in this Agreement, with respect to the security interests granted in favor of the Purchaser Representative, for the benefit of the Purchasers, under the Back-up Collateral Documents, and with respect to rights of the Purchasers under the NPA and the other Transaction Documents with respect to the GSK Proceeds, the GSK License Agreement or the IP Rights, or the security interests granted under the Security Agreement (as defined in the NPA), (i) the Company shall not dispose of, assign or otherwise transfer, in whole or in part, (1) any of the Company’s right, title or interest in or to the applicable IP Rights with respect to the Commercialization of the Licensed Products in the Territory (and the Company shall provide written notice to the Purchaser if it takes any such action outside of the Territory), (2) the GSK License Agreement, (3) the Purchased Proceeds or proceeds thereof or (4) the Back-up Collateral and (ii) the Company shall not grant any Lien on (1) the IP Rights in the Territory (and the Company shall provide written notice to the Purchaser if either of them grants any such Lien outside of the Territory), (2) the Purchased Proceeds or proceeds thereof, (3) the GSK License Agreement or (4) the Back-up Collateral.
Section 6.6 Termination of the GSK License Agreement.
(a) Without limiting the provisions of Section 6.5 or any other rights or remedies the Purchaser Representative or Purchasers may have under this Agreement, if GSK terminates the GSK License Agreement or the GSK License Agreement otherwise terminates (whether in whole or in part), in any case during the term of the GSK License Agreement, then the Company shall, at the Purchaser Representative’s request and direction at any time after Payment in Full:
(i) subject to the terms and conditions of the GSK License Agreement: (A) prepare the Termination and Wind-Down Plan (as defined in the GSK License Agreement) in accordance with Section 11.7(b) of the GSK License Agreement, provided, that the Company shall provide the Purchaser Representative a reasonable opportunity to review and comment on each draft of the Termination and Wind-Down Plan (as defined in the GSK License Agreement) and any amendments thereto prior to the presentation of such drafts to GSK, and shall consider the Purchaser Representative’s comments thereon in good faith; (B) exercise its rights under Section 11.7(b)(iv) of the GSK License Agreement, if available, to negotiate a Reversion License (as defined in the GSK License Agreement), provided that the Company shall provide the Purchaser Representative a reasonable opportunity to review and comment on the Reversion License (as defined in the GSK License Agreement) prior to execution of such Reversion License (as defined in the GSK License Agreement), and shall consider the Purchaser Representative’s comments thereon in good faith; and (C) take any other commercially reasonable actions with respect to GSK and the GSK License Agreement reasonably requested by the Purchaser Representative to enable a New Arrangement; and
(ii) use Commercially Reasonable and Diligent Efforts for a period of [***] (or such shorter period as the Company and the Purchaser Representative may agree) following such termination to negotiate a license with a Third Party with respect to the applicable IP Rights for such Third Party to Commercialize the applicable Licensed Products for any purpose that GSK would have been permitted to Commercialize the applicable Licensed Products under the GSK License Agreement, which license shall (i) become effective not earlier than the effective date of such termination, (ii) expire not later than the last day of the applicable Royalty Term under the GSK License Agreement (and, if such termination is only in part in respect of the applicable Licensed Product in a particular country (and not in whole), the applicable Royalty Term shall be such term that is applicable under the GSK License Agreement for such applicable Licensed Product in such country) and (iii) include terms, conditions and limitations that are not materially less favorable to the Company, taking into account the sale of the Purchased Proceeds pursuant to the Transaction Documents, than those contained in the GSK License Agreement, including with respect to obligations and costs imposed on the Company, disclaimers of the Company’s liability, Intellectual Property ownership and control and indemnification of the Company (any such license, a “New Arrangement”). The Company shall consult and reasonably consider any comments from the Purchaser Representative with respect to such negotiation of a New Arrangement. If the Company is unable to secure a New Arrangement within [***] of the termination of the GSK License Agreement (or such shorter period as the Company and the Purchaser Representative shall agree), then the Purchaser Representative shall have the right to negotiate a New Arrangement on behalf of the Company, and the Company agrees to use Commercially Reasonable and Diligent Efforts to cooperate and assist the Purchaser Representative in connection with the Purchaser’s efforts pursuant to this sentence. The Company shall not pay (or enter into any agreement to pay) any upfront costs, fees or expenses to a Third Party in connection with the Company’s efforts to locate, negotiate and secure a New Arrangement (“New Arrangement Expenses”) without the prior written consent of Purchaser Representative. In no event shall the Company be required to incur any Obligation of any kind with respect to, and any directions provided by Purchaser
Representative under this Section 6.6 shall not include any direction regarding, the prosecution, maintenance, enforcement or defense of the Intellectual Property. If Purchaser Representative does not consent to such New Arrangement Expenses, the Company may, upon written notice to the Purchaser Representative, terminate the Initial Search Period (as defined in the NPA). All costs and expenses (including attorneys’ fees and expenses) incurred by the Company complying with this Section 6.6 (including, without limitation, any New Arrangement Expenses consented to by Purchaser Representative), shall be borne by the Purchasers and shall be payable by Purchasers upon demand of the Company.
(b) Should the Company or the Purchaser Representative identify any New Arrangement pursuant to Section 6.6(a)(ii), the Company agrees to exercise Commercially Reasonable and Diligent Efforts to promptly duly execute and deliver a new license agreement effecting such New Arrangement that satisfies the foregoing requirements. All amounts payable to the Company under any New Arrangement that constitute Purchased Proceeds or other amounts intended to replace, succeed to or be substantially equivalent to the Purchased Proceeds shall remain subject to this Agreement and the other Transaction Documents. Following the execution of any New Arrangement, the Parties shall negotiate in good faith and use commercially reasonable efforts to enter into such amendments to this Agreement and the other Transaction Documents as may be reasonably necessary to reflect the terms of such New Arrangement and to preserve, to the greatest extent practicable, the economic benefit of the Purchased Proceeds and the Purchasers’ rights hereunder; provided that, pending the effectiveness of any such amendment, this Agreement shall be interpreted and applied in a manner that gives effect to the Parties’ intent that the Purchasers continue to receive the benefit of the Purchased Proceeds attributable to such New Arrangement.
Section 6.7 Back-up Collateral Matters.
(a) On or prior to the Effective Date, not in derogation of the statement of the intent of the Parties in Section 2.1(b), and for the purposes of providing additional assurance to the Purchaser Representative and the Purchasers in the event that, despite the intent of the Parties, the sale, transfer, assignment and conveyance contemplated hereby is hereafter held not to be a sale, the Company shall enter into the Back-up Security Agreement, pursuant to which the Company shall grant to the Purchaser Representative, a continuing security interest of first priority in all of its right, title and interest in, to and under the Back-up Collateral, whether now or hereafter existing, and any and all “proceeds” thereof (as such term is defined in the Uniform Commercial Code), in each case, for the benefit of the Purchaser Representative and the Purchasers.
(b) (i) The Company authorizes and consents to the Purchaser Representative filing, including with the Secretary of State of the State of Delaware, one or more Uniform Commercial Code financing statements (and continuation statements with respect to such financing statements when applicable) or other instruments and notices, in such manner and in such jurisdictions, as in the Purchaser Representative’s determination may be necessary or appropriate to evidence the purchase, acquisition and acceptance by the Purchasers of the Purchased Proceeds and proceeds thereof hereunder and to perfect and maintain the perfection of each of the Purchaser Representative’s ownership, for the benefit of the Purchasers, in the Purchased Proceeds and proceeds thereof and the back-up security interest in the Back-up Collateral granted by the Company to the Purchaser Representative, for the benefit of the Purchasers, pursuant to the Back-up Security Agreement; provided that the Purchaser Representative will provide the Company with a reasonable opportunity to review any such financing statements (or similar documents) prior to filing and the collateral identified in any such financing shall be limited to a legally sufficient description of the “Back-up Collateral” as defined herein. For greater certainty, the Purchaser Representative will not file this Agreement in connection with the filing of any such financing statements (or similar documents) but may file a summary or memorandum of this Agreement if required under
Applicable Laws providing for such filing. For sake of clarification, the foregoing statements in this Section 6.7 shall not bind either Party regarding the reporting of the transactions contemplated hereby for GAAP or SEC reporting purposes. (ii) In connection with the foregoing and with the security interests being granted pursuant to the Back-up Security Agreement, the Company shall promptly, upon the reasonable request of the Purchaser Representative, at the Company’s sole cost and expense, (A) execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any other document or instrument supplemental to or confirmatory of the Transaction Documents or otherwise deemed by the Purchaser Representative reasonably necessary for the continued validity, perfection and priority of the Liens on the Back-up Collateral covered thereby subject to no other Liens other than Liens under the Transaction Documents, or obtain any consents or waivers as may be necessary in connection therewith; (B) deliver or cause to be delivered to the Purchaser Representative from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to the Purchaser Representative as the Purchaser Representative shall reasonably deem necessary to perfect or maintain the Liens on the Back-up Collateral pursuant to the Transaction Documents; and (C) upon the exercise by the Purchaser Representative of any power, right, privilege or remedy pursuant to any Transaction Document which requires any consent, approval, registration, qualification or authorization of any Governmental Authority, execute and deliver all applications, certifications, instruments and other documents and papers that the Purchaser Representative may require. In addition, the Company shall promptly, at its sole cost and expense, execute and deliver to the Purchaser Representative such further instruments and documents, and take such further action as the Purchaser Representative may, at any time and from time to time, reasonably request in order to carry out the intent and purpose of this Agreement and the other Transaction Documents and to establish and protect the rights, interests and remedies created, or intended to be created, in favor of the Purchaser Representative and the Purchasers hereby and thereby.
Section 6.8 Compliance with Material Contracts. The Company shall comply with each Material Contract (other than the GSK License Agreement), except as could not, individually or in the aggregate, reasonably be expected to have an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of the Purchasers to receive the payments based on GSK Proceeds.
Section 6.9 Audits.
(a) The Company shall not, without first consulting the Purchaser Representative, cause an inspection or audit of GSK’s books and records to be conducted pursuant to and in accordance with Section 6.8(b) of the GSK License Agreement except in connection with inspections or audits requested by the Purchaser under the NPA. From time to time, but not more frequently than [***] (including any requests under the NPA), the Purchaser Representative may request the Company to, and the Company shall, cause an inspection or audit of GSK’s books and records in respect of the Purchased Proceeds and proceeds thereof to be conducted pursuant to and in accordance with Section 6.8(b) of the GSK License Agreement. If, following any such inspection or audit, GSK disagrees with the initial independent certified public accounting firm’s calculations, the Company shall, at the direction of the Purchaser Representative, work with GSK to resolve such disagreement; provided, that the Company shall not resolve any such disagreement without the prior written consent of the Purchaser Representative. If GSK and the Company, at the direction of the Purchaser Representative, are unable to reach a mutually acceptable resolution, then at the direction of the Purchaser Representative, the Company shall submit the dispute to the second independent certified public accounting firm in accordance with Section 6.8(b) of the GSK License Agreement. For the purposes of exercising the Purchaser Representative’s rights pursuant to this Section 6.9(a) in respect of the GSK License Agreement, the Company shall appoint such accounting firm of nationally recognized standing as the Purchaser Representative shall select for such purpose (it
being understood and agreed that any such accounting firm shall, pursuant to Section 6.8(b) of the GSK License Agreement be reasonably acceptable to GSK). The Company and the Purchaser Representative agree that [***] percent ([***]%) of the expenses of, and amounts payable to GSK as a result of any inspection or audit carried out at the request of the Purchaser Representative pursuant to this Section 6.9(a) that would otherwise be borne by the Company pursuant to the GSK License Agreement shall instead be borne by the Purchaser Representative and reimbursed to the Company promptly on demand, including such reasonable fees and expenses of such accounting firm as are to be borne by the Company pursuant to Section 6.8(b) of the GSK License Agreement together with [***]percent ([***]%) of the Company’s out-of-pocket costs and expenses incurred in connection with such inspection or audit; provided, that for the avoidance of doubt, any audit caused by the Company without complying with the consultation requirements in the first two sentences of this Section 6.9(a) shall not be deemed to be carried out at the request of the Purchaser Representative and the Purchaser Representative shall have no obligation to reimburse the Company, pursuant to this sentence, for any fees, costs or expenses incurred by the Company in connection therewith. The Company shall, to the extent not prohibited by obligations of confidentiality contained in the GSK License Agreement pursuant to which an inspection or audit in respect of the Purchased Proceeds is conducted, promptly (but in no event later than [***]) furnish to the Purchaser Representative any inspection or audit report prepared in connection with such inspection or audit.
(b) In the event that any inspection or audit conducted pursuant to Section 6.9(a) uncovers that the amounts actually paid to the Purchaser Representative for any period in respect of the Purchased Proceeds and proceeds thereof were greater than the amounts that should have been paid to the Purchaser Representative for such period in respect of the Purchased Proceeds and proceeds thereof, the Purchaser Representative shall cause the amount of such overpayment to be paid to GSK promptly (but in no event later than [***]) after delivery to the Purchaser Representative, pursuant to Section 6.9(a), of the applicable inspection or audit report or certificate, as the case may be, showing such overpayment. In the event that any inspection or audit conducted pursuant to Section 6.9(a) uncovers that the amounts actually paid to the Purchaser Representative for any period in respect of the Purchased Proceeds and proceeds thereof were less than the amounts that should have been paid to the Purchaser Representative for such period in respect of the Purchased Proceeds and proceeds thereof, the Company shall cooperate and provide assistance as reasonably requested by the Purchaser Representative to cause the amount of such underpayment to be paid to the Purchaser Representative by GSK in accordance with the timeframe set forth in the GSK License Agreement promptly after delivery to the Purchaser Representative, pursuant to Section 6.9(a), of the applicable inspection or audit report or certificate, as the case may be, showing such underpayment.
(c) Without limitation of the foregoing, the Purchaser Representative and its representatives shall have the right for the duration of this Agreement, at the expense of the Company, during regular business hours and upon reasonable prior written notice and exercisable not more than [***] (including any such requests under the NPA), to access, receive, review and make copies of (i) the books and records of the Company and its Affiliates and such other documents and materials as are in the possession or control of the Company or its Affiliates, and (ii) such other information as the Purchaser Representative may reasonably request, in each case of the foregoing subsections (i) or (ii), for the bona fide auditing, tax, regulatory or legal compliance purposes of any Purchaser or its Affiliate, including as reasonably related to confirming and/or verifying the economic, contractual and other rights, interests, entitlements, obligations and terms under the Transaction Documents. Upon written request from the Purchaser Representative, any such information, documents or materials shall be furnished in a digital format either via email or in a virtual data room, in each case as reasonably practicable.
(d) The Company shall (i) promptly (and in any event within [***]) after any request, deliver such current bank statements and other information relating to all deposit accounts and securities accounts of Issuer and (ii) at the request of Purchaser Representative, provide Purchaser Representative with read-only online access to all deposit accounts (including, without limitation, the Collection Account) and securities accounts of the Company.
Section 6.10 IP Rights.
(a) To the extent required or permitted by the GSK License Agreement and subject to Section 6.10(b) below, the Company shall, at the Company’s expense, diligently file, prosecute and maintain the IP Rights in the Territory in the event that (i) the Company has the sole right to or the first right to file, prosecute or maintain an IP Right in the Territory, or (ii) the Company has the back-up or second right under a Material Contract to, following any Material Contract Counterparty’s decision not to exercise its first right to, file, prosecute or maintain any IP Right in the Territory, including payment of maintenance fees or annuities.
(b) To the extent required or permitted by the GSK License Agreement, the Company shall, at the Company’s expense, in the event that (i) the Company has the sole right to or the first right to enforce or defend any IP Right in the Territory, or (ii) the Company has the back-up or second right under a Material Contract to, following any Material Contract Counterparty’s decision not to exercise its first right to, enforce or defend any IP Right in the Territory, (A) diligently enforce the applicable IP Rights in the Territory against third party infringement, in any jurisdiction, provided that there shall be no obligation to enforce IP Rights in the Territory unless the failure to enforce would reasonably be expected to have adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of the Purchasers to receive the GSK Proceeds, (B) diligently defend the applicable IP Rights in the Territory against any claims of invalidity or unenforceability, in any jurisdiction, and (C) when available in respect of any applicable Licensed Product in the Territory, obtain Patents and any corrections, substitutions, reissues and reexaminations thereof and obtain Patent term extensions and any other forms of Patent term restoration in any country in the Territory. If the Company determines that it is not commercially reasonable to act in respect of matters for which the Company is obligated to act by the foregoing clauses (B) and (C) with respect to a particular IP Right in a particular country in the Territory, the Company shall provide advance written notice thereof to the Purchaser Representative and shall consult with the Purchaser Representative with respect thereto; provided that the Purchaser Representative’s prior written consent (not to be unreasonably withheld) is required to relieve the Company of its obligation to act in accordance with the foregoing clauses (B) and (C) with respect to a particular IP Right in a particular country in the Territory. The Company shall promptly (but in any event within [***]) provide to the Purchaser Representative a copy of any written notice or other documentation received in connection with any such legal action, suit or other proceeding relating to the IP Rights, regardless of whether such legal action, suit or other proceeding occurs inside or outside of the Territory.
(c) The Company shall, except to the extent prohibited by obligations of confidentiality contained in the GSK License Agreement, promptly (but in any event within [***]) after receipt thereof, provide to the Purchaser Representative a copy of all substantive written notices or other documentation relating to the patentability, enforceability, validity, scope or term of the Patents included in the IP Rights, and shall provide the Purchaser Representative with a copy of drafts of any written material proposed to be filed in response thereto.
(d) To the extent required or permitted by the GSK License Agreement, the Company shall not disclaim or abandon, or fail to use Commercially Reasonable and Diligent Efforts necessary or desirable to prevent the disclaimer or abandonment of, any IP Rights in the Territory (and the Company shall provide written notice to the Purchaser Representative if it disclaims or abandons or fails to use
Commercially Reasonable and Diligent Efforts necessary or desirable to prevent the disclaimer or abandonment of any IP Rights outside of the Territory).
(e) To the extent permitted or required under the GSK License Agreement, the Company shall diligently defend against any claim or action by any other Person that the Commercialization of Licensed Products as currently contemplated in the GSK License Agreement, Infringes on any Patents or other Intellectual Property rights of any other Person or constitutes misappropriation of any other Person’s Trade Secrets or other Intellectual Property rights.
(f) The Company shall not exercise and enforce their applicable rights, or fail to exercise or enforce their rights, in respect of any Material Contract, including the GSK License Agreement, in any manner that would result in a breach of this Agreement.
Section 6.11 Compliance with Permits. In connection with all Product Development and Commercialization Activities by or on behalf of the Company or GSK for each and any Licensed Product, the Company shall comply, and shall use commercially reasonable efforts to cause each Third Party engaging in such activities on behalf of the Party to comply, in all material respects with all Permits.
Section 6.12 Additional Covenants of the Company. Each of Holdings and the Company shall:
(a) only enter into Contracts in its own name as a legal entity separate from the Parent, from Holdings and from any other Person (it being agreed by the Parties that the Company has complied with this requirement in connection with its entry into the Transaction Documents);
(b) not commingle its assets with assets of any other Person, except in connection with, and for the limited purposes of, the Collection Account;
(c) conduct its business only in its own name and comply with all organizational formalities necessary to maintain its separate existence;
(d) maintain separate books and records, showing its assets and liabilities separate and apart from those of any other Person and not have its assets listed on any financial statement of any other Person; provided, however, that the Company’s assets may be included in consolidated financial statements of the Parent in conformity with the applicable provisions of GAAP (provided that such assets are also listed on the Company’s own separate balance sheet);
(e) pay its own liabilities and expenses only out of its own funds or GSK Proceeds as set forth in the NPA; provided that the foregoing shall not prohibit the payment of liabilities and expenses by the Parent on behalf of the Company so long as such payments are subject to reimbursement or are otherwise recorded as capital contributions or intercompany loans;
(f) maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, that the foregoing shall not require the holders of its Capital Stock to make additional capital contributions to the Company;
(g) cause the representatives of the Company to act at all times with respect to the Company consistently and not in a manner opposed to the foregoing;
(h) not incur any Indebtedness except as permitted under Section 9.05 of the NPA;
(i) not, directly or indirectly, effectuate or consummate a Change of Control; provided that a Change of Control described solely in clause (a) of the definition thereof shall be permitted if (i) no Contributor Event of Default (as defined in the NPA) and Servicer Termination Event (as defined in the NPA) exists immediately before or immediately after giving effect thereto and, (ii) either (A) the Company is the surviving Person after giving effect to such Change of Control and remains obligated under the Transaction Documents to which the Company is a party, or (B) any surviving Person expressly assumes in writing all obligations of the Company under the Transaction Documents to which the Company is a party, to the extent such assumption does not occur by operation of law;
(j) not, directly or indirectly, make any dividends or other distributions (whether in cash, securities or other property) to holders of its Equity Interests, other than (i) any dividend or distribution of its rights in the Retained Excess Proceeds and (ii) distributions of Retained Excess Proceeds pursuant to a Permitted Royalty Monetization; and
(k) not issue any Equity Interests of any kind.
Section 6.13 Payment of Taxes. Each of Holdings and the Company will timely (i) file all required U.S. federal, state, local and non-U.S. income tax returns and all other material tax returns and reports and (ii) pay all U.S. federal, state, local and non-U.S. income Taxes and all other material Taxes levied or imposed upon it or its properties, income or assets (including in its capacity as a withholding agent) except those which will be contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves will be established in accordance with GAAP or where such Taxes, individually or in the aggregate, are less than $[***] and such failure would not have an adverse effect, in any material respect, including on the timing, amount or duration of, the GSK Proceeds or the right of the Purchasers to receive the Purchased Proceeds.
Section 6.14 Parent’s Performance on Behalf of the Company. Notwithstanding anything to the contrary in this Agreement, to the extent that Parent performs any obligation of the Company under this Agreement on the Company’s behalf pursuant to Parent’s servicing obligations under the Contribution Agreement, the Company shall be deemed to have satisfied such obligation under this Agreement. For the avoidance of doubt, this Section 6.14 shall not diminish the substantive obligations of the Company or excuse compliance with any requirement that is additional to, or materially different from, the obligations required to be performed by Parent under the Contribution Agreement.
ARTICLE VII
NEGATIVE COVENANTS
During the Payment Term, the Company further covenants and agrees as follows:
Section 7.1 Liens. The Company shall not create, incur, assume or suffer to exist any Lien upon any Purchased Proceeds or proceeds thereof or the Back-up Collateral, whether now owned or hereafter acquired, other than Liens created in favor of the Purchaser Representative, for the benefit of the Secured Parties, pursuant to the Transaction Documents or as otherwise permitted under Section 9.03 of the NPA. For avoidance of doubt, the Company may grant a Lien on the Retained Excess Proceeds and any proceeds thereof as part of a Permitted Royalty Monetization.
Section 7.2 Fundamental Changes.
(a) Neither Holdings nor the Company shall merge, dissolve, liquidate, consolidate with or into another Person, or dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person.
(b) Neither Holdings nor the Company shall institute (or consent to the institution of), agree to, or cause, directly or indirectly, any Bankruptcy Event with respect to itself or the other.
Section 7.3 Organization Documents; Fiscal Year; Legal Name, Jurisdiction of Organization and Form of Organization; Certain Amendments; Subsidiaries.
(a) Neither Holdings nor the Company shall amend, modify or change its Organization Documents.
(b) Neither Holdings nor the Company shall (i) enter into any Material Contract (other than those in existence on the Effective Date or in connection with a Permitted Royalty Monetization or New Arrangement) or (ii) amend, change, supplement, waive or otherwise modify (or permit the amendment, change, supplement, waiver or modification of), or enter into any forbearance from exercising any rights with respect to, any Material Contract, in each case without the consent of Purchaser Representative (such consent not to be unreasonably withheld or delayed), if the related amendment, modification, waiver or termination could reasonably be expected to have an adverse effect, in any material respect, on the timing, amount or duration of, the Purchased Proceeds or the right of the Purchasers to receive the Purchased Proceeds.
(c) The Company shall not form, acquire or otherwise establish any new Subsidiary.
Section 7.4 Anti-Corruption Laws; Anti-Terrorism Laws.
(a) The Company will not (i) directly or indirectly knowingly enter into, nor permit any of their respective Subsidiaries or Affiliates to directly or indirectly knowingly enter into, any documents, instruments, agreements or Contracts with any Person that is the subject of Sanctions, or (ii) directly or indirectly, permit any of their respective Subsidiaries or Affiliates to directly or indirectly, (A) conduct any business or engage in any transaction or dealing with any Person that is the subject of Sanctions, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Person that is the subject of Sanctions, (B) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti-Terrorism Law, or (C) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.
(b) The Company shall not engage, nor permit any of its directors, officers, employees or agents to engage, directly or indirectly, in any activity which would constitute a violation of the FCPA or otherwise make, offer, promise or authorize any payment or gift of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the FCPA), foreign political party or official thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign Governmental Authority or (iii) securing any improper advantage, in the case of clauses (i), (ii) and (iii) above in order to assist the Company or any of its Affiliates in obtaining or retaining business for or with, or directing business to, any Person.
Section 7.5 Tax Status. Neither Holdings nor the Company shall take or permit any action that would cause the Company to cease, for U.S. federal or any applicable state or local income tax purpose, to be a disregarded entity owned by a U.S. Person.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF THE PurchaserS and THE PURCHASER REPRESENTATIVE
Each of the Purchaser Representative and the Purchasers hereby represents and warrants separately (and not jointly) to the Company as of the Effective Date as follows:
Section 8.1 Organization. Such entity is a Delaware limited partnership or limited liability company duly organized, validly existing and in good standing under the Laws of its state of formation and has all powers and authority, and all licenses, permits, franchises, authorizations, consents and approvals of all Governmental Authorities, required to own its property and conduct its business as now conducted.
Section 8.2 No Conflicts. None of the execution and delivery by such entity of any of the Transaction Documents to which it is party, the performance by it of the obligations contemplated hereby or thereby or the consummation of the transactions contemplated hereby or thereby will contravene, conflict with, result in a breach, violation, cancellation or termination of, constitute a default (with or without notice or lapse of time, or both) under, require prepayment under, give any Person the right to exercise any remedy (including termination, cancellation or acceleration) or obtain any additional rights under, or accelerate the maturity or performance of or payment under, in any respect, (i) any Applicable Law or any judgment, order, writ, decree, permit or license of any Governmental Authority to which such entity or any of its assets or properties may be subject or bound, (ii) any term or provision of any contract, agreement, indenture, lease, license, deed, commitment, obligation or instrument to which such entity is a party or by which such entity or any of its assets or properties is bound or committed or (iii) any term or provision of any of the organizational documents of such entity, except in the case of clause (i) where any such event would not result in a material adverse effect on the ability of such entity to consummate the transactions contemplated by the Transaction Documents.
Section 8.3 Authorization. Such entity has all powers and authority to execute and deliver, and perform its obligations under, the Transaction Documents to which it is party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of each of the Transaction Documents to which such entity is party, and the performance by it of its obligations hereunder and thereunder, have been duly authorized by it. Each of the Transaction Documents to which such entity is party has been duly executed and delivered by it. Each of the Transaction Documents to which such entity is party constitutes the legal, valid and binding obligation of it, enforceable against it in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.
Section 8.4 Governmental and Third Party Authorizations. The execution and delivery by such entity of the Transaction Documents to which it is party, the performance by it of its obligations hereunder and thereunder and the consummation of any of the transactions contemplated hereunder and thereunder do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Authority or any other Person, except as described in Section 5.5.
Section 8.5 No Litigation. There is no action, suit, arbitration proceeding, claim, citation, summons, subpoena, investigation or other proceeding (whether civil, criminal, administrative, regulatory, investigative or informal and including by or before a Governmental Authority) pending or, to the knowledge of such entity, threatened by or against such entity, at law or in equity, that challenges or seeks to prevent or delay or which, if adversely determined, would prevent or delay the consummation of any of the transactions contemplated by any of the Transaction Documents to which it is party.
Section 8.6 No Brokers’ Fees. Such entity has not taken any action that would entitle any person or entity to any commission or broker’s fee in connection with the transactions contemplated by this Agreement.
Section 8.7 Funds Available. Such entity has sufficient funds on hand to satisfy the Purchaser Representative’s obligation, solely in its capacity as agent for the Purchasers, to pay the Purchase Price due and payable on the Effective Date. Such entity acknowledges and agrees that its obligations under this Agreement are not contingent on obtaining financing.
Section 8.8 Access to Information. Such entity acknowledges that it has (a) reviewed such documents and information relating to the Purchased Proceeds, the Back-up Collateral and the Licensed Products and (b) had the opportunity to ask such questions of, and to receive answers from, representatives of the Company, in each case, as it deemed necessary to make an informed decision to purchase, acquire and accept the Purchased Proceeds in accordance with the terms of this Agreement. Such entity has such knowledge, sophistication and experience in financial and business matters that it is capable of evaluating the risks and merits of purchasing, acquiring and accepting the Purchased Proceeds in accordance with the terms of this Agreement.
Section 8.9 Tax Status. Such entity is a U.S. Person.
ARTICLE IX
Purchaser Representative
Section 9.1 Appointment; Authorization. Each Purchaser hereby appoints HCR SPERO SPV, LLC (or any Affiliate of Purchaser Representative that becomes Purchaser Representative pursuant to the terms hereof) to act on its behalf as Purchaser Representative under this Agreement and the other Transaction Documents and authorizes Purchaser Representative to take such action as Purchaser Representative on its behalf and to exercise such powers under this Agreement and the other Transaction Documents as are delegated to Purchaser Representative by the terms thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of Purchaser Representative and Purchasers, and the Company shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” or “representative” in this Agreement or in any other Transaction Document (or any other similar term) with reference to Purchaser Representative is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
Section 9.2 Duties. Purchaser Representative shall not have any duties or obligations except those expressly set forth herein and in the other Transaction Documents, and its duties hereunder shall be administrative in nature. Neither Purchaser Representative nor any of its Affiliates shall be liable for any action taken or not taken by Purchaser Representative (a) with the
consent or at the request of the Purchasers or (b) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. In all cases in which the Transaction Documents do not require Purchaser Representative to take specific action, Purchaser Representative shall be fully justified in using its discretion in failing to take or in taking any action thereunder.
Section 9.3 Reliance. Purchaser Representative shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Purchaser Representative also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. Purchaser Representative may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Section 9.4 Indemnification by Purchasers. The Purchasers shall, on a ratable basis, indemnify Purchaser Representative, its Affiliates and their respective officers, partners, directors, trustees, employees, agents and controlling Persons (to the extent not reimbursed by the Company) upon demand against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except as a result of Purchaser Representative’s gross negligence, bad faith or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction) that Purchaser Representative may suffer or incur in connection with the Transaction Documents or any action taken or omitted by Purchaser Representative hereunder or thereunder.
Section 9.5 Non-Reliance. Each Purchaser acknowledges that it has, independently and without reliance upon Purchaser Representative or any other Purchaser or any of their respective Affiliates and based on such documents and information as it has deemed appropriate, made its own financial analysis and decision to enter into this Agreement. Each Purchaser also acknowledges that it will, independently and without reliance upon Purchaser Representative or any other Purchaser or any of their Affiliates and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Transaction Document or any related agreement or any document furnished hereunder or thereunder.
Section 9.6 Successor Purchaser Representative. Purchaser Representative may, at any time upon [***] prior notice of its resignation to the Purchasers and the Company, resign as Purchaser Representative. Upon receipt of any such notice of resignation, the Purchasers shall have the right to appoint a successor Purchaser Representative. Upon the acceptance of a successor’s appointment as Purchaser Representative hereunder and notice of such acceptance to the resigning Purchaser Representative, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the resigning (or resigned) Purchaser Representative; the resigning Purchaser Representative’s resignation shall become immediately effective and the resigning Purchaser Representative shall be discharged from all of its duties and obligations hereunder and under the other Transaction Documents. If no such successor shall have been so appointed by the Purchasers and shall have accepted such appointment within [***] after the resigning Purchaser Representative gives notice of its resignation, then the resigning Purchaser Representative, from and following the expiration of such [***] period, shall have the exclusive
right, upon [***] notice to the Company and the Purchasers, to make its resignation effective immediately.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendments; No Waivers. Neither this Agreement nor any term or provision hereof may be amended, supplemented, restated, waived, changed or modified except with the written consent of the Company and the Purchaser Representative (acting for itself and for the Purchasers).
Section 10.2 Notices. All notices and other communications under this Agreement to a party hereto shall be in writing and shall be sent by email with PDF attachment, internationally recognized overnight delivery service or personal delivery to the following address of such party, or to such other address as shall be designated from time to time by such party in accordance with this Section 10.2:
(a) If to Company:
c/o Spero Therapeutics, Inc.
675 Massachusetts Avenue
14th Floor
Cambridge, MA 02139
Attention: Esther Rajavelu
Email: [***]
With a copy (which shall not constitute notice) to:
WilmerHale
60 State Street
Boston, MA 02109
Attention: George W. Shuster Jr.; Nathan J. Moore
Email: george.shuster@wilmerhale.com; nathan.moore@wilmerhale.com
(b) If to Purchaser or the Purchaser Representative:
c/o HCRX Investments HoldCo, L.P.
300 Atlantic Street, Suite 600
Stamford, CT 06901
Attention: [***]
Email: [***]
with a copy (which shall not constitute notice) to:
c/o HCRX Investments HoldCo, L.P.
300 Atlantic Street, Suite 600
Stamford, CT 06901
Attention: Chief Legal Officer
Email: [***]
and with a copy (which shall not constitute notice) to:
Sidley Austin LLP
2850 Quarry Lake Drive, Suite 301
Baltimore, MD 21209
Attention: [***]
Email: [***]
Any Party may change its address for the receipt of notices at any time by giving notice thereof to the other Party. Except as otherwise provided herein, any notice authorized or required to be given by this Agreement shall be effective when received.
Section 10.3 No Waiver; Cumulative Remedies; Enforcement. No failure or delay by either Party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No notice to or demand on either Party hereto in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval hereunder shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law.
Notwithstanding anything to the contrary contained herein or in any other Transaction Document, the authority to enforce rights and remedies hereunder and under the other Transaction Documents against the Company shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Purchasers and the Purchaser Representative for the benefit of all the Secured Parties; provided, however, that, the foregoing shall not prohibit (a) the Purchaser Representative from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Purchaser Representative) hereunder and under the other Transaction Documents, (b) any Purchaser from exercising Set-Off rights in accordance with Section 10.5, or (c) any Purchaser from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to the Company under any Debtor Relief Law.
Section 10.4 Expenses; Indemnity.
(a) Expenses. The Company shall pay, promptly following written demand therefor (i) all reasonable and documented out-of-pocket expenses incurred by the Purchaser Representative or any of its Affiliates or any Purchaser or any of their respective Affiliates in connection with any amendments, modifications or waivers of the provisions of this Agreement or any other Transaction Document (whether or not the transactions contemplated hereby or thereby shall be consummated) or the administration of this Agreement and the other Transaction Documents (including any amendment, restatement, amendment and restatement, supplement or other modification of the Transaction Documents) and (ii) all reasonable and documented out-of-pocket expenses incurred by the Purchaser Representative or any Purchaser (including the fees, charges and disbursements of any counsel for the Purchaser Representative or any Purchaser), in connection with the enforcement or protection of its rights in connection with this Agreement and the other Transaction Documents, including its rights under this Section 10.4, or (B) except as otherwise set forth herein, in connection with the payment of the Purchase Price made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such payment of the Purchase Price and transfer of the Purchased Proceeds and proceeds thereof to the Purchasers.
(b) General Indemnity. From and after the Closing and without duplication of any amounts owing by the Company or any Third Party under any other Transaction Documents:
(i) The Company agrees to indemnify, defend and hold harmless the Purchaser Representative, the Purchasers and their respective Affiliates and its and their directors, managers, trustees, officers, agents and employees (the “Purchaser Indemnified Parties”) from, against and in respect of all Losses suffered or incurred by the Purchaser Indemnified Parties to the extent arising out of or resulting from (A) any breach of any of the representations or warranties of the Company in this Agreement, (B) any breach of any of the covenants or agreements of the Company in this Agreement, (C) any Third Party Claim arising out of or resulting from the Purchased Proceeds or proceeds thereof, and (D) any Excluded Liabilities and Obligations; provided, that, for the avoidance of doubt, other than in the case of the foregoing clause (D), the Company shall not be obligated to indemnify, defend or hold harmless the Purchaser Indemnified Parties in respect of Losses to the extent arising out of or resulting from (i) the gross negligence or willful misconduct of a Purchaser Indemnified Party, (ii) a breach by a Purchaser Indemnified Party of this Agreement, (iii) any claim, action, suit, inquiry, litigation, investigation or proceeding that does not involve an act or omission of Holdings or the Company and that is brought by a Purchaser Indemnified Party against any other Purchaser Indemnified Party or (iv) a decline in sales of any Licensed Product due to factors (including an Insolvency Event (as defined in the NPA) of GSK) that are not attributable to the acts or omissions of the Company or its Affiliates that constitute a breach or default under the Transaction Documents.
(ii) Each of the Purchaser Representative and the Purchasers hereby agree (severally and not jointly) to indemnify, defend and hold harmless the Company and its directors, officers, agents and employees (the “Company Indemnified Parties”) from, against and in respect of all Losses suffered or incurred by the Company Indemnified Parties to the extent arising out of or resulting from (A) any breach of any of the representations or warranties of the Purchaser Representative or such Purchaser in this Agreement and (B) any breach of any of the covenants or agreements of the Purchaser Representative or such Purchaser in this Agreement.
Notwithstanding the foregoing, (1) the Company will have no obligation to indemnify any Purchaser Indemnified Party to the extent that any Losses result from or arise out of any matters for which such Purchaser Indemnified Party is obligated to indemnify the Company Indemnified Party under Section 10.4(b)(ii) and (2) the Purchaser Representative and the Purchasers will have no obligation to indemnify the Company Indemnified Party to the extent that any Losses result from or arise out of any matters for which the Company is obligated to indemnify any Purchaser Indemnified Party under Section 10.4(b)(i).
(c) Claims Procedures.
(i) If either a Purchaser Indemnified Party, on the one hand, or a Company Indemnified Party, on the other hand (such Purchaser Indemnified Party on the one hand and such Company Indemnified Party on the other hand being hereinafter referred to as an “Indemnified Party”), has suffered or incurred any Losses for which indemnification may be sought under this Section 10.4, the Indemnified Party shall so notify the other Party from whom indemnification is sought under this Section 10.4 (the “Indemnifying Party”) promptly in writing describing such Loss, the amount or estimated amount thereof, if known or reasonably capable of estimation, and the method of computation of such Loss, all with reasonable particularity and containing a reference to the provisions of this Agreement in respect of which such Loss shall have occurred. If any claim, action, suit or proceeding is asserted or instituted by or against a Third Party with respect to which an Indemnified Party intends to claim any Loss under this Section 10.4 (a “Third Party Claim”),
such Indemnified Party shall promptly notify the Indemnifying Party of such Third Party Claim and tender to the Indemnifying Party the defense of such Third Party Claim. A failure by an Indemnified Party to give notice and to tender the defense of such Third Party Claim in a timely manner pursuant to this Section 10.4(c) shall not limit the obligation of the Indemnifying Party under this Section 10.4, except to the extent such Indemnifying Party is actually prejudiced thereby.
(ii) The Indemnifying Party will be entitled to participate in the defense of any Third Party Claim that is the subject of a notice given by or on behalf of any Indemnified Party pursuant to Section 10.4(c)(i). In addition, the Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party gives written notice that they or it will defend the Third Party Claim to the Indemnified Party within [***] after the Indemnified Party has given notice of the Third Party Claim under Section 10.4(c)(i) stating that the Indemnifying Party will, and thereby covenants to, indemnify, defend and hold harmless the Indemnified Party from and against the entirety of any and all Losses the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (ii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (iii) the Indemnified Party has not been advised by counsel that an actual or potential conflict exists between the Indemnified Party and the Indemnifying Party in connection with the defense of the Third Party Claim and (iv) the Third Party Claim does not relate to or otherwise arise in connection with any criminal action, suit, investigation or proceeding.
(iii) The Indemnifying Party will not consent to the entry of any Judgment or enter into any compromise or settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (which consent will not be unreasonably withheld, conditioned or delayed) unless such Judgment, compromise or settlement (i) provides for the payment by the Indemnifying Party of money as sole relief for the claimant, (ii) results in the general release of all Indemnified Parties and its Affiliates from all liabilities arising or relating to, or in connection with, the Third Party Claim, and (iii) involves no finding or admission of any violation of law or the rights of any Person and no effect on any other claims that may be made against the Indemnified Party or any of its Affiliates.
(iv) If the Indemnifying Party does not deliver the notice contemplated by Section 10.4(c)(i), within [***] after the Indemnified Party has given notice of the Third Party Claim pursuant to Section 10.4(c)(i), or otherwise at any time fails to conduct the defense of the Third Party Claim diligently, the Indemnified Party may defend, and may consent to the entry of any Judgment or enter into any compromise or settlement with respect to, the Third Party Claim in any manner it may deem appropriate following consultation with the Indemnifying Party in connection therewith. If such notice and evidence is given on a timely basis and the Indemnifying Party conducts the defense of the Third Party Claim diligently but any of the other conditions in Section 10.4(c)(ii) is or becomes unsatisfied, the Indemnified Party may defend, and may consent to the entry of any Judgment or enter into any compromise or settlement with respect to, the Third Party Claim; provided, that the Indemnifying Party will not be bound by the entry of any such Judgment consented to, or any such compromise or settlement effected, without its prior written consent (which consent will not be unreasonably withheld, conditioned or delayed).
(d) Limitations on Liability; Time for Claims.
(i) Except for claims arising from a breach of confidentiality obligations under Section 10.7 or in cases of fraud, bad faith or willful misconduct, no Party shall be liable for any consequential, punitive, special or incidental damages under this Section 10.4 (and no claim for indemnification hereunder shall be asserted) as a result of any breach or violation of any covenant or agreement of such Party (including under this Section 10.4) in or pursuant to this Agreement. In connection with the foregoing, the Parties acknowledge and agree that (A) the Purchasers’ damages, if any, for any such action or claim will typically include Losses for the payment of the Purchased Proceeds and proceeds thereof that the Purchaser Representative and Purchasers were entitled to receive or would have received absent such breach, as well as expenses incurred in connection with enforcement of this Agreement and the other Transaction Documents, and (B) the Purchaser Representative and the Purchasers shall be entitled to make claims for all such missing, delayed or diminished payments in respect of the Purchased Proceeds and proceeds thereof as Losses hereunder, and such missing, delayed or diminished payments of in respect of the Purchased Proceeds and proceeds thereof shall not be deemed consequential, punitive, special, indirect or incidental damages.
(ii) Subject to the last sentence of this clause (d)(ii), notwithstanding anything else to the contrary herein, the Purchasers’ aggregate liability in respect of claims for indemnification pursuant to Section 10.4(b)(ii)(A) will not exceed the Purchase Price. The limitations under this clause (d)(ii) shall not apply to any claim for indemnification hereunder in the case of fraud, bad faith, willful misconduct or the misappropriation, conversion or intentional misapplication of any Retained Excess Proceeds.
(iii) No claim may be made or suit instituted seeking indemnification pursuant to Section 10.4(b)(i)(A) or Section 10.4(b)(ii)(A) unless a written notice is provided to the Company or Purchaser Representative, as applicable, prior to the date that is (A) [***] following the First Payment Date with respect to breach of any Fundamental Representation, and (B) [***] following the First Payment Date with respect to breach of any other representation or warranty. No claim may be made or suit instituted seeking indemnification pursuant to any other provision of Section 10.4(b)(i)(B) or Section 10.4(b)(ii)(B) unless a written notice is provided to the Company or Purchaser Representative, as applicable, prior to the date that is the later of (1) [***] following the First Payment Date or (2) [***] following the Party that is bringing the claim having knowledge of the occurrence of the event giving rise to such claim for indemnification under such other provision; provided that such date shall in no event be later than the last day of the Payment Term (except with respect to any payments invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, under any bankruptcy act or code, state or federal law, common law or equitable doctrine).
(e) Tax Treatment of Indemnification Payments. For all purposes hereunder, any indemnification payments made pursuant to this Section 10.4 will be treated as an adjustment to the Purchase Price for all Tax purposes to the fullest extent permitted by Applicable Law.
Section 10.5 Payments Set Aside. To the extent that any payment by or on behalf of the Company is made to the Purchaser Representative or any Purchaser, or the Purchaser Representative or any Purchaser exercises its right of Set-Off, and such payment or the proceeds of such Set-Off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Purchaser Representative or such Purchaser in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such Set-Off had not occurred, and (b) each Purchaser severally agrees to pay to the Purchaser Representative upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Purchaser Representative, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Purchasers under clause (b) of the preceding sentence shall survive the payment in full of all Obligations and the termination of this Agreement and the other Transaction Documents.
Section 10.6 Assignment. The Company may not assign in whole or in part this Agreement, any of their rights or obligations hereunder, or any of their rights in the Licensed Products, the GSK License Agreement, Meiji License Agreement, the Back-up Collateral or the IP Rights, without the Purchaser Representative’s prior written consent, provided that the Company may assign the Retained Excess Proceeds and any proceeds thereof as part of a Permitted Royalty Monetization without the Purchaser Representative’s prior written consent. The Purchaser Representative and each Purchaser may at any time assign this Agreement in whole or in part to any Person, including to any Third Party or to one or more of its Affiliates. This Agreement shall be binding upon, inure to the benefit of and be enforceable by, the Parties and their respective permitted successors and assigns. Any purported assignment of rights or obligations in violation of this Section 10.6 will be void.
Section 10.7 Treatment of Certain Information; Confidentiality. Each Party agrees that, during the term of this Agreement and for [***] thereafter, it shall maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other Party, (e) as may be reasonably necessary in connection with the exercise of any remedies hereunder or under any other Transaction Document or any action or proceeding relating to this Agreement or any other Transaction Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.7, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights and obligations under this Agreement or the Purchased Proceeds (in the case of the Purchaser Representative), (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Company and its obligations, this Agreement or payments hereunder or (iii) any financing sources of such Party, (g) on a confidential basis to (i) any rating agency in connection with rating the Company or the advances of the Purchase Price to be made hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Company, (i) in the case of the Purchaser Representative and the Purchasers, to the members of its investment committee (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (j) for tax or audit purposes, (k) to any actual or potential investors, members, and partners of the Purchaser Representative, any Purchaser or their Affiliates (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential) or (l) to the extent
such Information (i) becomes publicly available other than as a result of a breach of this Section 10.7 or (ii) becomes available to the Purchaser Representative, any Purchaser or any of their respective Affiliates on a nonconfidential basis from a source other than the Company.
For purposes of this Section 10.7, “Information” means all information furnished to a Party (the “Receiving Party”) by or on behalf of the other Parties (the “Disclosing Party”) pursuant to this Agreement, other than any such information that is available to the Receiving Party on a nonconfidential basis prior to disclosure by such Disclosing Party; provided, that, in the case of information received from the Company or any Subsidiary after the Effective Date, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 10.7 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Section 10.8 Counterparts; Effectiveness. This Agreement may be executed in counterparts (and by different Parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Article IV, this Agreement shall become effective when it shall have been executed by the Purchaser Representative and when the Purchaser Representative shall have received counterparts hereof that, when taken together, bear the signatures of each of the other Parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 10.9 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Transaction Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof and shall continue in full force until (a) [***] following the First Payment Date with respect to Fundamental Representations, and (b) [***] following the First Payment Date with respect to all other representations and warranties. Such representations and warranties have been or will be relied upon by the Purchaser Representative and each Purchaser, regardless of any investigation made by the Purchaser Representative or any Purchaser or on their behalf and notwithstanding that the Purchaser Representative or any Purchaser may have had notice or knowledge of any default at the time of Closing, and shall continue in full force and effect throughout the Payment Term.
Section 10.10 Severability. If any provision of this Agreement or the other Transaction Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Transaction Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 10.11 Governing Law; Jurisdiction; Etc.
(a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS (EXCEPT, AS TO ANY OTHER TRANSACTION DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT (EXCEPT, AS TO ANY OTHER TRANSACTION DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. THE COMPANY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE PURCHASER REPRESENTATIVE, ANY PURCHASER OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY OTHER FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK AND ANY UNITED STATES DISTRICT COURT IN THE STATE OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF LOCATED IN NEW YORK COUNTY, NEW YORK, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER TRANSACTION DOCUMENT SHALL AFFECT ANY RIGHT THAT THE PURCHASER REPRESENTATIVE OR ANY PURCHASER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AGAINST THE COMPANY OR THE COMPANY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE. THE COMPANY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT IN ANY COURT REFERRED TO IN CLAUSE (B) OF THIS SECTION 10.11. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
Section 10.12 Waiver of Right to Trial by Jury. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.12.
Section 10.13 Electronic Execution; Electronic Records; Counterparts. This Agreement, any Transaction Document and any other Communication, including Communications required to be in writing, may be in the form of an Electronic Record and may be executed using Electronic Signatures. The Company and each of the Purchaser Representative and each Purchaser agrees that any Electronic Signature on or associated with any Communication shall be valid and binding on such Person to the same extent as a manual, original signature, and that any Communication entered into by Electronic Signature, will constitute the legal, valid and binding obligation of such Person enforceable against such Person in accordance with the terms thereof to the same extent as if a manually executed original signature was delivered. Any Communication may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Communication. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance of a manually signed paper “Communication” which has been converted into electronic form (such as scanned into .pdf format), or an electronically signed Communication converted into another format, for transmission, delivery and/or retention. The Purchaser Representative and each of the Purchasers may, at its option, create one or more copies of any Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document. All Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein to the contrary, the Purchaser Representative is not under any obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by such Person pursuant to procedures approved by it; provided, that, without limiting the foregoing, (a) to the extent the Purchasers and the Purchaser Representative have agreed to accept such Electronic Signature, they shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of the Company and/or any Purchaser without further verification and (b) upon the request of the Purchaser Representative or any Purchaser, any Electronic Signature shall be promptly followed by such manually executed counterpart.
The Purchaser and the Purchaser Representative shall not be responsible for or have any duty to ascertain or inquire into the sufficiency, validity, enforceability, effectiveness or genuineness of any Transaction Document or any other agreement, instrument or document (including, for the avoidance of doubt, in connection with the Purchasers and the Purchaser Representative’s reliance on any Electronic Signature transmitted by telecopy, emailed .pdf or any other electronic means). The Purchaser and the Purchaser Representative shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Transaction Document by acting upon, any Communication (which writing may be an electronic message, Internet or intranet website posting or other distribution or signed using an Electronic Signature) or any statement made to it orally or by telephone and reasonably believed by it to be genuine and signed or sent or otherwise authenticated (whether or not such Person in fact meets the requirements set forth in the Transaction Documents for being the maker thereof).
The Company, the Purchaser Representative and each Purchaser hereby waives (i) any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Transaction Document based solely on the lack of paper original copies of this Agreement, such other Transaction Document, and (ii) any claim against the Purchaser Representative, each Purchaser and each Related Party for any liabilities arising solely from the Purchaser Representative’s and/or any Purchaser’s reliance on or use of Electronic Signatures, including any liabilities arising as a result of the failure of the Company to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.
Section 10.14 USA PATRIOT Act. Each Purchaser that is subject to the Act (as hereinafter defined) and the Purchaser Representative (for itself and not on behalf of any Purchaser) hereby notifies the Company that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Purchaser or the Purchaser Representative, as applicable, to identify the Company in accordance with the Act. The Company agrees to, promptly following a request by the Purchaser Representative or any Purchaser, provide all such other documentation and information that the Purchaser Representative or such Purchaser requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
Section 10.15 No Advisory or Fiduciary Relationship. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Transaction Document), the Company acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a)(i) the arranging and other services regarding this Agreement provided by the Purchaser Representative and the Purchasers are arm’s-length commercial transactions between the Company and its Affiliates, on the one hand, and the Purchaser Representative and the Purchasers on the other hand, (ii) the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the Company is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Transaction Documents; (b)(i) the Purchaser Representative and each Purchaser is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary, for the Company or any of its Affiliates or any other Person and (ii) neither the Purchaser Representative nor any Purchaser has any obligation to the Company or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Transaction Documents; and (c) the Purchaser Representative and the Purchasers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and its Affiliates, and neither the Purchaser Representative nor any Purchaser has any obligation to disclose any of such interests to the Company or its Affiliates. To the fullest extent permitted by law, the Company hereby waives and releases any claims that it may have against the Purchaser Representative or any Purchaser with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 10.16 Entire Agreement. This Agreement, together with the Exhibits hereto (which are incorporated herein by reference) and the other Transaction Documents, constitute the entire agreement among the Parties hereto with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, among the Parties hereto with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein (or in the Exhibits hereto or the other Transaction Documents) has been made or relied upon by either Party hereto.
Section 10.17 No Third Party Rights. Other than the Parties, no Person will have any legal or equitable right, remedy or claim under or with respect to this Agreement. This Agreement may be amended or terminated, and any provision of this Agreement may be waived, without the consent of any Person who is not a Party. In respect of the rights of the Purchaser Indemnified Parties under Section 10.4, the Purchaser Representative shall enforce any legal or equitable right, remedy or claim under or with respect to this Agreement for the benefit of such Purchaser Indemnified Party.
Section 10.18 Table of Contents and Headings. The Table of Contents and headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.
Section 10.19 Public Announcement.
(a) As soon as reasonably practicable following the date hereof, one or both of the Company and the Purchaser Representative shall issue a mutually agreed to press release. Except as required by Applicable Law (including disclosure requirements of the SEC, the Nasdaq Stock Market or any other stock exchange on which securities issued by a Party or its Affiliates are traded) or for statements that are materially consistent with all or any portion of a previously approved public disclosure, neither Party shall make any other public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other Party, which shall not be unreasonably withheld, conditioned or delayed. In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Party (which in the case of the Purchasers, shall be the Purchaser Representative) with a copy of the proposed text of such announcement sufficiently in advance of the scheduled release to afford such other Party a reasonable opportunity to review and comment upon the proposed text.
(b) The Parties shall coordinate in advance with each other in connection with the filing of this Agreement (including proposed redaction of certain provisions of this Agreement) with the SEC, the Nasdaq Stock Market or any other stock exchange or Governmental Authority on which securities issued by a Party or its Affiliate are traded, and each Party shall use reasonable efforts to seek confidential treatment for the terms of this Agreement proposed to be redacted. The Purchaser Representative acknowledges that it will be necessary for the Company to file this Agreement with the SEC and to make other public disclosures regarding the terms of this Agreement and payments made under this Agreement in its reports filed with the SEC and any registration statement it may file with the SEC, and the Company will provide the Purchaser Representative a reasonable opportunity to review and comment on (and request) any proposed redactions to the copy of this Agreement filed with the SEC as well as on such other public disclosures; provided that the Company shall not be required to provide the Purchaser Representative the opportunity to review and comment on any disclosure substantively identical to any disclosure previously reviewed and commented upon by the Purchaser Representative (except for disclosure of any previously redacted information). Other than such obligation, neither Party (nor its Affiliates) shall be obligated to consult with or obtain approval from the other Party with respect to any filings with the SEC, the Nasdaq Stock Market or any other stock exchange or Governmental Authority. For clarity, once a public announcement or other disclosure is made by a Party in accordance with this Section 10.19, then no further consent or compliance with this Section 10.19 shall be required for any substantially similar disclosure thereafter.
Section 10.20 Specific Performance. Each of the Parties hereto acknowledges that the other Party hereto may not have adequate remedy at law if the other Party fails to perform any of its obligations under any of the Transaction Documents. In such event, each of the Parties hereto agrees that the other Party hereto shall have the right, in addition to any other rights it may have (whether at law or in equity), to seek specific performance of this Agreement and the other Transaction Documents without the necessity of posting a bond or proving the inadequacy of monetary damages as a remedy and to seek injunctive relief against any breach or threatened breach of the Transaction Documents. The Parties further agree not to assert that a remedy of specific performance is unenforceable, invalid, contrary to Applicable Law or inequitable for any reason.
Section 10.21 Limited Recourse; Disposition of Retained Excess Proceeds. For the avoidance of doubt and notwithstanding anything else to the contrary in this Agreement or the other Transaction Documents, other than as set forth in the Parent Guaranty (as defined in the NPA), all Obligations shall be payable hereunder solely from the Purchased Proceeds, or, to the extent permitted hereunder, from proceeds of Back-up Collateral. Notwithstanding anything else to the contrary in this Agreement or the other Note Documents, the Company and the Parent shall be permitted to enter into and consummate one or more Permitted Royalty Monetizations, and no such transfer shall result in a breach or default hereunder or any other Transaction Document.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first written above.
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THE COMPANY: |
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SPERO SPV, LLC |
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By: |
/s/ Esther Rajavelu |
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Name: Esther Rajavelu |
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Title: Chief Executive Officer, Chief Financial Officer and Treasurer |
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THE PURCHASERS: |
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HRBR 2025-2, LLC |
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By: |
Global Atlantic Financial Company, as its Administrator |
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By: |
/s/ Michael Morreale |
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Name: Michael Morreale |
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Title: Director |
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HCRX INVESTMENTS HOLDCO, L.P. |
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By: |
HCRX Master GP, LLC |
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By: |
/s/ Clarke B. Futch |
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Name: Clarke B. Futch |
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Title: Chairman & Chief Executive Officer |
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THE PURCHASER REPRESENTATIVE: |
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HCR SPERO SPV, LLC |
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By: |
/s/ Clarke B. Futch |
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Name: Clarke B. Futch |
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Title: Authorized Signatory |
