|
Delaware
|
| |
3841
|
| |
26-4042544
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
|
|
Rick A. Werner, Esq.
Haynes & Boone, LLP 30 Rockefeller Plaza, 26 th Floor New York, NY 10112 (212) 659-7300 |
| |
Neil M. Kaufman
Kaufman & Associates, LLC 190 Motor Parkway, Suite 202 Hauppauge, NY 11788 (631) 972-0042 |
|
| Large accelerated filer ☐ | | | Accelerated filer ☐ | | | Non-accelerated filer ☒ | | | Smaller reporting company ☒ | |
| | | | | | | | | | Emerging growth company ☒ | |
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 2 | | | |
| | | | | 3 | | | |
| | | | | 21 | | | |
| | | | | 22 | | | |
| | | | | 23 | | | |
| | | | | 25 | | | |
| | | | | 51 | | | |
| | | | | 53 | | | |
| | | | | 60 | | | |
| | | | | 68 | | | |
| | | | | 71 | | | |
| | | | | 72 | | | |
| | | | | 72 | | | |
| | | | | 72 | | | |
| | | | | 73 | | | |
| | | | | 74 | | | |
| | | | | 75 | | | |
| | | | | 76 | | | |
| | | | | 82 | | | |
| | | | | 86 | | | |
| | | | | 110 | | | |
| | | | | 114 | | | |
| | | | | 119 | | | |
| | | | | 121 | | | |
| | | | | 122 | | | |
| | | | | 126 | | | |
| | | | | 129 | | | |
| | | | | 131 | | | |
| | | | | 133 | | | |
| | | | | 138 | | | |
| | | | | 139 | | | |
| | | | | 139 | | | |
| | | | | 139 | | | |
| | | | | F-1 | | |
| | |
As of or for the years ended
|
| |
As of or for the nine months ended
|
| ||||||||||||||||||
| | |
December 31,
2017 |
| |
December 31,
2016 |
| |
September 30,
2018 |
| |
September 30,
2017 |
| ||||||||||||
(in millions)
|
| |
Historical
|
| |
Historical
(Unaudited) |
| ||||||||||||||||||
Combined Statement of Operations data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue
|
| | | $ | 1,992 | | | | | $ | 2,152 | | | | | $ | 1,752 | | | | | $ | 1,330 | | |
Loss from operations before tax
|
| | | | (969 ) | | | | | | (1,839 ) | | | | | | (1,323 ) | | | | | | (771 ) | | |
Net loss
|
| | | | (953 ) | | | | | | (1,776 ) | | | | | | (1,323 ) | | | | | | (759 ) | | |
Combined Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets
|
| | | $ | 894 | | | | | $ | 1,261 | | | | | $ | 1,153 | | | | | | | | |
Total current liabilities
|
| | | | 210 | | | | | | 384 | | | | | | 561 | | | | | | | | |
Other long-term liabilities
|
| | | | 59 | | | | | | 83 | | | | | | 53 | | | | | | | | |
Total liabilities
|
| | | | 269 | | | | | | 467 | | | | | | 614 | | | | | | | | |
Combined Statements of Cash Flows data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flows (used in) operating activities
|
| | | $ | (777 ) | | | | | $ | (1,317 ) | | | | | $ | (1,237 ) | | | | | $ | (847 ) | | |
Cash flows (used in) investing activities
|
| | | | (7 ) | | | | | | — | | | | | | — | | | | | | (7 ) | | |
Cash flows provided by financing activities
|
| | | | 784 | | | | | | 1,317 | | | | | | 1,237 | | | | | | 854 | | |
Advances from Parent
|
| | | | 784 | | | | | | 1,317 | | | | | | 1,237 | | | | | | 854 | | |
| | |
As of or for the years ended
|
| |
As of or for the nine months ended
|
| ||||||||||||||||||
| | |
December 31,
2017 |
| |
December 31,
2016 |
| |
September 30,
2018 |
| |
September 30,
2017 |
| ||||||||||||
| | |
Historical
|
| |
Historical
(Unaudited) |
| ||||||||||||||||||
Consolidated Statement of Operations data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Expenses
|
| | | $ | 737,670 | | | | | $ | 1,060,395 | | | | | $ | 636,888 | | | | | $ | 524,758 | | |
Net loss
|
| | | | (737,670 ) | | | | | | (1,060,395 ) | | | | | | (636,888 ) | | | | | | (524,758 ) | | |
Consolidated Balance Sheet Data:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Total assets
|
| | | $ | 471,500 | | | | | $ | 479,750 | | | | | | 529,063 | | | | | $ | | | |
Total current liabilities
|
| | | | 2,269,465 | | | | | | 1,540,045 | | | | | | 2,963,916 | | | | | | | | |
Total liabilities
|
| | | | 2,269,465 | | | | | | 1,540,045 | | | | | | 2,963,916 | | | | | | | | |
Members’ deficit
|
| | | $ | (1,797,965 ) | | | | | $ | (1,060,295 ) | | | | | $ | (2,434,853 ) | | | | | | | | |
Consolidated Statements of Cash Flows data:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Cash flows (used in) operating activities
|
| | | $ | (625,393 ) | | | | | $ | (1,024,017 ) | | | | | $ | (404,626 ) | | | | | $ | (456,640 ) | | |
Cash flows provided by financing activities
|
| | | | 625,393 | | | | | | 1,024,017 | | | | | | 404,626 | | | | | | 456,640 | | |
Advances from TOG
|
| | | | 625,393 | | | | | | 1,024,017 | | | | | | 404,626 | | | | | | 456,640 | | |
(in thousands)
|
| |
Historical
TOP as of and for the Nine Months Ended September 30, 2018 |
| |
Historical
AquaMed as of and for the Nine Months Ended September 30, 2018 |
| |
Transaction
Adjustments |
| |
Pro Forma
Combined |
| ||||||||||||
Revenue
|
| | | $ | — | | | | | $ | 1,752 | | | | | $ | — | | | | | $ | 1,752 | | |
Loss before income taxes
|
| | | | (637 ) | | | | | | (1,323 ) | | | | | | — | | | | | | (1,960 ) | | |
Income tax provision
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Net loss
|
| | | $ | (637 ) | | | | | $ | (1,323 ) | | | | | $ | — | | | | | $ | (1,960 ) | | |
Total assets
|
| | | $ | 530 | | | | | $ | 1,153 | | | | | $ | — | | | | | $ | 1,683 | | |
Total liabilities
|
| | | $ | 2,965 | | | | | $ | 614 | | | | | $ | — | | | | | $ | 3,579 | | |
(in thousands)
|
| |
Historical
TOP for the Year Ended December 31, 2017 |
| |
Historical
AquaMed for the Year Ended December 31, 2017 |
| |
Transaction
Adjustments |
| |
Pro Forma
Combined |
| ||||||||||||
Revenue
|
| | | $ | — | | | | | $ | 1,992 | | | | | $ | — | | | | | $ | 1,992 | | |
Loss before income taxes
|
| | | | (738 ) | | | | | | (969 ) | | | | | | — | | | | | | (1,707 ) | | |
Income tax benefit
|
| | | | — | | | | | | 16 | | | | | | — | | | | | | 16 | | |
Net loss
|
| | | $ | (738 ) | | | | | $ | (953 ) | | | | | $ | — | | | | | $ | (1,691 ) | | |
(in thousands)
|
| |
TO
Pharmaceuticals as of September 30, 2018 |
| |
AquaMed
Technologies, Inc. as of September 30, 2018 |
| |
Effect of
Mergers |
| |
Pro Forma
Combined |
| ||||||||||||
Cash
|
| | | $ | — | | | | | | — | | | | | | — | | | | | $ | — | | |
Short-term obligations: | | | | | | | | | | | | | | | | | | | | | | | | | |
Current maturities of long-term debt
|
| | | $ | — | | | | | | | | | | | | | | | | | | — | | |
Current maturities of capitalized lease obligations
|
| | | | — | | | | | | | | | | | | | | | | | | — | | |
Total short-term debt and current obligations of long-term debt
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Long-term obligations: | | | | | | | | | | | | | | | | | | | | | | | | | |
Total long-term debt
|
| | | $ | — | | | | | | | | | | | | | | | | | | — | | |
Less: current maturities of long-term debt
|
| | | | — | | | | | | | | | | | | | | | | | | — | | |
Total long-term debt, net of current maturities
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Stockholders’ equity: | | | | | | | | | | | | | | | | | | | | | | | | | |
Member’s Deficit
|
| | | $ | (2,435 ) | | | | | | — | | | | | | 2,435 | | | | | | — | | |
Parent’s Net Investment
|
| | | | — | | | | | | 539 | | | | | | (539 ) | | | | | | — | | |
Preferred stock
|
| | | | | | | | | | | | | | | | | | | | | | — | | |
Common stock
|
| | | | | | | | | | | | | | | | 1 | | | | | | 1 | | |
Additional paid in capital
|
| | | | | | | | | | | | | | | | (1,897 ) | | | | | | (1,897 ) | | |
Accumulated deficit
|
| | | | | | | | | | | | | | | | | | | | | | — | | |
Accumulated other comprehensive (loss) income
|
| | | | | | | | | | | | | | | | | | | | | | — | | |
Total equity
|
| | | | (2,435 ) | | | | | | 539 | | | | | | — | | | | | | (1,896 ) | | |
Total capitalization
|
| | | $ | (2,435 ) | | | | | | 539 | | | | | | — | | | | | $ | (1,896 ) | | |
|
(in thousands)
|
| |
Nine Months
Ended September 30, (unaudited) |
| |
Year Ended
December 31, |
| ||||||||||||||||||
|
2018
|
| |
2017
|
| |
2017
|
| |
2016
|
| ||||||||||||||
REVENUES: | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue, net of returns, allowances and discounts
|
| | | $ | 1,752 | | | | | $ | 1,330 | | | | | $ | 1,992 | | | | | $ | 2,152 | | |
Cost of revenues
|
| | | | (1,354 ) | | | | | | (1,326 ) | | | | | | (1,845 ) | | | | | | (2,266 ) | | |
Gross profit (loss)
|
| | | | 398 | | | | | | 4 | | | | | | 147 | | | | | | (114 ) | | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | (1,733 ) | | | | | | (775 ) | | | | | | (1,116 ) | | | | | | (1,750 ) | | |
Total operating expenses
|
| | | | (1,733 ) | | | | | | (775 ) | | | | | | (1,116 ) | | | | | | (1,750 ) | | |
Loss from operations
|
| | | | (1,335 ) | | | | | | (771 ) | | | | | | (969 ) | | | | | | (1,864 ) | | |
OTHER INCOME: | | | | | | | | | | | | | | | | | | | | | | | | | |
Sundry
|
| | | | 12 | | | | | | — | | | | | | — | | | | | | 25 | | |
Total other income
|
| | | | 12 | | | | | | — | | | | | | — | | | | | | 25 | | |
LOSS FROM OPERATIONS BEFORE TAX
|
| | | | (1,323 ) | | | | | | (771 ) | | | | | | (969 ) | | | | | | (1,839 ) | | |
INCOME TAX BENEFIT
|
| | | | — | | | | | | 12 | | | | | | 16 | | | | | | 63 | | |
NET LOSS
|
| | | $ | (1,323 ) | | | | | $ | (759 ) | | | | | $ | (953 ) | | | | | $ | (1,776 ) | | |
|
(in thousands)
|
| |
September 30,
2018 |
| |
December 31,
2017 |
| ||||||
| | |
(unaudited)
|
| | | | | | | |||
Consolidated Balance Sheet Data: | | | | | | | | | | | | | |
Accounts receivable, net
|
| | | $ | 172 | | | | | $ | 99 | | |
Inventory, net
|
| | | | 183 | | | | | | 93 | | |
Prepaid expenses and other current assets
|
| | | | 341 | | | | | | 7 | | |
Total assets
|
| | | | 1,153 | | | | | | 894 | | |
Total liabilities
|
| | | | 614 | | | | | | 269 | | |
Total Parent Net Investment
|
| | | | 539 | | | | | | 625 | | |
Total liabilities and Parent net investment
|
| | | $ | 1,153 | | | | | $ | 894 | | |
| | |
Nine Months
Ended September 30, (unaudited) |
| |
Year Ended
December 31, |
|||||||||||||||||
| | |
2018
|
| |
2017
|
| |
2017
|
| |
2016
|
|||||||||||
OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | $ | 296,779 | | | | | $ | 450,936 | | | | | $ | 502,574 | | | | | $ | 954,216 |
Research and development
|
| | | | 340,109 | | | | | | 73,822 | | | | | | 235,096 | | | | | | 106,179 |
Total operating expenses
|
| | | | 636,888 | | | | | | 524,758 | | | | | | 737,670 | | | | | | 1,060,395 |
Loss from operations
|
| | | | (636,888 ) | | | | | | (524,758 ) | | | | | | (737,670 ) | | | | | | (1,060,395 ) |
NET LOSS
|
| | | $ | (637 ) | | | | | $ | (525 ) | | | | | $ | (738 ) | | | | | $ | (1,060 ) |
|
| | |
September 30,
2018 |
| |
December 31,
2017 |
| ||||||
| | |
(unaudited)
|
| | | | | | | |||
Consolidated Balance Sheet Data: | | | | | | | | | | | | | |
Licenses, net of accumulated amortization
|
| | | | 435,563 | | | | | | 454,500 | | |
Total assets
|
| | | | 529,063 | | | | | | 471,500 | | |
Total liabilities
|
| | | | 2,963,916 | | | | | | 2,269,465 | | |
Members’ deficit
|
| | | $ | (2,434,853 ) | | | | | $ | (1,797,965 ) | | |
(in thousands)
|
| |
TO
Pharmaceuticals (1) |
| |
AquaMed
Technologies, Inc. (1) |
| |
Transaction
Adjustments |
| |
Footnote
Reference |
| |
Pro Forma
Combined |
| ||||||||||||
ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | | | | $ | — | | |
Accounts receivable
|
| | | | — | | | | | | 172 | | | | | | — | | | | | | | | | 172 | | |
Inventory, net
|
| | | | — | | | | | | 183 | | | | | | — | | | | | | | | | 183 | | |
Prepaid expenses and other current assets
|
| | | | 94 | | | | | | 341 | | | | | | — | | | | | | | | | 435 | | |
Total current assets
|
| | | | 94 | | | | | | 696 | | | | | | — | | | | | | | | | 790 | | |
Improvements and equipment, net
|
| | | | — | | | | | | 279 | | | | | | — | | | | | | | | | 279 | | |
Intangible assets, net
|
| | | | 436 | | | | | | — | | | | | | — | | | | | | | | | 436 | | |
Goodwill
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Other assets
|
| | | | — | | | | | | 178 | | | | | | — | | | | | | | | | 178 | | |
Total assets
|
| | | $ | 530 | | | | | $ | 1,153 | | | | | $ | — | | | | | | | | $ | 1,683 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 89 | | | | | $ | 305 | | | | | $ | — | | | | | | | | $ | 394 | | |
Accrued expenses and other current liabilities
|
| | | | 316 | | | | | | 256 | | | | | | — | | | | | | | | | 572 | | |
Due to parent
|
| | | | 2,560 | | | | | | — | | | | | | — | | | | | | | | | 2,560 | | |
Total current liabilities
|
| | | | 2,965 | | | | | | 561 | | | | | | — | | | | | | | | | 3,526 | | |
Long-term debt
|
| | | | | | | | | | | | | | | | — | | | | | | | | | — | | |
Other long-term liabilities
|
| | | | — | | | | | | 53 | | | | | | — | | | | | | | | | 53 | | |
Total liabilities
|
| | | | 2,965 | | | | | | 614 | | | | | | — | | | | | | | | | 3,579 | | |
Commitments and Contingencies | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Member Deficit
|
| | | | (2,435 ) | | | | | | | | | | | | 2,435 | | | |
3(b)
|
| | | | — | | |
Parent’s Net Investment
|
| | | | — | | | | | | 539 | | | | | | (539 ) | | | |
2(a), 3(a)
|
| | | | — | | |
Preferred Stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Common Stock
|
| | | | — | | | | | | — | | | | | | 1 | | | |
3(a), 3(b)
|
| | | | 1 | | |
Additional paid-in capital
|
| | | | — | | | | | | — | | | | | | (1,897 ) | | | |
3(a), 3(b)
|
| | | | (1,897 ) | | |
Accumulated deficit
|
| | | | — | | | | | | — | | | | | | — | | | |
2(a), 3(a), 3(b)
|
| | | | — | | |
Total stockholders’ equity
|
| | | | (2,435 ) | | | | | | 539 | | | | | | — | | | | | | | | | (1,896 ) | | |
Total liabilities and stockholders’ equity
|
| | | $ | 530 | | | | | $ | 1,153 | | | | | $ | — | | | | | | | | $ | 1,683 | | |
|
(in thousands)
|
| |
TO
Pharmaceuticals (1) |
| |
AquaMed
Technologies, Inc. (1) |
| |
Transaction
Adjustments |
| |
Footnote
Reference |
| |
Pro Forma
Combined |
| ||||||||||||
Revenue, net of returns, allowances and discounts
|
| | | $ | — | | | | | $ | 1,992 | | | | | $ | — | | | | | | | | $ | 1,992 | | |
Cost of revenues
|
| | | | — | | | | | | 1,845 | | | | | | — | | | | | | | | | 1,845 | | |
Gross profit
|
| | | | — | | | | | | 147 | | | | | | — | | | | | | | | | 147 | | |
Operating expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 503 | | | | | | 1,116 | | | | | | — | | | | | | | | | 1,619 | | |
Research and product development
|
| | | | 235 | | | | | | — | | | | | | — | | | | | | | | | 235 | | |
Acquisition-related expenses
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Change in fair value of contingent consideration liability
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Total operating expenses
|
| | | | 738 | | | | | | 1,116 | | | | | | — | | | | | | | | | 1,854 | | |
Loss from operations
|
| | | | (738 ) | | | | | | (969 ) | | | | | | — | | | | | | | | | (1,707 ) | | |
Other income (expense) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sundry
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Total other expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Loss before income tax provision
|
| | | | (738 ) | | | | | | (969 ) | | | | | | — | | | | | | | | | (1,707 ) | | |
Income tax benefit
|
| | | | — | | | | | | 16 | | | | | | — | | | | | | | | | 16 | | |
Net loss
|
| | | $ | (738 ) | | | | | $ | (953 ) | | | | | $ | — | | | | | | | | $ | (1,691 ) | | |
|
(in thousands)
|
| |
TO
Pharmaceuticals (1) |
| |
AquaMed
Technologies, Inc. (1) |
| |
Transaction
Adjustments |
| |
Footnote
Reference |
| |
Pro Forma
Combined |
| ||||||||||||
Revenue, net of returns, allowances and discounts
|
| | | $ | — | | | | | $ | 1,752 | | | | | $ | — | | | | | | | | $ | 1,752 | | |
Cost of revenues
|
| | | | — | | | | | | 1,354 | | | | | | — | | | | | | | | | 1,354 | | |
Gross profit
|
| | | | — | | | | | | 398 | | | | | | — | | | | | | | | | 398 | | |
Operating expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 297 | | | | | | 1,733 | | | | | | — | | | | | | | | | 2,030 | | |
Research and product development
|
| | | | 340 | | | | | | — | | | | | | — | | | | | | | | | 340 | | |
Total operating expenses
|
| | | | 637 | | | | | | 1,733 | | | | | | — | | | | | | | | | 2,370 | | |
Loss from operations
|
| | | | (637 ) | | | | | | (1,335 ) | | | | | | — | | | | | | | | | (1,972 ) | | |
Other income (expense)
|
| | | | | | | | | | 12 | | | | | | | | | | | | | | | 12 | | |
Total other expense
|
| | | | — | | | | | | 12 | | | | | | — | | | | | | | | | 12 | | |
Loss before income tax provision
|
| | | | (637 ) | | | | | | (1,323 ) | | | | | | — | | | | | | | | | (1,960 ) | | |
Income tax provision
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Net loss
|
| | | $ | (637 ) | | | | | $ | (1,323 ) | | | | | $ | — | | | | | | | | $ | (1,960 ) | | |
|
|
Receivables and other current assets
|
| | | | 513 | | |
|
Property and equipment
|
| | | | 279 | | |
|
Inventory
|
| | | | 183 | | |
|
Goodwill
|
| | | | 0 | | |
|
Other noncurrent assets
|
| | | | 178 | | |
|
Other liabilities assumed
|
| | | | (614 ) | | |
|
Preliminary valuation of common shares to be issued
|
| | | $ | 539 | | |
Application number
|
| |
Description of Provisional Patent
|
| |
Filing Date
|
|
62/610,589 | | | Use of cannabinoid compositions for the treatment of inflammatory skin disorders* | | |
December 12, 2017
|
|
62/632,021 | | | Use of cannabinoid compositions and methods for the treatment of protein energy wasting | | |
February 19, 2018
|
|
62/674,235 | | | Use of cannabinoid compositions for the treatment of inflammatory skin disorders | | |
May 21, 2018
|
|
62/676,093 | | | Use of cannabis-based compositions for the treatment of autistic spectrum disorders | | |
May 24, 2018
|
|
62/776,076 | | | Use of cannabis-based compositions for the treatment of Alzheimer’s disease and dementia | | |
December 6, 2018
|
|
62/776,084 | | | Use of cannabis-based compositions for the treatment of Migraine and headache | | |
December 6, 2018
|
|
|
DATA
|
| |
RESEARCH
|
| |
CLINICAL DEVELOPMENT
|
| | | | | ||||||||
|
•
TOL has amassed one of the largest medical cannabis treatment databases in the world, with over 20,000 patient records.
•
Patients have reported on the strain used, dosage prescribed and outcomes across a wide variety of diseases.
•
TOP has leveraged TOL’s data to selectively apply for 7 patents.
|
| |
•
TOP and TOL scientists have been researching cannabinoids for over 40 years.
•
At least ten published peer-reviewed journal articles have been published by the TOP and TOL team.
•
TOP and TOL regularly conduct retrospective analyses on its patient dataset to identify optimal strains/disease states for clinical investigation.
|
| |
•
Two completed Phase II double-blind trials related to Crohn’s disease and colitis in two different treatment platforms.
•
Currently recruiting accruing patients for two additional Phase II trials.
•
By early 2019, TOP anticipates that three additional Phase II trials will have commenced.
|
| | | | | ||||||||
| | | | | | | | | | | | | | | | | | | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Cost of revenues | | | | | | | | | | | | | |
Materials and finished products
|
| | | $ | 674 | | | | | $ | 629 | | |
Stock-based compensation
|
| | | | 45 | | | | | | 184 | | |
Compensation and benefits
|
| | | | 481 | | | | | | 616 | | |
Depreciation and amortization
|
| | | | 288 | | | | | | 288 | | |
Equipment, production and other expenses
|
| | | | 357 | | | | | | 549 | | |
Total cost of revenues
|
| | | $ | 1,845 | | | | | $ | 2,266 | | |
|
| | |
Year Ended
December 31, |
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Selling, general and administrative expenses | | | | | | | | | | | | | |
Compensation and benefits
|
| | | $ | 184 | | | | | $ | 269 | | |
Stock-based compensation
|
| | | | 198 | | | | | | 563 | | |
Other expenses and professional fees
|
| | | | 734 | | | | | | 918 | | |
Total selling, general and administrative expenses
|
| | | $ | 1,116 | | | | | $ | 1,750 | | |
|
| | |
Nine Months Ended
September 30, |
| |||||||||
| | |
2018
|
| |
2017
|
| ||||||
Cost of revenues | | | | | | | | | | | | | |
Materials and finished products
|
| | | $ | 502 | | | | | $ | 268 | | |
Stock-based compensation
|
| | | | 33 | | | | | | 25 | | |
Compensation and benefits
|
| | | | 299 | | | | | | 384 | | |
Depreciation and amortization
|
| | | | 217 | | | | | | 217 | | |
Equipment, production and other expenses
|
| | | | 303 | | | | | | 432 | | |
Total cost of revenues
|
| | | $ | 1,354 | | | | | $ | 1,326 | | |
|
| | |
Nine Months Ended
September 30, |
| |||||||||
| | |
2018
|
| |
2017
|
| ||||||
Selling, general and administrative expenses | | | | | | | | | | | | | |
Compensation and benefits
|
| | | $ | 301 | | | | | $ | 151 | | |
Stock-based compensation
|
| | | | 173 | | | | | | 158 | | |
Professional fees
|
| | | | 715 | | | | | | 289 | | |
Other expenses and professional fees
|
| | | | 544 | | | | | | 177 | | |
Total selling, general and administrative expenses
|
| | | $ | 1,733 | | | | | $ | 775 | | |
|
Name
|
| |
Age
|
| |
Position
|
|
Executive Officers | | | | | | | |
Seth Yakatan | | |
48
|
| | Chief Executive Officer | |
Mitchell Glass | | |
67
|
| | Chief Medical Officer | |
Sidney Taubenfeld | | |
58
|
| | Vice President | |
Directors | | | | | | | |
David Johnson | | |
60
|
| | Chairman of the Board of Directors | |
Berel Farkas | | |
30
|
| | Director | |
Name and principal position
|
| |
Salary
|
| |
Annual
Incentive Target (1) |
| |
Long Term
Incentive Target (1) |
| |
Target Total Direct
Compensation (1) |
| ||||||||||||
Seth Yakatan
|
| | | $ | 150,000 | | | | | | — | | | | | | — | | | | | | — | | |
Dr. Mitchell Glass
|
| | | $ | 120,000 | | | | | | — | | | | | | — | | | | | | — | | |
Sidney Taubenfeld
|
| | | $ | 168,000 | | | | | | — | | | | | | — | | | | | | — | | |
Name and Address of Beneficial Owner
(1)
|
| |
Number of
Shares Beneficially Owned (2) |
| |
Percentage
Beneficially Owned (2) |
| ||||||
5% Owners | | | | | | | | | | | | | |
Tikun Olam Ltd.
183 Ibn Gabirol Street Tel Aviv, 6200715, Israel |
| | | | 2,120,784 | | | | | | 12.3 % | | |
Tsachi Cohen
183 Ibn Gabirol Street Tel Aviv, 6200715, Israel |
| | | | 2,120,784 (3) | | | | | | 12.3 % | | |
Menachem Silber
77 Water Street, 8 th Floor New York, NY 10005 |
| | | | 1,175,961 | | | | | | 6.8 % | | |
Eric Lerner
77 Water Street, 8 th Floor New York, NY 10005 |
| | | | 913,664 | | | | | | 5.3 % | | |
Officers and Directors | | | | | | | | | | | | | |
Berel Farkas
|
| | | | 1,638,932 (4) | | | | | | 9.5 % | | |
David I. Johnson
|
| | | | 119,847 (5) | | | | | | * | | |
Seth Yakatan
(6)
|
| | | | — | | | | | | — | | |
Mitchell Glass
|
| | | | 5,385 | | | | | | * | | |
Name and Address of Beneficial Owner
(1)
|
| |
Number of
Shares Beneficially Owned (2) |
| |
Percentage
Beneficially Owned (2) |
| ||||||
Sidney Taubenfeld
|
| | | | 527,067 (7) | | | | | | 3.0 % | | |
All executive officers and directors of the Company, as a group
|
| | | | 2,290,512 | | | | | | 13.2 % | | |
| AUDITED FINANCIAL STATEMENTS OF AQUAMED: | | | | | | | |
| | | | | F-2 | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS OF AQUAMED: | | | | | | | |
| | | | | F-18 | | | |
| | | | | F-19 | | | |
| | | | | F-20 | | | |
| | | | | F-21 | | | |
| | | | | F-22 | | | |
| AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF TOP: | | | | | | | |
| | | | | F-30 | | | |
| | | | | F-31 | | | |
| | | | | F-32 | | | |
| | | | | F-33 | | | |
| | | | | F-34 | | | |
| | | | | F-35 | | | |
|
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF
TOP: |
| | | | | | |
| | | | | F-43 | | | |
| | | | | F-44 | | | |
| | | | | F-45 | | | |
| | | | | F-46 | | | |
| | | | | F-47 | | |
| | |
December 31,
2017 |
| |
December 31,
2016 |
| ||||||
ASSETS: | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | |
Accounts receivable, net
|
| | | $ | 99 | | | | | $ | 74 | | |
Inventory, net
|
| | | | 93 | | | | | | 158 | | |
Prepaid expenses and other current assets
|
| | | | 7 | | | | | | 25 | | |
Total current assets
|
| | | | 199 | | | | | | 257 | | |
Improvements and equipment, net
|
| | | | 522 | | | | | | 831 | | |
Other assets
|
| | | | 173 | | | | | | 173 | | |
Total assets
|
| | | $ | 894 | | | | | $ | 1,261 | | |
LIABILITIES AND PARENT’S NET INVESTMENT | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 63 | | | | | $ | 147 | | |
Accrued expenses and other current liabilities
|
| | | | 147 | | | | | | 237 | | |
Total current liabilities
|
| | | | 210 | | | | | | 384 | | |
Deferred tax liability
|
| | | | — | | | | | | 16 | | |
Other long-term liabilities
|
| | | | 59 | | | | | | 67 | | |
Total liabilities
|
| | | | 269 | | | | | | 467 | | |
Commitments and Contingencies | | | | | | | | | | | | | |
Parent’s net investment
|
| | | | 625 | | | | | | 794 | | |
Total Parent’s net investment
|
| | | | 625 | | | | | | 794 | | |
Total liabilities and Parent’s net investment
|
| | | $ | 894 | | | | | $ | 1,261 | | |
|
| | |
Years Ended December 31,
|
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Revenue, net of returns, allowances and discounts
|
| | | $ | 1,992 | | | | | $ | 2,152 | | |
Cost of revenues
|
| | | | 1,845 | | | | | | 2,266 | | |
Gross profit/(loss)
|
| | | | 147 | | | | | | (114 ) | | |
Operating expenses | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 1,116 | | | | | | 1,750 | | |
Total operating expenses
|
| | | | 1,116 | | | | | | 1,750 | | |
Loss from operations
|
| | | | (969 ) | | | | | | (1,864 ) | | |
Other income | | | | | | | | | | | | | |
Sundry
|
| | | | — | | | | | | 25 | | |
Total other income
|
| | | | — | | | | | | 25 | | |
Loss from operations before tax
|
| | | | (969 ) | | | | | | (1,839 ) | | |
Income tax benefit
|
| | | | 16 | | | | | | 63 | | |
Net loss
|
| | | $ | (953 ) | | | | | $ | (1,776 ) | | |
|
| | |
Years Ended December 31,
|
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Parent’s net investment, beginning of year
|
| | | $ | 794 | | | | | $ | 1,253 | | |
Net Loss
|
| | | | (953 ) | | | | | | (1,776 ) | | |
Advances from Parent
|
| | | | 784 | | | | | | 1,317 | | |
Parent’s net investment, end of year
|
| | | $ | 625 | | | | | $ | 794 | | |
|
| | |
Years Ended December 31,
|
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Operating Activities | | | | | | | | | | | | | |
Net loss
|
| | | $ | (953 ) | | | | | $ | (1,776 ) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 316 | | | | | | 324 | | |
Amortization of deferred lease incentive
|
| | | | (8 ) | | | | | | (9 ) | | |
Deferred income tax expense
|
| | | | (16 ) | | | | | | (63 ) | | |
Provision for doubtful accounts
|
| | | | 2 | | | | | | 12 | | |
Provision for excess and slow moving inventory
|
| | | | 5 | | | | | | — | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable
|
| | | | (27 ) | | | | | | 212 | | |
Inventory
|
| | | | 60 | | | | | | 46 | | |
Prepaid expenses and other assets
|
| | | | 18 | | | | | | 15 | | |
Accounts payable
|
| | | | (84 ) | | | | | | (35 ) | | |
Accrued expenses and other liabilities
|
| | | | (90 ) | | | | | | (43 ) | | |
Net Cash Used in Operating Activities
|
| | | | (777 ) | | | | | | (1,317 ) | | |
Investing Activities | | | | | | | | | | | | | |
Purchase of improvements and equipment
|
| | | | (7 ) | | | | | | — | | |
Net Cash Used in Investing Activities
|
| | |
|
(7
)
|
| | | |
|
—
|
| |
Financing Activities | | | | | | | | | | | | | |
Advances from parent
|
| | | | 784 | | | | | | 1,317 | | |
Net Cash Provided by Financing Activities
|
| | | | 784 | | | | | | 1,317 | | |
Net Increase (Decrease) in Cash and Cash Equivalents
|
| | | | — | | | | | | — | | |
Cash and Cash Equivalents
– Beginning of year
|
| | | | — | | | | | | — | | |
Cash and Cash Equivalents
– End of year
|
| | | $ | — | | | | | $ | — | | |
Supplemental Disclosure of Cash Flows Information | | | | | | | | | | | | | |
Cash paid during the period for: | | | | | | | | | | | | | |
Interest
|
| | | $ | — | | | | | $ | — | | |
Taxes
|
| | | | — | | | | | | — | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Selling, general and administrative expenses | | | | ||||||||||
Compensation and benefits
|
| | | $ | 184 | | | | | $ | 269 | | |
Stock-based compensation
|
| | | | 198 | | | | | | 563 | | |
Other expenses and professional fees
|
| | | | 734 | | | | | | 918 | | |
Total selling, general and administrative expenses
|
| | | $ | 1,116 | | | | | $ | 1,750 | | |
|
| | |
December 31,
2017 |
| |
December 31,
2016 |
| ||||||
Raw materials
|
| | | $ | 98 | | | | | $ | 135 | | |
Work in process
|
| | | | — | | | | | | 21 | | |
Finished goods
|
| | | | — | | | | | | 2 | | |
Less: Inventory reserve for excess and slow moving inventory
|
| | | | (5 ) | | | | | | — | | |
Total
|
| | | $ | 93 | | | | | $ | 158 | | |
|
| | |
December 31,
2017 |
| |
December 31,
2016 |
| ||||||
Salaries, benefits and incentive compensation
|
| | | $ | 92 | | | | | $ | 111 | | |
Professional fees
|
| | | | 28 | | | | | | 60 | | |
Other
|
| | | | 27 | | | | | | 66 | | |
Total accrued expenses and other current liabilities
|
| | | $ | 147 | | | | | $ | 237 | | |
|
|
2018
|
| | | | 207 | | |
|
2019
|
| | | | 207 | | |
|
2020
|
| | | | 207 | | |
|
2021
|
| | | | 207 | | |
|
2022
|
| | | | 207 | | |
|
Thereafter
|
| | | | 639 | | |
|
Total
|
| | | $ | 1,674 | | |
|
| | |
% of Total Revenue
|
| |
Accounts Receivable
December 31, 2017 |
| ||||||||||||
Customer
|
| |
2017
|
| |
2016
|
| ||||||||||||
A
|
| | | | 65 % | | | | | | 72 % | | | | | | 100 % | | |
B
|
| | | | 16 % | | | | | | 12 % | | | | | | 0 % | | |
| | |
Useful Life
(Years) |
| |
December 31,
|
| |||||||||
| | |
2017
|
| |
2016
|
| |||||||||
Machinery and equipment
|
| |
3 – 10
|
| | | $ | 2,893 | | | | | $ | 2,893 | | |
Office furniture and equipment
|
| |
3 – 10
|
| | | | 56 | | | | | | 49 | | |
Leasehold improvements
|
| |
(A)
|
| | | | 228 | | | | | | 228 | | |
| | | | | | | | 3,177 | | | | | | 3,170 | | |
Less: Accumulated depreciation and amortization
|
| | | | | | | (2,655 ) | | | | | | (2,339 ) | | |
Improvements and equipment, net
|
| | | | | | $ | 522 | | | | | $ | 831 | | |
|
| | |
For The Years Ended
December 31, |
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Federal: | | | | ||||||||||
Current
|
| | | $ | — | | | | | $ | — | | |
Deferred
|
| | | | (13 ) | | | | | | (50 ) | | |
State and local: | | | | | | | | | | | | | |
Current
|
| | | | — | | | | | | — | | |
Deferred
|
| | | | (3 ) | | | | | | (13 ) | | |
Income tax (benefit) provision
|
| | | $ | (16 ) | | | | | $ | (63 ) | | |
|
| | |
For The Years Ended
December 31, |
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
U.S. federal statutory rate
|
| | | | 34.0 % | | | | | | 34.0 % | | |
State tax rate, net of federal benefit
|
| | | | 0.1 % | | | | | | 0.2 % | | |
Permanent differences – Other
|
| | | | 0.0 % | | | | | | (0.3 )% | | |
Tax Reform – Federal Rate Change
|
| | | | (139.0 )% | | | | | | 0.0 % | | |
Tax Reform – Change in valuation allowance
|
| | | | 139.0 % | | | | | | 0.0 % | | |
Change in valuation allowance
|
| | | | (32.4 )% | | | | | | (30.4 )% | | |
Income tax benefit
|
| | | | 1.7 % | | | | | | 3.5 % | | |
|
| | |
As of December 31,
|
| |||||||||
| | |
2017
|
| |
2016
|
| ||||||
Deferred tax assets: | | | | ||||||||||
Net operating loss carryforwards
|
| | | $ | 2,752 | | | | | $ | 3,823 | | |
Intangible Assets
|
| | | | 233 | | | | | | 415 | | |
Goodwill and Tradename
|
| | | | 29 | | | | | | — | | |
Accruals
|
| | | | 21 | | | | | | 51 | | |
Other
|
| | | | 2 | | | | | | 5 | | |
Total deferred tax assets
|
| | | | 3,037 | | | | | | 4,294 | | |
Valuation allowance
|
| | | | (2,957 ) | | | | | | (4,027 ) | | |
Deferred tax assets, net of valuation allowance
|
| | | $ | 80 | | | | | $ | 267 | | |
Deferred tax liabilities: | | | | ||||||||||
Property and equipment
|
| | | | (80 ) | | | | | | (267 ) | | |
Intangible assets
|
| | | | — | | | | | | — | | |
Goodwill and Trade Name
|
| | | | — | | | | | | (16 ) | | |
Total deferred tax liabilities
|
| | | | (80 ) | | | | | | (283 ) | | |
Net deferred tax liabilities
|
| | | $ | — | | | | | $ | (16 ) | | |
|
| | |
September 30,
2018 |
| |
December 31,
2017 |
| ||||||
| | |
(Unaudited)
|
| | ||||||||
ASSETS: | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | |
Accounts receivable, net
|
| | | $ | 172 | | | | | $ | 99 | | |
Inventory, net
|
| | | | 183 | | | | | | 93 | | |
Prepaid expenses and other current assets
|
| | | | 341 | | | | | | 7 | | |
Total current assets
|
| | | | 696 | | | | | | 199 | | |
Improvements and equipment, net
|
| | | | 279 | | | | | | 522 | | |
Other assets
|
| | | | 178 | | | | | | 173 | | |
Total assets
|
| | | $ | 1,153 | | | | | $ | 894 | | |
LIABILITIES AND PARENT’S NET INVESTMENT | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 305 | | | | | $ | 63 | | |
Accrued expenses and other current liabilities
|
| | | | 256 | | | | | | 147 | | |
Total current liabilities
|
| | | | 561 | | | | | | 210 | | |
Other long-term liabilities
|
| | | | 53 | | | | | | 59 | | |
Total liabilities
|
| | | | 614 | | | | | | 269 | | |
Commitments and Contingencies | | | | | | | | | | | | | |
Parent’s net investment
|
| | | | 539 | | | | | | 625 | | |
Total Parent’s net investment
|
| | | | 539 | | | | | | 625 | | |
Total liabilities and Parent’s net investment
|
| | | $ | 1,153 | | | | | $ | 894 | | |
|
| | |
Nine Months Ended
September 30, |
| |||||||||
| | |
2018
|
| |
2017
|
| ||||||
Revenue, net of returns, allowances and discounts
|
| | | $ | 1,752 | | | | | $ | 1,330 | | |
Cost of revenues
|
| | | | 1,354 | | | | | | 1,326 | | |
Gross profit
|
| | | | 398 | | | | | | 4 | | |
Operating expenses | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | | 1,733 | | | | | | 775 | | |
Total operating expenses
|
| | | | 1,733 | | | | | | 775 | | |
Loss from operations
|
| | | | (1,335 ) | | | | | | (771 ) | | |
Other income | | | | | | | | | | | | | |
Sundry
|
| | | | 12 | | | | | | — | | |
Total other income
|
| | | | 12 | | | | | | — | | |
Loss from operations before tax
|
| | | | (1,323 ) | | | | | | (771 ) | | |
Income tax benefit
|
| | | | — | | | | | | 12 | | |
Net loss
|
| | | $ | (1,323 ) | | | | | $ | (759 ) | | |
|
| | |
For the
Nine Months Ended September 30, 2018 |
| |||
Parent’s net investment, beginning of period
|
| | | $ | 625 | | |
Net Loss
|
| | | | (1,323 ) | | |
Advances from Parent
|
| | | | 1,237 | | |
Parent’s net investment, end of period
|
| | | $ | 539 | | |
|
| | |
Nine Months Ended
September 30, |
| |||||||||
| | |
2018
|
| |
2017
|
| ||||||
Operating Activities | | | | | | | | | | | | | |
Net loss
|
| | | $ | (1,323 ) | | | | | $ | (759 ) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 243 | | | | | | 237 | | |
Amortization of deferred lease incentive
|
| | | | (6 ) | | | | | | (6 ) | | |
Deferred income tax expense
|
| | | | — | | | | | | (12 ) | | |
Provision for doubtful accounts
|
| | | | 2 | | | | | | (12 ) | | |
Provision for excess and slow moving inventory
|
| | | | (5 ) | | | | | | (5 ) | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable
|
| | | | (75 ) | | | | | | (160 ) | | |
Inventory
|
| | | | (85 ) | | | | | | (8 ) | | |
Prepaid expenses and other assets
|
| | | | (334 ) | | | | | | 16 | | |
Accounts payable
|
| | | | 242 | | | | | | (39 ) | | |
Accrued expenses and other liabilities
|
| | | | 104 | | | | | | (99 ) | | |
Net Cash Used in Operating Activities
|
| | | | (1,237 ) | | | | | | (847 ) | | |
Investing Activities | | | | | | | | | | | | | |
Purchase of improvements and equipment
|
| | | | — | | | | | | (7 ) | | |
Net Cash Used in Investing Activities
|
| | |
|
—
|
| | | |
|
(7
)
|
| |
Financing Activities | | | | | | | | | | | | | |
Advances from parent
|
| | | | 1,237 | | | | | | 854 | | |
Net Cash Provided by Financing Activities
|
| | | | 1,237 | | | | | | 854 | | |
Net Increase (Decrease) in Cash and Cash Equivalents
|
| | | | — | | | | | | — | | |
Cash and Cash Equivalents
– Beginning of period
|
| | | | — | | | | | | — | | |
Cash and Cash Equivalents
– End of period
|
| | | $ | — | | | | | $ | — | | |
Supplemental Disclosure of Cash Flows Information | | | | | | | | | | | | | |
Cash paid during the period for: | | | | | | | | | | | | | |
Interest
|
| | | $ | — | | | | | $ | — | | |
Taxes
|
| | | | — | | | | | | — | | |
| | |
Nine Months Ended
September 30, |
| |||||||||
| | |
2018
|
| |
2017
|
| ||||||
Selling, general and administrative expenses | | | | ||||||||||
Compensation and benefits
|
| | | $ | 301 | | | | | $ | 151 | | |
Stock-based compensation
|
| | | | 173 | | | | | | 158 | | |
Professional fees
|
| | | | 715 | | | | | | 289 | | |
Other expenses and professional fees
|
| | | | 544 | | | | | | 177 | | |
Total selling, general and administrative expenses
|
| | | $ | 1,733 | | | | | $ | 775 | | |
|
| | |
September 30,
2018 |
| |
December 31,
2017 |
| ||||||
Raw materials
|
| | | $ | 130 | | | | | $ | 98 | | |
Work in process
|
| | | | 53 | | | | | | — | | |
Finished goods
|
| | | | — | | | | | | — | | |
Less: Inventory reserve for excess and slow moving inventory
|
| | | | — | | | | | | (5 ) | | |
Total
|
| | | $ | 183 | | | | | $ | 93 | | |
|
| | |
September 30,
2018 |
| |
December 31,
2017 |
| ||||||
Salaries, benefits and incentive compensation
|
| | | $ | 108 | | | | | $ | 92 | | |
Professional fees
|
| | | | 123 | | | | | | 28 | | |
Other
|
| | | | 25 | | | | | | 27 | | |
Total accrued expenses and other current liabilities
|
| | | $ | 256 | | | | | $ | 147 | | |
|
|
2018
|
| | | | 52 | | |
|
2019
|
| | | | 207 | | |
|
2020
|
| | | | 207 | | |
|
2021
|
| | | | 207 | | |
|
2022
|
| | | | 207 | | |
|
Thereafter
|
| | | | 639 | | |
|
Total
|
| | | $ | 1,519 | | |
|
| | |
% of Total Revenue
|
| |
Accounts Receivable
September 30, 2018 |
| ||||||||||||
Customer
|
| |
2018
|
| |
2017
|
| ||||||||||||
A
|
| | | | 63 % | | | | | | 61 % | | | | | | 54 % | | |
B
|
| | | | 13 % | | | | | | 20 % | | | | | | 0 % | | |
| | |
Useful Life
(Years) |
| |
September 30,
2018 |
| |
December 31,
2017 |
| ||||||
Machinery and equipment
|
| |
3 – 10
|
| | | $ | 2,893 | | | | | $ | 2,893 | | |
Office furniture and equipment
|
| |
3 – 10
|
| | | | 49 | | | | | | 56 | | |
Leasehold improvements
|
| |
(A)
|
| | | | 228 | | | | | | 228 | | |
| | | | | | | | 3,170 | | | | | | 3,177 | | |
Less: Accumulated depreciation and amortization
|
| | | | | | | (2,891 ) | | | | | | (2,655 ) | | |
Improvements and equipment, net
|
| | | | | | $ | 279 | | | | | $ | 522 | | |
|
| | |
2017
|
| |
2016
|
| ||||||
ASSETS
|
| | | | | | | | | | | | |
Current Assets | | | | | | | | | | | | | |
Other receivable-related party
|
| | | $ | 17,000 | | | | | $ | — | | |
Total Current Assets
|
| | | | 17,000 | | | | | | — | | |
Intangible Assets | | | | | | | | | | | | | |
Licenses, net of accumulated amortization
|
| | | | 454,500 | | | | | | 479,750 | | |
Total Assets
|
| | | $ | 471,500 | | | | | $ | 479,750 | | |
LIABLILITIES
|
| | | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 65,155 | | | | | $ | 11,128 | | |
Accrued expenses
|
| | | | 50,000 | | | | | | — | | |
Due to affiliate
|
| | | | 2,154,310 | | | | | | 1,528,917 | | |
Total Current Liabilities
|
| | | | 2,269,465 | | | | | | 1,540,045 | | |
MEMBER’S DEFICIT
|
| | | | | | | | | | | | |
Member’s Deficit
|
| | | | (1,797,965 ) | | | | | | (1,060,295 ) | | |
Total Liabilities and Member’s Deficit
|
| | | $ | 471,500 | | | | | $ | 479,750 | | |
|
| | |
2017
|
| |
2016
|
| ||||||
Operating Expenses | | | | | | | | | | | | | |
Selling, general & administrative
|
| | | $ | 502,574 | | | | | $ | 954,216 | | |
Research & development
|
| | | | 235,096 | | | | | | 106,179 | | |
Total Operating Expenses
|
| | | | 737,670 | | | | | | 1,060,395 | | |
Net Loss from Operations
|
| | | $ | (737,670 ) | | | | | $ | (1,060,395 ) | | |
Net Loss
|
| | | $ | (737,670 ) | | | | | $ | (1,060,395 ) | | |
|
| | |
2017
|
| |
2016
|
| ||||||
Balance, Beginning of Year
|
| | | $ | (1,060,295 ) | | | | | $ | 100 | | |
Net Loss
|
| | | | (737,670 ) | | | | | | (1,060,395 ) | | |
Balance, End of Year
|
| | | $ | (1,797,965 ) | | | | | $ | (1,060,295 ) | | |
|
| | |
2017
|
| |
2016
|
| | | ||||||||||
Cash Flow from Operating Activities: | | | | | | | | | | | | | | | | ||||
Net loss
|
| | | $ | (737,670 ) | | | | | $ | (1,060,395 ) | | | | | ||||
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | | | | ||||
Amortization
|
| | | | 25,250 | | | | | | 25,250 | | | | | ||||
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | | | | ||||
Other receivable-related party
|
| | | | (17,000 ) | | | | | | — | | | | | ||||
Accounts payable
|
| | | | 54,027 | | | | | | 11,128 | | | | | ||||
Accrued expenses
|
| | | | 50,000 | | | | | | — | | | | | ||||
Net cash used by operating activities
|
| | | | (625,393 ) | | | | | | (1,024,017 ) | | | | | ||||
Cash Flows from Financing Activities | | | | | | | | | | | | | | | | ||||
Due to affiliate
|
| | | | 625,393 | | | | | | 1,024,017 | | | | | ||||
Net cash provided by financing activities
|
| | | | 625,393 | | | | | | 1,024,017 | | | | | ||||
Net Increase (Decrease) in Cash
|
| | | | — | | | | | | — | | | | | ||||
Cash, Beginning of the Year
|
| | | | — | | | | | | — | | | | | ||||
Cash, End of the Year
|
| | | $ | — | | | | | $ | — | | | | | ||||
| | | | | | | | | | | | | | | | | | | |
| | |
For the Period Ended
December 31, 2016 |
| |||
Operating Expenses | | | | | | | |
Clinical Trials (R&D)
|
| | | | 106,179 | | |
Medical Advisory Board (R&D)
|
| | | | — | | |
Legal & Professional Fees
|
| | | | 702,603 | | |
Other Operating Expenses
|
| | | | 226,363 | | |
Total Expenses
|
| | | $ | 1,035,145 | | |
|
| | |
September 30,
2018 (Unaudited) |
| |
December 31,
2017 |
| ||||||
ASSETS
|
| | | | | | | | | | | | |
Current Assets | | | | | | | | | | | | | |
Other receivable-related party
|
| | | $ | 93,500 | | | | | $ | 17,000 | | |
Total Current Assets
|
| | | | 93,500 | | | | | | 17,000 | | |
Intangible Assets | | | | | | | | | | | | | |
Licenses, net of accumulated amortization
|
| | | | 435,563 | | | | | | 454,500 | | |
Total Assets
|
| | | $ | 529,063 | | | | | $ | 471,500 | | |
LIABLILITIES
|
| | | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 89,471 | | | | | $ | 65,155 | | |
Accrued expenses
|
| | | | 315,509 | | | | | | 50,000 | | |
Due to affiliate
|
| | | | 2,558,936 | | | | | | 2,154,310 | | |
Total Current Liabilities
|
| | | | 2,963,916 | | | | | | 2,269,465 | | |
MEMBERS’ DEFICIT
|
| | | | | | | | | | | | |
Members’ Deficit
|
| | | | (2,434,853 ) | | | | | | (1,797,965 ) | | |
Total Liabilities and Members’ Deficit
|
| | | $ | 529,063 | | | | | $ | 471,500 | | |
|
| | |
2018
(Unaudited) |
| |
2017
(Unaudited) |
| ||||||
Operating Expenses | | | | | | | | | | | | | |
Selling, general and administrative
|
| | | $ | 296,779 | | | | | $ | 450,936 | | |
Research and development
|
| | | | 340,109 | | | | | | 73,822 | | |
Total Operating Expenses
|
| | | | 636,888 | | | | | | 524,758 | | |
Net Loss from Operations
|
| | | $ | (636,888 ) | | | | | $ | (524,758 ) | | |
Net Loss
|
| | | $ | (636,888 ) | | | | | $ | (524,758 ) | | |
|
| | |
2018
(Unaudited) |
| |||
Balance as of January 31, 2018
|
| | | $ | (1,797,965 ) | | |
Net Loss
|
| | | | (636,888 ) | | |
Balance at September 30, 2018
|
| | | $ | (2,434,853 ) | | |
|
| | |
2018
(Unaudited) |
| |
2017
(Unaudited) |
| ||||||
Cash Flow from Operating Activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (636,888 ) | | | | | $ | (524,758 ) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Amortization
|
| | | | 18,937 | | | | | | 18,938 | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Other asset
|
| | | | (76,500 ) | | | | | | — | | |
Accounts payable
|
| | | | 24,316 | | | | | | 24,180 | | |
Accrued expenses
|
| | | | 265,509 | | | | | | 25,000 | | |
Net cash provided (used) by operating activities
|
| | | | (404,626 ) | | | | | | (456,640 ) | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | |
Advances to/from parent
|
| | | | 404,626 | | | | | | 456,640 | | |
Net cash provided by financing activities
|
| | | | 404,626 | | | | | | 456,640 | | |
Net Increase (Decrease) in Cash
|
| | | | — | | | | | | — | | |
Cash, Beginning of the Year
|
| | | | — | | | | | | — | | |
Cash, End of the Year
|
| | | $ | — | | | | | $ | — | | |
|
Item
|
| |
Amount
to Be Paid |
| |||
Securities and Exchange Commission registration fee
|
| | | $ | 65.33 | | |
Blue Sky fees and expenses
|
| | | | * | | |
Legal fees and expenses
|
| | | | * | | |
Accounting fees and expenses
|
| | | | * | | |
Printing expenses
|
| | | | * | | |
Miscellaneous
|
| | | | * | | |
Total
|
| | | $ | * | | |
|
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ DAVID I. JOHNSON
David I. Johnson
|
| |
Director and Chief Executive Officer
(Principal Executive Officer) |
| |
January 9, 2019
|
|
|
/s/ JOSEPH WARUSZ
Joseph Warusz
|
| | Chief Financial Officer (Principal Financial and Accounting Officer) | | |
January 9, 2019
|
|
Exhibit 2.2
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (this “ Amendment ”) is made as of January 8, 2019, by and among AquaMed Technologies, Inc., a Delaware corporation (“ Parent ”), AQ TOP, LLC, a Delaware limited liability company (“ Merger Sub ”), and TO Pharmaceuticals LLC, a Delaware limited liability company (“ Company ”). Parent, Merger Sub and Company are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .” Capitalized terms used but not defined herein shall have the meanings assigned to them in the Original Agreement (defined below).
RECITALS
WHEREAS, Parent, Merger Sub and Company are parties to that certain Agreement and Plan of Merger, dated as of November 27, 2018 (including the exhibits and schedules attached thereto, the “ Original Agreement ”);
WHEREAS, the Parties desire to amend and restate Section 8.1(b) and amend Exhibit A of the Original Agreement as provided herein;
WHEREAS, the Board of Managers of the Company and the Board of Directors of the Parent have each previously approved this Amendment; and
WHEREAS, the Parties constitute all of the parties required to amend the Original Agreement in accordance with Section 9.2 thereof as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. | Amendments to the Original Agreement . |
A. Section 8.1(b) of the Original Agreement is hereby amended and restated in its entirety as follows: “by either Parent or the Company if the Merger shall not have been consummated by April 11, 2019 (the “ End Date ”); provided, however, in the event that the SEC has not concluded its review of the preliminary proxy statement in connection with the Adynxx Merger or the Registration Statement by the date which is sixty (60) days prior to the End Date, then Parent or the Company shall be entitled to extend the End Date for an additional sixty (60) days; provided further , that a party shall not be permitted to terminate this Agreement pursuant to this Subsection (b) if the failure to consummate the Merger by the End Date is attributable to a failure on the part of such party to perform any covenant or obligation in this Agreement required to be performed by such party at or prior to the Effective Time;”.
B. The definition of Registration Statement in Exhibit A of the Original Agreement is hereby amended to replace the phrase “[…] on Form 10” with “[…] on Form S-1”.
- 1 -
2. Effect of Amendments . Except as amended as set forth above, the Original Agreement shall continue in full force and effect. Nothing in this Amendment shall be construed to modify any provision of the Original Agreement other than as specifically amended as set forth above. The Original Agreement, as amended hereby, remains in full force and effect. Any reference to the Original Agreement contained in the Original Agreement shall, from and after the date hereof, be deemed to refer to the Original Agreement as amended hereby. The Original Agreement, as amended by this Amendment, represents the entire understanding and agreement of the Parties with respect to the subject matter of this Amendment, supersedes all prior negotiations between the Parties, and may not be amended, supplemented, or changed orally but only by an agreement in writing signed by the Party or Parties against whom enforcement is sought and making specific reference to this Amendment. If there are any conflicts between this Amendment and the Original Agreement, then this Amendment will govern and control.
3. Consent and Waiver . Parent hereby consents to the transactions contemplated by, and irrevocably waives the terms of Section 4.3(b) of the Original Agreement, solely with respect to (i) the amendment to the license agreement, dated as of April 13, 2017, by and between Tikun Olam Ltd, an Israeli corporation (“Tikun Olam”), and TO Pharmaceuticals USA LLC, a Delaware limited liability company (“TOPUSA”), dated as of December 9, 2018, by and between Tikun Olam and TOPUSA; and (ii) the amendment to the license agreement, dated as of April 13, 2017, by and between Tikun Olam and Tikun Olam IP Ltd., a Cayman Islands company (“TOIP”), dated as of December 9, 2018, by and between Tikun Olam and TOIP.
4. Financial Statements . As promptly as practicable after the date of this Amendment, and in any case, no later than March 1, 2019, each of Parent and Company will deliver to the other party audited financial statements of Parent or Company, as applicable, for the fiscal year ended December 31, 2018 (together, the “ 2018 Audited Financials ”). The 2018 Audited Financials (i) will be prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), (ii) will fairly present the consolidated financial position of Parent and Company and their applicable Subsidiaries as at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated, and (iii) will be consistent with, and prepared from, the books and records of Parent or Company, as applicable.
5. Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such State, without reference to such State’s or any other state’s or other jurisdiction’s principles of conflict of laws.
6. Binding Effect . This Amendment shall be binding upon and shall inure to the benefit of the Parties and their respective successors, heirs, executors, administrators, legal representatives, and permitted assigns.
7. Counterparts . This Amendment may be executed in multiple counterparts, each of which will be deemed to be an original copy of this Amendment and all of which, when taken together, will be deemed to constitute one and the same agreement. In the event that a signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” or other electronic format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile, “.pdf,” or other electronic format signature page were an original thereof.
* * * * *
- 2 -
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the Parties as of the date first written above.
PARENT : | |||
AQUAMED TECHNOLOGIES, Inc. | |||
By: | /s/ David I. Johnson | ||
Name: | David I. Johnson | ||
Title: | Chief Executive Officer | ||
merger sub : | |||
AQ TOP, LLC | |||
By: | /s/ David I. Johnson | ||
Name: | David I. Johnson | ||
Title: | Chief Executive Officer | ||
company : | |||
TO PHARMACEUTICALS LLC |
|||
By: | /s/ Barry Farkas | ||
Name: | Barry Farkas | ||
Title: | Manager |
Signature Page to
Amendment No. 1 to Agreement and Plan of Merger
Exhibit 2.3
Form of Distribution Agreement
ASSET CONTRIBUTION AND SEPARATION AGREEMENT
by and between
ALLIQUA BIOMEDICAL, INC.
and
ACQUAMED TECHNOLOGIES, INC.
Dated as of [●], 2018
ASSET CONTRIBUTION AND SEPARATION AGREEMENT
THIS ASSET CONTRIBUTION AND SEPARATION AGREEMENT (this “Agreement”) is entered into as of [●], 2018, by and among: Alliqua BioMedical, Inc . , a Delaware corporation (“Alliqua”), and AquaMed Technologies, Inc., a Delaware corporation (“AquaMed”). Certain capitalized terms used in this Agreement are defined in Exhibit A .
BACKGROUND
WHEREAS, AquaMed, a wholly-owned subsidiary of Alliqua, currently conducts the AquaMed Business;
WHEREAS, (i) the Board of Directors of Alliqua (the “Board”) has (x) determined that the Distribution and the other transactions contemplated by this Agreement and the Ancillary Agreements (as defined below) are in the best interests of Alliqua and its stockholders and (y) approved this Agreement and each of the Ancillary Agreements and (ii) the board of directors of AquaMed has approved this Agreement and each of the Ancillary Agreements (to the extent AquaMed is a party thereto);
WHEREAS, immediately following the Distribution AquaMed intends to consummate the merger and other transactions contemplated by the AquaMed Merger Agreement; and
WHEREAS, it is appropriate and desirable to set forth the principal corporate transactions and certain other agreements relating to the relationship of Alliqua and AquaMed and their respective subsidiaries as set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as follows:
Article 1
THE CONTRIBUTION AND ASSUMPTION OF LIABILITIES
1.1 Contribution of Alliqua Assets. Alliqua shall contribute, transfer and convey, and issue to AquaMed, at the Closing, all of its right, title and interest in all assets primarily utilized in connection with the AquaMed Business, including without limitation the following tangible and intangible assets (collectively, the “Contributed Alliqua Assets”) on the terms and subject to the conditions set forth in this Agreement:
(a) Patents and Patent Applications: All of the patents and patent applications primarily utilized in connection with the AquaMed Business, including without limitation those identified on Schedule 1.1(a), and all active prosecution cases related thereto (the patents and patent applications referred to in this Section 1.1(a), and all active prosecution cases related thereto, being referred to in this Agreement as the “Alliqua Contributed Patents”);
(b) Other Intellectual Property: All of the trade secrets, know-how and other IP Rights (other than the Alliqua Contributed Patents), primarily utilized in connection with the AquaMed Business, including without limitation those identified on Schedule 1.1(b) (the Alliqua Contributed Patents, together with the IP Rights referred to in this Section 1.1(b), being referred to in this Agreement as the “Alliqua Contributed IP”);
(c) Raw Materials: All of the raw materials primarily utilized in connection with the AquaMed Business, including without limitation those identified on Schedule 1.1(c) (the raw materials referred to in this Section 1.1(c) being referred to in this Agreement as the “Alliqua Contributed Raw Materials”); provided, however, that Alliqua shall not be obligated to contribute, transfer and convey any Alliqua Contributed Raw Materials that are lost or destroyed (without any intentional action by Alliqua) following the date hereof in the ordinary course of business;
1 |
(d) Equipment: All of the equipment primarily utilized in connection with the AquaMed Business, including without limitation that identified on Schedule 1.1(d) (it being understood that equipment owned by a Third Party and leased to Alliqua shall not constitute a Contributed Alliqua Asset, but all contracts or agreements or other rights relating thereto shall constitute Alliqua Contributed Assets);
(e) Inventory: All of the finished goods, works in process, raw materials and supplies primarily utilized in connection with the AquaMed Business, including without limitation that identified on Schedule 1.1(e) to the extent in Alliqua’s possession on the Closing Date;
(f) Contracts: All rights of Alliqua under the contracts primarily utilized in connection with the AquaMed Business, to the extent thereof, including without limitation those identified on Schedule 1.1(f) (the “Alliqua Contributed Contracts”);
(g) Files and Records: (i) All books and records (including accounting records, vendor files, customer lists, accounts receivable and payable records) related to the Contributed Alliqua Assets, and (ii) all files and data identified on Schedule 1.1(g); provided, however, that Alliqua shall be entitled to retain, subject to the confidentiality obligations contained herein, copies of such items following the Closing;
(h) Regulatory Filings: All of the Regulatory Filings of Alliqua related to the Contributed Alliqua Assets, including without limitation those identified on Schedule 1.1(h);
(i) Government Authorizations. To the extent permitted by law, all licenses, Government Authorizations, approvals and authorizations of Alliqua by any Governmental Body that are primarily utilized in connection with the AquaMed Business, including without limitation those identified on Schedule 1.1(i);
(j) Prepaid Expenses: All prepaid expenses, credits, advance payments, security, deposits, charges, sums and fees relating to the AquaMed Business or the Contributed Alliqua Assets that are identified on Schedule 1.1(j);
(k) Warranties: All of Alliqua’s warranties, indemnities and all similar rights against third parties to the extent relating to the AquaMed Business or the Contributed Alliqua Assets;
(l) Leases: All of Alliqua’s right, title, and interest in and to those real property leases relating to or utilized in connection with the AquaMed Business, including without limitation those set forth on Schedule 1.1(1) (the “Assigned Alliqua Leases”);
(m) Goodwill: All goodwill associated with, relating to or utilized in connection with the AquaMed Business or any of the Contributed Alliqua Assets.
(n) For all purposes under this Agreement, and for purposes of the Contribution, Alliqua shall be deemed to be contributing, assigning, transferring or conveying those assets, rights and properties expressly identified as being contributed, transferred or conveyed by Alliqua as set forth above or on Schedule 1.1(a), Schedule 1.1(b), Schedule 1.1(c), Schedule 1.1(d), Schedule 1.1(e), Schedule 1.1(f), Schedule 1.1(g), Schedule 1.1(h), Schedule 1.1(i), Schedule 1.1(j) and Schedule 1.1(1), and good will associated there with and any other assets of Alliqua that are used exclusively in the AquaMed Business. All assets used in connection with the AquaMed Business which are not used exclusively by the AquaMed business are listed on Schedule 1.1(n).
1.2 Issuance to Alliqua of AquaMed Shares. At the Closing, as consideration for the Contributed Alliqua Assets, AquaMed shall issue and deliver to Alliqua _________ shares (the “AquaMed Shares”) of common stock of AquaMed (the “AquaMed Common Stock”).
2 |
1.3 Assumption of Liabilities.
(a) AquaMed Liabilities . Simultaneously with the Closing, AquaMed shall assume and be liable for, and shall pay, perform and discharge, when due, all of the following Liabilities, which shall be deemed “AquaMed Liabilities”: (i) all of the Liabilities set forth on the Carve-Out Balance Sheet, (ii) all Liabilities relating to or arising out of or resulting from (A) the operation of the AquaMed Business, as conducted at any time from its inception, at or after the Closing Date or (B) the ownership or use of the Contributed Alliqua Assets and (iii) Liabilities allocated to or assumed by AquaMed pursuant to the Tax Matters Agreement.
(b) Alliqua Retained Liabilities . Notwithstanding Section 1.3(a), the parties agree that AquaMed is not assuming, and the AquaMed Liabilities shall not include, any Liabilities of any Alliqua Group Member, whether in existence on or before or arising after the Closing Date, other than those specifically identified as AquaMed Liabilities in Section 1.3(a) above (collectively, the “Retained Alliqua Liabilities”).
(c) Assumption Agreements . At the Closing, AquaMed shall assume the AquaMed Liabilities by delivery of an assumption agreement to Alliqua, substantially in the form of Exhibit B (the “Assumption Agreement”).
1.4 Consents; Assignments Not Effected at Closing .
(a) Prior to Closing, and, prior to the Distribution, Alliqua and AquaMed shall use commercially reasonable efforts, and shall cooperate with each other, to obtain any Consent required for the transfer and assignment of all Alliqua Contributed Contracts, to AquaMed, and to obtain any release, substitution or amendment required to novate any and all Alliqua Contributed Contracts or to obtain in writing the unconditional release of all Alliqua Group Members from such Alliqua Contributed Contracts, and to permit AquaMed to assume the rights and AquaMed Liabilities under the Alliqua Contributed Contracts.
(b) Notwithstanding anything to the contrary in this Agreement, and subject to the provisions of this Section 1.4, to the extent that the sale, assignment, transfer, conveyance or delivery, or attempted sale, assignment, transfer, conveyance or delivery of any Contributed Alliqua Contract to AquaMed would require the Consent of a Person (including any Governmental Body), who is not a Party to this Agreement or an Affiliate of a Party to this Agreement, including any Consent required to release any Alliqua Group Member from a Alliqua Contributed Contract, and such Consent shall not have been obtained prior to the Closing, unless otherwise agreed by Alliqua in writing (following the closing of the transactions contemplated by the Adynxx Merger Agreement), this Agreement shall not constitute a sale, assignment, transfer, conveyance or delivery of such Alliqua Contributed Contract; provided, however, it being understood that, subject to the satisfaction or waiver of the conditions contained in ARTICLE 2 and ARTICLE 3, the Closing shall occur notwithstanding the foregoing.
(c) If any Consent required for Alliqua to transfer or assign any Alliqua Contributed Contract to AquaMed is not obtained on or before Closing, for a two year period from and after the date hereof, Alliqua and AquaMed shall use commercially reasonable efforts, and shall cooperate with each other, following the Closing, at the sole cost and expense of AquaMed, to obtain such Consent. Alliqua shall hold such Alliqua Contributed Contract for the use and benefit of AquaMed and its subsidiaries, and to the extent commercially reasonable and feasible and permitted by Applicable Law, Alliqua shall provide AquaMed and its subsidiaries with the use and possession of such Alliqua Contributed Contract prior to the receipt of the Consent required for the transfer of the Alliqua Contributed Contract to AquaMed or its subsidiaries. AquaMed shall bear the risk of loss of such Alliqua Contributed Contract, until such Consent is received and the transfer is completed, and (i) any and all costs incurred by the Alliqua Group in connection with the continued possession or ownership of such Alliqua Contributed Contract prior to the date any such required Consent is obtained shall be borne and reimbursed, promptly upon request, to Alliqua by AquaMed, and (ii) all benefits in connection with the continued possession or ownership of such Alliqua Contributed Contract prior to the date any such required Consent is obtained shall be for the benefit of and provided, promptly upon request, by Alliqua to AquaMed or its subsidiaries.
(d) After the Closing Date, Alliqua Group Members may receive mail, packages and other communications intended to be sent or properly belonging to AquaMed, and AquaMed may receive mail, packages and other communications intended to be sent or properly belonging to Alliqua Group Members. Accordingly, at all times after the Closing Date, the Alliqua Group Member or AquaMed receiving any such mail, package and other communication shall be entitled to open the same and to the extent that it does not relate to the business of the receiving company, the receiving company shall promptly deliver such mail, package or other communication (or, in case the same also relates to the business of the receiving company, copies thereof) to such the company to which it relates. The provisions of this Section 1.4(e) are not intended to, and shall not, be deemed to constitute an authorization by any Alliqua Group Member to permit AquaMed to accept service of process on its behalf or constitute AquaMed an agent for service of process, or authorization by AquaMed to permit any Alliqua Group Member to accept service of process on its behalf or constitute any Alliqua Group member an agent for service of process.
3 |
1.5 Representations and Warranties.
(a) Equipment . All material items of equipment and other tangible assets owned by or leased to, and necessary for the operation of, the AquaMed Business that are part of the Alliqua Contributed Assets are adequate for the uses to which they are being put by Alliqua, are in good and safe working condition and repair (ordinary wear and tear excepted) and are adequate for the conduct of the AquaMed Business in the manner in which such business is currently being conducted. All of said tangible assets are being delivered to AquaMed free and clear of any Encumbrances, except for Permitted Encumbrances.
(b) Absence of Undisclosed Liabilities . AquaMed does not have any material Liabilities, other than: (a) Liabilities that are fully reflected or reserved for in the Carve-Out Balance Sheet; or (b) Liabilities incurred by AquaMed in the ordinary course of business after the date hereof and consistent with past practice and which, individually or in the aggregate, are not material.
1.6 Closing.
(a) Subject to Section 1.4 and the satisfaction or waiver of the conditions set forth in ARTICLE 2 and ARTICLE 3, the closing of the Contribution, the Distribution, the issuance of the AquaMed Shares by AquaMed to Alliqua, in each case pursuant to this Agreement (the “Closing”), shall take place immediately prior to the closing of the transactions contemplated by the Adynxx Merger Agreement, assuming the satisfaction or waiver of the last of the conditions set forth in Articles 2 and 3 to be satisfied (other than those conditions that by their nature are to be satisfied at Closing, or at such other time and place as may be agreed upon by Alliqua and AquaMed). The Closing may be accomplished by the exchange of signatures by overnight mail or by scanned and emailed signatures, as the parties may deem appropriate. For purposes of this Agreement, “Closing Date” shall mean the date on which the Closing actually takes place. In no event shall the Closing occur after the consummation of the transactions contemplated by the Adynxx Merger Agreement.
(b) At the Closing, AquaMed shall issue the AquaMed Shares in accordance with Section 1.2 by book entry of such shares.
Article 2
CONDITIONS PRECEDENT TO ACQUAMED’S OBLIGATION TO CLOSE
AquaMed’s obligation to issue the AquaMed Shares and assume the AquaMed Assumed Liabilities and to take the other actions required to be taken by AquaMed at the Closing are subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by AquaMed, in whole or in part, in writing):
2.1 Performance of Obligations. The covenants and obligations that Alliqua is required to comply with or to perform at or prior to the Closing pursuant to this Agreement shall have been complied with and performed, and the representations and warranties of Alliqua in Article 1 hereof shall be true and correct, in each case in all material respects.
2.2 Closing Documents. AquaMed shall have received the following documents, each of which shall be in full force and effect:
(a) the Assumption Agreement between AquaMed and Alliqua, duly executed by Alliqua;
(b) each of the Ancillary Agreements, duly executed by Alliqua;
4 |
(c) a certificate of Alliqua’s Secretary, dated as of the Closing Date certifying: (i) the incumbency of the officers of Alliqua signing this Agreement, the Ancillary Agreements, and the other documents contemplated herein to be executed and delivered by Alliqua; and (ii) the resolutions of the Alliqua Board authorizing this Agreement and the Ancillary Agreements to which Alliqua is a party and the transactions contemplated herein and therein;
(d) such bills of sale, endorsements, assignments, stock transfer powers, stock certificates, and other documents as AquaMed may, acting reasonably and in good faith, determine to be necessary or appropriate to assign, convey, transfer and deliver to AquaMed good and marketable title to the Alliqua Contributed Assets (including notice of assignment to AquaMed of the U.S. patents included in the Alliqua Contributed Patents); and
(e) the Consents listed on Schedule 2.2(e) required to transfer or assign Contributed Alliqua Assets, including Alliqua Contributed Contracts, to AquaMed.
2.3 Contributed Alliqua Assets. Alliqua shall have contributed the Contributed Alliqua Assets to AquaMed.
2.4 No Proceedings. No Proceeding shall be pending or threatened in writing to enjoin, delay, prohibit or restrict the consummation of the Contribution.
2.5 No Orders. No Order issued by any Governmental Body of competent jurisdiction prohibiting the consummation of the Contribution shall be in effect.
2.6 Merger . The Agreement and Plan of Merger and Reorganization between AquaMed, AQ TOP, LLC and TO Pharmaceuticals, LLC dated November [___], 2018 (the “AquaMed Merger Agreement”), shall be in full force and effect and all conditions precedent required to be satisfied thereunder for the consummation of the merger and other transactions contemplated thereby to be consummated immediately following the Closing shall be so satisfied.
Article 3
CONDITIONS PRECEDENT TO ALLIQUA’S OBLIGATION TO CLOSE
Alliqua’s obligation to contribute the Contributed Alliqua Assets and to take the other actions required to be taken by Alliqua at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Alliqua, in whole or in part, in writing):
3.1 Performance of Obligations. The covenants and obligations that AquaMed are required to comply with or to perform at or prior to the Closing pursuant to this Agreement shall have been complied with and performed in all material respects.
3.2 Documents. Alliqua shall have received the following documents, each of which shall be in full force and effect:
(a) the Assumption Agreement between AquaMed and Alliqua, duly executed by AquaMed;
(b) share certificates (or at Alliqua’s election, evidence of book entry) representing the AquaMed Shares duly registered in the name of Alliqua;
(c) each of the Ancillary Agreements, duly executed by AquaMed;
(d) a certificate of AquaMed’s Secretary, dated as of the Closing Date certifying: (i) the incumbency of the officers of AquaMed signing this Agreement, the Ancillary Agreements, and the other documents contemplated herein to be executed and delivered by AquaMed and (ii) the resolutions of the board of directors of AquaMed authorizing this Agreement and the Ancillary Agreements to which it is a party and the transactions contemplated herein and therein;
5 |
(e) such assignments, assumption agreements and other documents as Alliqua may, acting reasonably and in good faith, determine to be necessary or appropriate to effect the assumption by AquaMed of the Assumed Alliqua Liabilities.
(f) the Consents listed on Schedule 2.2(e) required to transfer or assign Contributed Alliqua Assets, including Alliqua Contributed Contracts to AquaMed; and
(g) written agreements from all parties to Alliqua Contributed Contracts releasing Alliqua from any and all liabilities thereunder, or an indemnity in form and substance reasonably satisfactory to Alliqua and AquaMed pursuant to which AquaMed indemnifies and holds harmless AquaMed from liabilities resulting from the performance of such Alliqua Contributed Contracts by Aquamed or its subsidiaries.
3.3 No Proceedings. No Proceeding shall be pending or threatened in writing seeking to enjoin, delay, prohibit or restrict the consummation of the Contribution.
3.4 No Orders. No Order issued by any Governmental Body of competent jurisdiction prohibiting the consummation of the Contribution shall be in effect.
3.5 Merger. The AquaMed Merger Agreement shall be in full force and effect and all conditions precedent required to be satisfied thereunder for the consummation of the merger and other transactions contemplated thereby to be consummated immediately following the Closing shall have been satisfied.
3.6 Adynxx Merger. The Agreement and Plan of Merger and Reorganization among Alliqua, Embark Merger Sub, Inc. and Adynxx, Inc. dated October 11, 2018 (the “Adynxx Merger Agreement”), shall be in full force and effect and the transactions contemplated thereby shall be consummated immediately following the Closing under this Agreement.
3.7 Form 10 . The SEC shall have declared effective the Form 10, of which the Information Statement forms a part, and no order terminating the registration of the Common Stock under the Exchange Act will be in effect, no Proceeding seeking to terminate such registration shall be pending before or threatened by the SEC, and distribution of the Information Statement (or the Notice of Internet Availability of the Information Statement if permitted as a means of delivery under applicable Legal Requirements) shall have been commenced to Registered Holders of Alliqua Common Stock; and
3.8 NASDAQ Listing . The AquaMed Shares shall have been approved and accepted for listing on the Nasdaq Capital Market (or such other national securities exchange registered with the SEC under Section 6 of the Exchange Act), subject to official notice of issuance.
3.9 Third Party Valuation . Alliqua shall have received an independent third party valuation of the AquaMed Shares to be distributed in the Distribution.
3.10 Tax . Alliqua shall be satisfied the transactions contemplated by this Agreement, including the contribution of the Contributed Alliqua Assets to AquaMed and the Distribution, will not result in any material Tax payable by Alliqua.
Article 4
THE DISTRIBUTION
4.1 Stock Dividend to Alliqua Shareholders; Distribution . Immediately following the Closing and prior to the closing of the transactions contemplated by the Adynxx Merger Agreement, Alliqua shall cause the Distribution Agent to issue pro rata to the Record Holders the AquaMed Shares (such issuance, the “Distribution”) and shall credit the appropriate number of AquaMed Shares to book entry accounts for each Record Holder or designated transferee or transferees of such Record Holder. For Record Holders who own Alliqua Common Stock through a broker or other nominee, their AquaMed Shares will be credited to their respective accounts by such broker or nominee. No action by any Record Holder (or such Record Holder’s designated transferee or transferees) shall be necessary to receive the applicable number of shares of AquaMed Common Stock (and, if applicable, cash in lieu of any fractional shares) such shareholder is entitled to in the Distribution.
6 |
4.2 Fractional Shares . Record Holders who, after aggregating the number of AquaMed Shares (or fractions thereof) to which such shareholder is entitled to receive in the Distribution, would be entitled to receive a fraction of a share of AquaMed Common Stock in the Distribution, will receive cash in lieu of a fractional share. Fractional shares of AquaMed Common Stock will not be distributed in the Distribution nor credited to book-entry accounts. The Distribution Agent shall, as soon as practicable after the Closing Date, (a) determine the number of whole shares and fractional shares of AquaMed Common Stock allocable to each Record Holder, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder’s or owner’s ratable share of the net proceeds of such sale, based upon the average gross selling price per share of AquaMed Common Stock after making appropriate deductions for any amounts required to be withheld for United States federal income tax purposes. AquaMed shall bear the cost of brokerage fees and transfer Taxes incurred in connection with these sales of fractional shares, which such sales shall occur as soon after the Closing Date as practicable and as determined by the Distribution Agent. None of the Alliqua Group Members, AquaMed or the Distribution Agent will guarantee any minimum sale price for the fractional shares of AquaMed Common Stock. No Alliqua Group Member or AquaMed will pay any interest on the proceeds from the sale of fractional shares. The Distribution Agent will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Distribution Agent nor the selected broker-dealers will be Affiliates of Alliqua or AquaMed.
4.3 Adjustment to Number of AquaMed Shares . Prior to the Closing Date, AquaMed shall amend its Certificate of Incorporation to effect a split up of the Common Stock, or shall issue to Alliqua as a stock dividend, such that Alliqua shall hold on the Distribution Date the number of shares of AquaMed Common Stock as may be determined pursuant to the AquaMed Merger Agreement.
4.4 Actions in Connection with the Distribution . Prior to the Closing Date, AquaMed shall take the following actions to facilitate the Distribution in compliance with applicable Legal Requirements.
(a) Promptly following execution of this Agreement, AquaMed shall file with the SEC a Form 10 to register the AquaMed Shares under Section 12(b) of the Exchange Act. AquaMed shall file such amendments, supplements, and exhibits to its Form 10 as the SEC may require and as may be necessary in order to cause the Form 10 to become and remain effective under the Exchange Act. AquaMed shall mail (or deliver by electronic means where not prohibited by applicable Legal Requirements) to the Record Holders of Alliqua common shares, at such time on or prior to the Closing Date as Alliqua shall reasonably determine, the Information Statement (or a Notice of Internet Availability of such Information Statement if permitted as a means of delivery under applicable Legal Requirements), as well as any other information concerning AquaMed, its business, operations and management, the Contribution, and such other matters as are necessary and as may be required by applicable Legal Requirements. Promptly after receiving a request from Alliqua, AquaMed shall prepare and, in accordance with applicable Legal Requirements, file with the SEC any such documentation that is reasonably necessary to effectuate the Distribution, and AquaMed shall use commercially reasonable efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable.
(b) AquaMed shall use commercially reasonable efforts to prepare and have approved and made effective, an application for the original listing of the AquaMed Shares on the Nasdaq Capital Market (or such other national securities exchange registered with the SEC under Section 6 of the Exchange Act), subject to official notice of distribution which application of original listing shall be initially submitted as promptly as reasonably practicable following the execution of this Agreement.
(c) Nothing in this Section 4.5 shall be deemed to shift or otherwise impose on Alliqua liability for any portion of the Form 10 or Information Statement.
7 |
Article 5
THE MERGER
5.1 The Merger . AquaMed shall not enter into any amendment or modification to or waive any provision of the AquaMed Merger Agreement or terminate the AquaMed Merger Agreement, in any case, without the prior written consent of Alliqua. AquaMed will use its reasonable best efforts to cause the transactions contemplated by the AquaMed Merger Agreement to be consummated.
Article 6
POST-CLOSING COVENANTS
6.1 Further Assurances.
(a) From and after the Closing, each Party shall cooperate with the other Party, and shall cause to be executed and delivered such documents as the other Party may reasonably request for the purpose of perfecting, completing, or documenting the transactions contemplated by this Agreement, the cost of which shall be borne by the requesting party.
(b) After the Closing, if Alliqua or any Alliqua Group Member receives any payment, refund or other amount that is a Contributed Alliqua Asset or otherwise belongs to AquaMed, Alliqua shall promptly remit or shall cause to be remitted such amount to AquaMed. Any payment, refund or other amount that relates to an Alliqua Contributed Asset, including any Alliqua Contributed Contract, shall belong to AquaMed unless such payment, refund, or other amount is not an Alliqua Contributed Asset.
(c) After the Closing, if AquaMed receives any payment, refund or other amount that is properly due and owing to an Alliqua Group Member, AquaMed shall promptly remit or shall cause to be remitted such amount to Alliqua Group Member.
6.2 Post-Closing Access. Each Party agrees to provide the assistance and access set forth in this Section 6.2, subject to Section 6.3.
(a) During the Access Period each Party shall provide the other Party the following information, access, and assistance:
(i) Access to Books and Records . Reasonable access to its properties, books and records, and personnel having knowledge of the content of such books and records, for purposes reasonably related to compliance with Legal Requirements.
(ii) Work Papers and Auditor Personnel . Except to the extent otherwise contemplated by the Ancillary Agreements and subject to Section 6.3, AquaMed shall authorize and request its auditors to make reasonably available to Alliqua’s auditors both the personnel who performed (if such personnel are still employees of AquaMed) or are performing the annual audits of AquaMed’s financial statements and copies of work papers related to the annual audits (subject to the execution of any reasonable and customary access letters that AquaMed’s auditors may require in connection with the review of such work papers by Alliqua’s auditors), in all cases within a reasonable time prior to Alliqua’s auditors’ opinion date, to the extent practicable, so that Alliqua’s auditors are able to perform the procedures they reasonably consider necessary to take responsibility for the work of the AquaMed’s auditors as it relates to Alliqua’s auditors’ report on Alliqua’s financial statements, all within sufficient time to enable Alliqua to timely file its annual audited financial statements with the SEC. Except to the extent otherwise contemplated by the Ancillary Agreements and subject to Section 6.3, Alliqua shall authorize and request its auditors to make reasonably available to Aquamed’s auditors both the personnel who performed (if such personnel are still employees of Alliqua or its successor) or are performing the annual audits of Alliqua’s financial statements and copies of work papers related to the annual audits (subject to the execution of any reasonable and customary access letters that Alliqua’s auditors may require in connection with the review of such work papers by AquaMed’s auditors), in all cases within a reasonable time prior to AquaMed’s auditors’ opinion date, to the extent practicable, so that AquaMed’s auditors are able to perform the procedures they reasonably consider necessary to take responsibility for the work of the Alliqua’s auditors as it relates to AquaMed’s auditors’ report on AquaMed’s financial statements, all within sufficient time to enable AquaMed to timely file its annual audited financial statements with the SEC.
8 |
(iii) Current, Quarterly and Annual Reports . Until the date that is twelve months after the Closing Date, at least two (2) Business Days prior to the earlier of public dissemination or filing with the SEC, each Party shall deliver to the other Party, a reasonably complete draft of any earnings news release, any filing with the SEC, including, but not limited to Current Reports on Form 8-K, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, proxy statement or any other annual report purporting to fulfill the requirements of 17 CFR 240-14c-3, and any amendments thereof; provided, that, to the extent AquaMed’s first proxy statement for an annual meeting of shareholders held after the fiscal year during which the Distribution occurs discusses Alliqua compensation programs, AquaMed shall substantially conform its proxy statement to Alliqua’s proxy statement (or to information that Alliqua provides to AquaMed under cover of a written communication stating that Alliqua intends to include such information in Alliqua’s proxy statement) for such year so long as Alliqua delivers such information to AquaMed at least ten (10) Business Days’ prior to AquaMed’s proposed filing of its preliminary proxy statement for such year. Each Party shall notify the other Party as soon as reasonably practicable after becoming aware of any material accounting differences between the financial statements to be included in such Party’s Annual Report on Form 10-K and the pro-forma financial statements included, as applicable, in the Form 10 filed by AquaMed in connection with the Distribution or the Form 8-K to filed by Alliqua on or about the time of the Distribution. If any such differences are disclosed to any Party as provided in this paragraph, the Parties shall meet or otherwise confer as soon as reasonably practicable thereafter, and in any event prior to the filing of any Annual Report on Form 10-K, to resolve such differences and the effects thereof on the Parties’ applicable Annual Reports on Form 10-K.
(iv) Other Information by Alliqua. Subject to compliance with the terms of the Ancillary Agreements, Alliqua shall provide AquaMed information that (A) primarily relates to AquaMed or the AquaMed Business, as the case may be, or (B) is necessary for AquaMed to comply with the terms of, or otherwise perform under, any Ancillary Agreement to which any Alliqua Group Member and AquaMed are parties. Such information shall be provided, as soon as reasonably practicable following the receipt of such request, at the expense of AquaMed. Alliqua shall be required to provide only such information in the possession or control of Alliqua or any Aliqua Group Member or any Affiliate of Alliqua, and only to the extent such information is not already in the possession or control of AquaMed. Alliqua may provide appropriate copies of such information, except that originals shall be provided if AquaMed has a reasonable need for such originals; provided that, to the extent any originals are delivered to AquaMed pursuant to this Agreement or the Ancillary Agreements, AquaMed shall, at its own expense, return them to Alliqua within a reasonable time after the need to retain such originals has ceased. If Alliqua, in its sole discretion, determines that any such access or the provision of any such information would violate any Legal Requirement or any Contract with a Third Party or could reasonably result in the waiver of any attorney-client privilege, rights under the work product doctrine or other applicable privilege, Alliqua shall not be obligated to provide such information requested by AquaMed.
(v) Other Information by AquaMed. Subject to compliance with the terms of the Ancillary Agreements, AquaMed shall provide Alliqua information that (A) primarily relates to Alliqua or the Alliqua Business, as the case may be, or (B) is necessary for Alliqua to comply with the terms of, or otherwise perform under, any Ancillary Agreement to which AquaMed and/or Alliqua are parties. Such information shall be provided, as soon as reasonably practicable following the receipt of such request, at the expense of Alliqua. AquaMed shall be required to provide only such information in the possession or control of AquaMed or any of AquaMed’s Affiliates, and only to the extent such information is not already in the possession or control of Alliqua. AquaMed may provide appropriate copies of such information, except that originals shall be provided if Alliqua has a reasonable need for such originals; provided that, to the extent any originals are delivered to Alliqua pursuant to this Agreement or the Ancillary Agreements, Alliqua shall, at its own expense, return them to AquaMed within a reasonable time after the need to retain such originals has ceased. If AquaMed, in its sole discretion, determines that any such access or the provision of any such information would violate any Legal Requirement or any Contract with a Third Party or could reasonably result in the waiver of any attorney-client privilege, rights under the work product doctrine or other applicable privilege, AquaMed shall not be obligated to provide such information requested by Alliqua.
(b) Other than in circumstances in which indemnification is sought pursuant to ARTICLE 8 (in which event the provisions of such ARTICLE 8 shall govern) or for matters related to provision of tax records (in which event the provisions of the Tax Matters Agreement shall govern) and subject to appropriate restrictions for Privileged Information or Confidential Information, at all times, each Party shall provide the other Party the following information, access, and assistance at all times:
9 |
(i) Alliqua shall provide AquaMed all information that (A) is reasonably required by AquaMed to comply with reporting, disclosure, filing or other requirements imposed on AquaMed (including under applicable securities Legal Requirements) by a Governmental Body having jurisdiction over AquaMed, or (B) is for use in any Proceeding (other an a Proceeding in which any Alliqua Group Member is an opposing party) or in order to satisfy audit, accounting, claims, regulatory, litigation, or other similar requirements, as applicable. Alliqua shall be required to provide only such information in the possession or control of Alliqua or any Alliqua Group Member or any Affilaite of Alliqua, and only to the extent such information is not already in the possession or control of AquaMed. Alliqua may provide appropriate copies of such information, except that originals shall be provided if AquaMed has a reasonable need for such originals; provided that, to the extent any originals are delivered to AquaMed pursuant to this Agreement or the Ancillary Agreements, AquaMed shall, at its own expense, return them to Alliqua within a reasonable time after the need to retain such originals has ceased. If Alliqua, in its sole discretion, determines that any such access or the provision of any such information would violate any Legal Requirement or any Contract with a Third Party or could reasonably result in the waiver of any attorney-client privilege, rights under the work product doctrine or other applicable privilege, Alliqua shall not be obligated to provide such information requested by AquaMed.
(ii) AquaMed shall provide Alliqua all information that (A) is reasonably required by Alliqua to comply with reporting, disclosure, filing or other requirements imposed on Alliqua (including under applicable securities Legal Requirements) by a Governmental Entity having jurisdiction over Alliqua, or (B) is for use in any Proceeding (other an a Proceeding in which AquaMed is an opposing party) or in order to satisfy audit, accounting, claims, regulatory, litigation, or other similar requirements, as applicable. AquaMed shall be required to provide only such information in the possession or control of AquaMed or any of AquaMed’s Affiliates, and only to the extent such information is not already in the possession or control of Alliqua. AquaMed may provide appropriate copies of such information, except that originals shall be provided if Alliqua has a reasonable need for such originals; provided that, to the extent any originals are delivered to Alliqua pursuant to this Agreement or the Ancillary Agreements, Alliqua shall, at its own expense, return them to AquaMed within a reasonable time after the need to retain such originals has ceased. If AquaMed, in its sole discretion, determines that any such access or the provision of any such information would violate any Legal Requirement or any Contract with a Third Party or could reasonably result in the waiver of any attorney-client privilege, rights under the work product doctrine or other applicable privilege, AquaMed shall not be obligated to provide such information requested by Alliqua.
(c) Nothing in this Section 6.2 shall require any Party to violate any Contract with any Third Party regarding the confidentiality of confidential and proprietary information belonging or relating to that Third Party or its business; provided, however, that in the event that a Party is required to provide any such information, such Party shall use commercially reasonable efforts to seek to obtain such Third Party’s written consent to the disclosure of such information.
(d) Each Party shall inform its officers, employees, agents, consultants, advisors, authorized accountants, counsel and other designated representatives who have or have access to the other Party’s Confidential Information or other information provided pursuant to Section 6.2 of their obligation to hold such information confidential in accordance with the provisions of this Agreement.
(e) The Parties acknowledge that information provided under this Section 6.2 may constitute material, nonpublic information, and trading in the securities of a Party (or the securities of its Affiliates, subsidiaries or partners) while in possession of such material, nonpublic material information may constitute a violation of the United States federal securities Legal Requirements.
10 |
6.3 Confidentiality.
(a) Confidential Information pertaining to the Alliqua Business or any Alliqua Group Member shall be deemed to belong to the Alliqua Group. Confidential Information pertaining to the AquaMed Business or AquaMed shall be deemed to belong to AquaMed. Confidential Information pertaining to the Alliqua Business and the AquaMed Business, or to an Alliqua Group Member and AquaMed (“Jointly Owned Confidential Information”), shall be deemed to belong to both the Alliqua Group and AquaMed . Except as otherwise provided in the Ancillary Agreements, each Party shall hold, and shall cause its officers, employees, agents, consultants and advisors to hold, in strict confidence and not to disclose, release or use (including for any ongoing or future commercial purpose) Confidential Information belonging to the other Party, without the prior written consent of the Party to whom the Confidential Information belongs, which consent, in each case, may be withheld in such Party’s sole and absolute discretion, except where disclosure is required by applicable Legal Requirements; provided that each Party may disclose, or may permit disclosure of, Confidential Information (i) to its respective auditors, attorneys, financial advisors, bankers and other consultants and advisors who have a need to know such information for auditing and other non-commercial purposes and are informed of the obligation to hold such information confidential, and in respect of whose failure to comply with such obligations the applicable Party will be responsible, (ii) if any Party or any of its Affiliates is required or compelled to disclose any such Confidential Information by judicial or administrative process or by other Legal Requirement (including the rules and regulations promulgated by the SEC) or stock exchange rule or is advised by outside counsel in connection with a Proceeding brought by a Governmental Entity that it is advisable to do so, (iii) as required in connection with any Proceeding by one Party against any other Party, (iv) as necessary in order to permit a Party to prepare and disclose its financial statements in connection with any regulatory filings or tax returns, (v) as necessary for a Party to enforce its rights or perform its obligations under this Agreement or an Ancillary Agreement, (vi) to other Persons in connection with their evaluation of, and negotiating and consummating, a potential strategic transaction, to the extent reasonably necessary in connection therewith, provided an appropriate and customary confidentiality agreement has been entered into with the Person receiving such Confidential Information, and (vii) in the case of Jointly Owned Confidential Information, for any and all uses and purposes, subject to any agreement between the Parties that jointly own such Confidential Information, but in the absence of any such agreement, disclosure of Jointly Owned Confidential Information to a Third Party shall be subject to either obtaining the consent of the joint owner or obtaining a written agreement in customary form and scope from the Third Party to maintain the confidentiality of such Confidential Information. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made by a Third Party pursuant to clause (ii), (iii), or (v) of this Section, each Party, as applicable, shall promptly notify (to the extent permissible by law) the Party to whom the Confidential Information belongs of the existence of such request, demand or disclosure requirement and shall provide such affected Party a reasonable opportunity to seek an appropriate protective order or other remedy, which such Party will cooperate in obtaining to the extent reasonably practicable. In the event that such appropriate protective order or other remedy is not obtained, the Party which is subject to the disclosure requirement shall furnish only that portion of the Confidential Information that is required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded such Confidential Information. As used in this Agreement, Confidential Information includes the following information: know-how; experiments and experimental design; formulas; processes; product ideas; inventions (whether patentable or not); unpublished patent applications; trade secrets; improvements; copyrightable materials; schematics; non-clinical and clinical data; product and service pricing; personnel and compensation; customers; business opportunity; laboratory note books; laboratory analysis and reports; protocols and techniques; procedure and operating manuals; studies; contracts and agreements; records; systems and programs; computer source code; business, financial, and product development plans, forecasts, and strategies; financial information; income tax returns; communications to or from attorneys and attorney work product; communications to and from accountants and accountant work papers; communications to and from Government Bodies; information subject to a confidentiality or non-disclosure agreement benefiting a Third Party. “Confidential Information” shall not include any information which: (w) is in the public domain at the time of disclosure or which thereafter enters the public domain through no improper action or inaction by the receiving Party; (x) was in the possession of or known by the receiving Party prior to receipt from the disclosing Party as shown by the receiving Party’s files and records in existence prior to the time of disclosure; (y) was disclosed to the receiving Party or any by a third party who did not receive the information from the disclosing Party under restriction prohibiting disclosure to the receiving Party; or (z) was independently developed by the receiving Party without the use of Confidential Information provided by the disclosing Party.
(b) Each Party acknowledges that it may have in its possession confidential or proprietary information of Third Parties that was received under confidentiality or non-disclosure agreements with such Third Party. Each Party shall comply, and shall cause its officers, employees, agents, consultants and advisors (or potential buyers) to comply, with all terms and conditions of any such Third Party agreements, with respect to any confidential and proprietary information of Third Parties to which it has had access.
11 |
(c) Notwithstanding anything to the contrary set forth herein, (i) the Parties shall be deemed to have satisfied their obligations hereunder with respect to Confidential information if they exercise at least the same degree of care that applies to their respective confidential and proprietary information pursuant to policies in effect as of the Closing and (ii) confidentiality obligations provided for in any Contract between each Party and its employees shall remain in full force and effect. Notwithstanding anything to the contrary set forth herein, Confidential Information of any Party in the possession of and used by any other Party (the “Other Party”) as of the Closing Date may continue to be used by such Other Party in and only in the operation of the AquaMed Business (if the Other Party is AquaMed) or the Alliqua Business (if the Other Party is a Alliqua Group Member); provided that such Confidential information may only be shared with additional officers, employees, agents, consultants and advisors of such Other Party on a need-to-know basis exclusively with regard to such permitted use; provided, further, that such Confidential information may be used only so long as the Confidential information is maintained in confidence and not disclosed in violation of this Section 6.3.
(d) The Parties agree that irreparable damage may occur in the event that the provisions of this Section 6.3 are not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to seek an injunction to enforce specifically the terms and provisions of this Section 6.3 in any court having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.
(e) For the avoidance of doubt and notwithstanding any other provision of this Section 6.3, (i) the disclosure and sharing of Privileged Information shall be governed solely by Section 6.4, and (ii) information that is subject to any confidentiality provision or other disclosure restriction in any Ancillary Agreement shall be governed by the terms of such Ancillary Agreement.
(f) The rights and obligations of Alliqua under this Section 6.3 shall apply as well to each Alliqua Group Member with respect to such Alliqua Group Member’s own Confidential Information and Confidential Information disclosed to it by AquaMed. The rights and obligations of AquaMed under this Section 6.3 shall apply to AquaMed and its subsidiaries with respect to AquaMed ’s own Confidential Information and any Confidential Information disclosed to it by any Alliqua Group Member.
6.4 Privilege Matters .
(a) Pre-Distribution Services . The Parties recognize that legal and other professional services that have been and will be provided prior to the Distribution have been and will be rendered for the collective benefit of each of the Alliqua Group Members and AquaMed, and that each of the Alliqua Group Members and AquaMed should be deemed to be the client with respect to such pre-Distribution services for the purposes of asserting all privileges, immunities, or other protections from disclosure which may be asserted under applicable law, including attorney-client privilege, business strategy privilege, joint defense privilege, common interest privilege, and protection under the work-product doctrine (“Privilege”). The Parties shall have a shared Privilege with respect to all information subject to Privilege (“Privileged Information”) which relates to such pre-Distribution services. For the avoidance of doubt, Privileged Information within the scope of this Section 6.4 includes, but is not limited to, services rendered by legal counsel retained or employed by any Alliqua Group Member or AquaMed, including outside counsel and in-house counsel.
(b) Post-Distribution Services . The Parties recognize that legal and other professional services will be provided following the Distribution to the Alliqua Group Members and to AquaMed. The Parties further recognize that certain of such post-Distribution services will be rendered solely for the benefit of one or more Alliqua Group Members or AquaMed, as the case may be, while other post-Distribution services may be rendered with respect to Proceedings, disputes, or other matters which involve both Alliqua Group Members and AquaMed. With respect to such post-Distribution services and related Privileged Information, the Parties agree as follows:
(i) All Privileged Information relating to any claims, Proceedings, disputes, or other matters which involve both an Alliqua Group Member and AquaMed shall be subject to a shared Privilege among the Alliqua Group Members and AquaMed involved in the claims, Proceedings, disputes, or other matters at issue; and
12 |
(ii) Except as otherwise provided in Section 6.4(b)(i), Privileged Information relating to post-Distribution services provided solely to one or more Alliqua Group Members or AquaMed shall not be deemed shared between the Alliqua Group and AquaMed; provided, that the foregoing shall not be construed or interpreted to restrict the right or authority of the Alliqua Group Members and AquaMed (x) to enter into any further agreement, not otherwise inconsistent with the terms of this Agreement, concerning the sharing of Privileged Information or (y) otherwise to share Privileged Information without waiving any Privilege which could be asserted under applicable law.
(c) Further Agreements Regarding Privileged Information . The Parties agree as follows regarding all Privileged Information with respect to which the Alliqua Group and AquaMed shall have a shared Privilege under Section 6.4(a) or 6.4(b):
(i) Subject to Section 6.4(c)(iii) and 6.4(c)(iv), no Alliqua Group Member may waive, nor allege or purport to waive, any Privilege which could be asserted under any applicable law, and in which AquaMed has a shared Privilege, without the written consent of AquaMed, which shall not be unreasonably withheld or delayed, and AquaMed may not waive, nor allege or purport to waive, any Privilege which could be asserted under any applicable law, and in which any Alliqua Group Member has a shared Privilege, without the written consent of such Alliqua Group Member, which shall not be unreasonably withheld or delayed. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within fifteen (15) days after a written request seeking such consent;
(ii) If a dispute arises regarding whether a Privilege should be waived to protect or advance the interest of any Party or any of its subsidiaries, each Party agrees that it shall, and it shall cause its subsidiary to, negotiate in good faith to minimize any prejudice to the rights of the other Party, and shall not unreasonably withhold consent to any request for waiver by the other Party. Each Party specifically agrees that it shall not withhold consent to waive a Privilege for any purpose except to protect the legitimate interests of itself or any of its subsidiaries;
(iii) If, within fifteen (15) days of receipt of written objection to a requested waiver, the Parties have not succeeded in negotiating a resolution to any dispute regarding whether a Privilege should be waived, and the requesting Party determines that a Privilege should nonetheless be waived to protect or advance the interest of itself or any of its subsidiaries, the requesting Party shall provide the objecting Party fifteen (15) days written notice prior to the grant of such waiver. Each Party agrees that failure within fifteen (15) days of receipt of such notice to commence Proceedings in accordance with Section 6.3 to enjoin such disclosure under applicable Law shall be deemed full and effective consent to such disclosure, and the Party’s agree that if any Proceeding to resolve any such dispute is commenced any such Privilege shall not be waived by either Party until the final determination of such dispute; and
(iv) In the event of any Proceeding or dispute between any Alliqua Group Member and AquaMed, other than to resolve a Privilege waiver under this Section 6.4, any Alliqua Group Member and AquaMed may waive a Privilege in which there is a shared Privilege, without obtaining the consent of the other holder of the shared Privilege; provided, that such waiver of a shared Privilege shall be effective only as to the use of Privileged Information with respect to the Proceeding or dispute between the Alliqua Group Member(s) and AquaMed, and shall not operate as a waiver of the shared Privilege with respect to Third Parties.
6.5 Non-Solicitation.
(a) AquaMed shall not, during the Restricted Period, whether for its own account or for the account of any Person, solicit, endeavor to entice away from any Alliqua Group Member, or otherwise interfere with the relationship of any of Alliqua Group Member with, any Person that, during the Restricted Period, is employed by or otherwise engaged to perform services for any Alliqua Group Member.
(b) Neither Alliqua nor any other Alliqua Group Member, shall, during the Restricted Period, whether for its own account or for the account of any Person, solicit, endeavor to entice away from AquaMed, or otherwise interfere with the relationship of AquaMed with, any Person that, during the Restricted Period, is employed by AquaMed.
13 |
6.6 Employee Matters.
(a) Schedule 6.6(a) identifies those employees of Alliqua that it is anticipated will commence working for AquaMed as of the Closing (the “ Continuing Employees ”). As of the Closing, the salary, wages, bonus and/or incentive compensation, and other employee benefit plans, programs, and arrangements with respect to the Continuing Employees shall be the sole responsibility of AquaMed, on such terms, if any, that AquaMed may determine to provide to such Continuing Employees. On and after the Closing Date, Alliqua shall, or shall cause one or more Alliqua Group Members to, assume or retain, and Alliqua hereby agrees to (or to cause an Alliqua Group Member to) pay, perform, fulfill and discharge, in due course in full (i) all Liabilities under all Alliqua Benefit Plans, (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all of the employees and former employees to the extent arising in connection with or as a result of employment with or the performance of services for any Alliqua Group Member before, on or after the Closing Date, and (iii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all Alliqua Group employees and former employees to the extent arising in connection with or as a result of employment with or the performance of services for AquaMed before the Closing Date, and notwithstanding anything in this Agreement to the contrary, Liabilities arising in connection with any claims by any service provider to any Alliqua Group Member for severance or other rights on account of a change in control in connection with the transactions contemplated by the this Agreement.
(b) With respect to each employee benefit plan maintained by AquaMed or a subsidiary of AquaMed in which the Continuing Employees become eligible to participate on or after the Closing, the Continuing Employees shall be given credit for all service with Alliqua for purposes of determining eligibility to participate and vesting (excluding with respect to any equity compensation awards) to the same extent as if such services had been rendered to AquaMed.
(c) Notwithstanding the foregoing, this Section 6.6 is not intended to and shall not (i) create any third party rights, (ii) require AquaMed or its subsidiaries to continue any employee benefit plan, program, policy agreement or arrangement beyond the time when it otherwise lawfully could be terminated or modified, or (iii) provide any Continuing Employee with any rights to continued employment, severance pay or similar benefits following any termination of employment.
(d) Effective as of the Closing Date: (i) AquaMed shall cease to be a participating company in any Alliqua Benefit Plan; and (ii) except as required by applicable Legal Requirements, each AquaMed Employee shall cease to participate in, be covered by, accrue benefits under, or be eligible to contribute to any Alliqua Benefit Plan; provided, that Alliqua shall be responsible for satisfying obligations under Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code, to provide continuation coverage and notice of such coverage to employees of AquaMed and their eligible dependents who suffer a “qualifying event” on or before the Closing Date, including the closing of the transactions contemplated by this Agreement.
(e) As soon as reasonably practicable following the Closing Date, Alliqua (acting directly or through an Affiliate thereof) shall cash out each AquaMed Employee for the value of accrued but unused vacation time and other time-off benefits as such AquaMed Employee had with the Alliqua Group as of immediately before the Closing Date.
(f) With respect to claims for workers’ compensation, (a) AquaMed shall be responsible for claims in respect of AquaMed Employees, only if the incident giving rise to such claim occurs after the Closing Date, and (b) Alliqua shall be responsible for all claims in respect of Alliqua Group Employees and Former Employees and AquaMed Employees, if the incident giving rise to such claim occurs or occurred on or prior to the Closing Date, or is asserted by or on behalf of former employees who terminated employment with the Alliqua Group and/or AquaMed before the Closing Date.
14 |
(g) Alliqua shall cause the Alliqua 401(k) Plan to provide that effective on the Closing Date, all account balances of AquaMed Employees under the Alliqua 401(k) Plan shall be fully vested and nonforfeitable. Not later than sixty (60) days following the Closing Date (or such later time as mutually agreed by the Parties), Alliqua shall cause the Alliqua 401(k) Plan to make distributions available to AquaMed Employees in connection with the separation of such AquaMed Employees from service to any Alliqua Group Member; provided that Alliqua shall cause the Alliqua 401(k) Plan to continue to accept repayment of outstanding participant loans by AquaMed Employees following the Closing Date until such loans are repaid in full, or until the participant elects to receive a distribution of such participant’s account balance under the Plan, whichever is earlier. On and after the Closing Date, (i) the Alliqua 401(k) Plan shall continue to be responsible for Liabilities in respect of all participants under the Alliqua 401(k) Plan; provided that AquaMed Employees shall cease to be eligible to contribute to, or otherwise accrue additional benefits under, the Alliqua 401(k) Plan effective as of the Closing Date.
(h) With respect to employee welfare and fringe benefits that are provided through the purchase of insurance, Alliqua shall cause the Alliqua Welfare Plans to fully perform, pay and discharge all claims of AquaMed Employees that are incurred prior to the Closing Date. Except as otherwise provided in Section 6.6(d), Alliqua shall not be responsible to perform, pay or discharge claims of AquaMed Employees that are incurred on and after the Closing Date.
(i) Notwithstanding anything in this Agreement to the contrary, the Parties agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided herein to ensure that the treatment of any award or other compensation does not cause the imposition of a tax under Section 409A of the Code.
Article 7
TERMINATION
7.1 Termination Events. This Agreement may be terminated prior to the Closing:
(a) by the mutual written consent of Alliqua and AquaMed;
(b) by Alliqua if the Closing has not taken place on or before February 15, 2019 (other than as a result of any failure on the part of Alliqua to comply with or perform its covenants and obligations under this Agreement);
(c) by AquaMed if the Closing has not taken place on or before February 15, 2019 (other than as a result of any failure on the part of AquaMed to comply with or perform any covenant or obligation set forth in this Agreement);
(d) by either Alliqua or AquaMed, if a court of competent jurisdiction or other Governmental Body shall have issued an Order, or shall have taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the Contribution or the Distribution; provided, that a Party shall not be permitted to terminate this Agreement pursuant to this Section 7.1(d) if the issuance of such Order or the taking of such action is attributable to the failure of such Party to perform in any material respect any covenant or obligation in this Agreement required to be performed by such Party at or prior to the Closing;
(e) by Alliqua, if any of AquaMed’s covenants or representations and warranties contained in this Agreement shall have been breached in any material respect, if (i) such breach would cause any of the conditions in ARTICLE 2 or ARTICLE 3 not to be satisfied; and (ii) such breach (if curable) is not cured by AquaMed within thirty (30) calendar days after receiving written notice from Alliqua of such breach;
(f) by AquaMed if any of Alliqua’s covenants or representations and warranties contained in this Agreement shall have been breached in any material respect, in either case if (i) such inaccuracy or breach would cause the conditions in ARTICLE 2 or ARTICLE 3 not to be satisfied; and (ii) such inaccuracy or breach (if curable) is not cured by Alliqua within thirty (30) calendar days after receiving written notice from AquaMed of such inaccuracy or breach;
7.2 Termination Procedures. If Alliqua wishes to terminate this Agreement pursuant to and in accordance with Section 7.1, Alliqua shall deliver to AquaMed a written notice stating that Alliqua is terminating this Agreement and setting forth a description of the basis on which Alliqua is terminating this Agreement. If AquaMed wishes to terminate this Agreement pursuant to and in accordance with Section 7.1, AquaMed shall deliver to Alliqua a written notice stating that AquaMed s terminating this Agreement and setting forth a description of the basis on which AquaMed is terminating this Agreement.
15 |
7.3 Effect of Termination. If this Agreement is terminated pursuant to Section 7.1, all further obligations of the parties under this Agreement shall terminate; provided, however, that no Party shall be relieved of any obligation or Liability arising from any willful breach by such Party of any covenant contained in this Agreement.
Article 8
INDEMNIFICATION
8.1 Indemnification by Alliqua.
(a) From and after the Closing Date (but subject to the limitations set forth in this ARTICLE 8), Alliqua shall indemnify and hold harmless each of the AquaMed Indemnitees against, and shall reimburse each of the AquaMed Indemnitees for, any Damages (regardless of whether or not such Damages relate to a Third Party claim) that are incurred or suffered by any of the AquaMed Indemnitees based upon, arising out of, with respect to, or by reason of:
(i) any breach of any covenant or obligation or representation of Alliqua contained in this Agreement or in any Ancillary Agreement; or
(ii) the Retained Alliqua Liabilities.
8.2 Indemnification by AquaMed.
(a) From and after the Closing Date (but subject to the limitations set forth in this ARTICLE 8), AquaMed shall indemnify and hold harmless each of the Alliqua Indemnitees against, and shall reimburse each of the Alliqua Indemnitees for, any Damages (regardless of whether or not such Damages relate to a Third Party claim) that are incurred or suffered by any of the Alliqua Indemnitees based upon, arising out of, with respect to, or by reason of:
(i) any breach of any covenant or obligation or representation of AquaMed contained in this Agreement or in any Ancillary Agreement;
(ii) the Alliqua Contributed Contracts, whether arising prior to, on, or after the Closing Date;
(iii) ownership, use, or operation of the Contributed Alliqua Assets after the Closing; Date;
(iv) the AquaMed Liabilities; or
(v) the conduct of the AquaMed Business prior to, at or after the Closing.
8.3 Procedures.
(a) Promptly after any Indemnitee becomes aware of any event or circumstance that would reasonably be expected to constitute or give rise to any claim for indemnification pursuant to this ARTICLE 8, such Indemnitee shall take all commercially reasonable efforts to mitigate and minimize all Damages that may result from such event or circumstance (it being understood that nothing in this Section 8.3 shall limit such Indemnitee’s right to seek indemnification hereunder with respect to any costs of such mitigation).
(b) Each Indemnitee shall use commercially reasonable efforts to collect any amounts available under insurance coverage for any Damages payable under this ARTICLE 8. The amount of any Damages for which indemnification is provided under this ARTICLE 8 to an Indemnitee shall be net of any amounts recovered or recoverable by such Indemnitee under insurance policies with respect to such Damages, but shall also include (i) reasonable out-of-pocket costs and expenses relating to collection under such insurance policies; and (ii) any deductibles under insurance policies to the extent paid or by which insurance proceeds were reduced and any increases in premiums.
16 |
(c) Subject to any injunction or other equitable remedies that may be available to the Alliqua Indemnitees or the AquaMed Indemnitees, from and after the Closing Date, the Indemnitors shall not be liable or responsible in any manner whatsoever (whether for indemnification or otherwise) to the Indemnitees with respect to the matters contemplated by this Agreement except as expressly provided in this ARTICLE 8 and in accordance with the provisions of Section 9.11, and, subject to the foregoing, this ARTICLE 8 provides the exclusive remedy and cause of action of Indemnitees against any Indemnitor with respect to any matter arising out of or in connection with this Agreement; provided, however, that no claim against an Indemnitor for fraud by such Indemnitor shall be subject to the limitations of this Section 8.3.
8.4 Defense of Third-Party Claims. In the event of the assertion of any claim or commencement of any Proceeding by any Person other than a Alliqua Group Member or AquaMed with respect to which any Indemnitee may be entitled to indemnification pursuant to this ARTICLE 8, the Indemnitor shall have the right, at its election and expense, to proceed with the defense of such Proceeding on its own with counsel reasonably satisfactory to the Indemnitee(s); provided, however, that the Indemnitor shall not settle or compromise any such Proceeding without the prior written consent of the Indemnitee(s), which consent shall not be unreasonably withheld, conditioned or delayed. The Indemnitee(s) shall give the Indemnitor prompt written notice after the Indemnitee becomes aware of the commencement of any such Proceeding against the Indemnitee(s); provided, however, any failure on the part of the Indemnitee(s) to so notify the Indemnitor shall not limit any of the obligations of the Indemnitor, or limit any of the rights of the Indemnitee(s), under this ARTICLE 8, except to the extent such failure prejudices the defense of such Proceeding. If the Indemnitor elects to assume and control the defense of any such Proceeding: (a) at the request of the Indemnitor, the Indemnitee(s) shall make available to the Indemnitor any documents and materials in the possession of the Indemnitee(s) that may be necessary or useful to the defense of such Proceeding; (b) the Indemnitor shall keep the Indemnitee(s) reasonably informed of all material developments relating to such Proceeding; and (c) the Indemnitee(s) shall have the right to participate in the defense of such Proceeding at the Indemnitee’s own expense. If the Indemnitor does not elect to proceed with the defense of any such Proceeding, or fails to so proceed in a timely manner, the Indemnitee(s) may proceed with the defense of such Proceeding with counsel reasonably satisfactory to the Indemnitor and at Indemnitors’ expense; provided, however, that the Indemnitee(s) may not settle or compromise any such Proceeding without the prior written consent of the Indemnitor which consent may not be unreasonably withheld, conditioned or delayed.
8.5 Ancillary Agreements. If an Ancillary Agreement contains provisions for indemnification of any Party thereto, any claim for indemnification arising under that Ancillary Agreement or for breach of the Ancillary Agreement shall be governed by the Ancillary Agreement and not by this ARTICLE 8.
Article 9
MISCELLANEOUS PROVISIONS
9.1 Tax Matters. On the Closing Date, Alliqua and AquaMed shall enter into the Tax Matters Agreement.
9.2 Insurance Matters .
(a) The parties intend that the Contributed Alliqua Assets shall include all rights that AqauMed may have as of the Closing Date as a subsidiary or division of Alliqua prior to the Closing Date under any policy of insurance issued to Alliqua by any insurance carrier prior to the Closing Date, including any rights AquaMed may have, as an insured or additional named insured, subsidiary or division, to avail itself, subject to Section 9.2(b), of any such policy of insurance as in effect prior to the Closing Date. In addition, prior to the Closing Date, Alliqua will, at AquaMed’s expense, provide reasonable assistance to AquaMed in connection with AquaMed’s procurement of its own insurance such that the retroactive date of any claims made insurance plicy acquired by AquaMed is the same retroactive date that applies to any Alliqua insurance policy under which AquaMed is an additional insured.
17 |
(b) With respect to any loss, Liability or damage relating to resulting from or arising out of Alliqua’s ownership or conduct of the AquaMed Business on or prior to the Closing Date for which Alliqua would be entitled to assert a claim for recovery under any policy of insurance, including any director’s and officer’s liability insurance, maintained by or for the benefit of Alliqua in respect of the AquaMed Business, at the request and sole cost and expense of AquaMed, Alliqua will use commercially reasonable efforts to assert, or to assist AquaMed to assert, one or more claims under such insurance covering such loss, Liability or damage if AquaMed is not itself entitled to assert such claim but Alliqua is so entitled.
9.3 Independent Investigation; Sole Representations. AquaMed acknowledges that has conducted their own independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations, financial condition, technology and prospects of the AquaMed Business and Contributed Alliqua Assets. AquaMed acknowledges that it and its Representatives have been provided adequate access to Alliqua Group personnel, properties, premises and records pertaining to the Contributed Alliqua Assets and Alliqua Assumed Liabilities for such purpose. In entering into this Agreement, AquaMed acknowledges that it has relied upon the aforementioned investigation, review and analysis and on the terms hereof. AquaMed hereby agrees and acknowledges that: (a) none of the Alliqua Group Members nor any of their respective Affiliates or Representatives, make or have made, and neither AquaMed nor AquaMed is relying on, any representation or warranty, express or implied, at law or in equity, with respect to the Contributed Alliqua Assets, the Assumed Alliqua Liabilities, including as to: (i) merchantability or fitness of any Contributed Alliqua Asset for any particular use or purpose; (ii) the operation or use of any Alliqua IP Rights or other technology included in the Contributed Alliqua Assets; (iii) the probable success or profitability of AquaMed or AquaMed; or (iv) any projections, reports or other documents or information relating to the Contributed Alliqua Assets; and (b) other than the indemnification obligations of Alliqua set forth in ARTICLE 8, no Alliqua Group Member or any of their respective Representatives will have or be subject to any Liability or indemnification obligation to AquaMed or to any other Person resulting from the delivery to AquaMed or its respective Representatives of, or their use of, any information relating to the Contributed Alliqua Assets, the Assumed Alliqua Liabilities, including any information, documents or material made available orally or in writing, in any “data room,” management presentations, functional “break-out” discussions, responses to questions submitted on behalf of AquaMed, or in any other form in expectation of the transactions contemplated by this Agreement, except for fraud or intentional misrepresentation.
9.4 Publicity. Each of AquaMed and Alliqua may issue an initial press release concerning this Agreement and the Distribution that is approved in advance by such other Party. Thereafter, Alliqua and AquaMed shall consult with each other before issuing any press release or otherwise making any public statements or filings with respect to this Agreement, the Distribution, or any of the other transactions contemplated by this Agreement, but AquaMed and the Alliqua Group Members each shall not issue any press release or make any public statement or filing relating to this Agreement, the Distribution, or the other transactions contemplated by this Agreement without the prior written consent of the other, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that the foregoing limitations shall not apply to any disclosure of any information concerning this Agreement, the Distribution, or the transactions contemplated by this Agreement: (i) by Alliqua which Alliqua deems appropriate in its reasonable judgment, in light of its status as a company having reporting obligations under Section 13 of the Exchange Act and that offers its securities from time to time in public offerings and private placements under the Securities Act, including in registration statements, prospectuses, private placement memoranda under the Securities Act and reports filed with the SEC under the Exchange Act, to securities analysts and institutional investors and in press interviews; (ii) by AquaMed after the Distribution which AquaMed deems appropriate in its reasonable judgment, in light of its status as a company having reporting obligations under Section 13 of the Exchange Act and that offers its securities from time to time in public offerings and private placements under the Securities Act, including in registration statements, prospectuses, private placement memoranda under the Securities Act and reports filed with the SEC under the Exchange Act, to securities analysts and institutional investors and in press interviews; or (iii) in connection with any dispute between the Parties regarding this Agreement or any Ancillary Agreement or the transactions contemplated thereby.
18 |
9.5 Fees & Expenses.
(a) Except as otherwise specifically set forth in this Agreement, AquaMed shall bear and pay all fees, costs and expenses that have been incurred or that are in the future incurred by, on behalf of or for the benefit of AquaMed in connection with the Distribution, including but not limited to preparation and filing of the Form 10, attorneys and accounting fees and expenses, expenses of obtaining any letter ruling from the Internal Revenue Services, all transfer agent and Distribution Agent fees, all stock exchange or application, listing or similar fees, and all costs and expenses related to registration or exemption from registration of the Distribution under the securities laws of states and foreign jurisdictions (collectively, the “AquaMed Transaction Expenses”), all of which (except for up to $100,000) shall be paid in full prior to the closing of the AquaMed Merger. No Alliqua Group Member shall have any liability to any broker, finder, investment banker, or other advisor retained or engaged by AquaMed or any subsidiary thereof or any of their respective Representatives in connection with this Agreement or any of the transactions contemplated by this Agreement (“AquaMed Agent”), and AquaMed shall indemnify and hold Alliqua and AquaMed harmless from any claims by any AquaMed Agent for any fees or compensation.
(b) Alliqua shall bear and pay all fees, costs and expenses that have been incurred prior to or at the Closing, incurred by, on behalf or for the benefit of each Alliqua Group Member in connection with: (i) the negotiation, preparation and review of this Agreement and the Ancillary Agreements; and (ii) the preparation and submission of any filing or notice required to be made or given by any Alliqua Group Member in connection with any of the transactions contemplated by this Agreement, and the obtaining of any Consent required to be obtained in connection the contribution of the Contributed Alliqua Assets, including the assignment of Alliqua Contributed Contracts (collectively, the “Alliqua Transaction Expenses”). AquaMed shall have no liability to any broker, finder, investment banker, or other advisor retained or engaged by any Alliqua Group Member or any of their respective Representatives in connection with the transactions contemplated by this Agreement (“Alliqua Agent”), and Alliqua indemnify and hold AquaMed harmless from any claims by any Alliqua Agent for any fees or compensation.
9.6 Attorneys ’ Fees. If any Proceeding relating to this Agreement or any of the Ancillary Agreements or the enforcement of any provision of any of this Agreement or any of the Ancillary Agreements is brought against any Party to this Agreement, the prevailing Party shall be entitled to recover reasonable attorneys’ fees, costs and disbursements (in addition to any other relief to which the prevailing Party may be entitled).
9.7 Notices. Any notice or other communication required or permitted to be delivered to any Party under this Agreement shall be in writing and shall be deemed properly delivered, given and received: (a) at the time and date of delivery, when delivered by hand; (b) the next Business Day if sent by next Business Day courier service; (c) at the time and date of delivery, if sent by facsimile or electronic transmission before 5:00 p.m. in New York City, New York, when the date and time of transmission is confirmed by the transmitting equipment; (d) on the next Business Day, if sent by facsimile or electronic transmission after 5:00 p.m. in New York, New York, when the date and time of transmission is confirmed by the transmitting equipment; in any case to the address or facsimile telephone number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto):
If to AquaMed:
2150 Cabot Blvd. West, Suite B
Langhorne, PA 19047
Attention: President
with a copy (which shall not constitute notice) to:
Kaufman & Associates, LLC
190 Motor Parkway, Suite 202
Hauppauge, New York 11788
Attention: Neil M. Kaufman
Facsimile: (631) 410-1007
nkaufman@kaufman-associates.com
If to Alliqua:
2150 Cabot Blvd. West, Suite B
Langhorne, PA 19047
Attention: David Johnson
19 |
9.8 Headings. The headings and titles of Articles, Sections and paragraphs contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement, and shall not be referred to in connection with the construction or interpretation of this Agreement.
9.9 Counterparts and Exchanges by Electronic Transmission or Facsimile. This Agreement may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic transmission or facsimile shall be sufficient to bind the parties to the terms and conditions of this Agreement.
9.10 Governing Law; Venue.
(a) This Agreement and all claims or causes of action (whether in contract or tort or otherwise) based upon, arising out of or related to this Agreement or the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflict of laws principles that would result in the application of any law other than the laws of the State of Delaware. Each of the parties hereto: (i) consents to and submits to the exclusive jurisdiction and venue of the courts of the State of Delaware or the United States District Court for the District of Delaware, in any Proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement; (ii) agrees that, except as provided for in Section 9.10(b), all claims in respect of any such Proceeding shall be heard and determined in any such court; (iii) shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; and (iv) shall not bring any Proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any other court. Each of Alliqua and AquaMed hereby agrees that service of any process, summons, notice or document in accordance with the provisions of Section 9.7 shall be effective service of process for any Proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby.
(b) Notwithstanding anything to the contrary contained in this Agreement, any claim for indemnification pursuant to Article 8 shall be brought and resolved exclusively in accordance with Article 8; provided, however, that nothing in this Section 9.10(b) shall prevent any party from seeking injunctive and other equitable relief from a court of competent jurisdiction in compliance with Section 9.10(a).
9.11 Successors and Assigns; Parties in Interest.
(a) This Agreement shall be binding upon AquaMed and its successors and assigns (if any), and Alliqua and its successors and assigns (if any). This Agreement shall inure to the benefit of AquaMed, Alliqua, the Indemnitees, and the respective successors and assigns (if any) of the foregoing.
(b) Neither Alliqua nor AquaMed may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of the other Party. Any attempted assignment or delegation not made in compliance with this Section 9.11 shall be void.
(c) Except with respect to the Indemnitees and the provisions of ARTICLE 8 none of the provisions of this Agreement is intended to provide any rights or remedies to any Person other than the Parties to this Agreement and their respective successors and assigns (if any). After the Closing, the Indemnitees shall be third-party beneficiaries of, and entitled to enforce, ARTICLE 8, but no consent of the Indemnitees, or any of them, shall be required to amend any provision of the Agreement, including the provisions of ARTICLE 8 either before or after Closing. Without limiting the generality of the foregoing, no creditor of AquaMed or of any Affiliate of AquaMed, or of Alliqua or any of Affiliate of Alliqua, shall have any rights under this Agreement or any of the Ancillary Agreements.
20 |
9.12 Specific Performance. Alliqua and AquaMed acknowledge and agree that irreparable damage would occur in the event any of the provisions of this Agreement required to be performed by any of the Parties were not performed in accordance with their specific terms or were otherwise breached, and that monetary damages, even if available, would not be an adequate remedy therefor. Accordingly, in the event of any breach or threatened breach by any Party of any covenant or obligation contained in this Agreement, Alliqua or AquaMed shall be entitled to obtain, without proof of actual damages (and in addition to any other remedy to which such party may be entitled at law or in equity): (a) a decree or order of specific performance to enforce the observance and performance of such covenant or obligation; and (b) an injunction restraining such breach or threatened breach. Alliqua and AquaMed each hereby waives any requirement for the securing or posting of any bond in connection with any such remedy.
9.13 Waiver. No failure on the part of any party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. No Party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.
9.14 Amendments. This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of Alliqua and AquaMed.
9.15 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the Parties agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, and this Agreement shall be enforceable as so modified.
9.16 Entire Agreement. This Agreement and the Ancillary Agreements set forth the entire understanding of the parties relating to the subject matter hereof and thereof and supersede all prior agreements and understandings among or between any of the Parties relating to the subject matter hereof and thereof.
9.17 Construction.
(a) For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders.
(b) The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words “include” and “including” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”
(d) Except as otherwise indicated, all references in this Agreement to “Articles,” “Sections” and “Exhibits” are intended to refer to Articles and Sections of this Agreement and Exhibits to this Agreement.
[Signature Page to the Asset Contribution Agreement Follows]
21 |
The parties to this Agreement have caused this Agreement to be executed and delivered as of the date first written above.
Alliqua BioMedical, Inc. | ||
a Delaware Corporation | ||
By: | / | |
Title: | Chief Executive Officer | |
AquaMed Technologies, Inc. | ||
a Delaware Corporation | ||
By: | ||
Title: | Chief Executive Officer |
[Signature Page to the Asset Contribution Agreement]
22 |
Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A ):
Access Period shall mean the period of time commencing on the Closing Date and ending on the earliest date by which each Party has filed its Annual Report on Form 10-K with the SEC containing the report of its registered independent public accountant as to the audit of financial statements and control over internal financial reporting for the earlier of the fiscal year during which the Distribution occurs or the fiscal year during which Alliqua ceases to consolidate the financial statements of AquaMed with those of Alliqua for financial reporting purposes
Affiliate shall mean with respect to any Person, any other Person that as of the date of the Agreement or as of any subsequent date, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person.
Agreement shall mean the Asset Contribution and Separation Agreement to which this Exhibit A is attached (including the Schedules and all other attachments and exhibits thereto), as it may be amended from time to time.
Alliqua shall have the meaning set forth in the preamble to the Agreement.
Alliqua 401(k) Plan shall mean the Alliqua, Inc. 401(k) Profit Sharing Plan and Trust.
Alliqua Agent shall have the meaning set forth in Section 9.5(b).
Alliqua Benefit Plan shall mean any Benefit Plan sponsored, maintained or contributed to by any Alliqua Group Member or any ERISA Affiliate thereof as of the Closing Date.
Alliqua Board shall mean the board of directors of Alliqua.
Alliqua Business shall mean all business activities conducted by Alliqua other than the AquaMed Business.
Alliqua Contributed Contract shall have the meaning set forth in Section 1.1(f).
Alliqua Contributed Equipment shall have the meaning set forth in Section 1.2(d).
Alliqua Contributed Inventory shall have the meaning set forth in Section 1.2 (e).
Alliqua Contributed IP shall have the meaning set forth in Section 1.1(b).
Alliqua Contributed Patents shall have the meaning set forth in Section 1.1(a).
Alliqua Contributed Raw Materials shall have the meaning set forth in Section 1.1(c).
Alliqua Contributed Records shall have the meaning set forth in Section 1.2 (g).
Alliqua Group shall mean all of Alliqua’s subsidiaries and other Entities the financial statements of which are consolidated with those of Alliqua for financial reporting purposes under GAAP, but excluding AquaMed.
Alliqua Group Employee shall mean an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, family, sick leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and other approved leaves) who, as of the Closing Date, is employed by any Alliqua Group Member.
23 |
Alliqua Group Member shall mean any Entity that is part of the Alliqua Group.
Alliqua Indemnitees shall mean any and all of the following Persons: (a) each Alliqua Group Member; (b) each Representative of any Alliqua Group Member, and (c) the respective successors and assigns of the Persons referred to in clauses “(a)” and “(b)” of this sentence.
Alliqua IP Rights shall mean (A) all IP Rights owned exclusively by Alliqua or jointly owned by Alliqua and one or more Third Parties, and (B) all Alliqua Third Party IP Rights.
Alliqua Third Party IP Rights shall mean any IP Right licensed to Alliqua by a Third Party.
Alliqua Transaction Expenses shall have the meaning set forth in Section 9.5 (b).
Alliqua Welfare Plans shall mean those welfare benefit plans (including each “welfare benefit plan” within the meaning of Section 3(1) of ERISA) maintained by any Alliqua Group Member in respect of Alliqua Group Employees or AquaMed Employees as of the Closing Date.
Ancillary Agreements shall mean: (a) the Tax Matters Agreement and (b) the Assumption Agreement.
AquaMed shall have the meaning set forth in the preamble to the Agreement.
AquaMed Agent shall have the meaning set forth in Section 9.5(a).
AquaMed Business shall mean the development and manufacturing of aqueous polymer hydrogels conducted by or on behalf of AquaMed.
AquaMed Common Stock shall mean the common stock of AquaMed, $0.001 par value per share.
AquaMed Employee shall mean an active employee or an employee on approved leave of absence (including maternity, paternity, family, sick leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and other approved leaves) who, as of the Closing Date, is employed by AquaMed.
AquaMed Indemnitees shall mean any and all of the following Persons: (a) AquaMed; (b) each Representative of AquaMed; and (c) the respective successors and assigns of the Persons referred to in clauses “(a)” and “(b)” of this sentence.
AquaMed Merger Agreement shall have the meaning set forth in Section 2.6.
AquaMed Shares shall have the meaning set forth in Section 1.2.
AquaMed Transaction Expenses shall have the meaning set forth in Section 9.5(a).
Assumed Alliqua Liabilities shall have the meaning set forth in Section 1.3(c).
Assumption Agreement shall have the meaning set forth in Section 1.3(c).
Benefit Plan shall mean, with respect to any Alliqua Group Member or AquaMed, each plan, program, arrangement, agreement or commitment that is an employment, consulting, non-competition or deferred compensation agreement, or an executive compensation, bonus, employee pension, profit-sharing, savings, retirement, stock option, stock purchase, stock appreciation right, restricted stock, other equity-based compensation plan, or life, health, hospitalization, disability or accident insurance plan, corporate-owned or key-man life insurance or other employee benefit plan, program, arrangement, agreement or commitment, including any “employee benefit plan” (as defined in Section 3(3) of ERISA), sponsored or maintained by such entity (or to which such entity contributes or is required to contribute).
24 |
Business Day shall mean any day other than a Saturday, Sunday or a day on which banking institutions in California are authorized or obligated by Legal Requirement or executive order to be closed.
Carve-Out Balance Sheet shall mean the carve-out balance sheet of AquaMed attached hereto on Schedule 1.3(a).
Closing Date shall have the meaning set forth in Section 1.6(a).
Closing shall have the meaning set forth in Section 1.6(a).
Code shall mean the Internal Revenue Code of 1986, as amended.
Confidential Information shall have the meaning set forth in Section 6.3(a).
Consent shall mean any approval, consent, permission or authorization (including any Governmental Authorization).
Continuing Employees shall have the meaning set forth in Section 6.6(a).
Contract shall mean any written agreement, contract, instrument, deed, purchase order or legally binding written undertaking.
Contributed Alliqua Assets shall have the meaning set forth in Section 1.1.
Contribution shall mean (a) the contribution of the Contributed Alliqua Assets to AquaMed and (b) the assumption by AquaMed of the AquaMed Liabilities, in exchange for AquaMed Shares.
Copyrights shall mean all copyrights, copyright registrations and applications therefor and copyrightable works, including all rights of authorship, use, publication, reproduction, distribution, performance, preparation of derivative works, transformation, and rights of ownership of copyrightable works and all rights to register and obtain renewals and extensions of registrations.
Damages shall mean any claim, loss, damage, liability, judgment, award, fee or expense (including reasonable expenses of investigation and reasonable attorneys’ experts’, accounting, or advisory fees and expenses in connection with any action, suit or proceeding whether involving a third-party claim or a claim solely between the parties hereto), including any incidental, indirect or consequential damages, losses, liabilities or expenses.
Distribution shall have the meaning set forth in Section 4.1.
Distribution Agent shall mean a transfer agent appointed by Alliqua to provide services at the sole cost and expense of AquaMed in connection with the distribution of the AquaMed Shares to the Record Holders pursuant to the Distribution.
Encumbrance shall mean any lien, pledge, hypothecation, charge, mortgage, easement, encroachment, imperfection of title, title exception, title defect, right of possession, lease, tenancy license, security interest, encumbrance, claim, infringement, interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).
Entity shall mean any corporation, general partnership, limited partnership, limited liability partnership, joint venture, trust, unincorporated association, or other entity.
25 |
ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate shall mean with respect to any Person, each business or entity which is a member of a “controlled group of corporations,” under “common control” or a member of an “affiliated service group” with such Person within the meaning of Sections 414(b), (c) or (m) of the Code, or required to be aggregated with such Person under Section 414(o) of the Code, or under “common control” with such Person within the meaning of Section 4001(a)(14) of ERISA.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
Form 10 shall mean a registration statement on Form 10 for the registration of AquaMed Common Stock under Section 12(b) or Section 12(g) of the Exchange Act, including all exhibits to and amendments thereof, in form and substance as required by the Exchange Act and the rules and regulations of the SEC.
Former Employee shall mean any individual who was employed before the Closing Date by a Alliqua Group Member or AquaMed but who, as of the Closing Date, is not employed by a Alliqua Group Member or AquaMed.
GAAP shall mean 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, that are applicable to the circumstances of the date of determination, consistently applied.
Governmental Authorization shall mean any permit, license, registration, qualification or authorization issued by any Governmental Body.
Governmental Body shall mean any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government, (c) any self-regulatory organizations; or (d) any agency, commission or similar body or authority of any Governmental Body described in “(a),” “(b)” or “(c)”of this sentence.
Indemnitees shall mean the Alliqua Indemnitees, the AquaMed Indemnitees and the AquaMed Indemnitees.
Indemnitor shall mean the Party having an obligation to indemnify an Indemnitee.
Information Statement shall mean an information statement, containing all of the information required by Schedule 14C of the rules and regulations of the SEC under the Exchange Act, included as an exhibit to the Form 10 on the date the Form 10 becomes effective under the Exchange Act.
IP Rights shall mean any and all of the following: Copyrights, Patent Rights, Trademark Rights, trade secrets and other intellectual property rights.
Legal Requirement shall mean any law, statute, rule or regulation issued, enacted or promulgated by any Governmental Body.
Liability shall mean any debt, obligation, duty or liability of any nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability), regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with GAAP and regardless of whether such debt, obligation, duty or liability is immediately due and payable.
Order shall mean any order, judgment, decree, injunction, ruling, decision or award issued by any court, administrative agency or other Governmental Body or any arbitrator or arbitration panel.
26 |
Party shall mean Alliqua or AquaMed, as the context requires.
Patent Rights shall mean all issued patents and pending patent applications in any country or patent-granting region, including all provisional applications, international (PCT) applications, substitutions, continuations, continuations-in-part, divisions, renewals, reissues, re-examinations and extensions thereof.
Permitted Encumbrance shall mean any Encumbrance for current Taxes not yet due and payable, or being contested in good faith by appropriate proceeding and for which reserves have been established in accordance with GAAP; (ii) minor Encumbrances (including zoning restrictions, survey exceptions, easements, rights of way, licenses, rights, appurtenances and similar Encumbrances) that do not (in any case or in the aggregate) materially detract from the value of the assets subject thereto or materially impair the operations of any of the Alliqua Group.
Person shall mean any natural person, Governmental Body, or Entity.
Proceeding shall mean any demand, action, claim, lawsuit, countersuit, arbitration, inquiry, subpoena, case, litigation, or other proceeding or investigation (whether civil, criminal, administrative or investigative) by or before any court or grand jury, any Governmental Body, or any arbitrator or arbitration panel.
Record Date shall mean the date designated by the Alliqua Board for determining holders of Alliqua common shares entitled to receive AquaMed Shares in the Distribution.
Record Holder shall mean each holder of record of Alliqua common shares at the close of business on the Record Date, as determined by the records of Alliqua common share ownership maintained by the Distribution Agent.
Regulatory Filings shall mean, collectively: (a) all applications or filings (including counterparts of any of the foregoing in any country or region) required by any Government Body in connection with the development, manufacture, sales, import, export, or other provision to any Person of a AquaMed product or a Alliqua product; and (b) all supplements and amendments to any of the foregoing.
Representatives shall mean officers, directors, employees, agents, attorneys, accountants and advisors.
Restricted Period shall mean a period of three years commencing on the Closing Date.
Retained Alliqua Liabilities shall have the meaning set forth in Section 1.3(b).
SEC shall mean the United States Securities and Exchange Commission or any successor Governmental Body.
Securities Act shall mean the Securities Act of 1933, as amended from time to time.
Tax shall mean any tax (including any income tax, franchise tax, capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll tax), levy, assessment, tariff, impost, imposition, toll, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), that is, has been or may in the future be imposed, assessed or collected by or under the authority of any Governmental Body.
Third Party shall mean any Person other than (a) a Alliqua Group Member, (b) AquaMed, (c) any Affiliate of any Alliqua Group Member or AquaMed, or (d) any officer or director or any Entity described in (a), (b) or (c) of this sentence.
Trademark Rights shall mean all registered trademarks, unregistered trademarks, applications for registration of trademarks, registered service marks, unregistered service marks, applications for registration of service marks, registered trade names, unregistered trade names and applications for registration of trade names.
27 |
Exhibit 2.4
Final Form
TAX MATTERS AGREEMENT
by and among
ALLIQUA BIOMEDICAL, INC.
and
AQUAMED TECHNOLOGIES, INC.
Dated as of [ · ], 2018
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (this “ Agreement ”), is made and entered into as of [ · ], 2018, by and among Alliqua Biomedical, Inc., a Delaware corporation (“ Alliqua ”) and Aquamed Technologies, Inc., a Delaware corporation (“ Aquamed ”). Each of Alliqua and Aquamed is sometimes referred to herein as a “ Party ” and, collectively, as the “ Parties .”
WHEREAS, Alliqua and its subsidiary Aquamed currently conducts the Alliqua Business and the Aquamed Business;
WHEREAS, the board of directors of Alliqua (“ Alliqua Board ”) has determined that it is appropriate, desirable and in the best interests of Alliqua and its stockholders to separate the Alliqua Business from the Aquamed Business, and to divest the Aquamed Business in the manner contemplated by the Separation Agreement;
WHEREAS, Alliqua and Aquamed have entered into the Separation Agreement pursuant to which (i) Alliqua will contribute the Alliqua Contributed Assets to Aquamed and Aquamed will assume the Aquamed Liabilities in the manner contemplated by the Separation Agreement (the “ Contribution ”); and (iii) Alliqua will distribute, on a pro rata basis, all of the issued and outstanding shares of Aquamed Common Stock owned by Alliqua to the holders of Alliqua Common Stock (the “ Distribution ”) as described therein;
WHEREAS, the Parties wish to provide for the payment of Tax liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes;
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the Parties agree as follows:
Article I.
DEFINITIONS
1.01 General . As used in this Agreement, the following terms shall have the following meanings:
“ Accounting Firm ” has the meaning set forth in Section 7.01 .
“ Adjustment ” means an adjustment of any item of income, gain, loss, deduction, credit or any other item affecting Taxes of a taxpayer pursuant to a Final Determination.
“ Agreement ” has the meaning set forth in the preamble to this Agreement.
“ Ancillary Agreement ” has the meaning set forth in the Separation Agreement.
“ Aquamed Liabilities ” has the meaning set forth in the Separation Agreement.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Alliqua ” has the meaning set forth in the preamble to this Agreement.
“ Alliqua Board ” has the meaning set forth in the Recitals.
“ Alliqua Consolidated Return ” means the U.S. federal Income Tax Return required to be filed by Alliqua as the Common Parent.
“ Alliqua Consolidated Taxes ” means any U.S. federal Income Taxes attributable to any Alliqua Consolidated Return.
“ Alliqua Contributed Assets ” has the meaning set forth in the Separation Agreement.
“ Alliqua Entity ” means any Subsidiary of Alliqua immediately after the Distribution.
“ Alliqua Group ” means, individually or collectively, as the case may be, Alliqua and any Alliqua Entity, excluding any member of the Aquamed Group.
“ Alliqua Taxes ” means, without duplication, (a) any Alliqua Consolidated Taxes and (b) any Taxes imposed on Aquamed or any member of the Aquamed Group under Treasury Regulations Section 1.1502-6 (or any similar provision of other Law) as a result of Aquamed or any such member being or having been included as part of an Alliqua Consolidated Return (or similar consolidated or combined Tax Return under any other provision of Law), in each case (x) other than Aquamed Taxes and (y) including any Taxes resulting from an Adjustment that are not Aquamed Taxes.
“ Alliqua Transaction Taxes ” means any Taxes (a) imposed on Alliqua or Aquamed by reason of the Contribution or the Distribution and (b) payable by reason of the distribution of cash or other property from Aquamed to Alliqua (in each case including Transfer Taxes imposed on such transactions described in (a) and (b)). For the avoidance of doubt, Alliqua Transaction Taxes include, without limitation, Taxes payable by reason of deferred intercompany transactions or excess loss accounts triggered by the Contribution or the Distribution.
“ Aquamed ” has the meaning set forth in the preamble to this Agreement.
“ Aquamed Common Stock ” has the meaning set forth in the Separation Agreement.
“ Aquamed Entity ” means any Subsidiary of Aquamed immediately after the Distribution.
“ Aquamed Group ” means, individually or collectively, as the case may be, Aquamed and any Aquamed Entity.
“ Aquamed Taxes ” means, without duplication, (a) any Taxes of (i) Alliqua or any Subsidiary or former Subsidiary of Alliqua attributable to assets or activities of the Aquamed Business, as determined pursuant to Section 2.09 or (ii) Aquamed or any Subsidiary of Aquamed, (b) any Alliqua Transaction Taxes and (c) any Taxes attributable to an Extraordinary Transaction occurring after the Distribution on the Distribution Date by Aquamed or an Aquamed Entity.
“ Common Parent ” means the “common parent corporation” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code) filing a U.S. federal consolidated Income Tax Return.
“ Contribution ” has the meaning set forth in the recitals to this Agreement.
“ Distribution ” has the meaning set forth in the recitals to this Agreement.
“ Distribution Date ” means the date on which the Distribution is paid.
“ Due Date ” means (a) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and (b) with respect to a payment of Taxes, the date on which such payment is required to be made to the applicable Taxing Authority to avoid the incurrence of interest, penalties and/or additions to Tax.
“ Employee Matters Agreement ” means the Employee Matters Agreement by and between the Parties dated as of the date hereof.
“ Extraordinary Transaction ” means any action that is not in the Ordinary Course of Business, but shall not include (a) any action described in or contemplated by the Separation Agreement or any Ancillary Agreement, (b) any action that is undertaken pursuant to the Distribution, or (c) any compensatory payment or compensatory transfer in respect of services made as a result of, or in connection with, the Distribution (which shall be treated as paid immediately before the Distribution on the Distribution Date).
“ Final Determination ” means the final resolution of liability for any Tax for any taxable period, by or as a result of (a) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed to a court other than the Supreme Court of the United States, (b) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the entire Tax liability for any taxable period, (c) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax, or (d) any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other Taxing Authority.
“ Group ” of which a Person is a member means (i) the Alliqua Group if the Person is a member of the Alliqua Group, and (ii) the Aquamed Group if the Person is a member of the Aquamed Group.
“ Income Tax Return ” means any Tax Return on which Income Taxes are reflected or reported.
“ Income Taxes ” means any net income, net receipts, net profits, excess net profits or similar Taxes based upon, measured by, or calculated with respect to net income.
“ Indemnified Party ” means the Party which is entitled to seek indemnification from the other Party pursuant to the provisions of Article III.
“ Indemnifying Party ” means the Party from which the other Party is entitled to seek indemnification pursuant to the provisions of Article III.
“ Information ” has the meaning set forth in Section 6.01(a) .
“ IRS ” means the U.S. Internal Revenue Service.
“ Law ” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law).
“ Mixed Business Income Tax Return ” means any Mixed Business Tax Return on which Income Taxes are reflected or reported.
“ Mixed Business Tax Return ” means any Tax Return (other than an Alliqua Consolidated Return), including any consolidated, combined or unitary Tax Return, that reflects or reports Taxes that relate to at least one asset or activity that is part of the Alliqua Business, on the one hand, and at least one asset or activity that is part of the Aquamed Business, on the other hand.
“ Ordinary Course of Business ” means an action taken by a Person only if such action is taken in the ordinary course of the normal operations of such Person.
“ Party ” and “ Parties ” have the meaning set forth in the preamble to this Agreement.
“ Past Practice ” means past practices, accounting methods, elections and conventions.
“ Person ” has the meaning set forth in the Separation Agreement.
“ Post-Closing Period ” means any taxable period (or portion thereof) beginning after the Distribution Date, including for the avoidance of doubt, the portion of any Straddle Period beginning on the day after the Distribution Date.
“ Pre-Closing Period ” means any taxable period (or portion thereof) ending on or before the Distribution Date, including for the avoidance of doubt, the portion of any Straddle Period ending at the end of the day on the Distribution Date.
“ Preparing Party ” has the meaning set forth in Section 2.04(a)(ii) .
“ Privilege ” means any privilege that may be asserted under applicable Law, including any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.
“ Refund ” means any refund (or credit in lieu thereof) of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied to other Taxes payable), including any interest paid on or with respect to such refund of Taxes; provided , however , that for purposes of this Agreement, the amount of any Refund required to be paid to another Party shall be reduced by the net amount of any Income Taxes imposed on, related to, or attributable to, the receipt or accrual of such Refund.
“ Retention Period ” has the meaning set forth in Section 6.02 .
“ Reviewing Party ” has the meaning set forth in Section 2.04(a)(ii) .
“ Separation Agreement ” means the Separation and Distribution Agreement by and between Alliqua and Aquamed dated as of the date hereof.
“ Single Business Return ” means any Tax Return including any consolidated, combined or unitary Tax Return, that reflects or reports Tax Items relating only to the Alliqua Business, on the one hand, or the Aquamed Business, on the other (but not both).
“ Single Business Return Preparing Party ” has the meaning set forth in Section 2.04(b) .
“ Single Business Return Reviewing Party ” has the meaning set forth in Section 2.04(b) .
“ Straddle Period ” means any taxable period that begins on or before and ends after the Distribution Date.
“ Subsidiary ” means, with respect to any Person (a) a corporation more than fifty percent (50%) of the voting or capital stock of which is owned, directly or indirectly, by such Person or (b) a limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly, owns more than fifty percent (50%) of the equity economic interests thereof or for which such Person, directly or indirectly, has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body or which such Person otherwise has control (e.g., as the managing partner or managing member of a partnership or limited liability company, as the case may be).
“ Tax ” means (a) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any U.S. federal, state or local or foreign governmental authority, including net income, gross income, gross receipts, excise, real property, personal property, sales, use, service, service use, license, lease, capital stock, transfer, recording, franchise, business organization, occupation, premium, environmental, windfall profits, profits, customs, duties, payroll, wage, withholding, social security, employment, unemployment, insurance, severance, workers compensation, excise, stamp, alternative minimum, estimated, value added, ad valorem, hospitality, accommodations, transient accommodations, unclaimed property, escheat and other taxes, charges, fees, duties, levies, imposts, or other similar assessments in the nature of taxes, (b) any interest, penalties or additions attributable thereto and (c) all liabilities in respect of any items described in clauses (a) or (b) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).
“ Tax Attributes ” means net operating losses, capital losses, tax credit carryovers, earnings and profits, foreign tax credit carryovers, overall foreign losses, previously taxed income, tax bases, separate limitation losses and any other losses, deductions, credits or other comparable items that could affect a Tax liability for a past or future taxable period.
“ Tax Benefit ” means any Refund, credit, or other reduction in Tax payments otherwise required to be made to a Taxing Authority, including for the avoidance of doubt, any actual Tax savings if, as and when realized arising from a step-up in Tax basis or an increase in a Tax Attribute.
“ Tax Cost ” means any increase in Tax payments otherwise required to be made to a Taxing Authority (or any reduction in any Refund otherwise receivable from any Taxing Authority).
“ Tax Group ” means the members of a consolidated, combined, unitary or other tax group (determined under applicable U.S., State or foreign Income Tax law) which includes Alliqua or Aquamed, as the context requires, but for the avoidance of doubt, (i) Alliqua’s Tax Group does not include any members of the Aquamed Group and (ii) Aquamed’s Tax Group does not include any members of the Alliqua Group.
“ Tax Item ” means any item of income, gain, loss, deduction, credit, recapture of credit or any other item which increases or decreases Taxes paid or payable.
“ Tax Matter ” has the meaning set forth in Section 6.01(a) .
“ Tax Proceeding ” means any audit, assessment of Taxes, pre-filing agreement, other examination by any Taxing Authority, proceeding, appeal of a proceeding or litigation relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations.
“ Tax Return ” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, or declaration of estimated Tax) required to be supplied to, or filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax and any amended Tax return or claim for Refund.
“ Taxing Authority ” means any governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).
“ Transfer Taxes ” means all sales, use, transfer, real property transfer, intangible, recordation, registration, documentary, stamp or similar Taxes imposed on the Contribution or the Distribution.
“ Treasury Regulations ” means the final and temporary (but not proposed) Income Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“ U.S. ” means the United States of America.
TERMS DEFINED IN THIS AGREEMENT
Accounting Firm | 7.01 | |
Agreement | Preamble | |
Alliqua | Preamble | |
Alliqua Board | Recitals | |
Aquamed | Preamble | |
Distribution | Recitals | |
Information | 6.01(a) | |
Preparing Party | 2.04(a)(ii) | |
Retention Period | 6.02 | |
Reviewing Party | 2.04(a)(ii) | |
Single Business Return Preparing Party | 2.04(b) | |
Single Business Return Reviewing Party | 2.04(b) | |
Tax Matter |
6.01(a) |
1.02 Additional Definitions . Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Separation Agreement.
Article II.
PREPARATION, FILING AND PAYMENT OF TAXES SHOWN DUE ON TAX RETURNS
2.01 Alliqua Consolidated Returns .
(a) Alliqua Consolidated Returns . Alliqua shall prepare and file all Alliqua Consolidated Returns for a Pre-Closing Period or a Straddle Period, and shall pay all Taxes shown to be due and payable on such Tax Returns; provided that Aquamed shall reimburse Alliqua for any such Taxes that are Aquamed Taxes.
(b) Extraordinary Transactions . Notwithstanding anything to the contrary in this Agreement, for all Tax purposes, the Parties shall report any Extraordinary Transactions that are caused or permitted by Aquamed or any Aquamed Entity on the Distribution Date after the Distribution as occurring on the day after the Distribution Date to the maximum extent permitted pursuant to Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) or any similar or analogous provision of state, local or foreign Law.
2.02 Mixed Business Tax Returns .
(a) Subject to Section 2.02(b) , Alliqua shall prepare (or cause an Alliqua Entity to prepare) and Alliqua or an Alliqua Entity shall file (or cause to be filed) any Mixed Business Tax Returns for a Pre-Closing Period or a Straddle Period and shall pay, or cause such Alliqua Entity to pay, all Taxes shown to be due and payable on such Tax Returns; provided that Aquamed shall reimburse Alliqua for any such Taxes that are Aquamed Taxes.
(b) Aquamed shall prepare and file any Mixed Business Tax Returns for a Pre-Closing Period or a Straddle Period required to be filed by Aquamed or an Aquamed Entity after the Distribution Date, and Aquamed shall pay, or cause such Aquamed Entity to pay, all Taxes shown to be due and payable on such Tax Returns; provided that Alliqua shall reimburse Aquamed for any such Taxes that are Alliqua Taxes.
2.03 Single Business Returns .
(a) Alliqua shall prepare and file any Single Business Returns that relates to the Alliqua Business for a Pre-Closing Period or a Straddle Period and shall pay, or cause such Alliqua Entity to pay, all Taxes shown to be due and payable on such Tax Returns; provided that Aquamed shall reimburse Alliqua for any such Taxes that are Aquamed Taxes.
(b) Aquamed shall prepare and file any Single Business Returns that relates solely to the Aquamed Business for a Pre-Closing Period or a Straddle Period and shall pay, or cause such Aquamed Entity to pay, all Taxes shown to be due and payable on such Tax Returns; provided that Alliqua shall reimburse Aquamed for any such Taxes that are Alliqua Taxes.
2.04 Tax Return Procedures .
(a) Procedures relating to Tax Returns other than Single Business Returns .
(i) Alliqua Consolidated Returns . With respect to all Alliqua Consolidated Returns for the taxable year which includes the Distribution Date, Alliqua shall use the closing of the books method under (A) Treasury Regulation Section 1.1502-76 (including adopting the “end of the day rule” described therein) and (B) Section 382 of the Code and any applicable Treasury Regulations promulgated thereunder. To the extent that the positions taken on any Alliqua Consolidated Tax Return would reasonably be expected to materially adversely affect the Tax position of Aquamed or an Aquamed Entity for any period after the Distribution Date, Alliqua shall prepare the portions of such Tax Return that relates to the Aquamed Business in a manner that is consistent with Past Practice unless otherwise required by applicable Law or agreed to in writing by the Parties, and shall provide a draft of such portion of such Tax Return to Aquamed for its review and comment at least thirty (30) days prior to the Due Date for such Tax Return, provided , however , that nothing herein shall prevent Alliqua from timely filing any such Tax Return. In the event that Past Practice is not applicable to a particular item or matter, Alliqua shall determine the reporting of such item or matter in good faith. The Parties shall negotiate in good faith to resolve all disputed issues. Any disputes that the Parties are unable to resolve shall be resolved by the Accounting Firm pursuant to Section 7.01 . In the event that any dispute is not resolved (whether pursuant to good faith negotiations among the Parties or by the Accounting Firm) prior to the Due Date for the filing of any such Tax Return, such Tax Return shall be timely filed by Alliqua and Alliqua agrees to amend such Tax Return as necessary to reflect the resolution of such dispute in a manner consistent with such resolution.
(ii) Mixed Business Tax Returns . To the extent that the positions taken on any Mixed Business Tax Return would reasonably be expected to materially adversely affect the Tax position of the party other than the party that is required to prepare and file any such Tax Return pursuant to Section 2.02 (the “ Reviewing Party ”) in any Post-Closing Period, the party required to prepare and file such Tax Return (the “ Preparing Party ”) shall prepare the portions of such Tax Return that relates to the business of the Reviewing Party (the Alliqua Business or the Aquamed Business, as the case may be) in a manner that is consistent with Past Practice unless otherwise required by applicable Law or agreed to in writing by the Parties, and shall provide a draft of such portion of such Tax Return to the Reviewing Party for its review and comment at least thirty (30) days prior to the Due Date for such Tax Return, provided , however , that nothing herein shall prevent the Preparing Party from timely filing any such Tax Return. In the event that Past Practice is not applicable to a particular item or matter, the Preparing Party shall determine the reporting of such item or matter in good faith. The Parties shall negotiate in good faith to resolve all disputed issues. Any disputes that the Parties are unable to resolve shall be resolved by the Accounting Firm pursuant to Section 7.01 . In the event that any dispute is not resolved (whether pursuant to good faith negotiations among the Parties or by the Accounting Firm) prior to the Due Date for the filing of any such Tax Return, such Tax Return shall be timely filed by the Preparing Party and the Parties agree to amend such Tax Return as necessary to reflect the resolution of such dispute in a manner consistent with such resolution.
(b) Procedures relating to Single Business Returns . The Party that is required to prepare and file any Single Business Return pursuant to Section 2.03 (the “ Single Business Return Preparing Party ”) which reflects Taxes which are reimbursable by the other Party (the “ Single Business Return Reviewing Party ”), in whole or in part, shall (x) unless otherwise required by Law or agreed to in writing by the Single Business Return Reviewing Party, prepare such Tax Return in a manner consistent with Past Practice to the extent such items affect the Taxes for which the Single Business Return Reviewing Party is responsible pursuant to this Agreement, and (y) submit to the Single Business Return Reviewing Party a draft of any such Tax Return (or to the extent practicable the portion of such Tax Return that relates to Taxes for which the Single Business Return Reviewing Party is responsible pursuant to this Agreement) along with a statement setting forth the calculation of the Tax shown due and payable on such Tax Return reimbursable by the Single Business Return Reviewing Party under Section 2.03 at least thirty (30) days prior to the Due Date for such Tax Return provided , however , that nothing herein shall prevent the Single Business Return Preparing Party from timely filing any such Single Business Return. The Parties shall negotiate in good faith to resolve all disputed issues. Any disputes that the Parties are unable to resolve shall be resolved by the Accounting Firm pursuant to Section 7.01 . In the event that any dispute is not resolved (whether pursuant to good faith negotiations among the Parties or by the Accounting Firm) prior to the Due Date for the filing of any Single Business Return, such Single Business Return shall be timely filed by the Single Business Return Preparing Party and the Parties agree to amend such Single Business Return as necessary to reflect the resolution of such dispute in a manner consistent with such resolution.
2.05 Amended Returns . Except as provided in Section 2.04 to reflect the resolution of any dispute by the Accounting Firm pursuant to Section 7.01 , (a) except with the prior written consent of Alliqua (such consent not to be unreasonably withheld, delayed or conditioned), Aquamed shall not, and shall not permit any Aquamed Entity to, amend any Tax Return of Aquamed or any Aquamed Entity for any Pre-Closing Period or Straddle Period to the extent such amendment could reasonably be expected to result in an indemnification obligation on the part of Alliqua pursuant to Article III or otherwise increase the Taxes of any member of the Alliqua Group and (b) except with the prior written consent of Aquamed (such consent not to be unreasonably withheld, delayed or conditioned), Alliqua shall not, and shall not permit any Alliqua Entity to, amend any Tax Return for any Pre-Closing Period or Straddle Period to the extent such amendment could reasonably be expected to result in an indemnification obligation on the part of Aquamed pursuant to Article III or otherwise increase the Taxes of any member of the Aquamed Group.
2.06 Straddle Period Tax Allocation . Alliqua and Aquamed shall take all actions necessary or appropriate to close the taxable year of Aquamed and each Aquamed Entity for all Tax purposes as of the close of the Distribution Date to the extent permissible or required under applicable Law. If applicable Law does not require or permit Aquamed or an Aquamed Entity, as the case may be, to close its taxable year on the Distribution Date, then the allocation of income or deductions required to determine any Taxes or other amounts attributable to the portion of the Straddle Period ending on, or beginning after, the Distribution Date shall be made by means of a closing of the books and records of Aquamed or such Aquamed Entity as of the close of the Distribution Date; provided that exemptions, allowances or deductions that are calculated on an annual or periodic basis shall be allocated between such portions in proportion to the number of days in each such portion; provided , further , that real property and other property or similar periodic Taxes shall be apportioned on a per diem basis.
2.07 Timing of Payments . All Taxes required to be paid or caused to be paid pursuant to this Article II by either Alliqua or an Alliqua Entity or Aquamed or an Aquamed Entity, as the case may be, to an applicable Taxing Authority or reimbursed by Alliqua or Aquamed to the other Party pursuant to this Agreement, shall, in the case of a payment to a Taxing Authority, be paid on or before the Due Date for the payment of such Taxes and, in the case of a reimbursement to the other Party, be paid at least two (2) business days before the Due Date for the payment of such Taxes by the other Party; provided that the Party seeking reimbursement shall furnish such other Party reasonably satisfactory documentation setting forth the basis for, and calculation of, the amount of such reimbursement obligation at least twenty (20) days before such Due Date.
2.08 Expenses . Except as provided in Section 7.01 in respect of the expenses relating to the Accounting Firm, each Party shall bear its own expenses incurred in connection with this Article II.
2.09 Apportionment of Aquamed Taxes . For all purposes of this Agreement, but subject to Section 4.02 , Alliqua and Aquamed shall jointly determine in good faith which Tax Items are properly attributable to assets or activities of the Aquamed Business (and in the case of a Tax Item that is properly attributable to both the Aquamed Business and the Alliqua Business, the allocation of such Tax Item between the Aquamed Business and the Alliqua Business) in a manner consistent with the Past Practices of the Parties and the provisions of this Agreement and any disputes shall be resolved by the Accounting Firm in accordance with Section 7.01 .
2.10 Distribution Tax Reporting . The Parties shall cause the Distribution to be reported to holders of Alliqua Common Stock on IRS Form 1099-DIV or as otherwise required by applicable Law. The Parties shall not take any position on any U.S. federal or state income tax return or take any other U.S. tax reporting position that is inconsistent with the treatment of the Distribution as a distribution to which Section 301 of the Code applies, except as otherwise required by applicable Law.
Article III.
INDEMNIFICATION
3.01 Indemnification by Alliqua . Subject to Section 3.03 , Alliqua shall pay, and shall indemnify and hold the Aquamed Group harmless from and against, without duplication, (a) all Alliqua Taxes, (b) all Taxes incurred by Aquamed or any Aquamed Entity arising out of, attributable to, or resulting from the breach by Alliqua of any of its covenants hereunder, and (c) any out-of-pocket costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses).
3.02 Indemnification by Aquamed . Subject to Section 3.03 , Aquamed shall pay, and shall indemnify and hold the Alliqua Group harmless from and against, without duplication, (a) all Aquamed Taxes, (b) all Taxes incurred by Alliqua or any Alliqua Entity arising out of, attributable to, or resulting from the breach by Aquamed of any of its covenants hereunder, and (c) any out-of-pocket costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses).
3.03 Characterization of and Adjustments to Payments .
(a) For all Tax purposes, Alliqua and Aquamed shall treat any payment by Alliqua to a member of the Aquamed Group or by Aquamed to a member of the Alliqua Group required by this Agreement (other than payments with respect to interest accruing after the Distribution Date) as either a contribution by Alliqua to Aquamed or a distribution by Aquamed to Alliqua, as the case may be, occurring immediately prior to the Distribution.
(b) Notwithstanding the foregoing, the amount that any Indemnifying Party is or may be required to provide indemnification to or on behalf of any Indemnified Party pursuant to Article III of this Agreement shall be (i) decreased to take into account any Tax Benefit to the Indemnified Party (or any of its affiliates) arising from the incurrence or payment of the relevant indemnified item and actually realized in or prior to the taxable year succeeding the taxable year in which the indemnified item is incurred (which Tax Benefit would not have arisen or been allowable but for such indemnified item and which shall be calculated on a with and without basis), and (ii) increased to take into account any actual Tax Cost of the Indemnified Party (or any of its affiliates, which shall be calculated on a with and without basis) arising from the receipt of the relevant indemnity payment.
3.04 Timing of Indemnification Payments . Indemnification payments in respect of any liabilities for which an Indemnified Party is entitled to indemnification pursuant to this Article III shall be paid by the Indemnifying Party to the Indemnified Party within ten (10) days after written notification thereof by the Indemnified Party, including reasonably satisfactory documentation setting forth the basis for, and calculation of, the amount of such indemnification payment, or within ten (10) days after resolution pursuant to Section 7.01 .
3.05 Indemnification Payments under Ancillary Agreements . To the extent that an indemnification payment is made under any Ancillary Agreement, such indemnification payment shall be decreased to take into account the Tax Benefit actually realized (whether directly or indirectly) by the indemnified party and increased to take into account any Tax Cost actually incurred (whether directly or indirectly) by the indemnified party under principles analogous to the principles described in Section 3.03 hereof.
Article IV.
REFUNDS, CARRYBACKS, TIMING DIFFERENCE AND TAX ATTRIBUTES
4.01 Refunds and Credits .
(a) Alliqua shall be entitled to all Refunds of Taxes for which Alliqua is responsible pursuant to Article III, and Aquamed shall be entitled to all Refunds of Taxes for which Aquamed is responsible pursuant to Article III. For the avoidance of doubt, to the extent that a particular Refund of Taxes may be allocable to a Straddle Period with respect to which the Parties may share responsibility pursuant to Article III, the portion of such Refund to which each Party will be entitled shall be determined by comparing the amount of payments made by a Party (or any of member of such Party’s Group) to a Taxing Authority or to the other Party (and reduced by the amount of payments received from the other Party) pursuant to Articles II and III hereof with the Tax liability of such Party as determined under Section 2.06 , taking into account the facts as utilized for purposes of claiming such Refund. If a Party (or any member of its Tax Group) receives a Refund to which the other Party is entitled pursuant to this Agreement, such Party shall pay the amount to which such other Party is entitled (net of any Taxes imposed with respect to such refund and any other reasonable out-of-pocket costs incurred by such Party) within ten (10) days after the receipt of the Refund.
(b) Notwithstanding Section 4.01(a), to the extent that a Party (or any member of its Tax Group) applies or causes to be applied an overpayment of Taxes as a credit toward or a reduction in Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such overpayment of Taxes, if received as a Refund, would have been payable by such Party to the other Party pursuant to this Section 4.01, such Party shall pay such amount to the other Party no later than ten (10) days following the date on which the overpayment is reflected on a filed Tax Return.
(c) To the extent that the amount of any Refund under this Section 4.01 is later reduced by a Taxing Authority or in a Tax Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 4.01 and an appropriate adjusting payment shall be made.
4.02 Tax Attributes .
(a) As soon as reasonably practicable after the Distribution Date, Alliqua shall reasonably determine in good faith the allocation of Tax Attributes, as well as any limitations on the use thereof, arising in a Pre-Closing Period to the Alliqua Group and the Aquamed Group in accordance with the Code and Treasury Regulations (and any applicable state, local and foreign Tax Laws). Subject to the preceding sentence, Alliqua shall be entitled to make any determination as to (A) basis, and (B) valuation, and shall make such determinations reasonably and in good faith and consistent with Past Practice, where applicable. Alliqua shall consult in good faith with Aquamed regarding such allocation of Tax Attributes and determinations as to basis and valuation, and shall consider in good faith any comments received in writing from Aquamed regarding such allocation and determinations. Alliqua and Aquamed hereby agree to compute all Taxes for Post-Closing Periods consistently with the determination of the allocation of Tax Attributes pursuant to this Section 4.02(a) unless otherwise required by a Final Determination.
(b) To the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or Tax Proceeding, such reduction or increase shall be allocated to the Party to which such Tax Attribute was allocated pursuant to Section 4.02(a) .
4.03 Timing Differences . If pursuant to a Final Determination an Adjustment (i) increases the amount of liability for any Taxes for which a member of the Alliqua Group is responsible hereunder and a Tax Benefit is made allowable to Aquamed or a member of its Tax Group for any Tax period after the Distribution Date, which Tax Benefit would not have arisen or been allowable but for such Adjustment, and which Tax Benefit reduces Taxes in respect of a Tax period for which Aquamed or a member of its Tax Group is liable (and for which no member of the Alliqua Group is liable) or (ii) increases the amount of liability for any Taxes for which a member of the Aquamed Group is responsible hereunder and a Tax Benefit is made allowable to Alliqua or a member of its Tax Group for any Tax period prior to the Distribution Date, which Tax Benefit would not have arisen or been allowable but for such Adjustment, and which Tax Benefit reduces Taxes in respect of a Tax period which Alliqua or a member of its Tax Group is liable (and for which no member of the Aquamed Group is liable), then Aquamed or Alliqua, as the case may be, shall make a payment to either Alliqua or Aquamed, as appropriate, within thirty (30) days of the date that such paying Party (or any of its Tax Group members) actually receives such Tax Benefit (determined by comparing its (and its Tax Group members’) Tax liability with and without the Tax consequences of the Adjustment), which payment shall not exceed the increase in the amount of liability for any Taxes resulting from such Adjustment, for which a member of the Alliqua Group or Aquamed Group, as the case may be, is responsible hereunder.
4.04 Tax Benefit Determinations . Notwithstanding anything herein to the contrary, if and to the extent a Party owns, directly or indirectly, less than 100% of the equity of any entity and as a result of such less-than-100% ownership interest in the entity such entity is not a member of the Party’s Tax Group, then the amount of the Tax Benefit payment under Article IV shall be appropriately adjusted to take into account the percentage ownership (based on value) of any such entity, and shall be determined and due and owing even if such entity is not a member of the Tax Group of a Party.
4.05 Supporting Documentation . If a Party seeks any payment from the other Party pursuant to Article IV, the requesting Party shall furnish such other Party reasonably satisfactory documentation setting forth the basis for, and the calculation of, the amount of such payment obligation. If such other Party disagrees with the determination of the amount of the payment obligation set forth therein, any disputes shall be resolved by the Accounting Firm in accordance with Section 7.01 .
Article V.
TAX PROCEEDINGS
5.01 Notification of Tax Proceedings . Within ten (10) days after an Indemnified Party becomes aware of the commencement of a Tax Proceeding that may give rise to Taxes for which an Indemnifying Party is responsible pursuant to Article III, such Indemnified Party shall notify the Indemnifying Party of such Tax Proceeding, and thereafter shall promptly forward or make available to the Indemnifying Party copies of notices and communications relating to such Tax Proceeding. The failure of the Indemnified Party to notify the Indemnifying Party of the commencement of any such Tax Proceeding within such ten (10) day period or promptly forward any further notices or communications shall not relieve the Indemnifying Party of any obligation which it may have to the Indemnified Party under this Agreement except to the extent that the Indemnifying Party is prejudiced by such failure.
5.02 Tax Proceeding Procedures Generally .
(a) Tax Proceedings relating to Alliqua Consolidated Returns . Alliqua shall be entitled to contest, compromise, control and settle any adjustment or deficiency proposed, asserted or assessed pursuant to any Tax Proceeding with respect to any Alliqua Consolidated Return; provided that to the extent such Tax Proceeding could reasonably be expected to adversely affect the amount of Taxes for which Aquamed is responsible pursuant to Article III less the amount payable to Aquamed pursuant to Section 4.03 , Alliqua shall (i) defend such Tax Proceeding diligently and in good faith and (ii) shall keep Aquamed informed in a timely manner of all actions proposed to be taken by Alliqua with respect to such Tax Proceeding (or to the extent practicable the portion of such Tax Proceeding that relates to Taxes for which Aquamed is responsible pursuant to Article III), (C) shall permit Aquamed to participate (at Aquamed’s sole expense) in all proceedings with respect to such tax Proceeding (or to the extent practicable the portion of such Tax Proceeding that relates to Taxes for which Aquamed is responsible pursuant to Article III), and (D) shall not settle any such Tax Proceeding without the prior written consent of Aquamed, which shall not be unreasonably withheld, conditioned or delayed.
(b) Tax Proceedings relating to Other Returns. The Preparing Party (in the case of a Mixed Business Tax Return) or the Single Business Return Preparing Party (in the case of a Single Business Return) shall be entitled to contest, compromise, control and settle any adjustment or deficiency proposed, asserted or assessed pursuant to any Tax Proceeding with respect to any Mixed Business Tax Return or Single Business Return; provided that to the extent such Tax Proceeding could reasonably be expected to adversely affect the amount of Taxes for which the Reviewing Party or Single Business Return Reviewing Party (as applicable) is responsible pursuant to Article III, the controlling party shall (A) defend such Tax Proceeding diligently and in good faith, (B) shall keep the non-controlling party informed in a timely manner of all actions proposed to be taken by the controlling party with respect to such Tax Proceeding (or to the extent practicable the portion of such Tax Proceeding that relates to Taxes for which the non-controlling party is responsible pursuant to Article III), (C) shall permit the non-controlling party to participate (at the non-controlling party’s sole expense) in all proceedings with respect to such Tax Proceeding (or to the extent practicable the portion of such Tax Proceeding that relates to Taxes for which the non-controlling party is responsible pursuant to Article III), and (D) shall not settle any such Tax Proceeding without the prior written consent of the non-controlling party, which shall not be unreasonably withheld, conditioned or delayed.
Article VI.
COOPERATION
6.01 General Cooperation .
(a) The Parties shall each cooperate fully (and each shall cause its respective Subsidiaries to cooperate fully) with all reasonable requests in writing from another Party hereto, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of Tax Returns, claims for Refunds, Tax Proceedings, and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of either of the Parties or their respective Subsidiaries covered by this Agreement and in connection with any financial reporting matter relating to Taxes (a “ Tax Matter ”). Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter (“ Information ”) and shall include, without limitation:
(i) the provision of any Tax Returns, other than any Alliqua Consolidated Return, of the Parties and their respective Subsidiaries, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities (or, in the case of any Mixed Business Income Tax Return, to the extent practicable, the portion of such Tax Return that relates to Taxes for which Aquamed is responsible pursuant to this Agreement);
(ii) the execution of any document (including any power of attorney) in connection with any Tax Proceedings of either of the Parties or their respective Subsidiaries, or the filing of a Tax Return or a Refund claim of the Parties or any of their respective Subsidiaries;
(iii) the use of the Party’s commercially reasonable efforts to obtain any documentation in connection with a Tax Matter;
(iv) the use of the Party’s commercially reasonable efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents) (other than any Alliqua Consolidated Return), documents, books, records or other information in connection with the filing of any Tax Returns of either of the Parties or their Subsidiaries (or, in the case of any Mixed Business Income Tax Return, to the extent practicable, the portion of such Tax Return, documents, books, records or other information that relates to Taxes for which Aquamed is responsible pursuant to this Agreement); and
(v) the making of each Party’s employees, advisors, and facilities available on a reasonable and mutually convenient basis in connection with the foregoing matters.
(b) Notwithstanding anything in this Agreement to the contrary, neither Party shall be required to provide the other Party or any of such other Party’s Subsidiaries access to or copies of information, documents or personnel if such action could reasonably be expected to result in the waiver of any Privilege. In the event that either Party determines that the provision of any information or documents to the other Party or any of such other Party’s Subsidiaries could be commercially detrimental, violate any law or agreement or waive any Privilege, the Parties shall use commercially reasonable efforts to permit compliance with its obligations hereunder in a manner that avoids any such harm or consequence.
(c) The Parties shall perform all actions required or permitted under this Agreement in good faith. If one Party requests the cooperation of the other Party pursuant to this Section 6.01 or any other provision of this Agreement, except as otherwise expressly provided in this Agreement, the requesting Party shall reimburse such other Party for all reasonable out-of-pocket costs and expenses incurred by such other Party in complying with the requesting Party’s request.
6.02 Retention of Records . Alliqua and Aquamed shall retain or cause to be retained all Tax Returns, schedules and work papers, and all material records or other documents relating thereto in their possession, in each case that relate to a Pre-Closing Period, until the later of the six-year anniversary of the filing of the relevant Tax Return or, upon the written request of the other Party, for a reasonable time thereafter (the “ Retention Period ”). Upon the expiration of the Retention Period, the foregoing information may be destroyed or disposed of by the Party retaining such documentation or other information unless the other Party otherwise requests in writing before the expiration of the Retention Period. In such case, the Party retaining such documentation or other information shall deliver such materials to the other Party or continue to retain such materials, in either case at the expense of such other Party.
Article VII.
MISCELLANEOUS
7.01 Dispute Resolution . In the event of any dispute between the Parties as to any matter covered by this Agreement, the Parties shall appoint a nationally recognized public accounting firm reasonably acceptable to both of the Parties (the “ Accounting Firm ”) to resolve such dispute. In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by Alliqua and Aquamed and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination within the ranges submitted by the Parties. The Parties shall require the Accounting Firm to resolve all disputes no later than thirty (30) days after the submission of such dispute to the Accounting Firm, and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties. The Accounting Firm shall resolve all disputes in a manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the Past Practices of Alliqua and its Subsidiaries, except as otherwise required by applicable Law. The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination. The total costs and expenses of the Accounting Firm will be allocated and borne between Alliqua and Aquamed based upon that percentage of such fees and expenses equal to the percentage of the dollar value of the proposed determinations submitted to the Accounting Firm determined in favor of the other Party; provided, that if in light of the nature of the dispute the foregoing is not feasible, such costs and expenses shall be borne equally by the Parties. Any initial retainer required by the Accounting Firm shall be funded equally by the Parties (and, following the Accounting Firm’s determination, the Parties shall make appropriate payments between themselves as are necessary to give effect to the preceding sentence).
7.02 Interest on Late Payments . With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate per annum equal to the prime rate published in the Wall Street Journal for the relevant period.
7.03 Survival of Covenants . Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Distribution and remain in full force and effect in accordance with their applicable terms.
7.04 Successors . This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to either of the Parties hereto (including without limitation any successor of Alliqua or Aquamed succeeding to the Tax Attributes of either under Section 381 of the Code), to the same extent as if such successor had been an original party to this Agreement.
7.05 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.
7.06 Entire Agreement . Except as otherwise expressly provided in this Agreement, this Agreement, the Separation Agreement and the other Ancillary Agreements constitute the entire agreement of the Parties hereto with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties hereto with respect to the subject matter of this Agreement.
7.07 Assignment; No Third-Party Beneficiaries . This Agreement shall not be assigned by any Party without the prior written consent of the other Parties hereto, except that each Party may assign (a) any or all of its rights and obligations under this Agreement to any of its Subsidiaries and (b) any or all of its rights and obligations under this Agreement in connection with a sale or disposition of any of its assets or entities or lines of business; provided , however , that, in each case, no such assignment shall release such Party from any liability or obligation under this Agreement. Except as provided in Article III with respect to indemnified Parties, this Agreement is for the sole benefit of the Parties to this Agreement and their respective Subsidiaries and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
7.08 Specific Performance . In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is or is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by the Parties to this Agreement.
7.09 Amendment . No provision of this Agreement may be amended or modified except by a written instrument signed by the Parties to this Agreement. No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the Party so waiving. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
7.10 Rules of Construction . Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, exhibits and schedules of this Agreement unless otherwise specified; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (j) Alliqua and Aquamed have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (k) a reference to any Person includes such Person’s successors and permitted assigns.
7.11 Counterparts . This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.
7.12 Coordination with the Employee Matters Agreements . To the extent any covenants or agreements between the Parties with respect to employee withholding Taxes are set forth in the Employee Matters Agreement, such Taxes shall be governed exclusively by the Employee Matters Agreement and not by this Agreement.
7.13 Confidentiality . The parties hereby agree hold and keep confidential all information and material furnished by any Party or its representatives hereunder (including any Information and any Tax Returns) on terms comparable to those contained in a confidentiality agreement customary for transactions of this type.
7.14 Expenses . Except as otherwise provided in this Agreement, whether or not the Distribution or the other transactions contemplated by this Agreement are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs or expenses.
7.15 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
7.16 Notices . Any notice, demand, claim or other communication under this Agreement will be in writing and will be deemed to have been given (a) on delivery if delivered personally; (b) on the date on which delivery thereof is guaranteed by the carrier if delivered by a national courier guaranteeing delivery within a fixed number of days of sending; or (c) on the date of facsimile or email transmission thereof if delivery is confirmed, but, in each case, only if addressed to the Parties in the following manner at the following addresses or facsimile numbers (or at the other address or other number as a Party may specify by notice to the others):
If to: Alliqua after the Distribution Date, to:
[Address]
Attn:
Email:
Fax:
with a copy (which will not constitute notice) to:
[Law Firm Information]
Attention:
Email:
Fax:
If to: Aquamed, prior to or after the Distribution Date (or if to Alliqua before the Distribution Date) to:
[Address]
Attn:
Email:
Fax:
with a copy (which shall not constitute notice) to:
[Law Firm Information]
Attention:
Email:
Fax:
Any notice to Alliqua will be deemed notice to all members of the Alliqua Group, and any notice to Aquamed will be deemed notice to all members of the Aquamed Group.
7.17 Coordination with Ancillary Agreements . Except as explicitly set forth in the Separation Agreement or any other Ancillary Agreement, this Agreement shall be the exclusive agreement among the Parties with respect to all Tax matters, including indemnification in respect of Tax matters. The Parties agree that this Agreement shall take precedence over any and all agreements among the Parties with respect to Tax matters.
7.18 Effective Date . This Agreement shall become effective only upon the occurrence of the Distribution.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.
Alliqua Biomedical, Inc. |
By: |
Name: | |
Title: | |
Aquamed Technologies, Inc. |
By: |
Name: | |
Title: |
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
AQUAMED TECHNOLOGIES, INC.
ARTICLE I
The name of the corporation is AquaMed Technologies, Inc. (the “Corporation” ).
ARTICLE II
The address of the Corporation’s registered office is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, County of New Castle. The name of its registered agent at such address is Corporation Service Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as the same may be amended from time to time (the “Corporation Law”).
ARTICLE IV
The aggregate number of shares of all classes of stock which the Corporation shall have authority to issue is 12,000,000 shares, such shares being designated as follows: (i) 10,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), and (ii) 2,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).
The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (the “Board”) shall have authority to the fullest extent permitted under the Corporation Law to adopt by resolution from time to time one or more Certificates of Designation providing for the designation of one or more classes or series of Preferred Stock and the voting powers, whether full or limited or no voting powers, and such designations, preferences and relative, participating, optional, or other special rights and qualifications, limitations or restrictions thereof, and to fix or alter the number of shares comprising any such class or series, subject to any requirements of the Corporation Law and this Certificate, as the same may be amended from time to time.
ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
In furtherance of and not in limitation of the powers conferred by statute, the Board is expressly authorized to make, alter or repeal the bylaws of the Corporation and to designate the terms of any authorized but unissued shares of the Corporation’s Preferred Stock. As permitted by Section 242(b)(2) of the Corporation Law, the number of authorized shares of Common Stock of the Corporation may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote or written consent of a majority in voting power of the stock of the Corporation entitled to vote on an as-converted to Common Stock basis, voting together as a single class without the approval of the holders of the Common Stock voting as a separate class.
The directors of the Corporation shall be entitled to the benefits of all limitations on the liability of directors generally that are now or hereafter become available under the Corporation Law. Without limiting the generality of the foregoing, no director of the Corporation shall be personally liable to the corporation or to any stockholder of the Corporation for monetary damages for breach of fiduciary duty as a director, provided that this provision shall not limit the liability of a director (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 or successor provision of the Corporation Law, (iv) for any transaction from which the director derived an improper personal benefit; or (v) as otherwise prohibited by applicable law. Any repeal or modification of this ARTICLE VI shall only be prospective and shall not affect the rights under this ARTICLE VI in effect at the time of the alleged occurrence of any action or omission to act giving rise to liability.
Elections of directors need not be by written ballot except and to the extent provided in the bylaws of the Corporation.
ARTICLE VII
Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide.
ARTICLE VIII
The books of the Corporation may be kept (subject to any provision contained in the applicable statutes) outside the State of Delaware, at such place or places as may be designated from time to time by the Board or in the bylaws of the Corporation.
ARTICLE IX
The Corporation shall, to the maximum extent permitted from time to time under the laws of the State of Delaware, indemnify and hold harmless any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of the Corporation or while a director or officer is or was serving at the request of the Corporation as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against any and all expenses (including attorney’s fees and expenses), judgments, fines, penalties and amounts paid in settlement or incurred in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require the Corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person, except as otherwise required by law, or to otherwise advance any expenses to any officer of the Corporation, except as otherwise required by law. Such rights arising under any bylaw, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any repeal or modification of the foregoing provisions of this ARTICLE IX shall not adversely affect any right or protection of a director or officer of this Corporation existing at the time of such repeal or modification. The indemnification provided herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
- 2 - |
ARTICLE X
Subject to applicable law, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute.
ARTICLE XI
The name and address of the incorporator is as follows:
NAME | ADDRESS | |
Ralph D. Mosley, Jr. |
405 Lexington Avenue New York, New York 10174. |
[Signature Page Follows]
- 3 - |
IN WITNESS WHEREOF, the undersigned has caused this Certificate of Incorporation to be signed by its duly authorized representative, on the 13th day of January, 2009.
AQUAMED TECHNOLOGIES, INC. | ||
By: | /s/ Ralph D. Mosley, Jr. | |
Name: Ralph D. Mosley, Jr. | ||
Title: Sole Incorporator |
- 4 - |
Exhibit 3.2
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
AQUAMED TECHNOLOGIES, INC.
The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”) does hereby certify:
FIRST. The name of the corporation is AquaMed Technologies, Inc. (the “Corporation” ). The Corporation filed its original Certificate of lncorporation with the Secretary of State of the State of Delaware on January 13, 2009.
SECOND. Article IV of the Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:
“ARTICLE IV
The total number of shares of stock which the Corporation is authorized to issue is one hundred (100) shares of common stock, par value $0.001 per share (the “Common Stock” ).”
THIRD. Article VI of the Certificate of lncorporation is hereby amended and restated to read in its entirety as follows:
“ARTICLE VI
In furtherance of and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation (the “Board” ) is expressly authorized to make, alter or repeal the bylaws of the Corporation. As permitted by Section 242(b)(2) of the Corporation Law, the number of authorized shares of Common Stock of the Corporation may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote or written consent of a majority in voting power of the stock of the Corporation entitled to vote on an as-converted to Common Stock basis, voting together as a single class without the approval of the holders of the Common Stock voting as a separate class.
The directors of the Corporation shall be entitled to the benefits of all limitations on the liability of directors generally that are now or hereafter become available under the Corporation Law. Without limiting the generality of the foregoing, no director of the Corporation shall be personally liable to the Corporation or to any stockholder of the Corporation for monetary damages for breach of fiduciary duty as a director, provided that this provision shall not limit the liability of a director (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 or successor provision of the Corporation Law, (iv) for any transaction from which the director derived an improper personal benefit; or (v) as otherwise prohibited by applicable law. Any repeal or modification of this ARTICLE VI shall only be prospective and shall not affect the rights under this ARTICLE VI in effect at the time of the alleged occurrence of any action or omission to act giving rise to liability.
Elections of directors need not be by written ballot except and to the extent provided in the bylaws of the Corporation.”
FOURTH. Pursuant to Section 242(b) of the DGCL, the Board of Directors of the Corporation has duly adopted, and a majority of the outstanding stock entitled to vote thereon has approved, the amendment to the Certificate of Incorporation of the Corporation set forth in this Certificate of Amendment.
Remainder of Page Left Intentionally Blank,
Signature Page Follows.
2 |
IN WITNESS WHEREOF, the undesigned has executed this Certificate of Amendment to the Certificate of Incorporation, as of the 14th day of July, 2010.
AQUAMED TECHNOLOGIES, INC., a Delaware corporation |
||
By: | /s/ Benjamin Mayer | |
Name: Benjamin Mayer | ||
Title: President |
Signature Page - Amendment to Certificate of Incorporation
Exhibit 3.4
AQUAMED TECHNOLOGIES, INC.
BY-LAWS
ARTICLE I
OFFICES
1. The location of the registered office of the Corporation is Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, Delaware 19808, and the name of its registered agent at such address is Corporation Service Company.
2. The Corporation shall in addition to its registered office in the State of Delaware establish and maintain an office or offices at such place or places as the Board of Directors may from time to time find necessary or desirable.
ARTICLE II
CORPORATE SEAL
The corporate seal of the Corporation shall have inscribed thereon the name of the Corporation and may be in such form as the Board of Directors may determine. Such seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.
ARTICLE III
MEETINGS OF STOCKHOLDERS
1. All meetings of the stockholders shall be held at the registered office of the Corporation in the State of Delaware or at such other place as shall be determined from time to time by the Board of Directors.
2. The annual meeting of stockholders shall be held on such day and at such time as may be determined from time to time by resolution of the Board of Directors, when they shall elect by plurality vote, a Board of Directors to hold office until the annual meeting of stockholders held next after their election and their successors are respectively elected and qualified or until their earlier resignation or removal. Any other proper business may be transacted at the annual meeting.
3. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise expressly provided by statute, by the Certificate of Incorporation or by these By-laws.
4. At all meetings of the stockholders each stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three years prior to said meeting, unless such instrument provides for a longer period.
5. At each meeting of the stockholders each stockholder shall have one vote for each share of capital stock having voting power, registered in his name on the books of the Corporation at the record date fixed in accordance with these By-law, or otherwise determined, with respect to such meeting. Except as otherwise expressly provided by statute, by the Certificate of Incorporation or by these By-laws, all matters coming before any meeting of the stockholders shall be decided by the vote of a majority of the number of shares of stock present in person or represented by proxy at such meeting and entitled to vote thereat, a quorum being present.
6. Notice of each meeting of the stockholders shall be mailed to each stockholder entitled to vote thereat not less than 10 nor more than 60 days before the date of the meeting. Such notice shall state the place, date and hour of the meeting and, in the case of a special meeting, the purposes for which the meeting is called.
2 |
7. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Board of Directors.
8. At any annual or special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any stockholder who complies with the procedures set forth in this Article III Section 8.
The only business which shall be conducted at any meeting of the stockholders shall (i) have been specified in the written notice of the meeting (or any supplement thereto) given as provided in Article III Section 6, (ii) be brought before the meeting at the direction of the Board of Directors or the chairman of the meeting or (iii) have specified in a written notice (a “Stockholder Meeting Notice”) given to the Corporation, in accordance with all of the following requirements, by or on behalf of any stockholder who shall have been a stockholder of record on the record date for such meeting and who shall continue to be entitled to vote thereat. Each Stockholder Meeting Notice must be delivered personally to, or be mailed to and received by, the Secretary of the Corporation, at the principal executive offices of the Corporation, not less than 50 days nor more than 75 days prior to the meeting; provided, however, that in the event that less than 65 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the shareholder to be timely must be received not later than the close of business on the tenth day following the earlier of (i) day on which such notice of the date of the meeting was mailed or (ii) such public disclosure was made. Each Stockholder Meeting Notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting: (i) a description of each item of business proposed to be brought before the meeting and the reasons for conducting such business at the meeting; (ii) the name and address, as they appear on the Corporation’s books, of the shareholder proposing to bring such item of business before the meeting; (iii) the class and number of shares of stock held of record, owned beneficially and represented by proxy by such stockholder as of the record date for the meeting (if such date then shall have been made publicly available) and as of the date of such Stockholder Meeting Notice; and (iv) all other information which would be required to be included in a proxy statement filed with the Securities and Exchange Commission (the “Commission”) if, with respect to any such item of business, such stockholder were a participant in a solicitation subject to Section 14 of the Securities Exchange Act of 1934.
3 |
Any proposal by stockholders which has not previously received the approval of the Board of Directors shall require for its adoption the affirmative vote of holders of more than fifty percent (50%) of the votes which all stockholders are entitled to cast thereon, in addition to any other approval which is required by law, the Certificate of Incorporation, these By-laws or otherwise.
Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at any meeting of the stockholders except in accordance with the procedures set forth in these By-laws. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the procedures prescribed by these By-laws, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
9. When a meeting is adjourned to another time or place, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken, unless the adjournment is for more than 30 days, or unless after the adjournment a new record date is fixed for the adjourned meeting, in which case notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, any business may be transacted that might have been transacted at the original meeting.
4 |
10. The order of business at each meeting of stockholders shall be determined by the presiding officer.
ARTICLE IV
DIRECTORS
1. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors, which may exercise all such powers and authority for and on behalf of the Corporation as shall be permitted by law, the Certificate of Incorporation or these By-laws. Each of the directors shall hold office until the next annual meeting of stockholders and until his successor has been elected and qualified or until his earlier resignation or removal.
2. The Board is empowered to appoint a Chairman of the Board of Directors. The Chairman shall act as chairman of all meetings of the Board of Directors and at all special and annual meetings of stockholders, and shall have control over the agenda of such meetings, all in accordance with the provisions of these By-laws and the Certificate of Incorporation. The Chairman shall perform such other duties as may from time to time be assigned to him by the Board.
3. The Board of Directors may hold their meetings within or outside of the State of Delaware, at such place or places as it may from time to time determine.
5 |
4. The number of directors comprising the Board of Directors shall initially be three (3) and may be increased or decreased by the Board of Directors or stockholders. In case of any increase, the Board shall have power to elect each additional director to hold office until the next annual meeting of stockholders and until his successor is elected and qualified or his earlier resignation or removal. Any decrease in the number of directors shall take effect at the time of such action by the Board only to the extent that vacancies then exist; to the extent that such decrease exceeds the number of such vacancies, the decrease shall not become effective, except as further vacancies may thereafter occur, until the time of and in connection with the election of directors at the next succeeding annual meeting of the stockholders.
5. Except as otherwise expressly provided in the Certificate of Incorporation or these Bylaws, if the office of any director becomes vacant, by reason of death, resignation, disqualification or otherwise, a majority of the directors then in office, although less than a quorum, may fill the vacancy by electing a successor who shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified or his earlier resignation or removal.
6. Any director may resign at any time by giving written notice of his resignation to the Board of Directors. Any such resignation shall take effect upon receipt thereof by the Board, or at such later date as may be specified therein. Any such notice to the Board shall be addressed to it in care of the Secretary.
6 |
ARTICLE V
COMMITTEES OF DIRECTORS
1. The Board may designate an Executive Committee and one or more other committees, each such committee to consist of one or more directors of the Corporation. The Executive Committee shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation (except as otherwise expressly limited by statute), including the power and authority to declare dividends and to authorize the issuance of stock, and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall have such of the powers and authority of the Board as may be provided from time to time in resolutions adopted by the Board.
2. The requirements with respect to the manner in which the Executive Committee and each such other committee shall hold meetings and take actions shall be set forth in the resolutions of the Board of Directors designating the Executive Committee or such other committee.
ARTICLE VI
COMPENSATION OF DIRECTORS
The directors shall receive such compensation for their services as may be authorized by resolution of the Board of Directors, which compensation may include an annual fee and a fixed sum for expense of attendance at regular or special meetings of the Board or any committee thereof. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
7 |
ARTICLE VII
MEETINGS OF DIRECTORS; ACTION WITHOUT A MEETING
1. Regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as may be determined from time to time by resolution of the Board.
2. Special meetings of the Board of Directors shall be held whenever called by the Chairman, the President of the Corporation or the Board of Directors on at least 24 hours' notice to each director. Except as may be otherwise specifically provided by statute, by the Certificate of Incorporation or by these By-laws, the purpose or purposes of any such special meeting need not be stated in such notice, although the time and place of the meeting shall be stated.
3. At all meetings of the Board of Directors, the presence in person of a majority of the total number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and, except as otherwise provided by statute, by the Certificate of Incorporation or by these By-laws, if a quorum shall be present the act of a majority of the directors present shall be the act of the Board.
4. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all the members of the Board or such committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board of committee. Any director may participate in a meeting of the Board, or any committee designated by the Board, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this sentence shall constitute presence in person at such meeting.
8 |
ARTICLE VIII
OFFICERS
1. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer, a President, a Chief Financial Officer, one or more Vice Presidents, a Secretary and a Treasurer. The Board may also choose one or more Assistant Secretaries and Assistant Treasurers, and such other officers as it shall deem necessary. Any number of offices may be held by the same person.
2. The salaries of all officers of the Corporation shall be fixed by the Board of Directors, or in such manner as the Board may prescribe.
3. The officers of the Corporation shall hold office until their successors are elected and qualified, or until their earlier resignation or removal. Any officer may be at any time removed from office by the Board of Directors, with or without cause. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.
4. Any officer may resign at any time by giving written notice of his resignation to the Board of Directors. Any such resignation shall take effect upon receipt thereof by the Board or at such later date as may be specified therein. Any such notice to the Board shall be addressed to it in care of the Secretary.
9 |
ARTICLE IX
THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer shall have general supervision and direction of the business and affairs of the Corporation, subject, however, to the direction and control of the Board. The Chief Executive Officer may sign and execute in the name of the Corporation deeds, mortgages, bond, contracts or other instruments. He shall perform all duties incident to the office of the Chief Executive Officer and shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors may from time to time determine. In the absence of a President, the Chief Executive Officer shall also perform all duties incident to the office of President.
ARTICLE X
THE PRESIDENT
The President shall have general and active supervision and direction over the day to day business operations and affairs of the Corporation and over its several officers, agents and employees, subject, however, to the direction and control of the Board. The President may sign and execute in the name of the Corporation deeds, mortgages, bond, contracts or other instruments. He shall perform all duties incident to the office of the President and shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors may from time to time determine.
10 |
ARTICLE XI
CHIEF FINANCIAL OFFICER AND TREASURER
The Chief Financial Officer shall have the custody of the corporate funds and securities, and shall deposit or cause to be deposited under his direction all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors or pursuant to authority granted by it. He shall render to the Board of Directors, the Chief Executive Officer, and the President whenever they may require it an account of all his transactions as Chief Financial Officer. He shall have such other powers and duties as may be delegated to him by the Board of Directors, the Chief Executive Officer, or the President.
The Treasurer shall, in case of the absence of the Chief Financial Officer, perform the duties and exercise the powers of the Chief Financial Officer, and shall have such other powers and duties as may be delegated to him by the Board of Directors, the Chief Executive Officer, the Chief Operating Officer, the President or the Chief Financial Officer.
ARTICLE XII
VICE PRESIDENTS
The Vice Presidents shall have such powers and duties as may be delegated to them by the Board of Directors, the Chairman, the Chief Executive Officer or the President.
ARTICLE XIII
SECRETARY AND ASSISTANT SECRETARY
1. The Secretary shall attend all meetings of the Board of Directors and of the stockholders, and shall record the minutes of all proceedings in a book to be kept for that purpose. He shall perform like duties for the committees of the Board when required.
11 |
2. The Secretary shall give, or cause to be given, notice of meetings of the stockholders, of the Board of Directors and of the committees of the Board. He shall keep in safe custody the seal of the Corporation, and when authorized by the Chairman, the Chief Executive Officer or the President, shall affix the same to any instrument requiring it, and when so affixed it shall be attested by his signature or by the signature of an Assistant Secretary. He shall have such other powers and duties as may be delegated to him by the Chairman, the Chief Executive Officer or the President.
3. The Assistant Secretary shall, in case of the absence of the Secretary, perform the duties and exercise the powers of the Secretary, and shall have such other powers and duties as may be delegated to them by the Chairman, the Chief Executive Officer or the President.
ARTICLE XIV
CERTIFICATES OF STOCK
The certificates of stock of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary.
ARTICLE XV
CHECKS
All checks, drafts and other orders for the payment of money and all promissory notes and other evidences of indebtedness of the Corporation shall be signed by such officer or officers or such other person as may be designated by the Board of Directors or pursuant to authority granted by it.
12 |
ARTICLE XVI
FISCAL YEAR
The fiscal year of the Corporation shall be as determined from time to time by resolution duly adopted by the Board of Directors.
ARTICLE XVII
NOTICES AND WAIVERS
1. Whenever by statute, by the Certificate of Incorporation or by these By-laws it is provided that notice shall be given to any director or stockholder, such provision shall not be construed to require personal notice, but such notice may be given in writing, by mail, by depositing the same in the United States mail, postage prepaid, directed to such stockholder or director at his address as it appears on the records of the Corporation, and such notice shall be deemed to be given at the time when the same shall be thus deposited, or by electronic transmission consented to by the stockholder to whom the notice is given. Notice of regular or special meetings of the Board of Directors may also be given to any director by telephone or by telex, telegraph or cable, and in the latter event the notice shall be deemed to be given at the time such notice, addressed to such director at the address hereinabove provided, is transmitted by telex (with confirmed answerback), or delivered to and accepted by an authorized telegraph or cable office.
2. Notice of regular or special meetings of the Board of Directors may also be given to any director by telephone or by electronic transmission, and in the latter event the notice shall be deemed to be given at the time such notice, addressed to such director at the address hereinabove provided, is transmitted.
13 |
3. Whenever by statute, by the Certificate of Incorporation or by these By-laws a notice is required to be given, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of any stockholder or director at any meeting thereof shall constitute a waiver of notice of such meeting by such stockholder or director, as the case may be, except as otherwise provided by statute.
ARTICLE XVIII
INDEMNIFICATION
All persons who the Corporation is empowered to indemnify pursuant to the provisions of Section 145 of the General Corporation Law of the State of Delaware (or any similar provision or provisions of applicable law at the time in effect) shall be indemnified by the Corporation to the full extent permitted thereby. The foregoing right of indemnification shall not be deemed to be exclusive of any other such rights to which those seeking indemnification from the Corporation may be entitled, including, but not limited to, any rights of indemnification to which they may be entitled pursuant to any agreement, insurance policy, other by-law or charter provision, vote of stockholders or directors, or otherwise. No repeal or amendment of this Article shall adversely affect any rights of any person pursuant to this Article which existed at the time of such repeal or amendment with respect to acts or omissions occurring prior to such repeal or amendment.
14 |
ARTICLE XIX
ALTERATION OF BY-LAWS
The By-laws of the Corporation may be altered, amended or repealed, and new By-laws may be adopted, by the stockholders or by the Board of Directors.
15 |
Exhibit 10.1
ASSIGNMENT AND AMENDED AND RESTATED LEASE
ASSIGNMENT AND AMENDED AND RESTATED LEASE , by and among EMBRYO DEVELOPMENT CORPORATION, a Delaware corporation (“Assignor”), 2150 CABOT LLC, a Pennsylvania limited liability company (“Landlord”), and HYDROGEL DESIGN SYSTEMS, INC., a Delaware corporation (“Tenant” or “HDS”).
WITNESSETH:
WHEREAS , pursuant to that certain Assignment and Assumption of Leases, made as of January 25, 2002, by and between Maxxim Medical, Inc., as assignor (“Maxxim”), and Landlord, as assignee, Landlord acceded to all of the right, title and interest of Maxxim under that certain Lease with Assignor, dated February 17, 1997, as amended (as amended, the “Initial Lease”) by (i) that certain Consent and Addendum to Lease, dated June 5, 1997, between Circon Corporation, as landlord, and Assignor, as tenant, and (ii) that certain First Amendment to Lease, dated as of November 16, 2001 (the “Maxxim Lease”), for certain premises located in at 2150 Cabot Boulevard West, Langhorne, Township of Middletown, Bucks County, Pennsylvania, more particularly described on the Amended and Restated Reference Page hereto (the “Premises”);
WHEREAS , Assignor wishes to assign its rights, title and interest as tenant to the Premises to HDS, and HDS wishes to accede to such rights and has agreed to assume the obligations of Assignor with respect to the Premises; and
WHEREAS , Landlord has agreed to the assignment by Assignor and assumption by HDS of the rights and obligations as tenant to the Premises on the condition that the Initial Lease be amended and restated;
NOW, THEREFORE , in consideration of the premises and the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
1. | AMENDED AND RESTATED LEASE. |
Landlord and HDS (hereinafter “Tenant”) have agreed to enter into this Assignment and Amended and Restated Lease, pursuant to which HDS shall accede to the rights and obligations of Assignor as tenant of the Premises on the terms and conditions set forth herein.
(A) The security deposit held by Landlord under the Maxxim Lease, shall be held by Landlord hereunder for the benefit of Tenant. The total Security Deposit due from Tenant under this Lease shall be as set forth in the Amended & Restated Reference Page hereto, including Schedule “A” thereto (together, the “Reference Page”).
(B) Tenant hereby assumes, and agrees to be bound by, all of the covenants, agreements and obligations of Tenant under the Lease to the extent that the same arise or are incurred or are required to be performed on and after the date hereof and continuing during the Term.
(C) Assignor agrees to indemnify, defend and hold Tenant harmless from and against all claims and demands of Landlord or any of its predecessors arising under the Maxxim Lease as a result of Assignor's performance of, or failure to perform, the covenants, agreements and obligations of the tenant thereunder through the date hereof. Assignor shall pay all costs and expenses (including reasonable attorney's fees) incurred by Tenant in enforcing this indemnity. Landlord hereby releases Assignor from all obligations of a tenant with respect to the Premises from and after the date hereof.
(D) Tenant hereby assumes all of the obligations of tenant under the Lease with respect to the Premises after the date hereof. Tenant agrees to indemnify, defend and hold Assignor harmless from and against all claims and demands of Landlord, its successors and assigns under this Lease and any extensions, renewals or modifications hereof arising as a result of Tenant's performance of, or failure to perform, the covenants, agreements and obligations of the Tenant hereunder to be kept and performed by Tenant under this Lease from and after the date hereof, and shall pay all costs and expenses (including reasonable attorney's fees) incurred by Assignor in enforcing this indemnity.
(E) Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises set forth and described on the Reference Page. The Reference Page, including all terms defined thereon, is hereby incorporated as part of this Lease.
2. | USE AND RESTRICTIONS ON USE. |
The Premises shall be continuously used and occupied by Tenant, but only for the purposes listed on the Reference Page and for such other lawful purposes as may be incidental thereto, all to the extent permitted by applicable zoning regulations. Subject to the provisions of Section 9 hereof, Tenant shall at its own cost and expense obtain any and all licenses and permits necessary for any such use. The parking of automobiles, trucks or other vehicles in the areas not specifically designated on Exhibit A and the outside storage of any property are prohibited without Landlord’s prior written consent. Tenant shall comply with all governmental laws, ordinances and regulations applicable to the Tenant's use of the Premises and its occupancy thereof, and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of any violations or nuisances in or upon, or connected with, the Premises, all at Tenant’s sole expense. If, as a result of any change in the governmental laws, ordinances and regulations, the Premises must be altered to lawfully accommodate Tenant’s use and occupancy thereof, such alterations shall be made only with the consent of Landlord, but the entire cost thereof shall be borne by Tenant; provided, that, the necessity of Landlord’s consent shall in no way create any liability against Landlord for failure of Tenant to comply, or alter the Premises to comply, with such laws, ordinances and regulations. Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor take any other action which would constitute a nuisance or would disturb or endanger any other tenants of the Building, or unreasonably interfere, with such tenants’ use of their respective premises. Without Landlord’s prior written consent, Tenant shall not receive, store or otherwise handle any product, material or merchandise which is explosive or highly flammable. Tenant will not permit the Premises to be used for any purpose (including, without limitation, the storage of merchandise) in any manner which would render the insurance thereon void or increase the insurance rate thereof, and Tenant shall immediately cease and desist from such use, paying all cost and expense resulting from such improper use.
Tenant shall not use or permit any use of the Premises in a manner which creates any safety or environmental hazard, or which would be dangerous to the Premises. Also, other than subject to applicable law, Tenant shall not use the Premises for the generation, use, manufacture, refining, recycling, transportation, treatment, storage, discharge or disposal of any hazardous, toxic or polluting substance or waste or for any purpose which poses a substantial risk of damage to the environment and not engage in any activity which would subject Landlord, Tenant or the Premises to any liability, obligation or affirmative act under the provisions of any federal, state or local environmental law, regulation, order or ordinance, whether now existing or hereafter enacted, and Tenant shall indemnify, defend and hold Landlord harmless from all liabilities, obligations, costs and expenses (including, without limitation, any cleanup costs under any federal or state superfund-type statute) arising by reason of a breach of this covenant and the parties hereto specifically agree that this covenant shall survive the term of this Lease.
Tenant shall provide to the landlord, at least thirty (30) days prior to Tenant's occupancy of the Premises, a list of all chemicals that it anticipates will be stored in the Premises or used in any manufacturing process to be conducted on the Premises and information on how such chemicals ill be handled, moved, stored, consumed and disposed in a manner that will comply with all applicable environmental laws. Tenant shall promptly send to Landlord an update for such list as needed to the extent other additional chemicals are used in the process or stored in the Premises in the future.
3. | TERM. |
The term of this Lease shall be as indicated on the Reference Page (unless sooner terminated as herein provided).
4. | RENT AND SECURITY DEPOSIT. |
Tenant agrees to pay to Landlord the Annual Base Rent (“Annual Rent”) during the Term by paying the Monthly Installment of Rent on or before the first day of each full calendar month during the Term. Rent for any period during the Term which is less than one full month shall be a prorated portion of the Monthly Installment of Rent based upon a 30-day month. Said rent shall be paid to Landlord, without deduction or offset and without notice or demand at the Landlord’s address, as set forth on the Reference Page, or to such other person or at such other place as Landlord may from time to time designate in writing.
Tenant recognizes that late payment of any rent or other sum due hereunder will result in administrative expense to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if rent or any other sum is due and payable pursuant to this Lease, and when such amount remains due and unpaid five (5) days after said amount is due, such amount shall be increased by a late charge in an amount equal to five percent (5%) of the unpaid rent or other payment. The amount of the late charge to be paid by Tenant shall be reassessed and added to Tenant’s obligation for each successive monthly period until paid. The provisions of this Section in no way relieve Tenant of the obligation to pay rent or other payments on or before the date on which they are due, nor do the terms of this Section in any way affect Landlord’s remedies pursuant to Section 22 of this Lease in the event said rent or other payment is unpaid after the date due.
No security or guarantee which may now or hereafter be furnished to Landlord for the payment of rent or the performance of Tenant’s other obligations under this Lease shall in any way constitute a bar to the recovery of the Premises or defense to any action in unlawful detainer or to any other action which Landlord may bring for a breach of any of the terms, covenants or conditions of this Lease.
This Lease is what is commonly called a “Net, Net, Net Lease.” It is the intention of Landlord and Tenant that Annual Rent shall be absolutely net to Landlord and that all costs, expenses and obligations of every kind relating directly or indirectly in any way, foreseen and unforeseen, to the Tenant’s use, occupancy and possession of the Premises, which may arise or become due during the Term of this Lease, or any extension thereof, shall be paid by Tenant. Such Annual Rent and all additional rent, as defined herein, shall be paid without abatement, diminution, reductions, deduction or setoff.
The Annual Rent and the Monthly Installments of Rent due from February 1, 2002 through January 31, 2012 shall be as set forth on Schedule “A” hereto.” Tenant agrees to pay the Annual Rent specified herein, together with any additional rent required hereunder, in equal monthly increments, on the first day of each month for all months remaining in the initial Term of the Lease, as set forth on Schedule “A” hereto.
2 |
As security for performance of its obligations hereunder and upon execution of this Lease, Tenant shall pay to Landlord and agrees to maintain hereafter, a Security Deposit of Nine Thousand Six Hundred Twenty-five Dollars ($9,625.00). Subject to this Section 4, Landlord shall place the Security Deposit in an interest bearing money market account and interest so earned from the deposit shall remain in the account and become part of the Security Deposit. Landlord shall notify Tenant in writing of the account number and financial institution where the Security Deposit is being held. Upon the occurrence of any Event of Default (as defined in Section 21 hereof) by Tenant, Landlord may from time to time and without prejudice to any other remedy, use the Security Deposit and any interest earned thereon to the extent necessary to satisfy any arrears of Annual Rent or additional rent, or any other amount, damage, injury, expense or liability owed or caused to Landlord by such event of default. The remaining balance of such security, together with all remaining interest earned thereon, shall be returned by Landlord to Tenant within a thirty (30) days after termination of this Lease provided that there is no documented outstanding issue which could require a monetary resolution, in which event the Landlord shall have a reasonable time to investigate the same and refund the appropriate amount of the aforementioned security and interest. The Security Deposit shall not be considered an advance payment of rent or a measure of Landlord’s damages in ease of default by Tenant. In the event of the sale or transfer of Landlord’s interest in the Premises, Landlord shall have the right to transfer the Security Deposit and all interest earned thereon to the purchaser or transferee, and upon such transfer, Tenant shall look only to the new landlord for the return of the Security Deposit and interest and Landlord shall thereupon be released from all liability to Tenant for the return of or accounting for such Security Deposit and interest. Notwithstanding the foregoing, Tenant agrees that Landlord’s mortgagee, if any, shall have no liability to Tenant for the return of the Security Deposit and interest or any other funds deposited with Landlord unless and until such Security Deposit and interest or other funds is in fact paid or transferred by Landlord to such mortgagee, whether or not such mortgagee is operating the Premises at any time as a mortgagee in possession or has acquired title to the Premises upon exercising its remedies under its mortgage.
5. | REAL ESTATE TAXES. |
Landlord agrees to pay all general and special taxes, assessments and governmental charges of any kind and nature whatsoever (hereinafter collectively referred to as “Taxes”) lawfully levied against the Building, the real property on which it is situated and the grounds, parking areas, driveways and alleys around the Building. Tenant shall pay to Landlord as additional rent upon demand at the time the bill for each installment for any tax year applicable to the Term (or any renewal or extension thereof) issues, Tenant’s Proportionate Share, as set forth on the Reference Page, of the amount of such taxes applicable to each installment less any monthly payments paid by Tenant as provided below for such tax year. Prior to the actual determination of the Taxes for a calendar year, Landlord may, if it so elects and at any time or from time to time during said calendar year, estimate the amount of such Taxes. If, in the estimation of Landlord, such Taxes will exceed the previous year’s Taxes, Landlord shall give Tenant written notification of the amount of such estimated excess and Tenant agrees that it will increase its Monthly Installment of Rent subsequent to receipt of such written notification to include such excess. If the total Tenant actually paid for estimated Taxes pursuant to this Section is more than the actual Tax, Landlord shall remit the excess to Tenant within thirty (30) days of the making of such determination or, at Landlord's election, credit such amount against the next Monthly Installments of Rent. In addition, Tenant shall pay upon demand Tenant’s Proportionate Share of any reasonable fees, expenses and costs incurred by Landlord in protesting any assessments, levies or the tax rate. Taxes shall include the following by way of illustration, but not limitation: Real estate taxes; any other such taxes, charges and assessments which are levied with respect to the Building, and any improvements, fixtures and equipment and all other property of Landlord, real or personal, located in the Building and used in connection with the operation of the Building and the land upon which they are situated including any payments to any ground lessor in reimbursement of tax payments made by such lessor; fees or assessments for any governmental services to the Building; service payments in lieu of taxes; dues or assessments payable to any property owners association due to Landlord’s ownership of the Building; water and sewer charges; and any gross receipts tax and/or any tax which shall be levied in addition to or in lieu of real estate, possessory interest or personal property taxes.
Tenant, after prior written notice to Landlord, and at Tenant’s sole cost and expense, shall have the right to dispute by appeal any assessment of the aforementioned taxes. The Landlord may require that the Tenant deposit with Landlord a sum sufficient to pay the entire amount of any tax, charge, assessment or levy so disputed, plus potential interest and penalties. Tenant shall promptly pay and discharge all amounts determined to be payable pursuant to such legal proceedings pertaining to the appeal. Landlord agrees to join in any such proceedings only if such joinder is necessary to the prosecution thereof. The costs of such joinder shall be paid by Tenant.
6. | [INTENTIONALLY OMITTED] |
3 |
7. | ALTERATIONS. |
Except for the alterations, additions or improvements that were to be done by Tenant as part of Tenant’s initial occupancy under the Initial Lease, as specified in Exhibit B attached hereto and made a part hereof (the “Initial Improvements”), Tenant shall not make any alterations, improvements or additions to the Premises without the prior written approval of Landlord (which approval shall not be unreasonably withheld or delayed) except that Tenant may, after giving Landlord thirty (30) days’ prior written notice thereof (which notice shall contain a detailed written description and drawing of any contemplated alterations or improvements), make alterations, improvements and/or additions to the Premises that (a) total less than $10,000.00 in the aggregate in any given year, except in the case of emergency repairs, and (b) involve interior non-structural work to the Premises. Any alteration, addition, or improvement in, on, or to the Premises including carpeting, but excepting the “Accelerator” described in Exhibit B and movable furniture, equipment and other personal property of Tenant removable without material damage to the property or the Premises, shall be and remain the property of Tenant during the Term but shall, unless Landlord elects otherwise, become a part of the realty and belong to Landlord without compensation to Tenant upon the expiration or sooner termination of the Term and title shall pass to Landlord under this Lease as by a bill of sale, which Tenant hereby agrees to execute and deliver to, and for the benefit of, Landlord on the last day of the Term in a form acceptable to Landlord in its sole discretion. The Accelerator shall, at all times, be the property of Tenant. When applying for such consent, Tenant shall, if requested by Landlord, furnish complete plans and specifications for such alterations, additions and improvements. In the event Landlord consents to the making of any such alteration, addition, or improvement by Tenant, the same shall be made using a contractor reasonably acceptable to Landlord at Tenant's sole cost and expense. All alterations, additions or improvements proposed by Tenant shall be constructed in accordance with all government laws, ordinances, rules and regulations and Tenant shall, prior to construction, provide such assurances to Landlord, including, but not limited to, waivers of lien, surety company performance bonds and personal guaranties of individuals of substance, as Landlord shall require to assure payment of the costs thereof and to protect Landlord against any loss from any mechanics’, materialmen’s or other liens. Tenant shall pay in addition to any sums due pursuant to Sections 4 and 5 above any increase in real estate taxes attributable to any such alteration, addition, or improvement for so long, during the Term, as such increase is ascertainable. Upon the expiration or sooner termination of the Term as herein provided, Tenant shall, upon demand by Landlord, at Tenant’s sole cost and expense, forthwith and with all due diligence remove any such alterations, additions or improvements which are designated by Landlord to be removed, and Tenant shall forthwith and with all due diligence, at its sole cost and expense, repair and restore the Premises to their original condition, reasonable wear and tear and loss by casualty covered by Section 24 excepted.
In the event that Tenant fails to remove any alterations, additions, and/or improvements as herein described, Tenant shall reimburse Landlord for Landlord’s costs in removing such alterations, additions and/or improvements within thirty (30) days of Tenant's receipt of notice of such costs incurred by Landlord.
8. | TENANT’S REPAIRS. |
(A) Tenant shall, at its own cost and expense, keep and maintain all parts of the Premises and the surrounding real estate for which Landlord is not expressly responsible under the terms of the Lease, including portions shared in common with other tenants of the Building but not including other tenants’ premises, in good condition, promptly making all necessary repairs and replacements, with materials and workmanship of the same character, kind and quality as the original, including but not limited to, windows, glass and plate glass, doors, skylights, any special office entries, interior walls and finish work, floors and floor coverings, downspouts, gutters, heating and air conditioning systems, electrical systems and fixtures, sprinkler systems, dock boards, truck doors, dock bumpers, paving, plumbing work and fixtures, termite and pest extermination, regular removal of trash and debris, regular mowing of any grass, trimming, weed removal and general landscape maintenance. Tenant, as part of its obligations hereunder, shall (i) keep the Tenant’s Parking Area, driveways, alleys and the portions of the whole of the property to which it has access, in a clean and sanitary condition and (ii) without injury to the roof, other horizontal surfaces of the Building, downspouts, parking areas, driveways and sidewalks, remove all snow and ice from same. Tenant will, as far as possible, keep all such parts of the Premises, Building and the real estate on which the Building is located from deterioration due to ordinary wear and from falling temporarily out of repair, and upon termination of this Lease in any way Tenant will yield up the Premises to Landlord in good condition and repair, reasonable wear and tear and loss by fire or other casualty covered by insurance to be maintained by Landlord pursuant to Section 24 hereof and any condition caused by the failure of Landlord to make a repair or replacement required to be made by Landlord pursuant to Section 9 hereof excepted (but not excepting any damage to glass or loss not reimbursed by insurance because of the existence of a deductible under the appropriate policy).
(B) Tenant shall not damage any demising wall or disturb the integrity and support provided by any demising wall and shall, at its sole cost and expense, promptly repair any damage or injury to any demising wall caused by Tenant or its employees, agents or invitees.
(C) Tenant and its employees, customers and licensees shall have the non-exclusive right to use, in common with the other parties occupying said Building, common areas, if any, (exclusive of any parking or work load areas designated or to be designated by Landlord for the exclusive use of Tenant or other tenants occupying or to be occupying other portions of the Building), driveways and alleys adjacent to said Building, subject to such reasonable rules and regulations as Landlord may from time to time prescribe. Further, Landlord reserves the right to perform, upon notice to Tenant, the paving and landscape maintenance for the grounds around the Building, including, but not limited to, the mowing of the grass, care of shrubs, general landscaping and maintenance of common parking areas, if any, driveways and alleys, nonstructural roof repairs, exterior painting, common sewage line plumbing, and repair and maintenance of any other items, the obligations for which may be shared with other tenants in the Building and other improvements of which the Premises are a part, all of which are otherwise Tenant's obligations under Section 8(A), and Tenant shall, in lieu of the obligations set forth under Section 8(A) with respect to such items, be liable for Tenant’s Proportionate Share (as set forth on the Reference Page) of the cost and expense thereof including a reasonable management fee unless Landlord in its sole discretion determines that such cost and expense is properly allocable in another proportion or solely to either Tenant or the other tenants occupying said Building. Tenant shall pay to Landlord its share, determined as aforesaid, of such costs and expenses, upon demand, as additional rent, in the event Landlord elects to perform or cause to be performed such work.
(D) Except as provided for herein, each time that repairs to the heating and air conditioning systems may be necessary, Tenant shall be responsible, at Tenant’s sole cost and expense, for such repairs. Tenant shall, at its own cost and expense, enter into a regularly scheduled, comprehensive preventive maintenance/service contract (the “Service Contract”) with a maintenance contractor approved by Landlord (and a copy thereof shall be furnished to Landlord), for servicing all heating and air conditioning systems and equipment within the Premises. The Service Contract must include all services suggested by the equipment manufacturer in the operation/maintenance manual, must be comprehensive in nature in that such Service Contract shall include the repair and/or replacement (including parts and labor) of all major and minor components of the heating and air conditioning system including, but not limited to, the heat exchangers, burners, boilers, condensers, compressors, and blower mechanisms, and must become effective within ten (10) days of the date of execution of this Lease.
4 |
(E) Tenant shall, at its own cost and expense to the extent not covered by the insurance to be maintained by Landlord under Section 24, repair any damage to the Premises or the Building resulting from and/or caused in whole or in part by the negligence or misconduct of Tenant, its agents, servants, employees, patrons, customers, or any other person entering upon the property as a result of Tenant's business activities or caused by Tenant’s default hereunder.
(F) Subject to Section 9 below, Tenant accepted the Premises in “as is” condition on the date of the execution of the Initial Lease, and such “as is” condition included functioning heating, ventilation and air conditioning equipment and the delivery of the Premises in a broom clean condition. Tenant understands that the estimated square footage of the Premises is only an estimate and that the Annual Rent, Monthly Installments of Base Rent and Tenant's Proportionate Share shall remain unchanged regardless of whether the actual square footage is more or less.
9. | LANDLORD’S IMPROVEMENTS AND REPAIRS. |
To the extent reasonably practical and possible and not already accomplished, the Landlord shall, at its sole cost and expense, have all utilities for the Premises individually metered.
Landlord shall, at its sole cost and expense, maintain in good repair, reasonable wear and tear and any casualty covered by the provisions of Section 24 excepted, only the foundation and the structural soundness of the exterior walls and of the roof of the Building. Tenant shall immediately give Landlord written notice of any such defect or need for repairs after which Landlord shall have a reasonable opportunity to repair the same or cure such defect. Landlord’s liability with respect to any defects, repairs or maintenance for which Landlord is responsible under any of the provisions of the Lease shall be limited to the cost of such repairs or maintenance or the curing of such defect. The term “walls” as used herein shall not include windows, glass or plate glass, doors, special store fronts or office entries.
10. | SIGNS. |
Any signs installed by Tenant (the “Signs”) upon the Premises shall be in compliance with all state and local governmental ordinances and regulations and shall not be in violation of any covenants or restrictions which may pertain to the Premises. Upon termination of the Lease, Tenant shall remove all Signs and shall restore the Premises and/or the Building in accordance with the provisions of Section 7 or, at Landlord’s option, said Signs shall become part of the realty and belong to Landlord without compensation to Tenant and title shall pass to Landlord under this Lease as by a bill of sale.
11. | LIENS. |
Tenant shall keep the Premises and Tenant’s leasehold interest in the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by Tenant. In the event that Tenant shall not, within ten days following the imposition of any such lien, cause the same to be released of record, Landlord shall have the right to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith shall be considered additional rent and shall be payable to it by Tenant on demand with interest at the rate of eighteen percent (18%) per annum or the highest rate permitted by law, whichever is lower.
12. | ASSIGNMENT AND SUBLETTING. |
(A) Except as provided in this Section 12, Tenant shall not have the right to assign or pledge this Lease or to sublet the whole or any part of the Premises, whether voluntarily or by operation of law, or permit the use or occupancy of the Premises by anyone other than Tenant, or assign this Lease for security purposes, without the prior written consent of Landlord (which consent shall not be unreasonably withheld or delayed), and such restrictions shall be binding upon any assignee or subtenant to which Landlord has consented. In the event Tenant desires to sublet the Premises, or any portion thereof, or assign this Lease, Tenant shall give written notice thereof to Landlord at least sixty (60) days but no more than one hundred eighty (180) days prior to the proposed commencement date of such subletting or assignment, which notice shall set forth the name of the proposed subtenant or assignee, the relevant terms of any sublease and copies of financial reports and other relevant financial information of the proposed subtenant or assignee. Notwithstanding any permitted assignment or subletting, Tenant shall at all times remain directly and primarily responsible and liable for the payment of the rent herein specified and for compliance with all of its other obligations under this Lease. Upon the occurrence of an “Event of Default” (as hereinafter defined), if the Premises or any part thereof is then sublet, Landlord, in addition to any other remedies provided herein or by law, may collect directly from such subtenant all rents due and becoming due to Tenant under such sublease and apply such rent against any sums due to Landlord from Tenant hereunder. No such collection directly from an assignee or subtenant shall be construed to constitute a novation or a release of Tenant from the further performance of Tenant’s obligations hereunder.
(B) Within sixty (60) days from receipt of a sublease or assignment request in accordance with Section 12(A), Landlord shall either:
5 |
(i) in the event that Tenant desires to sublease less than thirty percent (30%) of the Premises to a person not a division or subsidiary of Tenant, grant or refuse consent and Tenant understands it will be reasonable for Landlord to avoid a potential multiple tenant situation which could be created by smaller sublets; or
(ii) in the event that Tenant desires to assign this Lease or sublease 30% or more of the Premises to a person not a division or subsidiary of Tenant, Landlord shall grant or refuse consent, however, such consent shall not be unreasonably withheld or delayed.
A sublease to a division or subsidiary of Tenant is permitted without consent as long as Tenant notifies Landlord in writing and acknowledges in that notice that Tenant remains fully responsible for the obligations of the Tenant hereunder.
(C) Consent by Landlord to any assignment or subletting shall not include consent to the assignment or transferring of any lease renewal option rights, space option rights or any special privileges or extra services granted to Tenant by this Lease, or addendum or amendment thereto or letter of agreement (and such options, rights, privileges or services shall terminate upon such assignment), unless Landlord specifically grants in writing such options, right, privileges or services to assignee or subtenant. Any sale, assignment, mortgage, transfer of this Lease or subletting which does not comply with the provisions of this Section shall be void.
(D) INTENTIONALLY OMITTED.
(E) Should Landlord agree to authorize and execute an assignment or sublease agreement, Tenant shall pay to Landlord on demand a sum equal to all of Landlord’s costs, including reasonable attorney’s fees, incurred in connection with such assignment or transfer.
(F) For purposes of this Section 12, any transfer or change in control of Tenant (or any subtenant, assignee, or occupant) by operation of law or otherwise shall be deemed an assignment hereunder, including, without limitation, any merger, consolidation, dissolution, or any change in the controlling equity interests of Tenant or any subtenant, assignee, or occupant (whether in a single transaction or series of transactions). Any assignment or subletting in contravention of the provisions of this Section 12 shall be void and shall be an Event of Default hereunder.
(G) No assignment or subletting pursuant to this Section 12 shall in any way relieve or release Tenant from liability for performance of the all of the terms, covenants, and conditions of this Lease. Any assignee or subtenant, prior to any such assignment or subtenancy, shall promptly execute and deliver to Landlord a written agreement assuming, without modification or limitation, all of the obligations under this Lease.
13. | INDEMNIFICATION. |
Landlord shall not be liable to Tenant, and Tenant hereby waives all claims against Landlord, for any damage to any property or any injury to any person in or about the Premises or the Building by or from any cause whatsoever (including, without limiting, the foregoing, rain or water leakage of any character from the roof, windows, walls, basement, pipes, plumbing works or appliances, the Building not being in good condition or repair, gas, fife, oil, electricity or theft); except that Landlord will indemnify and hold Tenant harmless from such claims, liabilities or costs (including court costs and attorney’s fees) for any damage to any property or any injury to any person occurring in, on or about the Premises or the Building when and to the extent such injury or damage is caused by the willful act of Landlord, or its agents, employees or contractors. Tenant shall indemnify and hold Landlord harmless from and defend Landlord against any and all claims, liability or costs (including court costs and attorney’s fees) for any damage to any property or any injury to any person occurring in, on or about the Premises or the Building unless such injury or damage shall be caused by another tenant in the Building. The provisions of this Section shall survive the termination of this Lease with respect to any claims fifty occurring prior to such termination.
14. | INSURANCE. |
(A) Tenant shall maintain in full force and effect, at its own expense, comprehensive general liability insurance (including a contractual liability and fire legal liability insurance endorsement) naming as additional insureds Landlord’s mortgagee, if any, against claims for bodily injury, death or property damage in amounts not less than $3,000,000 (or such higher limits up to a maximum limit of $5,000,000 as may be determined by Landlord or Landlord’s mortgagee from time to time, public liability insurance in the minimum amount of $5,000,000 against claims for personal injury, death or property damage suffered or occurring as a result of the use of products manufactured, constructed or sold by Tenant, or services rendered by Tenant, boiler and machinery coverage (direct damage and use and occupancy) on a replacement cost basis, and workmen's compensation insurance in an appropriate amount. Tenant shall also maintain, in full force and effect, at its own expense, in amounts (in no event less than $5,000,000) and subject to terms and conditions acceptable to Landlord, insurance coverage against any adverse environmental conditions at or near the Building and Premises created or caused by Tenant. If Tenant can not obtain such coverage to the satisfaction of Landlord, Tenant shall post an indemnity bond in amounts (in no event less than $5,000,000), and issued by a party, acceptable to Landlord, which bond shall be used to secure the Tenant’s obligations related to environmental conditions as set forth in this Lease, and in particular, Section 41 below.
6 |
(B) All policies of insurance shall be issued by insurers which are authorized to do business in the Commonwealth of Pennsylvania and which have a Best's financial rating of A or better and a size class rating of XII (12) or larger or otherwise acceptable to Landlord. At or prior to Tenant’s taking possession of the Premises, Tenant shall deposit the policy or policies of insurance, or certificates thereof, with Landlord and shall deposit with Landlord renewals thereof at least thirty (30) days prior to each expiration. Said policy or policies of insurance or certificates thereof shall not be subject to contribution, and shall have attached thereto an endorsement that such policy shall not be amended, canceled or terminated without at least thirty (30) days’ prior written notice to Landlord, that such policy or policies shall not be canceled or invalidated by any use of the Premises more hazardous than permitted in such policy or policies or by any change in title to or ownership of the Premises, and that no act or omission of Tenant shall invalidate the interest of Landlord or Landlord’s mortgagee under said insurance and expressly waiving all rights of subrogation as set forth in this Lease. At Landlord’s request, Tenant shall provide to Landlord at Landlord’s reasonable expense, if any, a letter from an authorized representative of its insurance carrier stating that Tenant's current and effective insurance coverage complies with the requirements contained herein.
(C) Landlord shall maintain, at Tenant's expense to the extent of Tenant's Proportionate Share, an all risk fire and extended coverage insurance policy with respect to the Building and the Premises.
15. | WAIVER OF SUBROGATION. |
Tenant and Landlord hereby mutually waive their respective rights of recovery against each other for any loss insured, covered and actually paid by fire, extended coverage or all risk insurance now or hereafter existing for the benefit of the respective party. Each party shall obtain any special endorsements required by their insurer to evidence compliance with the aforementioned waiver.
16. | SERVICES AND UTILITIES. |
Landlord agrees to provide, at its cost, water, electricity and telephone service connections into the Premises; but Tenant shall pay for all water, gas, heat, light, power, telephone, sewer, sprinkler system charges and other utilities and services used on or from the Premises, including, without limitation, Tenant's Proportionate Share of any central station signaling system installed in the Premises or the Building, together with any taxes, penalties, and surcharges or the like pertaining thereto and any maintenance charges for utilities. Tenant shall furnish all electric light bulbs, tubes and ballasts. If any such services are not separately metered to Tenant, Tenant shall pay such proportion of all charges jointly shared or metered with other premises as determined by Landlord, in its sole discretion, to be reasonable. Any such charges paid by Landlord and assessed against Tenant shall be immediately payable to Landlord on demand and shall be additional rent hereunder. Landlord shall in no event be liable for any interruption or failure of utility services on or to the Premises.
17. | HOLDING OVER. |
Tenant shall pay Landlord for each day Tenant retains possession of the Premises or part thereof after termination hereof by lapse of time or otherwise 150% of the amount of the Annual Rent for the last period prior to the date of such termination prorated on a daily basis, and also pay all damages sustained by Landlord by reason of such retention, and shall indemnify and hold Landlord harmless from any loss or liability resulting from such holding over and delay in surrender. If Landlord gives notice to Tenant of Landlord’s election thereof, such holding over shall constitute renewal of this Lease for a period from month to month or for one year, whichever shall be specified in such notice, in either case at 150% of the Annual Rent being paid to Landlord under this Lease immediately prior thereto, but if the Landlord does not so elect, acceptance by Landlord of rent after such termination shall not constitute a renewal; this provision shall not be deemed to waive Landlord’s right of re-entry or any other right hereunder or at law.
18. | SUBORDINATION/NON-DISTURBANCE. |
(A) Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, this Lease shall be subject and subordinate at all times to ground or underlying leases and to the lien of any mortgages or deeds of trust now or hereafter placed on, against or affecting the Building, Landlord's interest or estate therein, or any ground or underlying lease; provided, however, that if the lessor, mortgagee, trustee, or holder of any such mortgage or deed of trust elects to have Tenant’s interest in this Lease be superior to any such instrument, then by notice to Tenant this Lease shall be deemed superior, whether this Lease was executed before or after said instrument. Notwithstanding the foregoing, Tenant covenants and agrees to execute and deliver upon demand such further instruments evidencing such subordination or superiority of this Lease as may be required by Landlord.
(B) Upon execution of this Lease by Landlord, Landlord agrees to use Landlord’s best efforts, in Landlord's reasonable discretion, to obtain and furnish to Tenant agreement(s) (“Non-Disturbance Agreement”) executed and acknowledged in proper form except for execution on behalf of Tenant, from (i) the holder(s) of any mortgage now encumbering the Premises, and (ii) from the lessor(s) of any underlying leasehold estate or fee owner under an installment purchase agreement, if any, pursuant to which Landlord directly or indirectly derives its authority to execute this Lease (in either or any of such cases, an “Existing Holder”) whereby each Existing Holder agrees to not disturb Tenant in its rights, use and possession of the Premises under this Lease or to terminate this Lease, except to the extent permitted to Landlord by the terms of this Lease, notwithstanding the foreclosure or the enforcement of the mortgage or termination or other enforcement of an underlying lease or installment purchase agreement
19. | RULES AND REGULATIONS. |
Tenant shall faithfully observe and comply with all the rules and regulations as set forth in Exhibit D, if any, attached hereto and all reasonable modifications of and additions thereto from time to time put into effect by Landlord as well as all covenants, conditions and restrictions of record. Landlord shall not be responsible to Tenant for the non-performance by any other tenant or occupant of the Building of any such rules and regulations.
7 |
20. | RE-ENTRY BY LANDLORD. |
During the twelve (12) month period immediately preceding the Termination Date, Landlord reserves and shall at alt times have the right to reenter the Premises to show said Premises to prospective tenants. Landlord shall make a good faith effort to provide prior reasonable notice of such showings. At any time during the Term of this Lease, Landlord reserves and shall at all times have the right to re-enter the Premises to inspect the same, to supply any service to be provided by Landlord to Tenant hereunder, to show said Premises to prospective purchasers or mortgagees, and to alter, improve, or repair the Premises and any portion of the Building, without abatement of rent, and may for that purpose erect, use, and maintain scaffolding, pipes, conduits, and other necessary structures in and through the Building and Premises where reasonably required by the character of the work to be performed, provided entrance to the Premises shall not be blocked thereby, and further provide that the business of Tenant shall not be interfered with unreasonably. In the event that Landlord requires access to any under-floor duct, Landlord’s liability for carpet (or other floor covering) replacement shall be limited to replacement of the piece removed. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in the Premises, excluding Tenant’s vaults and safes, or special security areas (previously designated by Tenant to Landlord in writing by notice given hereunder), and Landlord shall have the right to use any and all means which Landlord may deem proper to open said doors in an emergency to obtain entry to any portion of the Premises. Landlord shall also have the right at any time to change the arrangement and/or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets or other public parts of the Building, and to change the name, number or designation by which the Building is commonly known.
21. | EVENTS OF DEFAULT. |
The following events shall be deemed to be events of default (each, an “Event of Default”) under this Lease:
(A) Tenant fails to pay when due any sum of money becoming due to be paid to Landlord hereunder, whether such sum be any installment of the rent herein reserved, any other amount treated as additional tent hereunder, or any other payment or reimbursement to Landlord required herein, whether or not treated as additional rent hereunder, and such failure shall continue for a period of five days from the date such payment was due; or
(B) Tenant fails to comply with any term, provision or covenant of this Lease other than by failing to pay when or before due any sum of money becoming due to be paid to Landlord hereunder; and shall not cure such failure within 20 days (forthwith, if the default involves a hazardous condition) after written notice thereof to Tenant; or
(C) Tenant abandons or vacates any substantial portion of the Premises without continuing to perform each and every one of Tenant's obligations under this Lease including, but not limited to, the payment of rent or other sums due hereunder or the obligation to maintain and repair all parts of the Premises in accordance with Section 8 hereof; or
(D) Tenant shall fail to vacate the Premises immediately upon termination of the Lease, by lapse of time or otherwise, or upon termination of Tenant’s right to possession only; or
(E) The leasehold interest of Tenant shall be levied upon under execution or be attached by process of law or Tenant shall fail to contest diligently the validity of any lien or claimed lien and give sufficient security to Landlord to ensure payment thereof or shall fail to satisfy any judgment rendered thereon and have the same released, and such default shall continue for ten days after written notice thereof to Tenant; or
(F) Tenant becomes insolvent, admit in writing its inability to pay its debts generally as they become due, files a petition in bankruptcy or a petition to take advantage of any insolvency statute, makes an assignment for the benefit of creditors, makes a transfer in fraud of creditors, applies for or consent to the appointment of a receiver of itself or of the whole or any substantial part of its property, or files a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws, as now in effect or hereafter amended, or any other applicable law or statute of the United States or any state thereof; or
(G) A court of competent jurisdiction enters an order, judgment or decree adjudicating Tenant a bankrupt, or appointing a receiver of Tenant, or of the whole or any substantial part of its property, without the consent of Tenant, or approving a petition tiled against Tenant seeking reorganization or arrangement of Tenant under the bankruptcy laws of the United States, as now in effect or hereafter amended, or any state thereof, and such order, judgment or decree is not vacated or set aside or stayed within 30 days from the date of entry thereof; or
(H) Tenant uses or occupies the Premises other than as permitted hereunder; or
(I) Tenant assigns or sublets, or purports to assign or sublet, the Premises or any portion thereof, other than in the manner and upon the conditions set forth herein; or
(J) Tenant removes, attempts to remove, or manifests an intention to remove any or all of Tenant’s property from the Premises other than in the ordinary and usual course of business. Any attempt to remove all or substantially all of Tenant’s property from the Premises shall be deemed to be not in the ordinary course of business; or
8 |
(K) Tenant fails to maintain in effect on any insurance as required by the terms of Section 24 hereof.
22. | REMEDIES. |
Upon the occurrence of any Events of Default described in Section 21 or any other default by Tenant described elsewhere in this Lease, Landlord shall have the option to pursue any one or more of the following remedies without any notice or demand whatsoever:
(A) Landlord may, at its election, terminate this Lease or terminate Tenant’s right to possession only, without terminating the Lease;
(B) Upon any termination of this Lease, whether by lapse of time or otherwise, or upon any termination of Tenant’s right to possession without termination of the Lease, Tenant shall surrender possession and vacate the Premises immediately, and deliver possession thereof to Landlord, and Tenant hereby grants to Landlord full and free right to enter into and upon the Premises in such event with or without process of law and to repossess Landlord of the Premises as of Landlord’s former estate and to expel or remove Tenant and any others who may be occupying or within the Premises and to remove any and all property therefrom, without being deemed in any manner guilty of trespass, eviction or forcible entry or detainer, and without incurring any liability for any damage resulting therefrom, Tenant hereby waiving any right to claim damage for such reentry and expulsion, and without relinquishing Landlord’s right to rent or any other right given to Landlord hereunder or by operation of law;
(C) Upon any termination of this Lease, whether by lapse of time or otherwise, Landlord shall be entitled to recover as damages, all rent, including any amounts treated as additional rent hereunder, and other sums due and payable by Tenant on the date of termination, plus the sum of (i) an amount equal to the then present value of the rent, including, any amounts treated as additional rent hereunder, and other sums provided herein to be paid by Tenant for the residue of the Term hereof, less the fair rental value of the Premises for such residue (taking into account the time and expense necessary to obtain a replacement tenant or tenants, including expenses hereinafter described in sub-Section (1)) relating to recovery of the Premises, preparation for re-letting and for re-letting itself), which the parties agree shall in no event exceed 60% of the then present value of the rent for the period and (ii) the cost of performing any other covenants which would have otherwise been performed by Tenant; provided however, notwithstanding anything contained herein to the contrary, Landlord will credit all rent received from re-letting the Premises against the amounts owed by Tenant;
(D) (i) Upon any termination of Tenant’s right to possession only without termination of the Lease, Landlord may, at Landlord’s option, enter into the Premises, remove Tenant’s signs and other evidences of tenancy, and take and hold possession thereof as provided in sub-section (B) of this Section 21 above, without such entry and possession terminating the Lease or releasing Tenant, in whole or in part, from any obligation, including Tenant’s obligation to pay the rent, including any amounts treated as additional rent, hereunder for the full Term. In any such case Tenant shall pay forthwith to Landlord, if Landlord so elects, a sum equal to the entire amount of the rent, including any amounts treated as additional rent hereunder, for the residue of the Term plus any other sums provided herein to be paid by Tenant for the remainder of the Term;
(ii) Landlord may, but need not, relet the Premises or any part thereof for such rent and upon such terms as Landlord in its sole discretion shall determine (including the right to relet the Premises for a greater or lesser term than that remaining under this Lease, the right to relet the Premises as a part of a larger area, and the right to change the character or use made of the Premises) and Landlord shall not be required to accept any tenant offered by Tenant or to observe any instructions given by Tenant about such reletting. In any such case, Landlord may make repairs, alterations and additions in or to the Premises, and redecorate the same to the extent Landlord deems necessary or desirable, and Tenant shall, upon demand, pay the cost thereof, together with Landlord’s expenses of reletting including, without limitation, any broker’s commission incurred by Landlord. If the consideration collected by Landlord upon any such reletting plus any sums previously collected from Tenant are not sufficient to pay the full amount of all rent, including any amounts treated as additional rent hereunder and other sums reserved in this lease for the remaining term hereof, together with the costs of repairs, alterations, additions, redecorating, and Lessor’s expenses of reletting and the collection of the rent accruing therefrom, (including attorney’s fees and broker’s commissions), Tenant shall pay to Landlord the amount of such deficiency upon demand and Tenant agrees that Landlord may file suit to recover any sums falling due under this Section from time to time;
(E) Landlord may, at Landlord's option, enter into and upon the Premises, with or without process of law, if Landlord determines in its sole discretion, that Tenant is not acting within a commercially reasonable time to maintain, repair or replace anything for which Tenant is responsible hereunder and correct the same, without being deemed in any manner guilty of trespass, eviction or forcible entry and detainer and without incurring any liability for any damage resulting therefrom and Tenant agrees to reimburse Landlord, on demand, as additional rent, for any expenses which Landlord may incur in thus effecting compliance with Tenant's obligations under this Lease;
(F) Any and all property which may be removed from the Premises by Landlord pursuant to the authority of the Lease or of law, to which Tenant is or may be entitled, may be handled, removed and stored, as the case may be, by or at the direction of Landlord at the risk, cost and expense of Tenant, and Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all expenses incurred in such removal and all storage charges against such property so long as the same shall be in Landlord’s possession or under Landlord’s control. Any such property of Tenant not retaken by Tenant from storage within 30 days after removal from the Premises shall, at Landlord’s option, be deemed conveyed by Tenant to Landlord under this Lease as by a bill of sale without further payment or credit by Landlord to Tenant.
(G) In addition to all other rights and remedies of Landlord, if an Event of Default occurs, Landlord shall, to the extent permitted by law, have a right of distress for rent and lien on all of Tenant’s fixtures, merchandise and equipment in the Premises, as security for rent and all other charges payable hereunder.
9 |
(H) SUBJECT TO THE PROVISIONS OF SECTION 21, PARAGRAPHS (H) (i)-(iv) OF SECTION 22 BELOW SETS FORTH WARRANTS OF AUTHORITY FOR AN ATTORNEY TO CONFESS JUDGMENTS AGAINST TENANT. IN GRANTING THESE WARRANTS OF ATTORNEY TO CONFESS JUDGMENTS AGAINST TENANT, TENANT HEREBY KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TENANT HAS OR MAY HAVE TO PRIOR NOTICES AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA.
(i) UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, TENANT HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARY OR CLERK OF ANY COURT OF JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, AS ATTORNEY FOR TENANT, TO APPEAR FOR TENANT IN ANY SUCH COURT IN ANY APPROPRIATE PROCEEDING BROUGHT OR TO BE BROUGHT AGAINST TENANT BY LANDLORD ON THIS LEASE AND THEREIN TO CONFESS JUDGMENT AGAINST TENANT FOR ALL RENT AND SUMS DUE BY TENANT FOR THE UNEXPIRED TERM OF THE LEASE HEREIN TOGETHER WITH COURT COSTS AND REASONABLE ATTORNEYS’ FEES (WHICH FOR PURPOSES OF THIS SUB-SECTION SHALL BE DEEMED REASONABLE IF SUCH FEES ARE LIMITED TO THE GREATER OF THE SUM OF $5,000 OR 7% OF THE AMOUNT THEN DUE AND OWING, AND FOR SO DOING THIS LEASE OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
(ii) AT ANY TIME AFTER AN EVENT OF DEFAULT HAS OCCURRED, TENANT IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARY OR CLERK OF ANY OTHER COURT OF JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, AS ATTORNEY FOR TENANT AND TENANT’S SUCCESSORS AND ASSIGNS OR ANY OTHER PERSONS CLAIMING ANY INTEREST UNDER OR THROUGH TENANT, AS WELL AS FOR ALL PERSONS CLAIMING UNDER, BY OR THROUGH TENANT, TO APPEAR FOR TENANT IN AN ACTION OR ACTIONS IN EJECTMENT OR OTHER APPROPRIATE ACTION FOR POSSESSION OF THE DEMISED PREMISES FILED BY LANDLORD OR ANY OWNER OR INTEREST HOLDER OF THE DEMISED PREMISES (WITHOUT THE NECESSITY OF FILING ANY BOND AND WITHOUT ANY STAY OF EXECUTION OR APPEAL) AND IN SUCH ACTION OR ACTIONS TO ADMIT LANDLORD’S SUPERIOR TITLE AND/OR CONFESS JUDGMENT FOR THE RECOVERY BY THE LANDLORD OF POSSESSION OF THE PREMISES, FOR WHICH THIS INSTRUMENT (OR A COPY HEREOF VERIFIED BY AFFIDAVIT OF THE LANDLORD OR ANYONE AUTHORIZED TO MAKE SUCH AFFIDAVIT ON BEHALF OF LANDLORD) SHALL BE A SUFFICIENT WARRANT; WHEREUPON A WRIT OF POSSESSION OR OTHER APPROPRIATE PROCESS TO OBTAIN POSSESSION OF THE DEMISED PREMISES MAY BE ISSUED FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER, THE TENANT HEREBY RELEASING AND AGREEING TO RELEASE THE LANDLORD AND SAID ATTORNEYS FROM ALL ERRORS AND DEFECTS WHATSOEVER OF A PROCEDURAL NATURE IN ENTERING ANY SUCH ACTION OR JUDGMENT OR IN CAUSING ANY SUCH WRIT OR PROCESS BE ISSUED OR IN ANY PROCEEDING THEREON OR CONCERNING THE SAME, PROVIDED THAT THE LANDLORD SHALL HAVE FILED IN SUCH ACTION AN AFFIDAVIT MADE BY A PERSON ON THE LANDLORD’S BEHALF SETTING FORTH THE FACTS NECESSARY TO AUTHORIZE THE ENTRY OF SUCH JUDGMENT ACCORDING TO THE TERMS OF THIS INSTRUMENT, OF WHICH FACTS SUCH AFFIDAVIT SHALL BE A PRIMA FACIE EVIDENCE.
(iii) IT IS HEREBY EXPRESSLY AGREED THAT IF FOR ANY REASON AFTER ANY SUCH ACTION UNDER (i) OR (ii) DIRECTLY ABOVE HAS BEEN COMMENCED, THE SAME SHALL BE DISCONTINUED, MARKED SATISFIED OF RECORD OR TERMINATED, OR POSSESSION OF THE DEMISED PREMISES SHALL REMAIN IN OR BE RESTORED TO EITHER TENANT OR ANYONE CLAIMING UNDER, BY OR THROUGH TENANT, THE LANDLORD MAY, WHENEVER AND AS OFTEN AS THE LANDLORD SHALL HAVE THE RIGHT TO TAKE POSSESSION AGAIN OF THE DEMISED PREMISES, BRING ONE OR MORE FURTHER SUCH ACTIONS IN THE MANNER HEREINABOVE SET FORTH TO OBTAIN A MONEY JUDGMENT AND/OR RECOVER POSSESSION OF THE DEMISED PREMISES AND TO CONFESS JUDGMENT THEREIN AS HEREIN ABOVE PROVIDED, AND THE AUTHORITY AND POWER GIVEN ABOVE TO ANY SUCH ATTORNEY SHALL EXTEND TO ALL SUCH FURTHER ACTIONS. THE LANDLORD SHALL HAVE THE RIGHT TO BRING SUCH AN ACTION OR ACTIONS AND TO CONFESS JUDGMENT THEREIN AS HEREINABOVE PROVIDED BEFORE OR AFTER COMMENCING AN ACTION FOR A MONEY JUDGMENT AND/OR POSSESSION AN) BEFORE OR AFTER JUDGMENT THEREON OR THEREIN HAS BEEN RECOVERED OR, A JUDICIAL SALE OF ALL OR ANY PART OF TENANT’S PROPERTY HAS TAKEN PLACE.
(iv) TENANT HEREBY RELEASES LANDLORD AND ANY ATTORNEY OR ATTORNEYS FROM ALL ERRORS, DEFECTS AND IMPERFECTIONS WHATSOEVER IN ENTERING JUDGMENT BY CONFESSION HEREON OR IN ISSUING ANY PROCESS OR INSTITUTING ANY PROCEEDINGS RELATING THERETO AND HEREBY WAIVES ALL WAIVABLE BENEFITS THAT MIGHT ACCRUE TO TENANT BY VIRTUE OF ANY PRESENT OR FUTURE LAWS INCLUDING WITHOUT LIMITATION THE PROVISIONS OF THE PENNSYLVANIA LANDLORD AND TENANT ACT AND LAWS EXEMPTING THE PREMISES OR TENANT OR PROVIDING FOR ANY STAY OF EXECUTION, EXEMPTION FROM CIVIL PROCESS OR EXTENSION OF TIME.
10 |
Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law or at equity (all such remedies being cumulative), nor shall pursuit of any remedy herein provided constitute a forfeiture or waiver of any rent due to Landlord hereunder or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions and covenants herein contained. No act or thing done by Landlord or its agents during the Term shall be deemed a termination of this Lease or an acceptance of the surrender of the Premises, and no agreement to terminate this Lease or accept a surrender of said Premises shall be valid unless in writing signed by Landlord. No waiver by Landlord of any violation or breach of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions and covenants herein contained. Landlord’s acceptance of the payment of rental or other payments hereunder after the occurrence of an event of default shall not be construed as an accord and satisfaction, compromise or waiver of such default, unless Landlord so notifies Tenant in writing. Forbearance by Landlord in enforcing one or more of the remedies herein provided upon an event of default shall not be deemed or construed to constitute a waiver of such default or of Landlord’s right to enforce any such remedies with respect to such default or any subsequent default. If, on account of any breach or default by Tenant under the Lease, it becomes necessary or appropriate for Landlord to employ or consult with an attorney concerning or to enforce or defend any of Landlord’s rights or remedies, Tenant agrees to pay all attorneys’ fees incurred by Landlord.
23. | QUIET ENJOYMENT. |
Landlord represents and warrants that it has full right and authority to enter into this Lease and that Tenant, while paying the rent and performing its other covenants and agreements herein set forth, shall peaceably and quietly have, hold and enjoy the Premises for the Term without hindrance or molestation from Landlord subject to the terms and provisions of this Lease.
24. | DAMAGE BY FIRE, ETC. |
(A) Landlord agrees to maintain standard fire and extended coverage insurance covering the Building in an amount not less than 90% of the full “replacement cost” thereof (as such term is defined in the Replacement Cost Endorsement to be attached thereto, if any) insuring against the perils of fire and lightning and including extended coverage, and earthquake and flood coverage, or at Landlord’s option, “All Risk” coverage, with earthquake and flood coverage, all such coverages and endorsements to be as defined, provided and limited in the standard bureau forms prescribed by the insurance regulatory authority, for the state in which the property is situated for use by insurance companies admitted in such state for the writing of such insurance on risks located within such state. Subject to the provisions of Sections 24(C), 24(D) and 24(F), such insurance shall be for the sole benefit of Landlord and under its sole control. Such insurance shall include protection for continuation of rental payments for a period of 12 months in the event of any damage caused by the perils referred to above. Tenant agrees to pay to Landlord, as additional rental, Tenant’s Proportionate Share of Landlord’s cost of maintaining such insurance. Said payments shall be made to Landlord within ten days after presentation to Tenant of Landlord’s statement setting forth the amount due, and the failure to pay such share shall be treated in the same manner as a default in the payment of rent hereunder when due. Any payment to be made pursuant to this Section 24 with respect to the year in which the Lease commences or terminates shall be prorated. Tenant shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained by Landlord hereunder unless Landlord is included as an additional insured thereon. Tenant shall immediately notify Landlord whenever any such separate insurance is taken out and shall promptly deliver to Landlord the policy or policies of such insurance.
(B) If the Building should be damaged or destroyed by fire, tornado or other casualty, Tenant shall give immediate written notice thereof to Landlord.
(C) If the Building should be damaged by any peril covered by the insurance to be provided by Landlord under Section 24(A), but only to such extent that the Building can in Landlord's estimation be materially restored within 180 days after the date upon which Landlord is notified by Tenant of such damage (except that Landlord may elect not to rebuild if such damage occurs during the last year of the Term), this Lease shall not terminate, and Landlord shall at its sole cost and expense thereupon proceed with reasonable diligence to rebuild and repair such Building to substantially the condition in which it existed prior to such damage, except Landlord shall not be required to rebuild, repair or replace any part of the partitions, fixtures, additions and other improvements which may have been placed in, on or about the Premises by Tenant. If the Premises are untenantable in whole following such damage and provided that Tenant has completely vacated the Premises as a result of such damage, the rent payable hereunder during the period in which the Premises are untenantable shall be abated to such extent as may actually be covered and paid by the insurance coverage discussed in Section 24(A) above. In the event that Landlord should fail to materially restore the Building within 180 days after the date upon which Landlord is notified by Tenant of such damage, Tenant may (if it has given Landlord at least 30 days noticó of its need and intent to do so) at its option terminate this Lease by delivering written notice of termination to Landlord as Tenant’s exclusive remedy, whereupon all rights and obligations hereunder shall cease and terminate; provided, however, that if construction is delayed because of changes, deletions, or additions in construction requested by Tenant, strikes, lockouts, casualties, acts of God, war, material or labor shortages, Governmental regulation or control or other causes beyond the reasonable control of Landlord, the period for restoration, repair or rebuilding shall be extended for the amount of time Landlord is so delayed. For purposes hereof, the Building or Premises shall be deemed “materially restored” if they are in such condition as would not prevent or materially interfere with Tenant’s use of the Premises for the purpose for which it was then being used.
(D) If the Building should be damaged or destroyed by fire, tornado or other casualty and Landlord is not required to rebuild pursuant to the provisions of Section 24(C), this Lease shall at, the option of Landlord, upon notice to Tenant, given within 30 days after Landlord is notified by Tenant of such damage, terminate and the rent shall be abated during the unexpired portion of this Lease, effective upon the date of the occurrence of such damage.
(E) Notwithstanding anything herein to the contrary, in the event the holder of any indebtedness secured by a mortgage or deed of trust covering the Premises or the Building requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within 15 days after such requirement is made by any such holder, whereupon this Lease shall end on the date of such notice to Tenant as if the date of such notice were the date originally fixed in this Lease for the expiration of the Term.
11 |
(F) In the event of any damage or destruction to the Premises by any peril covered by the provisions of this Section, Tenant shall, upon notice from Landlord, forthwith remove, at its sole cost and expense, such portion or all of Tenant’s shelves, bins; machinery and other trade fixtures and all other property belonging to Tenant or his licensees from such portion or all of the Premises as Landlord shall request and Tenant hereby indemnities and holds Landlord (including without limitation the trustee and beneficiaries if Landlord is a trust), Landlord’s agents and employees harmless from any loss, liability, claims, suits, costs, expenses, including attorney’s fees and damages, both real and alleged, arising out of any damage or injury as a result of the failure to properly secure the Premises prior to such removal and/or as a result of such removal.
25. | EMINENT DOMAIN. |
If the whole of the Premises hereby leased shall be taken by any public authority under the power of eminent domain, then the term of this Lease shall cease as of the day possession is taken by such public authority and all rentals shall be paid up to the date. If only a part of the Premises shall be taken under eminent domain, the Lease shall terminate as to the portion taken, and unless this Lease shall be terminated, as herein provided, it shall continue in full force and effect as to the remainder of the Premises and the minimum rent shall be reduced in the proportion the square footage taken bears to the total square footage demised. If more than fifty percent (50%) of the total square footage of the Premises is taken under power of eminent domain, either party, by written notice to the other delivered on or before the date of surrendering possession to the public authority, may terminate this Lease, effective as of such surrender of possession. All compensation and damages of any type whatsoever awarded for any taking, whole or partial, shall belong to and be the property of the Landlord except as hereinafter provided.
26. | SALE BY LANDLORD. |
In event of a sale or conveyance by Landlord of the Building, the same shall operate to release Landlord from any future liability upon any of the covenants or conditions, expressed or implied, herein contained in favor of Tenant, and in such event Tenant agrees to look solely to the responsibility of the successor in interest of Landlord in and to this Lease. Except as set forth in this Lease, this Lease shall not be affected by any such sale, and Tenant agrees to attorn to the purchaser or assignee. If any security has been given by Tenant to, secure the faithful performance of any of the covenants of this Lease, Landlord may transfer or deliver said security, as such, to Landlord’s successor in interest and, if Landlord delivers said security to Landlord’s successor in interest, Landlord shall be discharged from any further liability with regard to said security.
27. | ESTOPPEL CERTIFICATES. |
Within ten (10) days following any written request which Landlord may make from time to time, Tenant shall execute and deliver to Landlord or any prospective Landlord or mortgagee or prospective mortgagee a sworn statement certifying: (a) the date of commencement of this Lease; (b) the fact that this Lease is unmodified and in full force and effect (or, if there have been modifications hereto, that this Lease is in full force and effect, as modified, and stating the date and nature of such modifications); (c) the date to which the rent and other sums payable under this Lease have been paid; (d) the fact that there are no current defaults under this Lease by either Landlord or Tenant except as specified in Tenant’s statement; and (e) such other matters requested by Landlord. Landlord and Tenant intend that any statement delivered pursuant to this Section may be relied upon by any mortgagee, beneficiary or purchaser and Tenant shall be liable for all loss, cost or expense resulting from the failure of any sale or funding of any loan caused by any material misstatement contained in such estoppel certificate. Tenant hereby irrevocably appoints Landlord or if Landlord is a trust, Landlord’s beneficiary or agent, as attorney-in-fact for the Tenant with full power and authority to execute and deliver in the name of Tenant such estoppel certificate if Tenant fails to deliver the same within such ten-day period and such certificate as signed by Landlord, Landlord’s beneficiary or agent, as the case may be, shall be fully binding on Tenant, if Tenant fails to deliver a contrary certificate within five days after receipt by Tenant of a copy of the certificate executed by Landlord, Landlord’s beneficiary or agent, as the case may be, on behalf of Tenant.
28. | SURRENDER OF PREMISES. |
Tenant shall, at least ninety (90) days before the last day of the Term, arrange to meet Landlord for a joint inspection of the Premises. In the event of Tenant’s failure to arrange such joint inspection, Landlord’s inspection at or after Tenant’s vacating the Premises shall be conclusively deemed correct for purposes of determining Tenant’s responsibility for repairs and restoration.
At the end of the Term or any renewal thereof or other sooner termination of this Lease, Tenant will peaceably deliver up to Landlord possession of the Premises, together with all improvements or additions upon or belonging to the same, by whomsoever made, in the same condition as received or first installed broom clean and free of all debris, ordinary wear and tear and damage by fire, earthquake, Act of God, or the elements alone excepted. Tenant may, upon termination of this Lease, remove, to the extent purchased and installed by Tenant and removable without material damage to such property or the Premises: all movable partitions of less than full height from floor to ceiling; counters; and other personal property of Tenant. All such removal shall be at Tenant’s sole cost and expense and Tenant shall fully repair any damage caused by such removal. Property not so removed shall be deemed abandoned by the Tenant and title to the same shall thereupon pass to Landlord under this Lease as by a bill of sale. Tenant shall complete all work as required by Section 7 above, including without limitation, all Landlord’s conditions or requirements issued in conjunction with Landlord’s consent to any alterations, improvements or repairs. Upon request by Landlord, Tenant shall remove, at its sole cost and expense, any or all permanent improvements or additions to the Premises installed by Tenant and all movable partitions, counters and other personal property of Tenant and Tenant shall repair any damage resulting from such removal. Tenant shall indemnify Landlord against any loss or liability resulting from delay by Tenant in so surrendering the Premises, including, without limitation, any claims made by any succeeding tenant founded on such delay.
12 |
All obligations of Tenant hereunder not fully performed as of the expiration or earlier termination of the Term of this Lease shall survive the expiration or earlier termination of the Term. Upon the expiration or earlier termination of the Term, Tenant shall pay to Landlord the amount, as estimated by Landlord, necessary: (i) to repair and restore the Premises as provided herein; and (ii) to discharge Tenant’s obligation for unpaid amounts due Landlord. All such amounts shall be used and held by Landlord for payment of such obligations of Tenant, with Tenant being liable for any additional costs upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied. Any Security Deposit shall be credited against the amount payable by Tenant hereunder.
29. | NOTICES. |
Any notice or document required or permitted to be given or delivered to a party hereunder shall be in writing and shall be effective upon delivery to such party if personally delivered to such party or three (3) days after mailing if mailed by United States Mail, certified or registered mail, return receipt requested and all postage and certified or registered mail fees pre-paid, and addressed to the party for whom intended at such party’s address set forth below and with a copy sent as specified below, or at such other address as such party shall have theretofore specified by written notice delivered in accordance herewith.
If to Landlord, to:
Richard Harriton, President
2150 Cabot Management Inc.
60 East 42 nd Street
Suite 4510
New York, NY 10165;
with a copy to:
Michael Beckman, Esq.
Beckman, Millman, Barandes & Douglas
116 John Street
Suite 1313
New York, NY 10038
If to Tenant, to:
Matthew Harriton, President
Hydrogel Design Systems, Inc.
60 East 42 nd Street
Suite 4510
New York, NY 10165;
with a copy to:
Michael Beckman, Esq.
Beckman, Millman, Barandes & Douglas
116 John Street
Suite 1313
New York, NY 10038
30. | TAXES PAYABLE BY TENANT. |
In addition to rent and other charges to be paid by Tenant hereunder, Tenant shall reimburse to Landlord, upon demand, any and all taxes payable by Landlord (other than net income taxes) whether or not now customary or within the contemplation of the parties hereto: (a) upon, allocable to, or measured by or on the gross or net rent payable hereunder, including without limitation any gross income tax, sales tax or excise tax levied by the State, any political subdivision thereof, or the Federal Government with respect to the receipt of such rent; or (b) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy of the Premises or any portion thereof, including any sales, use or service tax imposed as a result thereof; or (c) upon or measured by the Tenant’s gross receipt or payroll or the value of Tenant’s equipment, furniture, fixtures, and other personal property of Tenant or leasehold improvements, alterations, additions, located in the Premises; or (d) upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.
In addition to the foregoing, Tenant agrees to pay, before delinquency, any and all taxes levied or assessed against Tenant and which become payable during the term hereof upon Tenant’s equipment, furniture, fixtures, and other personal property of Tenant located in the Premises.
13 |
31. | DEFINED TERMS AND HEADINGS. |
The section headings herein are for convenience of reference and shall in no way define, increase, limit, or describe the scope or intent of any provision of this Lease. Any indemnification of, insurance of, or option, granted to Landlord shall also include or be exercisable by Landlord’s trustee, beneficiary, agents and employees, as the case may be. In any case, where this Lease is signed by more than one person, the obligations hereunder shall be joint and several. The terms “Tenant” and “Landlord” or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, marital communities, firms, or corporations, and their and each of their respective successors, executors, administrators, and permitted assigns, according to the context hereof. Tenant agrees to furnish promptly upon demand a corporate resolution, proof of due authorization by partners, or other appropriate documentation evidencing the due authorization of Tenant to enter into this Lease. The term “rentable area” shall mean the rentable area of the Premises or the Building as calculated by the Landlord on the basis of the plans and specifications (which were available for inspection by Tenant at the time the Lease was executed) of the Building and including a proportionate share of any common areas. Tenant hereby consents and agrees that the calculation of rentable area on the Reference Page shall be controlling.
32. | ENFORCEABILITY. |
If for any reason whatsoever any of the provisions hereof shall be void, unenforceable or ineffective, all of the other provisions shall be and remain in full force and effect.
33. | COMMISSIONS. |
Each of Landlord and Tenant (i) represents and warrants to the other that it has not dealt with any broker or finder in connection with this Lease, except as described on the Reference Page; and (ii) indemnities and holds the other harmless from any and all losses, liability, costs or expenses (including attorneys’ fees) incurred as a result of any breach of the foregoing warranty.
34. | TIME AND APPLICABLE LAW. |
Time is of the essence of this Lease and all of its provisions. This Lease shall in all respects be governed by the laws of the state in which the Building is located.
35. | PARKING. |
Tenant shall have sole and exclusive use of the “Tenant's Parking Area”, as shown on Exhibit A. Tenant shall not at any time park or permit the parking of Tenant’s vehicles, or the vehicles of others, adjacent to loading areas or so as to interfere in any way with the use of such areas or in parking areas assigned to other tenants. Tenant shall not park or permit to be parked any inoperative vehicles or equipment on any portion of the parking or loading areas. Tenant shall be solely responsible for all maintenance, repair, snow and ice removal, lighting and security for the Tenant’s Parking Area and for any areas which Tenant rightfully uses for access to the Tenant's Parking Area.
36. | SUCCESSORS AND ASSIGNS. |
Subject to the provisions of Section 12 hereof, the terms, covenants and conditions contained herein shall be binding upon and inure to the benefit of the heirs, successors, executors, administrators, marital communities, if any, and assigns of the parties hereto.
37. | ENTIRE AGREEMENT. |
This Lease, together with its exhibits, contains all agreements of the parties hereto and supersedes any previous negotiations. There have been no representations made by the Landlord or understandings made between the parties other than those set forth in this Lease and its exhibits. This Lease may not be modified except by a written instrument duly executed by the parties hereto.
38. | EXAMINATION NOT OPTION. |
Submission of this Lease shall not be deemed to be a reservation of the Premises. Landlord shall not be bound hereby until its delivery to Tenant of an executed copy hereof signed by Landlord, already having been signed by Tenant and Assignor, and until such delivery Landlord reserves the right to exhibit and lease the Premises to other prospective tenants. Notwithstanding anything contained herein to the contrary, Landlord may withhold delivery of possession of the Premises from Tenant until such time as Tenant has paid to Landlord the Security Deposit and the first month’s rent as set forth in Section 4 and any other sum owed pursuant hereto.
39. | RECORDATION. |
Neither Landlord nor Tenant shall record this Lease or a short form memorandum hereof without the prior written consent of the other party, and the party offering the same for recording shall pay all charges and taxes incident thereto.
40. | LIMITATION OF LANDLORD’S LIABILITY. |
Tenant shall look solely to the Premises and rents derived therefrom for enforcement of any obligation hereunder or by law assumed or enforceable against Landlord, and no other property or other assets of Landlord shall be subjected to levy, execution or other enforcement procedure for the satisfaction of Tenant’s remedies or with respect to this Lease, the relationship of Landlord and Tenant hereunder, or Tenant’s use and occupancy of the Premises.
14 |
41. | ENVIRONMENTAL INDEMNITY. |
(A) Tenant unconditionally agrees to indemnity and hold harmless Landlord from and against any and all losses, claims, damages, penalties, liabilities, costs and expenses (including attorneys fees and Court costs) fines, injuries, penalties, response costs (including the cost of any required or necessary investigation, testing, monitoring, repair, cleanup, detoxification; preparation of any closure or other required plants, or other removal, response or remedial action at or relating to the property) collectively, the “Claims and Costs”, without limit as to amount, with respect to, as a direct or indirect result of, or arising out of any of the following:
(i) Any requirement, lawsuit (brought or threatened), settlement, agreement or requirement of any insurer of the Property or any portion thereof, relating to the Tenant's (including Tenant's agents, employees, invitees or licensees) generation, presence, management, disposal, release (or threatened release), escape, seepage, leakage or cleanup of any Hazardous Materials (as hereinafter defined) at, on, from or under all or portion of the Property; or
(1) The migration of Tenant’s (including Tenant's agents, employees, invitees or licensees) Hazardous Materials defined below from the Property to any other property; or
(2) The transportation of Tenant's (including Tenant’s agents, employees, invitees or licensees) Hazardous Materials from the Premises.
(B) For the purpose of this Agreement, the term “Hazardous Materials’ shall include, but shall not be limited to:
(1) Any substances defined as “Hazardous Substances”, “Pollutants”, “Contaminants”, “Hazardous Wastes”, or “Hazardous or Toxic Substances” or related materials or any other substance capable of polluting, or endangering the environment, as now or hereafter defined in any applicable federal, state or local law, regulation, ordinance or directive including, but not limited to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act, 41 U.S.C. §9601 et seq; the Hazardous Materials Transportation Act, 49 U.S.C. §1801 et seq; the Toxic Substance Control Act, 15 U.S.C. §2601, et seq; the Resource Conservation and Recovery Act, as amended 42 U.S.C. §9601, et seq; the Clean Water Act, 33 U.S.C. § 1251, et seq; and the Clean Air Act, 42 U.S.C. §7412, et seq; the Pennsylvania Hazardous Sites Cleanup Act, Act of October 18, 1988, No. 108; the Pennsylvania “Solid Waste Management Act”, 35 P.S. §6018.1 et seq; the Pennsylvania Clean Streams Law, 35 P.S. §691.1 et seq; the Pennsylvania “Air Pollution Control Act, 35 P.S. §4001.1, et seq. as any such Acts may be amended, modified or supplemented;
(2) Those substances listed or otherwise identified in the Regulations adopted and publications issues, as may be amended, modified or supplemented, pursuant to any of the above referred statutes; and
(3) Any friable asbestos, airborne asbestos, or any substance or material containing asbestos.
(C) Tenant shall indemnify Landlord from any such “Claims and Costs” defined above, whether arising under the statutory provisions enumerated above or whether said Claims and Costs are sought to be recovered under common law theories and actions.
(D) The indemnification, hold harmless and defend provisions of this Section 41 shall be deemed to be effective as against any Claims or Costs as defined in this Section 41 asserted or sought by any legal, equitable or administrative proceedings, or by any other method or means on or after the Commencement Date and shall be valid for all time thereafter and shall be binding upon the successors and assigns of Tenant.
(E) Tenant expressly assumes any and all liabilities as described in this Section 41 (A)-(D) above which may arise from circumstances or conditions on the Premises pursuant to common law or any federal, state or local law, ordinance or regulation relating to the environment including, but in no way limited to the various statutes and acts enumerated herein.
42. | LANDLORD REPRESENTATIONS TO TENANT. |
(A) Landlord represents to Tenant that as of the date hereof:
(i) Landlord has received no written notice from any municipal, state, federal or other governmental authority and has no knowledge of any zoning, building, fire, water, use, occupancy, health, environmental, or other statute, ordinance, code or regulatory violations issued in respect of the Building or the Premises which have not been heretofore corrected.
(1) Landlord has no actual knowledge that Landlord or any third party has caused or permitted any (i) hazardous material to be disposed of on, under or at the Building or the Premises in violation of any environmental statute or (ii) asbestos to be used in the construction of the Building or any components thereof.
(2) To Landlord’s actual knowledge, there are no underground storage tanks at or in the building or the Premises.
15 |
43. | COMPLIANCE WITH LAWS. |
(A) Tenant, at Tenant's sole cost and expense, shall comply with all laws (including, without limitation, environmental laws), rules, orders, ordinances, directions, regulations, and requirements of federal, state, county, and municipal authorities, now in force or which may hereafter be in force (hereinafter, “Laws”) respecting the Tenant's (including Tenant’s agents, employees, licensees, and invitees but not including Landlord’s or any prior tenants’ or owners’) use, occupation, construction, improvement, repair, or alteration of, additions or improvements to, the Premises. This compliance requirement includes, but is in no way limited to, all rules, regulations, and provisions of the ADA, or with any and all federal, state, county or municipal Laws requiring the provision of facilities or access for handicapped or other persons, and shall include without limitation the obligation to remove any barriers to access to the Premises, the removal of which may be required under any Laws.
(B) Tenant shall indemnify and hold Landlord harmless from and defend it against all fines, penalties, environmental clean up costs and claims of every kind and nature arising out of Tenant’s (including Tenant’s agents, employees, licensees, and invitees) failure to comply with any provision or requirement of subsection (A) above. The provisions of this Section 43 shall survive the termination of the Lease whether by agreement, upon default, or otherwise.
44. | SEVERABILITY. |
Each covenant and agreement in this Lease shall for all purposes be construed to be a separate and independent covenant or agreement. If any provision in this Lease or the application thereof shall to any extent be invalid, illegal or otherwise unenforceable, the remainder of this Lease, and the application of such provision other than as invalid, illegal or unenforceable, shall not be affected thereby; and such provisions in this Lease shall be valid and enforceable to the fullest extent permitted by law.
45. | AMENDMENT AND MODIFICATION. |
This Lease, including all Exhibits hereto, each of which is incorporated in this Lease, contains the entire agreement between the parties hereto, and shall not be amended, modified or supplemented unless by agreement in writing signed by both Landlord and Tenant.
16 |
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have executed this Lease as of the date set forth on the Reference Page.
LANDLORD: | |
2150 CABOT LLC | |
By: 2150 Cabot Management Inc. | |
ATTEST: |
By: | /s/ Richard Harriton | ||
Richard Harriton, President |
TENANT: | |
HYDROGEL DESIGN SYSTEMS, INC. |
ATTEST: | |||
By: | /s/ Karen Nazzareno | ||
Karen Nazzareno | |||
Chief Financial Officer |
17 |
ASSIGNOR: | |
EMBRYO DEVELOPMENT CORPORATION |
By: | /s/ Matthew Harriton | ||
ATTEST: | Matthew Harriton, President | ||
18 |
Exhibit 10.2
AMENDMENT TO LEASE
This Amendment is made as of February 23, 2007, by and between 2150 CABOT LLC (hereinafter “Landlord”) and HYDROGEL DESIGN SYSTEMS, INC, (hereinafter “Tenant”).
WHEREAS, Landlord and Tenant are parties to a certain Assignment and Amended and Restated Net Lease, dated January 25, 2002 (the “Original Lease”), as amended by a document entitled “AMENDMENT NO. 1 TO SCHEDULE “A” OF ASSIGNMENT AND AMENDED AND RESTATED LEASE” (the “Prior Amendment”) dated as of September 30, 2002; the Original Lease and the Prior Amendment, collectively being hereinafter called the “Lease;” and
WHEREAS, the parties hereto desire to provide for the Tenant to have certain options to extend the term of the Lease; and
WHEREAS, the parties hereto desire to correct certain errors and clarify certain ambiguities in the Lease;
NOW THEREFORE, the parties hereto agree as follows:
1. Landlord hereby grants to Tenant two (2) consecutive options (“Options”) to renew the Lease Term at the end of the initial term of the Lease for additional five (5) year periods each (“Renewal Terms”), on the same terms, conditions and covenants set forth in this Lease, except as provided below. The Options shall be exercised only by written notice delivered to Landlord at least one hundred and eighty (180) days before the expiration of the then-current term of this Lease. If Tenant fails to deliver to Landlord written notice of the exercise of either such Option within the prescribed time period, such Option shall lapse, there shall be no further right to renew the Lease Term and this Lease shall, automatically terminate at the end of the then-current term. The Options shall be exercisable by Tenant on the express condition that at the time of the exercise, and at all times prior to the commencement of the Renewal Term, Tenant shall not be in default under any of the provisions of this Lease beyond any cure periods contained in actual notices given or under the Lease. There shall be no further right of renewal beyond the Renewal Terms and the Options shall apply to all (and not less than all) of the Premises then leased hereunder.
1 |
For a period of fifteen (15) days following each Option notice date, Landlord and Tenant shall negotiate in good faith an amount which represents the fair market rental value of the Premises for the Renewal Term (“Fair Market Rental Value”). If, after such fifteen (15) day period, Landlord and Tenant are unable to agree on the Fair Market Rental Value, then, if Tenant so elects, Landlord and Tenant shall each choose a licensed commercial real estate appraiser having at least ten (10) years experience in appraising commercial real estate in southeastern Pennsylvania. Each appraiser chosen by Landlord and Tenant, respectively, shall determine the fair market rental value of the Premises and the appraisers’ determination of the fair market rental value of the Premises shall be averaged together and such average fair market rental value shall be the Fair Market Rental Value that shall be payable by Tenant beginning on the first day of the Renewal Term as further described herein. For purposes of this Section, Fair Market Rental Value shall be determined taking into consideration the condition of the Premises on the date when the Premises was first offered for lease to the general public. If Tenant does not elect to commence the appraisal process described above, the Option shall lapse, there shall be no further right to renew the Lease Term and this Lease shall automatically terminate at the end of the then-current term. In the event of a dispute regarding the bona fides or rational basis of an appraisal such dispute shall be submitted to the American Arbitration Association in Philadelphia to be determined in accordance with its rules and any specialized rules pertaining to adjudication of real estate appraisal issues.
2 |
2. It is agreed that the Prior Amendment, although executed by Tenant as the “Borrower” and by Richard Harriton as the “Lender”, was intended by the parties to have been executed by Hydrogel Design Systems, Inc. as the Tenant under the Original Lease and by Richard Harriton acting on behalf of the Landlord as the president of 2150 Cabot Management Inc., the manager of Landlord. By execution of this Amendment, Landlord and Tenant ratify the Prior Amendment as their respective acts and deeds and agree that the Prior Amendment constitutes a part of the Lease.
3. Landlord and Tenant confirm that the Original Lease and the Prior Amendment constitute the entire lease, and that there are no other documents or agreements in existence relating in any way to the relationship of Landlord and Tenant in those capacities other than those two (2) documents and, when executed, this Amendment. No other documents shall be part of or affect the Lease.
4. The Particle Beam Accelerator and associated alterations, improvements and infrastructure (“PBA”) was installed in the Premises by the Tenant, remains the personal property of the Tenant and, along with Tenant’s contents, is insured by Tenant. The PBA will always remain the property of the Tenant, and will be removed entirely from the Premises upon the expiration of the Lease. Any damages or alterations caused or made to the real property of which the Premises is a part either by said installations or their removal will be restored and repaired by Tenant.
5. Except as expressly modified hereby or to the extent inconsistent herewith, the Lease shall remain in full force and effect in accordance with its terms. Accordingly, tenant agrees that the warrants of attorney to confess judgment against tenant contained in the Original Lease shall apply with full force and effect to the Lease as hereby amended, and TENANT HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TENANT HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA, AND AGREES TO THE FOLLOWING:
3 |
a. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, TENANT HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARY OR CLERK OF ANY COURT OF JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, AS ATTORNEY FOR TENANT, TO APPEAR FOR TENANT IN ANY SUCH COURT IN ANY APPROPRIATE PROCEEDING BROUGHT OR TO BE BROUGHT AGAINST TENANT BY LANDLORD ON THIS LEASE AND THEREIN TO CONFESS JUDGMENT AGAINST TENANT FOR ALL RENT AND SUMS DUE BY TENANT FOR THE UNEXPIRED TERM OF THE LEASE HEREIN TOGETHER WITH COURT COSTS AND REASONABLE ATTORNEYS’ FEES (WHICH FOR PURPOSES OF THIS SUB-SECTION SHALL BE DEEMED REASONABLE IF SUCH FEES ARE LIMITED TO THE GREATER OF THE SUM OF $5,000 OR 7% OF THE AMOUNT THEN DUE AND OWING), AND FOR SO DOING THIS LEASE OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
b. AT ANY TIME AFTER AN EVENT OF DEFAULT HAS OCCURRED, TENANT IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARY OR CLERK OF ANY COURT OF JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, AS ATTORNEY FOR TENANT AND TENANT’S SUCCESSORS AND ASSIGNS OR ANY OTHER PERSONS CLAIMING ANY INTEREST UNDER OR THROUGH TENANT, AS WELL AS FOR ALL PERSONS CLAIMING UNDER, BY OR THROUGH TENANT, TO APPEAR FOR TENANT IN AN ACTION OR ACTIONS IN EJECTMENT OR OTHER APPROPRIATE ACTION FOR POSSESSION OF THE DEMISED PREMISES FILED BY LANDLORD OR ANY OWNER OR INTEREST HOLDER OF THE DEMISED PREMISES (WITHOUT THE NECESSITY OF FILING ANY BOND AND WITHOUT ANY STAY OF EXECUTION OR APPEAL) AND IN SUCH ACTION OR ACTIONS TO ADMIT LANDLORD’S SUPERIOR TITLE AND/OR CONFESS JUDGMENT FOR THE RECOVERY BY THE LANDLORD OF POSSESSION OF THE PREMISES, FOR WHICH THIS INSTRUMENT (OR A COPY HEREOF VERIFIED BY AFFIDAVIT OF THE LANDLORD OR ANYONE AUTHORIZED TO MAKE SUCH AFFIDAVIT ON BEHALF OF LANDLORD) SHALL BE A SUFFICIENT WARRANT; WHEREUPON A WRIT OF POSSESSION OR OTHER APPROPRIATE PROCESS TO OBTAIN POSSESSION OF THE DEMISED PREMISES MAY BE ISSUED FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER, THE TENANT HEREBY RELEASING AND AGREEING TO RELEASE THE LANDLORD AND SAID ATTORNEYS FROM ALL ERRORS AND DEFECTS WHATSOEVER OF A PROCEDURAL NATURE IN ENTERING ANY SUCH ACTION OR JUDGMENT OR IN CAUSING ANY SUCH WRIT OR PROCESS BE ISSUED OR IN ANY PROCEEDING THEREON OR CONCERNING THE SAME, PROVIDED THAT THE LANDLORD SHALL HAVE FILED IN SUCH ACTION AN AFFIDAVIT MADE BY A PERSON ON THE LANDLORD’S BEHALF SETTING FORTH THE FACTS NECESSARY TO AUTHORIZE THE ENTRY OF SUCH JUDGMENT ACCORDING TO THE TERMS OF THIS INSTRUMENT, OF WHICH FACTS SUCH AFFIDAVIT SHALL BE PRIMA FACIE EVIDENCE.
4 |
c. IT IS HEREBY EXPRESSLY AGREED THAT IF FOR ANY REASON AFTER ANY SUCH ACTION UNDER (a) OR (b) DIRECTLY ABOVE HAS BEEN COMMENCED, THE SAME SHALL BE DISCONTINUED, MARKED SATISFIED OF RECORD OR TERMINATED, OR POSSESSION OF THE DEMISED PREMISES SHALL REMAIN IN OR BE RESTORED TO EITHER TENANT OR ANYONE CLAIMING UNDER, BY OR THROUGH TENANT, THE LANDLORD MAY, WHENEVER AND AS OFTEN AS THE LANDLORD SHALL HAVE THE RIGHT TO TAKE POSSESSION AGAIN OF THE DEMISED PREMISES, BRING ONE OR MORE FURTHER SUCH ACTIONS IN THE MANNER HEREINABOVE SET FORTH TO OBTAIN A MONEY JUDGMENT AND/OR RECOVER POSSESSION OF THE DEMISED PREMISES AND TO CONFESS JUDGMENT THEREIN AS HEREIN ABOVE PROVIDED, AND THE AUTHORITY AND POWER GIVEN ABOVE TO ANY SUCH ATTORNEY SHALL EXTEND TO ALL SUCH FURTHER ACTIONS. THE LANDLORD SHALL HAVE THE RIGHT TO BRING SUCH AN ACTION OR ACTIONS AND TO CONFESS JUDGMENT THEREIN AS HEREINABOVE PROVIDED BEFORE OR AFTER COMMENCING AN ACTION FOR A MONEY JUDGMENT AND/OR POSSESSION AND BEFORE OR AFTER JUDGMENT THEREON OR THEREIN HAS BEEN RECOVERED OR A JUDICIAL SALE OF ALL OR ANY PART OF TENANT’S PROPERTY HAS TAKEN PLACE.
d. TENANT HEREBY RELEASES LANDLORD AND ANY ATTORNEY OR ATTORNEYS FROM ALL ERRORS, DEFECTS AND IMPERFECTIONS WHATSOEVER IN ENTERING JUDGMENT BY CONFESSION HEREON OR IN ISSUING ANY PROCESS OR INSTITUTING ANY PROCEEDING RELATING THERETO AND HEREBY WAIVES ALL WAIVABLE BENEFITS THAT MIGHT ACCRUE TO TENANT BY VIRTUE OF ANY PRESENT OR FUTURE LAWS INCLUDING WITHOUT LIMITATION THE PROVISIONS OF THE PENNSYLVANIA LANDLORD AND TENANT ACT AND LAWS EXEMPTING THE PREMISES OR TENANT OR PROVIDING FOR ANY STAY OF EXECUTION, EXEMPTION FROM CIVIL PROCESS OR EXTENSION OF TIME.
5 |
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Amendment to Lease to be duly signed the day and year first above written.
LANDLORD: | ||
2150 CABOT LLC | ||
By: 2150 Cabot Management, Inc. | ||
By: | /s/ Richard Harriton | |
Richard Harriton | ||
President | ||
TENANT: | ||
HYDROGEL DESIGN SYSTEMS, INC. | ||
By: | /s/ Matthew Harriton | |
Matthew Harriton | ||
President |
6 |
Exhibit 10.3
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE (“Third Amendment”) is made as of the 27 th day of February, 2009 by and between HYDROGEL DESIGN SYSTEMS, INC., a Delaware corporation (“Tenant”) and EXETER 2150 CABOT, L.P., a Pennsylvania limited partnership (“Landlord”).
WHEREAS, Landlord (as successor-in-interest to 2150 Cabot, LLC) and Tenant are parties to that certain Assignment and Amended and Restated Net Lease dated January 25, 2002 (“Original Lease”), as amended by the Amendment No. 1 to Schedule A of Assignment and Amended and Restated Lease dated September 30, 2002 (“2002 Amendment”), and the Amendment to Lease dated February 23, 2007 (“2007 Amendment”), pursuant to which Tenant leases from Landlord and Landlord leases to Tenant the premises consisting of approximately 16,500 rentable square feet as defined on page one (1) of the Original Lease (“Original Premises”) located at 2150 Cabot Boulevard, West Langhorne, Pennsylvania (“Building”). Collectively, the Original Lease, 2002 Amendment, 2007 Amendment and Third Amendment are referred to as the “Lease”.
WHEREAS, Landlord and Tenant now desire to extend the term of the Lease upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and other good and valuable consideration, the parties hereto, intending to be legally bound hereby, covenant and agree as follows,
1. Definitions; Recitals. Any capitalized terms used and not otherwise defined herein shall have the meaning given to such terms in the Original Lease. The above recitals are true and correct and are hereby incorporated into this Third Amendment as if set forth herein at length.
2. Term . The term of the Original Lease shall be extended for an additional four (4) years (“Extended Term”). Accordingly, “January 31, 2012” of the “Termination Date” on page one (1) of the Original Lease shall be deleted in its entirety and replaced with “January 31, 2016”. For all purposes in the Lease, except as set forth herein, the word “Term” shall include the “Extended Term”.
1 |
3. Rent . The Annual Base Rent/Monthly Installment of Base Rent for the Extended Term shall be as follows:
Time Period | Annual Base Rent |
Monthly
Installment of Base Rent |
||||||
February 1, 2012 – January 31, 2014 | $ | 187,521.57 | $ | 15,626.80 | ||||
February 1, 2014 – January 31, 2016 | $ | 206,250.00 | $ | 17,187.50 |
4. Brokers . Tenant represents and warrants to Landlord that Tenant has dealt with no broker, agent or other intermediary in connection with this Third Amendment, and that insofar as Tenant knows, no other broker, agent or other intermediary negotiated this Third Amendment. Tenant agrees to indemnify, defend and hold Landlord and its partners, employees, agents, and affiliates, harmless from and against any claims made by any broker, agent or other intermediary with respect to a claim for broker's commission or fee or similar compensation brought by any person in connection with this Third Amendment, provided that Landlord has not in fact retained such broker, agent or other intermediary.
5. Conflict . Any inconsistencies or conflicts between the terms and provisions of the Original Lease, the 2002 Amendment and the 2007 Amendment and the terms and provisions of this Third Amendment shall be resolved in favor of the terms and provisions of this Third Amendment.
[Remainder of page left intentionally blank.]
2 |
IN WITNESS WHEREOF, the parties have executed this Third Amendment as of the date and year first above written.
LANDLORD: | |
EXETER 2150 CABOT, L.P., | |
a Pennsylvania limited partnership |
By: | Exeter 2150 Cabot, LLC, | |
a Pennsylvania limited liability company,
its sole general partner |
Signed in the presence of; | By: | Exeter Industrial REIT I, |
a Maryland Business Trust, | ||
its sole member |
By: | /s/ Timothy J. Weber | ||
Witness | Name: Timothy J. Weber | ||
Title: Secretary/Treasurer |
Tenant: | |
HYDROGEL DESIGN SYSTEMS, INC., | |
a Delaware corporation |
Signed in the presence of: | |||
By: | /s/ Mathew Harriton | ||
Witness | Name: Mathew Harriton | ||
Title: PRESIDENT |
3 |
Exhibit 10.4
ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT (the “Assignment”) is made this 27 th day of February, 2009, by and among EXETER 2150 CABOT, L.P., a Pennsylvania limited partnership (the “Landlord” ) and HYDROGEL DESIGN SYSTEMS, INC., a Delaware corporation (the “Assignor” ); and AQUAMED TECHNOLOGIES, INC., a Delaware corporation (the “Assignee” ).
WITNESSETH
A. Landlord (as successor-in-interest to 2150 Cabot, LLC) and Assignor entered into that certain Assignment and Amended and Restated Net Lease dated January 25, 2002, as amended by the Amendment No. 1 to Schedule A of Assignment and Amended and Restated Lease dated September 30, 2002, the Amendment to Lease dated February 23, 2007 and the Third Amendment to Lease dated contemporaneously with this Assignment (collectively, referred to as the “Lease” ) pursuant to which Landlord leases to Assignor, and Assignor leases from Landlord, a portion of the building located at 2150 Cabot Boulevard, Langhorne, Pennsylvania, as defined more fully in the Lease.
B. In connection with the restructuring of the assets of Assignor, Assignor now desires to assign all of its right, title and interest in and to the Lease to Assignee (the “Assignment” ), Assignee desires to accept such Assignment from Assignor, and Landlord desires to consent to such Assignment, all in accordance with the terms and conditions set forth herein.
NOW, THEREFORE , in consideration of the covenants and conditions set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows:
1.. Recitals/Definitions The above recitals are true and correct and are hereby incorporated into this Assignment as if set forth herein at length. Any and all terms not defined herein shall have the definitions set forth in the Lease.
2. Assignment, Assumption and Consent . Effective as of the date hereof and with the consent of Landlord which is hereby granted: (i) Assignor hereby assigns to Assignee all of Assignor’s rights, covenants, obligations and liabilities in and to the Lease including, without limitation, all of Assignor’s rights to occupy the Premises, and to exercise any and all other lights of Assignor as Tenant under the Lease; and (ii) Assignee hereby unconditionally assumes all of Assignor’s rights, covenants, obligations and liabilities under the Lease, and agrees to pay when due all rents and other charges under the Lease and to perform and observe all of the other terms and conditions on Tenant’s part to be performed and observed under the Lease. As of the date hereof, all references to Tenant in the Lease shall refer to Assignee. Assignee confirms that it has reviewed the Lease with any legal counsel of Assignee’s choosing and Assignee agrees that Landlord shall have the right of direct action against Assignee pursuant to the same remedies as are available against Tenant.
3. Representations and Warranties of Assignor . Assignor hereby represents and warrants to Assignee and Landlord as follows:
a. Assignor has not previously assigned any of its rights under the Lease;
b. Assignor has full right, title and authority to assign the Lease to Assignee (subject to the consent of Landlord us set forth herein);
c. Assignor has fully performed all terms, covenants and conditions of the Lease on Assignor’s part to be performed prior to the date hereof;
d. There are no claims, security interests or liens against the Lease or the Premises, or to any fixtures and/or personal property installed by Assignor in the Premises; and
e. The creditworthiness of Assignee is equal to or greater than the creditworthiness of Assignor.
4. Liability of Assignor . Nothing in this Assignment shall be deemed to relieve Assignor from any of its obligations or liabilities under the Lease whether accruing prior to or after the date hereof, and Assignor hereby agrees to be bound by any amendment to the Lease after the date hereof which is executed by the then current Tenant. In furtherance of the foregoing, it is specifically understood and agreed that in the event of an Event of Default under the Lease, Landlord shall be entitled to commence any action or proceeding against Assignor or otherwise exercise any available remedies at law or in equity to enforce the provisions of the Lease against Assignor without first commencing any action or otherwise proceeding against Assignee or any other party, or otherwise exhausting all of its available remedies against Assignee or any other party.
5. Liability of Assignee.
a. Assignee hereby agrees to become fully liable for the prompt and faithful payment and performance of all of the covenants, obligations and liabilities of Assignor, its successors and assigns, under the Lease, including, but not limited to, the payments of all rent and other sums payable under the Lease, all damages in the event of any default or other breach of the Lease, and all other sums due Landlord thereunder, and also for all representations of Assignor and indemnity and reimbursement obligations of Assignor under the Lease, all of which obligations are incorporated herein by reference.
6. Miscellaneous . Except as expressly set forth herein, the Lease is unmodified and in full force and effect. This Assignment shall be binding upon and shall inure to the benefit of the parties and their successors and assigns.
7. Limited Consent . The consent of Landlord shall be deemed limited solely to the transfer as provided in this Assignment, and Landlord reserves the right to consent or to withhold consent and all other rights under the Lease with respect to any other matters including, without limitation, any assignments, subleases or transfers of the Lease or any interest therein or thereto.
8. Counterparts . This Assignment may be executed in any number of counterparts, each of which shall be an original, and all of which taken together shall constitute a single agreement. For purposes of this Assignment, a telecopy of an executed counterpart shall constitute an original. Any party delivering an executed counterpart of this Assignment by telecopier shall also deliver an original executed counterpart of this Assignment, but the failure to deliver an original executed counterpart shall not affect the validity of this Assignment.
IN WITNESS WHEREOF, the parties have executed this Assignment on the date first written above.
LANDLORD: | |
EXETER 2150 CABOT, L.P., | |
a Pennsylvania limited partnership |
By: | Exeter 2150 Cabot, LLC, | |
a Pennsylvania limited liability company, | ||
its sole general partner | ||
Signed in the presence of: | By: | Exeter Industrial REIT I, |
a Maryland Business Trust, | ||
its sole member |
By: | /s/ Timothy J. Weber | |||
Witness | Name: | Timothy J. Weber | ||
Title: | Secretary/Treasurer |
ASSIGNEE: | |
HYDROGEL DESIGN SYSTEMS, INC., | |
a Delaware corporation | |
Signed in the presence of: |
By: | /s/ Matthew Harriton | |||
Witness | Name: | Matthew Harriton | ||
Title: | President |
ASSIGNEE: | |
AQUAMED TECHNOLOGIES, INC., | |
a Delaware corporation | |
Signed in the presence of: |
By: | /s/ Benjamin Mayer | |||
Witness | Name: | Benjamin Mayer | ||
Title: | President |
Exhibit 10.5
FOURTH AMENDMENT TO LEASE
THIS FOURTH AMENDMENT TO LEASE is made this 24 th day of July, 2013, by and between EXETER 2150 CABOT, L.P., a Pennsylvania limited partnership (“Landlord”), and AQUAMED TECHNOLOGIES, INC., a Delaware corporation (“Tenant”).
RECITALS
A. 2150 Cabot LLC (Landlord’s predecessor in interest) and Hydrogel Design Systems, Inc. (Tenant’s predecessor in interest) entered into that certain Assignment and Amended and Restated Lease, dated January 25, 2002 (the “Original Lease”), as amended by the Amendment No. 1 to Schedule “A” of Assignment and Amended and Restated Lease dated September 30, 2002, an Amendment to Lease dated February 23, 2007 (the “2007 Amendment”) and a Third Amendment to Lease dated February 27, 2013 (collectively the “Existing Lease”), covering approximately 16,500 rentable square feet (the “Premises”) in the building located at 2150 Cabot Boulevard, West Langhorne, Pennsylvania (the “Building”). The term of the Existing Lease currently expires January 31, 2016.
B. Landlord and Tenant desire to, among other things, amend the Existing Lease, under the terms and conditions set forth below, to extend the term of the Existing Lease until January 31, 2026. All capitalized terms not otherwise defined herein shall have the same meanings ascribed to them in the Existing Lease. The Existing Lease as amended by this Amendment shall be defined herein as the “Lease”.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Page | 1 |
1. Extension of Term . The term of the Lease is hereby extended for an additional period of ten (10) years commencing on February 1, 2016 and continuing through and including January 31, 2026.
2. Base Rent . Commencing on February 1, 2016 and continuing on the first day of each calendar month through and including January 31, 2026, Tenant shall pay to Landlord Base Rent in accordance with the following schedule:
Period |
Rate Per
Rentable Square Foot |
Annual Base
Rent |
Monthly Base
Rent |
|||||||||
February 1, 2016 - January 31, 2026 | $ | 12.57 | $ | 207,405.00 | $ | 17,283.75 |
All Base Rent shall be paid to Landlord without notice or demand and without setoff, in advance of the first day of each calendar month during the term of the Lease as extended hereby. Unless otherwise specified in a notice delivered by Landlord to Tenant, all sums shall be paid to Landlord at the following address: 140 W. Germantown Pike, Suite 150, Plymouth Meeting, PA 19462.
Page | 2 |
3. Improvements . Landlord shall, at its sole cost and expense, make certain improvements to the Premises, as described on the construction documents attached hereto as Exhibit “A” (the “Improvements”). Landlord shall require its contractors performing the Improvements to (i) name Tenant as an additional insured on the contractor’s liability policies; (ii) carry worker’s compensation insurance with limits no less than that required by law; and (iii) obtain all governmental permits and approvals required for performing the Improvements. Following final completion of the Improvements, if the municipality provides a certificate of occupancy for the Premises, Landlord shall provide a copy of said certificate to Tenant. The Improvement shall be performed in two phases. The area comprising the first phase of the Improvements is shown on Exhibit “B” attached hereto and area comprising the second phase of the Improvements is also shown on Exhibit “B” attached hereto. Tenant shall cooperate with Landlord’s contractors performing the Improvements in making the various phased areas of the Premises readily accessible to the contractors performing the Improvements and the Landlord’s contractors shall use commercially reasonable efforts to minimize disruptions to Tenant’s business operations in the Premises during the construction of the Improvements including keeping the restrooms servicing the Premises open during normal business hours between 9:00 a.m. and 5:00 p.m. on weekdays, excluding holidays.
Landlord or its contractor shall promptly apply for a permit to perform the Improvements and shall substantially complete (meaning such state of completion, exclusive of improvements to be performed by Tenant or Tenant’s contractors, as will allow Tenant to utilize the Premises for its intended purpose, without material interference by reason of final completion) the Improvements with twelve (12) weeks following receipt of said permit (the “Estimated Completion Date”). If substantial completion of the Improvements are delayed beyond the Estimated Completion Date for reasons other than force majeure or delays attributable to Tenant, then as Tenant’s exclusive remedy for such delay, Tenant shall be entitled to one (1) day of abated Base Rent for each two (2) days of delay beyond the Estimated Completion Date. Except for the foregoing, Landlord shall not be liable for any loss or damages to Tenant caused by such delay. Such abatement (if any) shall be applied to the monthly installments of Base Rent as they become due and payable following February 1, 2016 and the term shall be extended by the number of days that Tenant received abated Base Rent.
Page | 3 |
4. Confession of Judgment . Tenant agrees that the warrants of attorney to confess judgment against Tenant contained in the Original Lease shall apply with full force and effect to the Lease, as hereby amended, and TENANT HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TENANT HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA, AND AGREES TO THE FOLLOWING:
(a) UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, TENANT HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARY OR CLERK OF ANY COURT OF JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, AS ATTORNEY FOR TENANT, TO APPEAR FOR TENANT IN ANY SUCH COURT IN ANY APPROPRIATE PROCEEDING BROUGHT OR TO BE BROUGHT AGAINST TENANT BY LANDLORD ON THE LEASE AND THEREIN TO CONFESS JUDGMENT AGAINST TENANT FOR ALL RENT AND SUMS DUE BY TENANT FOR THE UNEXPIRED TERM OF THE LEASE HEREIN TOGETHER WITH COURT COSTS AND REASONABLE ATTORNEY’S FEES (WHICH FOR PURPOSES OF THIS SUB-SECTION SHALL BE DEEMED REASONABLE IF SUCH FEES ARE LIMITED TO THE GREATER OF THE SUM OF $5,000 OR 7% OF THE AMOUNT THEN DUE AND OWING), AND FOR SO DOING THE LEASE OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
Page | 4 |
(b) AT ANY TIME AFTER AN EVENT OF DEFAULT HAS OCCURRED, TENANT IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARY OR CLERK OF ANY COURT OF JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, AS ATTORNEY FOR TENANT AND TENANT’S SUCCESSORS AND ASSIGNS OR ANY OTHER PERSONS CLAIMING ANY INTEREST UNDER OR THROUGH TENANT, AS WELL AS FOR ALL PERSONS CLAIMING UNDER, BY OR THROUGH TENANT, TO APPEAR FOR TENANT IN AN ACTION OR ACTIONS IN EJECTMENT OR OTHER APPROPRIATE ACTION FOR POSSESSION OF THE PREMISES FILED BY LANDLORD OR ANY OWNER OR INTEREST HOLDER OF THE PREMISES (WITHOUT THE NECESSITY OF FILING AND BOND AND WITHOUT ANY STAY OF EXECUTION OR APPEAL) AND IN SUCH ACTION OR ACTIONS TO ADMIT LANDLORD’S SUPERIOR TITLE AND/OR CONFESS JUDGMENT FOR THE RECOVERY BY THE LANDLORD OF POSSESSION OF THE PREMISES, FOR WHICH THIS INSTRUMENT (OR A COPY HEREOF VERIFIED BY AFFIDAVIT OF THE LANDLORD OR ANYONE AUTHORIZED TO MAKE SUCH AFFIDAVIT OF THE LANDLORD OR ANYONE AUTHORIZED TO MAKE SUCH AFFIDAVIT ON BEHALF OF LANDLORD) SHALL BE A SUFFICIENT WARRANTY, WHEREUPON A WRIT OF POSSESSION OR OTHER APPROPRIATE PROCESS TO OBTAIN POSSESSION OF THE PREMISES MAY BE ISSUED FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER, THE TENANT HEREBY RELEASING AND AGREEING TO RELEASE THE LANDLORD AND SAID ATTORNEYS FROM ALL ERRORS AND DEFECTS WHATSOEVER OF A PROCEDURAL NATURE IN ENTERING ANY SUCH ACTION OR JUDGMENT OR IN CAUSING ANY SUCH WRIT OR PROCESS BE ISSUED OR IN ANY PROCEEDING THEREON OR CONCERNING THE SAME, PROVIDED THAT THE LANDLORD SHALL HAVE FILED IN SUCH ACTION AN AFFIDAVIT MADE BY A PERSON ON THE LANDLORD’S BEHALF SETTING FORTH THE FACTS NECESSARY TO AUTHORIZE THE ENTRY OF SUCH JUDGMENT ACCORDING TO THE TERMS OF THIS INSTRUMENT, OF WHICH FACTS SUCH AFFIDAVIT SHALL BE PRIMA FACIE EVIDENCE.
Page | 5 |
(c) IT IS HEREBY EXPRESSLY AGREED THAT IF FOR ANY REASON AFTER ANY SUCH ACTION UNDER (a) OR (b) DIRECTLY ABOVE HAS BEEN COMMENCED, THE SAME SHALL BE DISCONTINUED, MARKED SATISFIED OF RECORD OR TERMINATED, OR POSSESSION OF THE PREMISES SHALL REMAIN IN OR BE RESTORED TO EITHER TENANT OR ANYONE CLAIMING UNDER, BY OR THROUGH TENANT, THE LANDLORD MAY, WHENEVER AND AS OFTEN AS THE LANDLORD SHALL HAVE THE RIGHT TO TAKE POSSESSION AGAIN OF THE PREMISES, BRING ONE OR MORE FURTHER SUCH ACTIONS IN THE MANNER HEREIN ABOVE SET FORTH TO OBTAIN A MONEY JUDGMENT AND/OR RECOVER POSSESSION OF THE PREMISES AND TO CONFESS JUDGMENT THEREIN AS HEREIN ABOVE PROVIDED, AND THE AUTHORITY AND POWER GIVEN ABOVE TO ANY SUCH ATTORNEY SHALL EXTEND TO ALL SUCH FURTHER ACTIONS. THE LANDLORD SHALL HAVE THE RIGHT TO BRING SUCH AN ACTION OR ACTIONS AND TO CONFESS JUDGMENT THEREIN AS HEREIN ABOVE PROVIDED BEFORE OR AFTER COMMENCING AN ACTION FOR A MONEY JUDGMENT AND/OR POSSESSION AND BEFORE OR AFTER JUDGMENT THEREON OR THEREIN HAS BEEN RECOVERED OR A JUDICIAL SALE OF ALL OR ANY PART OF TENANT’S PROPERTY HAS TAKEN PLACE.
Page | 6 |
(d) TENANT HEREBY RELEASES LANDLORD AND ANY ATTORNEY OR ATTORNEYS FROM ALL ERRORS, DEFECTS AND IMPERFECTIONS WHATSOEVER IN ENTERING JUDGMENT BY CONFESSION HEREON OR IN ISSUING ANY PROCESS OR INSTITUTING ANY PROCEEDING RELATING THERETO AND HEREBY WAIVES ALL WAIVABLE BENEFITS THAT MIGHT ACCRUE TO TENANT BY VIRTUE OF ANY PRESENT OR FUTURE LAWS INCLUDING WITHOUT LIMITATION THE PROVISIONS OF THE PENNSYLVANIA LANDLORD AND TENANT ACT AND LAWS EXEMPTING THE PREMISES OR TENANT OR PROVIDING FOR ANY STAY OF EXECUTION, EXEMPTION FROM CIVIL PROCESS OR EXTENSION OF TIME.
5. Brokers . Tenant represents and warrants that it has not dealt with any broker or agent in the negotiation for or the obtaining of this Amendment, other than Exeter Property Group Advisors, L.P. (“Agent”) and agrees to indemnify and hold Landlord harmless from any and all cost or liability for compensation claimed by any such broker or agent, other than Agent, employed by Tenant or claiming to have been engaged by Tenant in connection with this Amendment. The parties acknowledge that Agent has acted only as Agent with respect to the procurement and negotiation of this Amendment, and agree that Agent shall not be responsible or liable for any term, provision or condition of this Amendment. Agent is entitled to a leasing commission in connection with the making of this Amendment, which shall be paid by Landlord pursuant to a separate agreement between Landlord and Agent.
Page | 7 |
6. Notices . The provisions of Section 29 of the Original Lease are hereby deleted and replaced with the following:
“Any notice, consent or other communication under the Lease shall be in writing and shall be deemed duly given as of (a) the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier, or (b) the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
If to Landlord, to the following address (or to such other address as Landlord may designate by notice to Tenant):
140 W. Germantown Pike, Suite 150
Plymouth Meeting, PA 19462
Attention: Chief Financial Officer
with a copy to any mortgagee or other party designated by Landlord.
If to Tenant, to the following address:
At the Premises.
Page | 8 |
The giving of notice by Landlord’s attorneys, representatives and agents shall be deemed to be the acts of Landlord.”
7. Lapsed Provisions . The renewal options set forth in Section 1 of the 2007 Amendment are hereby terminated and of no further force and effect.
8. Binding Agreement . Except as expressly modified in this Amendment, the terms and conditions of the Existing Lease shall remain in full force and effect, without change. In the event that the terms of the Existing Lease shall conflict with the terms of this Amendment, the terms of this Amendment shall prevail. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original without the production of any other counterpart. This Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.
[signatures on following page]
Page | 9 |
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Lease as of the date set forth above.
Landlord : | Tenant : | |
EXETER 2150 CABOT, L.P., | AQUAMED TECHNOLOGIES, INC., a | |
a Pennsylvania limited partnership | Delaware corporation |
By: | Exeter 2150 Cabot, LLC, | By: | /s/ STEVEN BERGER |
a Pennsylvania limited liability company, | Name: | STEVEN BERGER | |
its sole general partner | Title: | CFO |
By: | Exeter Industrial REIT I, | ||
a Maryland Statutory Trust, | |||
its sole member |
By: | /s/ Timothy J. Weber | ||
Name : | Timothy J. Weber | ||
T itle: | Secretary/Treasurer |
Page | 10 |
EXHIBIT “A”
CONSTRUCTION DRAWINGS
Exhibit 10.6
EXECUTION COPY
US PHARMA
LICENSE AGREEMENT
This License Agreement (this “Agreement”), dated as of April 13, 2017 (the “Effective Date”), is by and between Tikun Olam Ltd ., an Israeli corporation, registration number 514263771 (“Licensor”) and TO Pharmaceuticals USA LLC , a Delaware limited liability company (“Licensee”). Licensor and Licensee shall each be individually referred to as a “Party” and collectively as the “Parties”.
WITNESSETH
WHEREAS , Licensor is the Cannabis Business in Israel, and through joint ventures, licenses and partnerships in other jurisdictions.
WHEREAS , in connection with its Cannabis Business or otherwise, Licensor is the owner of certain intellectual property, whether registered or applied for, which includes the Licensor patents, patent applications, plant patents and plant patent applications, continuation and continuation in part applications and patents maturing therefrom, and divisional applications and patents maturing therefrom, which includes the Licensor Trademarks (as defined herein), copyrights, promotional materials, know-how, trade secrets, knowledge, documentation, information relating to clinical or other trials, patient data, plant breeders rights, registered and unregistered cannabis varieties and uniquely identifiable strains of Cannabis in all forms (as further detailed hereunder), including with respect to any forms or strains of Cannabis (collectively known as the “Intellectual Property”) that are currently developed, as specified in more detail in Exhibit B hereof or which may be developed, owned or licensed in the future by Licensor, including Licensor Additional IP (collectively, the “Licensor IP”).
WHEREAS, Licensee is desirous of obtaining from Licensor a license to use the Licensor IP in connection with Licensee’s business, whether currently in existence or not, of producing, researching, developing, promoting, marketing, selling, and distributing Pharmaceutical Products (as defined herein), including for such purpose only, the planting, cultivating, growing, harvesting, use and processing of Cannabis, and application and delivery systems, methods and devices relating thereto (the “Pharmaceutical Business”), in the Territory (as defined herein), and Licensor is desirous of granting such a license to use the Licensor IP in connection with Licensee’s business pursuant to terms and conditions of this Agreement.
NOW, THEREFORE , in consideration of the premises and mutual covenants set forth herein, the Parties hereby agree as follows:
Section 1. Definitions . Capitalized terms used herein are as set forth on Exhibit A hereto.
Section 2. Grant of License .
2.1 Grant by Licensor . Subject to the terms and conditions set forth in this Agreement, Licensor hereby grants to Licensee, and Licensee hereby accepts a perpetual, non-revocable (subject to the terms hereof), royalty-free, exclusive, and sub-licensable license (the “License”) to use the Licensor IP and any Third-Party IP (subject to Section 2.9 hereof) solely in connection with the Pharmaceutical Business and solely in the United States (the “Territory”). Licensor shall not use or grant the right to use the Licensor IP to another third-party in connection with the Pharmaceutical Business in the Territory other than to an Affiliate of Licensee.
2.2 Ownership of Intellectual Property and New IP .
(a) Licensor Ownership . Subject to Section 2.3 hereof, Licensor shall (i) continue to own all Licensor IP owned by Licensor prior to April 19, 2015, and (ii) own all Intellectual Property developed after April 19, 2015 solely by Licensor without any specific or direct collaboration with Licensee or its Affiliates ("Licensor Additional IP").
(b) Licensee Ownership . Licensee shall own any and all Intellectual Property and improvements and modifications of the Licensor IP relating to the Pharmaceutical Business developed or acquired on or after April 19, 2015 (i) solely by Licensee, or (ii) jointly or collaboratively with Licensee anywhere in the world (collectively, the “New IP”), except to the extent such New IP is owned by the Pharmaceutical Affiliate, and is subject to that certain License Agreement of even date herewith between Licensor and the Pharmaceutical Affiliate (the “Affiliate Pharmaceutical License Agreement”). The New IP shall be used and/or licensed to third parties by Licensee solely within the Territory and solely in connection with the Pharmaceutical Business; however, the use of the New IP by (a) the Pharmaceutical Affiliate outside of the Territory for its Pharmaceutical Business, pursuant and subject to the Affiliate Pharmaceutical License Agreement; and (b) Tikun Olam LLC, a Delaware company, which is also an Affiliate of Licensee (hereinafter “TO LLC”), within the Territory pursuant to the License Agreement dated April 20, 2016, between Licensor and TO LLC (the “US Medical Cannabis License Agreement”), shall be permitted and shall not be a breach of this Agreement.
(c) New IP . Licensee shall have the right to use all New IP owned by it solely in connection with the Pharmaceutical Business, and/or license to third parties the right to use such New IP, solely in connection to the Pharmaceutical Business, in each case solely within the Territory. Licensor shall not have the independent right to use or license to third parties the right to use such New IP owned by Licensee outside the Territory in connection with any business similar to or competitive or potentially competitive with the Pharmaceutical Business, but shall be granted a license, pursuant to Section 2.4 below, to use the New IP outside the Territory solely in connection with its Cannabis Business. Any Licensor Additional IP not owned by Licensee or its Affiliates shall be subject to the License granted hereunder.
(d) New Strains . If Licensee, in connection with the Pharmaceutical Products or the Pharmaceutical Business, during the Term of this Agreement or thereafter, makes any improvements to the Licensor IP, including by developing new strains, including any Essentially Derived Variety, based on the TO Strains (collectively, the “New Strains”), Licensee shall own all rights, title and interest in such New Strains and the New IP; provided however, that (i) Licensee shall be entitled to use such New Strains only within the Territory and subject to the terms and conditions set forth in this Agreement regarding the use of the TO Strains; (ii) the Pharmaceutical Affiliate shall be entitled to use such New Strains outside of the Territory but only subject to the terms and conditions set forth in the Affiliate Pharmaceutical License Agreement; (iii) TO LLC shall be entitled to use such New Strains, solely within the Territory, and only subject to the terms of the US Medical Cannabis License Agreement; and (iv) pursuant to Section 2.4 hereof, Licensor shall be granted an non-revocable (subject to the terms hereof), perpetual, sub-licensable royalty-free license to use the New Strains, and shall be entitled to use them solely in connection with its Cannabis Business, and not any Pharmaceutical Business, outside the Territory.
2.3 Clinical Trials . The results of the Clinical Trials and all Intellectual Property in connection therewith and relating thereto shall be owned (a) by Licensor to the extent they were developed by Licensor prior to April 19, 2015 or developed after April 19, 2015 solely by Licensor without any specific or direct collaboration with Licensee or its Affiliates, including without limitation any direct non- de minimis financial contribution pursuant to Section 7.1(e) hereof, and (b) by Licensee, to the extent developed solely or primarily by Licensee or developed by Licensor on or after April 19, 2015 with specific or direct collaboration with Licensee or its Affiliates, including without limitation any direct non- de minimis financial contribution by Licensee or its Affiliates, anywhere in the world, except to the extent owned by the Pharmaceutical Affiliate pursuant to the License Agreements.
2 |
2.4 Grant by Licensee . Licensee hereby grants to Licensor, and Licensor hereby accepts, a perpetual, non-revocable (subject to the terms hereof), royalty-free, non-exclusive, and sub-licensable, license to use the New IP, the New Strains and the results of Clinical Trials, including any improvements and modifications thereof made by Licensee or any other party except Licensor, in each case solely outside the Territory but solely in connection with the Cannabis Business; provided, that the license granted pursuant to this Section 2.4 shall not apply to (a) any portion of Licensee's Intellectual Property which Licensee shall not have made available to TO LLC for use in TO LLC's Cannabis Business (as such term is defined in the US Medical Cannabis License Agreement), (b) any Acquired IP, and (c) any Licensee Excluded IP. For the Purpose of Section 2 of this Agreement, the term Cannabis Business shall exclude any Pharmaceutical Business.
2.5 Right to Sublicense . Licensee shall have the right to grant sublicenses of any of its rights under this License in connection with the Pharmaceutical Business solely within the Territory. The granting of sublicenses shall be at Licensee's sole and exclusive discretion and Licensee shall have the sole and exclusive power to determine the identity of any sublicensee, the applicable licensee fees or royalty rates, if any, and other terms and conditions of any sublicense.
2.6 Delivery of Licensor IP . To the extent permitted by Applicable Law (including for the avoidance of doubt, the export laws of the State of Israel and the importation federal laws and state laws of the United States), Licensor shall provide to Licensee seeds, plants or propagation materials of the strains of Cannabis included in the Licensor IP (the “TO Strains”), for the purpose of reproduction and use thereof by Licensee in accordance with the terms of this Agreement. To the extent such provision is not permitted by Applicable Law, Licensor shall cooperate with Licensee to permit Licensee, to the fullest extent permitted by Applicable Law, to utilize the TO Strains in connection with the Pharmaceutical Products and Licensee’s Pharmaceutical Business.
2.7 No Assignment of Licensor IP . Notwithstanding the foregoing, the License granted hereunder is not intended to be, and shall not be construed as, an assignment by Licensor to Licensee, in part or in whole, of the ownership of the Licensor IP.
2.8 Pharmaceutical Rights Only . The Parties recognize that, notwithstanding anything implicitly or explicitly to the contrary in this Agreement, the License granted hereunder does not grant any rights with respect to any use of Licensor IP or Licensee IP other than with respect to Licensee's Pharmaceutical Business within the Territory.
2.9 Third-Party IP . If at any time Licensor has a right to use the intellectual property of a third-party (“Third-Party IP”), to the extent permitted by such license or similar agreement, such Third-Party IP shall be deemed to be part of the Licensor IP and sub ject hereto. Licensor shall use commercially reasonable efforts to permit the use of any Third-Party IP by Licensee.
Section 3. Consideration, Payment .
In consideration of the License granted and the other Services (as hereinafter defined) provided pursuant to this Agreement, Licensee or an Affiliate of Licensee has paid or caused to be paid to Licensor an aggregate of Two Million Five Hundred Thousand U.S. Dollars ($2,500,000) (the “Payment”), of which $2,000,000 (the “USA Payment”) was paid to Licensor on behalf of Licensee and its Affiliate TO LLC. Licensor hereby acknowledges that (a) the Payment was made timely, and constitutes full payment of all obligations under Section VII of the MOU (as defined herein), and (b) that portions of such USA Payment shall be allocated to Licensee and TO LLC as payment of consideration pursuant to this Agreement and the US Medical Cannabis License Agreement, as determined by Licensee and its Affiliates, without duplication. No royalties or other payments are required hereunder.
3 |
Section 4. Term .
4.1 The License granted under this Agreement is perpetual and non-revocable (subject to the terms hereof).
Section 5. Licensor Representations and Warranties .
5.1 Organization of Licensor . Licensor is a corporation duly organized, validly existing and in good standing under the Laws of Israel. Licensor has all requisite power and authority to own, lease and operate its properties and to carry on its business and is duly qualified or licensed to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership, leasing, holding or use of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have a material adverse effect on the ability of Licensor to consummate the transactions contemplated hereby.
5.2 Authority . Subject to Section 8 hereof, Licensor has all requisite corporate power and authority to enter into this Agreement to which it is a party and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Licensor. This Agreement has been duly executed and delivered by Licensor and, assuming the due authorization, execution and delivery by the Licensee, and subject to Section 8 hereof, this Agreement constitutes the valid and binding obligations of Licensor, enforceable against Licensor in accordance with its terms, except as such enforceability may be subject to applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium and similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity.
5.3 Consents . Subject to Section 8 hereof, no consent, waiver, approval, order or authorization of, or registration, declaration or filing with, or notice to, any Governmental Authority, is required by or with respect to Licensor in connection with the execution and delivery of this Agreement by Licensor or the consummation by Licensor of the transactions contemplated hereby except for (a) such consents, approvals, orders, authorizations, registrations, declarations, filings and notices as may be required under Applicable Law and (b) such other filings, authorizations, consents and approvals that if not obtained or made would not have a material adverse effect on the ability of Licensor to consummate the transactions contemplated hereby.
5.4 No Conflict . Subject to Section 8 hereof, the execution and delivery by Licensor of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (a) any provision of the Organizational Documents of Licensor, or (b) any Applicable Law applicable to Licensor or any of its properties (whether tangible or intangible) or assets, except, in the case of clause (b), for such conflicts, violations or defaults as would not individually or in the aggregate reasonably be expected to have a material adverse effect on the ability of Licensor to consummate the transactions contemplated hereby.
5.5 Intellectual Property . Licensor is the owner or lawful licensee of the Licensor IP and has sufficient authority to grant Licensee the License pursuant to this Agreement. Licensor has not entered into any additional licenses or other arrangements that may limit Licensor’s rights or the rights of Licensee under this Agreement or which may reasonably be expected to lead to a claim of infringement or invalidity regarding any portion of the Licensor IP or its use. Licensor has no knowledge of infringement of, or conflict with, any license or other intellectual property right of any other third-party and there is no known claim pending, filed or threatened against Licensor of infringement, interference or invalidity regarding the Licensor IP or its use. Licensor has not granted and will not at any time during the Term grant or permit to exist any license or other contingent or non-contingent right, title or interest under or relating to the Licensor IP to any of its employees, principal shareholders or family members of Licensor’s principal shareholders or other third parties claiming rights derived from Licensor, that does or will conflict with or otherwise undermine or impair the rights of Licensee hereunder, including any of Licensor's representations, warranties or covenants hereunder. Notwithstanding the foregoing, Licensee acknowledges MedReleaf's interpretation of the MedReleaf License that it may conduct business within the Territory, so long as it does not make use of "Tikun Olam's Varieties" or the Licensor Trademarks, and the Parties agree that any such activity (to the extent performed by MedReleaf) shall not be deemed a breach of this Agreement by Licensor or any agreement of Licensor with any Affiliate of Licensee.
4 |
5.6 Legal Proceedings . There are no actions pending or threatened against or by Licensor or any Affiliate of Licensor that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. Subject to Section 8 hereof, no event has occurred or circumstances exist that may give rise or serve as a basis for any such action. Licensor warrants that its directors, officers, and management employees have not been convicted of any drug-related felony or of a crime related to fraud.
Section 6. Licensee Representations and Warranties .
6.1 Organization of Licensee . Licensee is a limited liability company duly organized, validly existing and in good standing under the Laws of Delaware. Licensee has all requisite power and authority to own, lease and operate its properties and to carry on its business.
6.2 Authority . Subject to Section 8 hereof, Licensee has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby has been duly authorized by all necessary corporate action on the part of Licensee. This Agreement has been duly executed and delivered by Licensee and, assuming the due authorization, execution and delivery by the other Parties hereto (other than Licensee), and subject Section 8 hereof, this Agreement constitutes the valid and binding obligations of Licensee, enforceable against Licensee in accordance with its terms, except as such enforceability may be subject to applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium and similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity.
6.3 Consents . Subject to Section 8 hereof, no consent, waiver, approval, order or authorization of, or registration, declaration or filing with, or notice to, any Governmental Authority, is required by or with respect to Licensee in connection with the execution and delivery of this Agreement or the consummation by Licensee of the transactions contemplated hereby except for (a) such consents, approvals, orders, authorizations, registrations, declarations, filings and notices as may be required under Applicable Law and (b) such other filings, authorizations, consents and approvals that if not obtained or made would not have a material adverse effect on the ability of Licensee to consummate the transactions contemplated hereby.
6.4 No Conflict . Subject to Section 8 hereof, the execution and delivery by Licensee of this Agreement and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (a) any provision of the Organizational Documents of Licensee, or (b) any Applicable Law applicable to Licensee or any of its properties (whether tangible or intangible) or assets, except, in the case of clause (b), for such conflicts, violations or defaults as would not individually or in the aggregate reasonably be expected to have a material adverse effect on the ability of Licensee to consummate the transactions contemplated hereby.
6.5 Legal Proceedings . There are no actions pending or, to Licensee’s knowledge, threatened against or by Licensee or any Affiliate of Licensee that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. Subject to Section 8 hereof, no event has occurred or circumstances exist that may give rise or serve as a basis for any such action. Licensee warrants that its managers, directors, officers, and management employees have not been convicted of any drug-related felony or of a crime related to fraud.
5 |
Section 7. Covenants .
7.1 Licensor Covenants . Licensor shall:
(a) Continue to conduct research and development efforts in connection with the Pharmaceutical Business within Israel and assist Licensee (at its request) with such research and development worldwide;
(b) provide to Licensee and its Affiliates training and assistance with research and development in connection with Licensee’s Pharmaceutical Business (the “Training Services”). In this connection, Licensor shall use a reasonable degree of care ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself, relating to training of the Licensee’s the staff and employees of Licensee, to the extent required or requested by Licensee;
(c) assist Licensee with design and establishment of operations in connection with the cultivation and production of Cannabis and extracts for Pharmaceutical Products (collectively, “Design and Operations Services”). In this connection, Licensor shall use a reasonable degree of care ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself in connection with the design, establishment and operation of Licensor’s Cannabis Business, and in any event in a manner and to the extent sufficient to comply with Applicable Law;
(d) assist Licensee in connection with conducting Clinical Trials and provide all related Clinical Trials Services. In this connection, Licensor shall use a reasonable degree of care, ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself in connection with its own research studies and clinical trials in Israel related to Cannabis Products, including extracts, and in any event in a manner and to the extent sufficient to comply with Applicable Law; and
(e) devote and pay not less than an aggregate of Three Hundred Seventy-Five Thousand U.S. Dollars ($375,000) to further develop and enhance the Licensor IP, including in connection with (i) patent prosecution, (ii) purchasing of equipment, and (iii) by funding up to Two Hundred Fifty Thousand U.S. Dollars ($250,000) in connection with the Clinical Trials, in amounts equal to funding therefor provided by Licensee and its Affiliates. In addition, Licensee, together with its Affiliates, TO LLC and the Pharmaceutical Affiliate, or such other Affiliates of Licensee as Licensee may determine, shall pay the aggregate remaining costs in connection with such Clinical Trials, if any. The obligations of Licensee and its Affiliates pursuant to this Section 7.1(e) shall be shared as determined by Licensee between Licensee and its Affiliates. The obligations of Licensor, Licensee or any of its Affiliates under this Section 7.1(e) and the obligations of Licensee’s Affiliates under any similar provisions of any other agreements, including the Affiliate License Agreements, shall not be duplicative of each other. Accordingly, the aggregate financial commitment of each of Licensor (on the one hand) and of Licensee and its Affiliates (on the other hand) pursuant to clause (iii) above shall be such Two Hundred Fifty Thousand U.S. Dollars ($250,000), and the amounts required pursuant to the second sentence of this Section 7.1(e) shall be shared among Licensee and its Affiliates. Licensee and Licensor acknowledge and agree that as of the date hereof, Licensor has already contributed $125,000 toward its obligations pursuant to clauses (i) and (ii) of this Section 7.1(e) and shall therefore only be required to contribute an additional $250,000, which shall be applied toward Licensor’s obligation to pay for 50% of the aggregate costs in connection with the Clinical Trials as set forth in clause (iii) above of this Section 7.1(e), any Clinical Trials as set forth in clause (iii) of Section 7.1(e) of the Affiliate Pharmaceutical License Agreement or any Clinical Trials as set forth in clause (iii) of Section 7.1(e) of the US Medical Cannabis License Agreement.
6 |
7.2 Licensee Covenants . Licensee shall:
(a) without prejudice to Section 7.1(e), in connection with the Services provided pursuant to Section 7.1, reimburse Licensor for all reasonable and actual out-of-pocket expenses (the “Expenses”), including the cost of air travel, accommodations and meals for employees of Licensor who in so providing such Services are required to travel outside Israel (not including salaries or other compensation paid to its employees, consultants, or related parties, except as Licensee may otherwise agree in writing), in each case upon submission of appropriate documentation evidencing such Expenses consistent with Licensee’s customary expense reimbursement policies; The obligations of Licensee or any of its Affiliates under this Section 7.2 and the obligations of Licensee’s Affiliates under any similar provisions of the Affiliate License Agreements shall not be duplicative of each other; and
(b) use commercially reasonable efforts to obtain any necessary FDA and other jurisdictional, governmental, regulatory approvals to the extent required by Applicable Law in connection with the Pharmaceutical Business in the Territory.
Section 8. Regulatory Disclosures .
8.1 The Parties acknowledge and agree that there is (a) an unpredictable regulatory environment in the area of cannabis law and that existing or new laws, interpretations of law, or enforcement policies may adversely impact the Parties’ business and (b) notwithstanding the laws of various U.S. states and other jurisdictions, Cannabis is a prohibited Schedule I controlled substance under United States federal law.
8.2 Legal Risks . The Parties acknowledge and agree that Licensee faces certain legal risk which include, but are not limited to, the following:
(a) Licensee and its suppliers or vendors, including Licensor, could be subject to criminal prosecution at any time by United States or other Governmental Authority;
(b) United States or other Governmental Authority may take actions to stop, hinder, delay or harm Licensee or take other actions that would be detrimental to Licensee; and
(c) This Agreement may be deemed void for illegality in whole or in material part.
7 |
Section 9. Confidentiality .
From time to time during the term of this Agreement, either Party (as the ”Disclosing Party”) may disclose or make available to the other Party (as the ”Receiving Party”) information which is considered proprietary or confidential by that Party, including without limitation: technology, business practices, trade secrets, processes, policies, procedures, techniques, technical information, formulae, plant strains, financial/financing contacts, investors, contractors, specifications, information data, the identity and special needs of customers or potential customers, databases, data, systems, methods of operation, client or customer lists, solicitation leads, marketing or advertising materials, techniques, know-how, processes, cost data, marketing data, business data, technical data and other technical know-how, Intellectual Property, trade secrets, third-party confidential information and other sensitive or proprietary information, whether orally or in written, electronic or other form or media, whether disclosed to the other Party or obtained by such Party through observation or examination of the other Party’s facilities or procedures or materials, and whether or not marked, designated or otherwise identified as “confidential” (collectively, ”Confidential Information”). Confidential Information shall not include information that, at the time of disclosure and as established by documentary evidence: (i) is or becomes generally available to and known by the public other than as a result of, directly or indirectly, any breach of this Section 9 by the Receiving Party or any of its Representatives; (ii) is or becomes available to the Receiving Party on a non-confidential basis from a third-party source, provided that such third-party is not and was not prohibited from disclosing such Confidential Information; (iii) was known by or in the possession of the Receiving Party or its Representatives prior to being disclosed by or on behalf of the Disclosing Party; (iv) was or is independently developed by the Receiving Party without reference to or use, in whole or in part, of any of the Disclosing Party's Confidential Information; or (v) is required to be disclosed pursuant to applicable federal, state or local law, regulation or a valid order issued by a court or Governmental Authority of competent jurisdiction. The Receiving Party shall: (A) protect and safeguard the confidentiality of the Disclosing Party's Confidential Information with at least the same degree of care as the Receiving Party would protect its own Confidential Information, but in no event with less than a commercially reasonable degree of care; (B) not use the Disclosing Party's Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Agreement; and (C) not disclose any such Confidential Information to any person or entity, except to the Receiving Party's Representatives who need to know the Confidential Information to assist the Receiving Party, or act on its behalf, to exercise its rights or perform its obligations under the Agreement. The Receiving Party shall be responsible for any breach of this Section 9 caused by any of its Representatives. On the expiration or termination of the Agreement, the Receiving Party shall promptly return, and shall require its Representatives to return to the Disclosing Party all copies, whether in written, electronic or other form or media, of the Disclosing Party's Confidential Information, or destroy all such copies and certify in writing to the Disclosing Party that such Confidential Information has been destroyed. Neither Party will use any Residual Information for any purpose whatsoever, including without limitation, the development of its own products or business. The Parties’ obligations under this Section 9 shall continue indefinitely and shall survive the termination of this Agreement. In addition to all other remedies available at law, the Disclosing Party may seek equitable relief (including injunctive relief) against the Receiving Party and its Representatives to prevent the breach or threatened breach of this Section 9 and to secure its enforcement.
Section 10. Intellectual Property Matters .
10.1 Inspection and Quality Control . Licensee agrees to affix to all Pharmaceutical Products for sale to third parties (and not Pharmaceutical Products held for internal use) that utilize the Licensor IP and any promotional and packaging material in connection with such Pharmaceutical Products, such Marks and notices of the Licensor IP, as shall be reasonably requested by Licensor, to the extent practicable and consistent with commercial practice. Licensee agrees to obtain Licensor’s specific written instructions with respect to the content and placements of all such notices required pursuant to this Section 10, which Licensor agrees to provide promptly. At all times when Licensee commercially uses the Licensor IP, to the extent practicable and consistent with commercial practice, Licensee shall note that Licensee’s use is made under license and shall indicate the owner of the Licensor IP.
10.2 Licensee agrees that Licensor shall have the right, at all reasonable times, upon no less than fifteen (15) Business Day’s prior written notice to Licensee, to inspect the premises of Licensee and elsewhere as Licensor considers necessary in order to verify Licensee's compliance with the terms hereof, including for appropriate quality control with respect to Licensee's use of the Licensor Trademarks.
10.3 Licensee agrees that it will not do or permit any act or thing that would endanger any proprietary right of Licensor with respect to the License granted pursuant to this Agreement and that Licensee will not claim any proprietary interest in the Licensor IP (including the Third-Party IP). Licensee agrees to cooperate with Licensor in registering, protecting and defending the License, including, but not limited to, if so requested by Licensor, executing and filing any and all documents and papers necessary or advisable in order to register or protect the License, including, without limitation, this Agreement or an abstract hereof.
8 |
10.4 In utilizing the Licensor IP in accordance with the terms of this Agreement, Licensee shall apply the same standards that Licensee uses for Licensee's own Intellectual Property and shall not utilize any of the Licensor IP (including without limitation, the Licensor Trademarks):
(a) in such a fashion that would cause confusion with, dilute or damage the reputation or image of Licensor, its products or services; provided however, that Licensee shall not be considered to be in breach of this Section 10.4(a) as a result of the sale by Licensee of Pharmaceutical Products bearing the Licensor name or other Licensor Trademarks; and/or
(b) in connection with any material that is obscene, pornographic, excessively violent, libelous or defamatory.
10.5 Licensee shall have the right, but not the obligation, at its own expense, to take any action it deems advisable in its sole discretion to apply for and prosecute registration of or otherwise protect the Licensor IP (including without limitation, the TO Strains and Licensor Trademarks) and the New IP (including without limitation, New Strains and Essentially Derived Varieties) in connection with the Pharmaceutical Products or the Pharmaceutical Business in the Territory. Licensor agrees to cooperate with Licensee in registering, protecting and defending the Licensor IP, including, but not limited to, if so requested by Licensee, executing and filing any and all documents and instruments necessary or advisable in order to register or protect the Licensor IP. All filings, registrations and applications shall be made in the name of the Party designated as the owner of the applicable Intellectual Property in accordance with the provisions of Section 2.2 hereof.
Section 11. Use of Licensor Trademarks .
11.1 Licensor hereby grants to Licensee and its Affiliates a right and license to use and to sublicense the right to use the Licensor Trademarks in connection with the Pharmaceutical Business, corporate names, and advertising, marketing, promoting and selling of Pharmaceutical Products and other related services within the Territory.
11.2 The Parties recognize the value of the goodwill associated with the Licensor Trademarks, and acknowledge that the Licensor Trademarks and all rights therein, as well as the goodwill which accrues during the term of this Agreement, belongs exclusively to the Licensor, and the Licensee shall not acquire any rights in the Licensor Trademarks, other than as expressly granted in this Agreement. Licensee shall not do anything inconsistent with Licensor's ownership of its Licensor Trademarks. In particular, but without limitation, Licensee shall not attack the validity of the Licensor Trademarks or the Licensor's rights in and to its Licensor Trademarks. Subject to the terms and provisions hereof, the Licensor retains the right to use and to license the use of its Licensor Trademarks for any and all goods or services.
11.3 Licensee shall not misuse or misappropriate any of the Licensor Trademarks. Licensee shall not engage in any conduct that impairs or might tend to impair the validity or enforceability of any of the Licensor Trademarks or any registrations of any of the Licensor Trademarks, or that dilutes or might dilute the distinctive quality of any of the Licensor Trademarks, or that disparages or might disparage any of the Licensor Trademarks. Notwithstanding anything to the contrary contained elsewhere in this Agreement, Licensee may not use any of the Licensor Trademarks on any materials or products unless it has received Licensor's prior written approval for such use, which shall not be unreasonably withheld, delayed or conditioned, except that Licensee shall not be required to obtain such approval in connection with the use of Licensor Trademarks on materials or products which does not materially differ from previously approved uses.
11.4 In addition to each Party’s other rights and remedies under this Agreement or otherwise, Licensee shall upon receipt of notice from the Licensor immediately discontinue any use of, and remove from its premises, all materials bearing any of the Licensor Trademarks, including any signs, labels, stationery, advertising, promotional material and literature that, in Licensor's reasonable opinion, constitutes an improper use of the Licensor Trademarks or reflects non-negligibly adversely on Licensor's reputation or brand image or any of its corporate affiliates or partners or on any of Licensor’s products or services.
9 |
11.5 All graphics, trademarks, service marks, trade names, trade dress, word marks, design marks, slogans and domain names, and all images, logos, artwork, text and other works of authorship (collectively, the “Marks”), created by or on behalf of Licensor that include or refer to the Licensor Trademarks, shall belong exclusively to Licensor, and Licensee assigns Licensor all rights, title and interest in and to said items; provided, that any Marks created by Licensee or its representatives that include or refer to the Licensor Trademarks or which are based on or derived from or combined with any Licensor IP in connection with its business shall be deemed to be Licensee IP, shall be owned by Licensee and shall be used by Licensor pursuant to Section 2.4 hereof subject to all restrictions applicable to New IP. Notwithstanding anything to the contrary herein, all Marks owned by Licensee, to the extent subject to Section 2.4 hereof shall, except with the written consent of Licensee, be used by Licensor in the form created by Licensee without material modification thereto except to the extent required by Applicable Law or applicable Governing Authority.
11.6 Licensee shall not engage in any conduct or take part in any activity that is or might be considered unfair competition or an infringement or other violation of the Licensor's rights in the Licensor Trademarks. Except as otherwise provided herein, Licensee acknowledges that it has no right whatsoever to object to or otherwise prevent the Licensor from allowing any other person to display the Licensor Trademarks or use them as part of any firm, corporation or business name except that Licensor shall not use or permit the use of Licensor Trademarks in the Territory in connection with any business which is similar to or competitive or potentially competitive with the Licensee’s Pharmaceutical Business in the Territory.
Section 12. Third - Party Infringement .
12.1 Report of Infringement . With respect to any Licensor IP subject to the License, including Licensor Trademarks, when information comes to the attention of the Licensee to the effect that any of the licensed rights have been or are threatened to be infringed by a third-party (including any propagation, production or reproduction of the TO Strains or New IP) in violation with the terms of this Agreement, the Licensee shall notify the Licensor in writing of any such infringement or threatened infringement of which it has become aware.
12.2 Action by Licensee . Subject to Section 12.3, in the event of an infringement or threatened infringement by a third-party of the Licensor IP in the Territory, Licensee shall take reasonable action, to stop any infringement or otherwise to enforce its rights, and the Licensor shall cooperate in any such action as reasonably requested. If the Licensee initiates legal action against the infringing party, the Licensee shall have the exclusive right to direct and control the litigation and any settlement thereof. Licensor shall not have any rights against the Licensee for damages or other remedy by reason of the Licensee’s alleged failure to prosecute any alleged infringements or imitations by others of the Licensor Trademarks, except as set forth herein. If Licensee does not diligently initiate legal action against the infringing party, then the Licensor shall have the exclusive right to bring suit, direct and control the litigation, and any settlement thereof (solely with respect to Licensor’s rights), at the equal expense of both Parties. The Licensee shall, at its’ expense, cooperate in any such Licensor action and any settlement thereof as reasonably requested.
10 |
12.3 Licensor Contribution . In the event that Licensee takes action pursuant to paragraph 12.2 above, Licensor shall pay to Licensee an amount equal to one-half of the costs and expenses (including attorney’s fees and expenses and costs of investigation) relating thereto (the “Infringement Contribution”) up to an aggregate amount equal to $200,000 (the “Cap”), which Cap shall include all of Licensor’s payments to (a) TO LLC pursuant to the US Medical Cannabis License Agreement, and (b) the Pharmaceutical Affiliate pursuant to the Affiliate Pharmaceutical License Agreement, in each case with respect to the similar Infringement Contributions included therein. The Infringement Contribution shall be payable solely by means of offset against any royalties due to Licensor in accordance with Section 3 of the US Medical Cannabis License Agreement (the "MM Royalties"), in which event Licensee and its Affiliates shall determine an appropriate allocation of the applicable Infringement Contribution. Notwithstanding the foregoing, if the aggregate amount of the Infringement Contribution, whether pursuant to this Section 12.3 or under any similar provision under the Affiliate License Agreements shall exceed the Cap, Licensor shall, subject to the foregoing allocation, nevertheless participate in and contribute towards such costs, solely by means of offset against any MM Royalties due to Licensor in accordance with the US Medical Cannabis License Agreement, up to the following amounts: (i) an amount equal to 10% of the first $500,000 of MM Royalties due to Licensor during any calendar year, plus (ii) an amount equal to 15% of any MM Royalties due to Licensor during any calendar year exceeding the first $500,000 of MM Royalties (e.g., in a year in which the total amount of MM Royalties due to Licensor is $800,000, the maximum additional payment on account of the Infringement Contribution shall be $95,000, and if the total required Infringement Contribution is higher than such amount, the balance may only be deducted from MM Royalties due in future years). For removal of doubt, other than consenting to the partial offset of the MM Royalties due to Licensor and their transfer from TO LLC to Licensee in accordance with the provisions of this Agreement and the US Medical Cannabis License Agreement, Licensor shall have no liability towards Licensee for the payment of the Infringement Contribution, nor shall Licensee have any claim or demand against Licensor if TO LLC refuses to or refrains from performing any offset or transfer any amount so offset by it to Licensee.
12.4 Enforcement of Rights Upon Sale of Land . Should Licensee or any person on its behalf sell, convey, transfer to or otherwise dispose of any real property on which any of the TO Strains or New Strains shall have been cultivated in connection with the Pharmaceutical Products or the Pharmaceutical Business, Licensee shall inform Licensor in writing, in advance of such sale, conveyance, transfer or disposition of the land and provide reasonable details regarding the intended transferee thereof. Licensee shall inform transferee of Licensor's rights pursuant to this Agreement and obtain transferees' undertaking to destroy and not to use in any manner any seeds, plants or propagation materials which may remain in or on the land. Licensee shall be responsible to enforce, at Licensee's expense, any breach by transferee of said undertaking.
Section 13. Indemnification .
13.1 Indemnity by Licensor . Licensor shall defend, indemnify and hold harmless Licensee and its officers, directors, employees, shareholders, agents, successors and assigns from and against any and all Losses, as incurred, resulting from, or arising out of (i) any claim, suit, action or proceeding against Licensee which alleges that any Licensor IP or deliverable hereunder infringes upon, misappropriates or violates any patents, copyrights, trademarks or trade secret rights or other proprietary rights of persons, firms or entities who are not parties to this Agreement (an “Infringement Claim”); (ii) any gross negligence, willful misconduct or misrepresentation by Licensor or its representatives; or (iii) any material breach of this Agreement by Licensor, its officers, directors, employees, principal shareholders or Affiliates. Notwithstanding anything to the contrary in this Agreement, the use of any extracts, seeds, plants or propagation materials of the TO Strains provided by Licensor pursuant to Section 2.6 above, and any reproduction thereof, shall be tested on a regular basis by Licensee, and any use thereof shall be at the sole risk of Licensee with respect to medical risk.
13.2 Indemnity by Licensee . Licensee shall defend, indemnify and hold harmless Licensor and its officers, directors, employees, shareholders, agents, successors and assigns from and against any and all Losses, as incurred, resulting from, or arising out of (i) any claim, suit, action or proceeding against Licensor which alleges that Licensee IP (other than if the claim, suit, action or proceeding results from an Infringement Claim subject to Section 13.1 ) infringes upon, misappropriates or violates any patents, copyrights, trademarks or trade secret rights or other proprietary rights of persons, firms or entities who are not parties to this Agreement; (ii) any gross negligence, willful misconduct or misrepresentation by Licensee or its representatives; or (iii) any material breach of this Agreement by Licensee, its officers, directors, employees, principal members or Affiliates.
11 |
13.3 Indemnification by Licensor for Infringement Claims . In the case of an Infringement Claim for indemnification pursuant to Section 13.1(i), Licensee shall promptly notify the indemnifying party in writing of any Infringement Claim and cooperate with Licensor at Licensor’s sole cost and expense. Licensor shall immediately take control of the defense and investigation of such Infringement Claim, assert all reasonable counterclaims, seek to recover all Losses and shall employ counsel of its choice to handle and defend the same, at its sole cost and expense. Licensor shall bear the cost of any related proceedings and shall be entitled to retain all sums recovered in any action for its own account. If Licensor obtains a decision in its favor, and the sums recovered by Licensor are less than Licensor’s legal and other applicable costs and expenses (including but not limited to, costs of investigation) in connection therewith (the “Shortfall”), Licensee shall pay the Shortfall to Licensor. If Licensor does not obtain a decision in its favor, Licensor shall pay all costs in connection with the Infringement Claim, including but not limited to, costs of investigation and reasonable attorneys’ fees and expenses incurred and will indemnify and hold harmless Licensee for any and all Losses incurred by Licensee with respect to its business in connection with such Infringement Claim. Licensor shall not settle any Infringement Claim in a manner that adversely affects the rights of Licensee without the Licensee’s prior written consent, which shall not be unreasonably withheld or delayed. Licensee’s failure to perform any obligations under this Section 13.3 shall not relieve Licensor of its obligations hereunder except to the extent that the Licensor can demonstrate that it has been materially prejudiced as a result of such failure by Licensee. Licensee may participate in and observe the proceedings at its own cost and expense.
13.4 Procedures for Third-Party Claims . In the case of any claim for indemnification arising from a claim of a third-party other than an Infringement Claim subject to Section 13.3 above (a “Third-Party Claim”), a party seeking indemnification hereunder (each an “Indemnified Party”) shall give prompt written notice, following such Indemnified Party’s receipt of such claim or demand, to the party from which indemnity is sought (each an “Indemnifying Party”) of any claim or demand of which such Indemnified Party has knowledge and as to which it may request indemnification hereunder; provided, however, that failure to give such notice will not affect such Indemnified Party’s rights hereunder unless, and then solely to the extent that, the rights of the Indemnifying Parties from whom indemnity is sought are prejudiced as a result of such failure. The Indemnifying Party shall have the right (and if it elects to exercise such right, shall do so within twenty (20) days after receiving such notice from the Indemnified Party) to defend and to direct the defense against any such claim or demand, in its name or in the name of the Indemnified Party, as the case may be, at the expense of the Indemnifying Party, and with counsel selected by the Indemnifying Party; provided, that the Indemnifying Party shall be entitled to assume control of the defense of such action only if the Indemnifying Party acknowledges in writing its indemnity obligations and assumes and holds the Indemnified Party harmless from and against all Losses resulting from such Third-Party Claim; and provided further that the Indemnifying Party shall not be entitled to assume control of such defense if (i) the Indemnifying Party shall not have notified the Indemnified Party of its exercise of its right to defend such Third-Party claim within such twenty (20) day period; (ii) such claim or demand seeks an injunction or other equitable relief against the Indemnified Party, (iii) the Indemnified Party shall have reasonably concluded that (x) there is a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such claim or demand or (y) the Indemnified Party has one or more defenses not available to the Indemnifying Party, (iv) such claim relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation, or (v) the appropriate court rules that the Indemnifying Party failed or is failing to vigorously prosecute or defend such Third-Party Claim. Notwithstanding anything in this Agreement to the contrary, the Indemnified Party shall, at the expense of the Indemnifying Party, cooperate with the Indemnifying Party, and keep the Indemnifying Party fully informed, in the defense of such claim or demand. The Indemnified Party shall have the right to participate in the defense of any claim or demand with counsel employed at its own expense; provided, however, that, in the case of any claim or demand described in clause (i) or (ii) of the second preceding sentence or as to which the Indemnifying Party shall not in fact have employed counsel to assume the defense of such claim or demand, the reasonable fees and disbursements of such counsel shall be at the expense of the Indemnifying Party. The Indemnifying Party shall have no indemnification obligations with respect to any such claim or demand which shall be settled by the Indemnified Party without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, delayed or conditioned. The Indemnifying Party shall not settle any such claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, delayed or conditioned if such settlement is accompanied by a document releasing the Indemnified Party from all liability with respect to the matter in controversy that is binding, valid and enforceable against all applicable Parties). Notwithstanding the foregoing, if the Indemnified Party fails to object to the settlement within five (5) Business Days of receipt of a written notice from the Indemnifying Party containing the terms and condition of such settlement, the Indemnified Party shall be deemed to have consented to the settlement.
12 |
13.5 Procedures for Inter-Party Claims . In the event that an Indemnified Party determines that it has an indemnification claim against an Indemnifying Party hereunder (other than as a result of a Third-party Claim or Infringement Claim), the Indemnified Party shall give prompt written notice thereof to the Indemnifying Party, specifying in reasonable detail, to the extent then known, the amount of such claim and any relevant facts and circumstances relating thereto. The Indemnified Party and the Indemnifying Party shall negotiate in good faith for the thirty (30) day period following receipt of such notice regarding the resolution of any disputed indemnification claims. If no resolution is reached with regard to such disputed claim between the Indemnifying Party and the Indemnified Party within such thirty (30) day period, the Indemnified Party shall, subject to Section 16.5 hereof (but without any duplication of the foregoing 30-day resolution period), be entitled to seek appropriate remedies in accordance with the terms hereof. In the event that the Indemnified Party is required to institute legal proceedings in order to recover its indemnification claims hereunder, the cost of such legal proceedings (including costs of investigation and reasonable attorneys’ fees and disbursements) shall be added to the amount of the indemnification claims payable to the Indemnified Party if the Indemnified Party recovers the indemnification claims in such legal proceedings. In the event that a party hereto claiming to be an Indemnified Party institutes legal proceedings in order to recover indemnification claims hereunder and the applicable court refuses to award any related amounts to such party, such party shall reimburse the defending party for the cost of such legal proceedings (including costs of investigation and reasonable attorneys’ fees and disbursements).
13.6 Recoveries . For purposes of this Section 13, any calculation of Losses shall be net of (i) any insurance proceeds actually received by the Indemnified Party with respect to such Losses (net of any costs of recovery of such insurance proceeds, including premium increases), and (ii) any monies actually received by the Indemnified Party with respect to such Losses pursuant to any indemnification obligations owed thereto by any third parties (net of any costs of recovery of such monies), and shall be exclusive of any amounts paid by Licensor pursuant to Section 12.3.
13.7 Offset . In the event that the Licensee has a Claim against Licensor arising under Section 13 of this Agreement, Licensee shall be entitled to request TO LLC to offset on Licensee’s behalf the amount of such Claim against any amounts due to Licensor pursuant to Section 3 of US Medical Cannabis License Agreement; provided, that (i) any amount so offset shall be separate and apart from, and shall not be subject to any of the limitations set forth in, Section 12.3 hereof or in any corresponding provision of the Affiliate License Agreements, and (ii) such offset shall be exercised in the following manner:
(a) Licensee shall first send to the Licensor a notice (the “Offset Notice”) specifying the amount of Licensee's claim and the manner in which it was calculated, identifying, to the extent applicable, the provisions hereof asserted to give rise to the Claim and briefly identifying the facts which constitute the basis of such obligation or Claim.
(b) Within 30 days after Licensee delivers the Offset Notice to Licensor, Licensor shall deliver to Licensee a written notice (the “Dispute Notice”) identifying in reasonable detail which Claims, or parts thereof, Licensor questions in good faith or does not question in good faith, as the case may be, and the reasons therefor. If within 30 days after giving the Offset Notice, Licensee does not receive a Dispute Notice from Licensor, Licensee shall be entitled to request TO LLC in writing, with a copy to Licensor, to offset the amount of any such Claim against payments due from TO LLC to Licensor pursuant to Section 3 of the US Medical Cannabis License Agreement; provided, that if such Claim is later defeated, defensed, settled or otherwise resolved for a cost to Licensee (the “Claim Resolution Amount”) which is less than the amount offset with respect to such Claim, then Licensee shall promptly instruct TO LLC to remit to Licensor the amount of the difference between the amount of such offset and the Claim Resolution Amount; provided, that if such instruction to TO LLC is not effectuated by TO LLC, then Licensee shall remit such amount directly to Licensor.
13 |
(c) If within 30 days after giving the Offset Notice, Licensee receives a Dispute Notice from Licensor, then (i) with respect to any portion of a Claim not questioned, the offset provisions of Section 13.7(b) above shall apply, and (ii) with respect to any portion of a Claim questioned, Licensee shall be entitled to request TO LLC to provisionally offset the amount thereof against MM Royalties due from TO LLC to Licensor pursuant to Section 3 of the US Medical Cannabis Agreement, by depositing any such amount in escrow with legal counsel to TO LLC.
(d) Any amounts questioned and held in escrow pursuant to Section 13.7(c)(ii) shall be held until six (6) months from the date of Licensee’s receipt of a Dispute Notice from Licensor, unless by such date the Claim becomes subject to a litigation, arbitration or other legal proceeding between the Parties or against one or more of the Parties (a ”Proceeding”). In the event the Claim does not become subject to a Proceeding within 6 months from the date of Licensee’s receipt of a Dispute Notice from Licensor, the funds held in escrow pursuant to Section 13.7(c)(ii) shall thereupon be promptly delivered to Licensor. In the event the Claim becomes subject to a Proceeding within 6 months from the date of Licensee’s receipt of a Dispute Notice from Licensor, the funds shall continue to be held in escrow until the Claim in respect thereof is resolved by agreement of the parties or an order of a court of competent jurisdiction directs payment of the disputed amount.
(e) Upon resolution of a Claim in accordance with the provisions of Section 13.7(d), the funds held in escrow pursuant to Section 13.7(c)(ii) shall thereupon be promptly delivered to Licensor to the extent required in accordance with the terms of the resolution of such Claim, and to the extent not so required to be so paid over to Licensor shall be paid to Licensee in settlement of its Claim, and all interest or other income, if any, which has been earned with respect to any such cash amount shall be allocated between Licensor and Licensee in proportion to their respective entitlements to such sum. Licensee and Licensor shall have no other responsibility or liability to account for any interest with respect to any amount so withheld or otherwise with respect to any Claim.
13.8 No Punitive, Exemplary or Aggravated Damages . In no event shall either Party be liable to the other Party for any claim for punitive, exemplary or aggravated damages or any indirect or consequential Losses in connection with a breach of this Agreement.
13.9 Survival . The obligations of each Party under this Section 13 shall survive the termination or expiration of this Agreement.
Section 14. Non-Competition .
14.1 During the term of this Agreement and for a period of twelve (12) months following the termination or cancellation of this Agreement, Licensor and any Affiliate thereof, will not market or sell Pharmaceutical Products derived from Cannabis or provide advisory services relating thereto in the Territory without the prior written consent of Licensee, which after a Licensor Exit Event will not be unreasonably withheld, delayed or conditioned; provided, that in such event reasonable provisions are effectuated to protect Licensee’s confidential information and business operations.
14 |
14.2 During the term of this Agreement and for a period of twelve (12) months following the termination or cancellation of this Agreement, subject to the Affiliate License Agreements, Licensee and its Affiliates will not, outside the Territory, without first obtaining the written consent of Licensor, market or sell Cannabis Products or provide advisory services relating thereto; provided, that the above restriction shall not apply with respect to Acquired IP and Licensee Excluded IP (and with respect to Licensee Excluded IP, subject to Section 2.7).
14.3 The obligations of each Party under this Section 14 run and inure to the benefit of each Party together with their successors and permitted assigns and shall survive the termination or expiration of this Agreement.
Section 15. Notices . All notices, claims or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and sent to the Parties at the addresses indicated below or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Each such notice or other communication to be given or delivered shall be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered, or (ii) if sent via an internationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one Business Day after deposit with the courier, or (iii) if sent via mail, at the earlier of its receipt or ten (10) days after the same has been deposited in a regularly-maintained government receptacle for the deposit of mail, or (iv) if sent via facsimile, upon confirmation of facsimile transfer, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next Business Day, or (v) if sent via email, PDF or by other electronic mail, upon its delivery, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next Business Day. All notices, claims and other communications hereunder may be given by any other means, but shall not be deemed to have been duly given unless and until it is actually received by the intended recipient.
If to Licensor: | Tikun Olam Ltd. |
183 Gvirol Street | |
Tel Aviv, Israel | |
Attention: Tsachi Cohen, Director & Aharon Lutzky, CEO | |
Fax: +972-3-6006201 | |
Email: tsachi@tikun-olam.co.il; aharon@tikun-olam.co.il | |
with a copy to: | Shenker – Lax Law Offices |
Rogovin Tidhar Tower, | |
11 Menachem Begin Rd., 12th floor | |
Ramat Gan | |
Attention: Oren Shenkar, Adv. | |
Fax: +972-3-6006201 | |
Email: Oren@sl-adv.co.il | |
If to Licensee: | TO Pharmaceuticals LLC |
77 Water Street | |
8 th floor | |
New York, New York 10005 | |
Attention: Chief Executive Officer | |
Fax: (646) 722-4101 | |
Email: IR@tikunolam.us | |
with copies to: | Kaufman & Associates, LLC |
200 Motor Parkway, Suite B-13 | |
Hauppauge, New York 11788 | |
Attention: Neil M. Kaufman, Esq. | |
Fax: (516) 410-1007 | |
Email: nkaufman@kaufman-associates.com | |
and | |
bernie@tikunolam.com | |
stephen@tikunolam.com |
15 |
Section 16. Miscellaneous .
16.1 Cooperation . Both Parties agree reasonably to cooperate with and assist each other in connection with the License granted under this Agreement and the development and success of Licensee’s Pharmaceutical Business within the Territory.
16.2 Prior Agreements/Oral Modification . Except as otherwise provided herein, this Agreement supersedes all prior agreements and constitutes the entire agreement and understanding between the Parties or otherwise with respect to the subject matter of this Agreement, including without limitation that certain Memorandum of Understanding dated as of April 19, 2015 between Licensor and Innocuous, LLC, a New York limited liability company, as amended by that certain letter agreement dated as of September 17, 2015 (the “MOU”). This Agreement may not be amended, modified in any manner or terminated orally or by course of conduct; no amendment, modification, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the Parties against whom the same is sought to be enforced. In the event of any explicit or implicit contradiction between the terms of this Agreement and the terms of the MedReleaf License which are applicable to Licensor or relate to the Tikun Olam IP (as defined in the MedReleaf License) the provisions of this Agreement shall prevail as between the Parties hereto.
16.3 Attorney’s Fees . Each party shall bear its own costs and expenses in connection with (a) the negotiation, execution and delivery of this Agreement and (b) any judicial or other action at law or equity that is brought by one of the Parties to this Agreement to enforce or interpret the provisions of this Agreement, in each case except as otherwise provided herein.
16.4 Governing Law; Jurisdiction . This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflict of laws provisions thereof. The Parties agree that, in the event of any action or suit as to any matters of dispute between the Parties, service of any process may be made upon the other Party in the same manner as the giving of notices under Section 16 of this Agreement. Notwithstanding anything to the contrary contained herein, in the event that any provision of this Agreement is unenforceable under the laws of the State of New York, and such provision is enforceable under the laws of any other state or jurisdiction, the Parties expressly agree that said provision shall be interpreted and construed under the laws of that state or jurisdiction.
16 |
16.5 Dispute Resolution . In the event of any dispute, claim, question, or disagreement arising from or relating to this Agreement or the breach thereof, the Parties hereto shall use their best efforts to settle the dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both Parties. If the dispute cannot be settled through negotiation within a period of seven (7) days, the Parties agree to attempt in good faith to settle the dispute through mediation, administered by a mediator mutually agreeable to both Parties, before resorting to arbitration. If they do not reach such solution, or an agreed upon mediator cannot be identified, within a period of thirty (30) days, then, upon notice by either Party to the other, all disputes, claims, questions, or differences shall be finally settled by arbitration administered by the American Arbitration Association, in New York, New York, in accordance with the provisions of that organization’s Commercial Arbitration Rules. The dispute shall be heard and determined by a panel of three (3) arbitrators, unless otherwise agreed by the Parties. In such case, each Party shall each select one (1) arbitrator. The arbitrator selected by the claimant and the arbitrator selected by respondent shall, within ten (10) days of their appointment, select a third neutral arbitrator. In the event that they are unable to do so, or if for any reason the three (3) arbitrators are not timely empanelled, the Parties, or either of them, or their attorneys, may request that the American Arbitration Association appoint the third or any other necessary arbitrator. Prior to the commencement of hearings, each of the arbitrators appointed shall provide an oath or undertaking of impartiality. The United States Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant hereto. Notwithstanding any provision hereof, any applicable law or public policy considerations, including without limitation any possible illegality or unenforceability of this Agreement or any portion hereof due to the subject matter hereof, the arbitrators shall interpret this Agreement giving full effect to the terms and provisions hereof. All charges of the American Arbitration Association or any mediator shall be borne equally by the Parties, and each Party hereby agrees to pay all such charges promptly upon request therefor, and if any Party shall fail to do so, the other Party shall be permitted to apply towards such charges any amounts otherwise due to the non-paying Party. The Parties to the arbitration proceeding shall bear their own respective expenses incurred in connection therewith, including, but not limited to, legal fees and expenses.
16.6 Successors and Assigns; Assignment .
(a) The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Unless clearly inapplicable, all references in this Agreement to a Party shall be deemed to include any such Party’s successors and assigns. No Party to this Agreement will have the right to assign its rights or obligations under this Agreement without the prior written consent of the other Party; provided, however, that (i) Licensee shall be permitted to assign its rights or obligations under this Agreement to any Affiliate of Licensee, and (ii) in the event of sale or transfer by Licensee of all or substantially all of its assets, this Agreement may be assigned to any successor or assignee thereof, except that the rights and obligations under this Agreement may not be assigned by Licensee in connection therewith without Licensor’s prior written consent prior to September 30, 2018, unless at the time of such assignment (y) the Enterprise Value (as defined below) of Licensee and its Pharmaceutical Affiliate on a consolidated basis in connection with such sale transaction equals or exceeds fifty million dollars ($50,000,000), or (z) the combined Enterprise Value of TO LLC, the Pharmaceutical Affiliate and Licensee, in each case on a consolidated basis, equals or exceeds two hundred fifty million dollars ($250,000,000).
(b) For purposes of this Section 16.6, the “Enterprise Value” of the Pharmaceutical Affiliate, TO LLC and Licensee shall be equal to (i) the pre-transaction value of such company in connection with or immediately prior to the sale of such company or its business (whether in connection with a sale of membership interests, or assets or a merger or consolidation) or (ii) if no such sale transaction has occurred, then the post -transaction value in connection with its most recent financing transaction; provided, however; that if the Parties do not agree on the determination of such Enterprise Value within ten (10) Business Days from the date that a proposed assignment by a Party subject to this Section 16.6 is disclosed by such Party to the other Party, then the determination thereof shall be made by the appointment by mutual agreement of an impartial United States recognized firm of independent certified public accountants or recognized valuation professionals (a “Valuator”), which Valuator shall be instructed to deliver a detailed report containing its calculation of the Enterprise Value (in connection with which calculation of Enterprise Value of the Valuator shall not include any minority discount) and within thirty (30) days after its engagement, which Valuator’s determination of Enterprise Value shall be final and binding. If one or more of the Parties objects or does not agree to the appointment of a Valuator within ten (10) Business Days after request by the other Party, the selection of the Valuator shall be submitted to binding arbitration pursuant to Section 16.5 hereof. The decision of the Valuator may be entered in any court having jurisdiction in New York and the costs and expenses incurred in connection with the arbitration shall be borne equally by the Parties.
17 |
(c) For purposes of this Section 16.6 and only this Section 16.6, a merger, consolidation or similar business combination as a result of which the members or stockholders owning a majority of the voting power of a company prior to the consummation thereof own less than a majority of the voting power of the surviving company in connection with such transaction shall be considered to be a sale of all or substantially all the assets of such company.
16.7 Third-Party Beneficiaries . Licensee’s Affiliates are third-party beneficiaries of Licensee’s rights under this Agreement, and shall be entitled to enforce such rights as provided herein. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties to this Agreement, or the Parties’ respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
16.8 Construction; Headings; Severability . The language of all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning, and not strictly for or against any of the Parties. This Agreement has been subject to negotiations among all Parties hereto and each party has been advised to seek such Party’s separate counsel, and, as such, this Agreement shall be deemed prepared by both Parties. Any ambiguities shall not be deemed to be construed against either party hereto. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any Applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the greatest extent possible to carry out the intentions of the Parties hereto. Notwithstanding anything to the contrary herein, including without limitation Section 16.2 hereof, if the License granted pursuant to this Agreement is or becomes invalid at any time or for any reason whatsoever, the License granted pursuant to the MOU shall be reinstated and be in full force and effect, subject to any other applicable provisions hereof and thereof, and the Parties will as between themselves continue to perform in good faith their obligations under this Agreement as closely as possible. As used in this Agreement, the term “or” shall be deemed to include the term “and/or” and the singular or plural number shall be deemed to include the other whenever the context so indicates or requires.
16.9 Force Majeure. Neither Party shall be responsible or liable for any delays in the performance of any duties under this Agreement which are not the fault or within the reasonable control of that Party including, but not limited to, fire, flood, natural disasters, acts of God, delays in deliveries by common carriers, governmental acts or orders, late deliveries of products or goods or furnishing of services by third-party vendors, civil disorders, acts of terrorism, or strikes and any other labor-related disruption, where such Party has communicated in writing the circumstances of said event to the other Party and taken any and all appropriate action to mitigate the effects of said event, and in any event, the time period for the performance of an obligation hereunder shall be extended for the amount of time of the delay or impossibility.
16.10 Waiver of Breach . The waiver by any Party of a breach of any provision of this Agreement by the other Parties must be in writing and shall not operate or be construed as a waiver of any subsequent breach by such other party. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.
18 |
16.11 Currency . Unless otherwise indicated, all dollar amounts in this Agreement are expressed in lawful dollars of the United States.
16.12 Right and Remedies . No right or remedy conferred upon or reserved to the Parties by this Agreement is intended to be, nor shall be deemed, exclusive of any other right or remedy herein or by law or equity provided or permitted, but each shall be cumulative of every other right or remedy.
16.13 Counterparts; Faxed or E-Mailed 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. Any executed signature page delivered by facsimile or e-mail transmission shall be binding to the same extent as an original executed signature page, with regard to this Agreement or any amendment thereto.
16.14 Recitals . The Recitals set forth above are hereby incorporated in and made a part of this Agreement by this reference.
Section 17. Offset . Other than as provided in Sections, 12.3 and 13.7 above, Licensee may not offset and may not request TO LLC to offset any amounts due to Licensor hereunder or under the US Medical Cannabis License Agreement from any claim it may have against Licensor, unless Licensee shall have obtained a final and binding judgement against Licensor by a court of competent jurisdiction issued within the framework of the Arbitration set forth in Section 16.5 above, or otherwise approved in writing by Licensor.
Section 18. Publicity . Both Parties shall reasonably cooperate in connection with issuing press releases or promotional or marketing material to the public or third parties in connection with matters subject hereto.
(Signature page to follow)
19 |
IN WITNESS WHEREOF , the Parties hereto have duly executed this License Agreement as of the day and year first written above.
Tikun Olam Ltd. |
By: | /s/ Tsachi Cohen | |
Name: | ||
Title: |
TO PHARMACEUTICAL USA LLC | |
By: TO HOLDING GROUP LLC, Manager | |
By: T.O. GLOBAL llC, Manager |
By: | /s/ Bernard Sucher | |
Name: Bernard Sucher | ||
Title: Chief Executive Officer |
20 |
Exhibit 10.7
TO Pharmaceuticals USA LLC
77 Water Street
8th floor
New York, New York 10005
December 9, 2018
To
Tikun Olam Ltd.
183 Ibn Gvirol Street,
Tel Aviv, Israel
Attention: Mr. Tsachi Cohen, Director
Re: Amendment to the License Agreement
Reference is made in this letter agreement (the " Letter ") to the License Agreement, dated as of April 13, 2017 (the " License Agreement "), by and between Tikun Olam Ltd., an Israeli corporation (" Licensor ") and TO Pharmaceuticals USA LLC, a Delaware limited liability company (the " Licensee ") (each a " Party " and together, the " Parties ").
Each of the Parties hereby agrees to the following amendment of the License Agreement (the " First Amendment "):
1. | All terms used herein and not defined shall have the meaning ascribed to them in the License Agreement. |
2. | The definition of “Pharmaceutical Product” in Exhibit A (Section 51) of the License Agreement is hereby deleted in its entirety and replaced with the following: |
" “ Pharmaceutical Product ” shall mean, any cannabis-based product, compound or medicine which under the laws of the United States would be regulated and subject to approval and restrictions of the FDA or any successor thereto or replacement thereof in the same manner and degree and for specific indications as an approved or registered pharmaceutical product (“ Pharmaceutical-Level Regulation ”), whether or not prescribed or used for that specific indication, and whether used or sold pursuant to a prescription or over the counter; provided, however, that for purposes of this Agreement: (a) the following shall not be considered a “Pharmaceutical Product”: (i) cannabis plants (including flowers) in their natural form; (ii) food supplements containing cannabis as part of their ingredients, unless they are subject in the United States to Pharmaceutical-Level Regulation; (iii) cosmetic products containing cannabis as part of their ingredients, unless they are subject in the United States to Pharmaceutical-Level Regulation; and (iv) cannabis-based toothpastes, (b) cannabis-based extracts, oils and mixtures shall not be considered a “Pharmaceutical Product”, unless and to the extent such extracts, oils or mixtures are or were subject in the United States to Pharmaceutical-Level Regulation or have potency levels equal to or higher than an identical or substantially similar product which is subject in the United States to Pharmaceutical-Level Regulation, and (c) notwithstanding the foregoing, in the event that identical or substantially similar cannabis-based products can be sold in the United States as both a pharmaceutical product which is subject to Pharmaceutical-Level Regulation and as a medical or adult use cannabis product which is not subject to Pharmaceutical-Level Regulation, for purposes of this Agreement, the form of such cannabis-based product which is permitted to be sold without being subject to Pharmaceutical-Level Regulation shall not be considered a “Pharmaceutical Product” . "
3. | Except for the provision which was amended in accordance with the terms of this First Amendment, the remainder of the terms and conditions of the License Agreement shall continue in full force and effect and shall apply, mutatis mutandis , to this First Amendment . |
4. | Miscellaneous . This Letter may be executed in multiple counterparts which, taken together, shall constitute one and the same agreement. In the event of a conflict between the provisions of this Letter and the License Agreement, the provisions of this Letter shall prevail. This Letter may be amended only with the written consent of all of the parties hereto. This Letter shall be subject to Section 16.4 (Governing Law; Jurisdiction) and 16.5 (Dispute Resolution) as set forth in the License Agreement. |
Please indicate your agreement with the above by signing and returning to us the enclosed copy of this Letter.
Sincerely, | |||
TO Pharmaceuticals USA LLC | |||
By: TO Pharmaceuticals LLC , Manager | |||
By: | /s/ Bernard Sucher | ||
Name: | Bernard Sucher | ||
Title: | Manager |
ACCEPTED AND AGREED AS OF | ||
THE DATE FIRST WRITTEN ABOVE: | ||
Tikun Olam Ltd. | ||
By: | /s/ Tsachi Cohen | |
Tsachi Cohen | ||
Director |
Exhibit 10.8
EXECUTION VERSION
GLOBAL PHARMA
LICENSE AGREEMENT
This License Agreement (this “Agreement”), dated as of April 13, 2017 (the “Effective Date”), is by and between Tikun Olam Ltd ., an Israeli corporation, registration number 514263771 (“Licensor”) and Tikun Olam IP Ltd., a Cayman Islands company (“Licensee”). Licensor and Licensee shall each be individually referred to as a “Party” and collectively as the “Parties”.
WITNESSETH
WHEREAS , Licensor is the Cannabis Business in Israel, and through joint ventures, licenses and partnerships in other jurisdictions.
WHEREAS , in connection with its Cannabis Business or otherwise, Licensor is the owner of certain intellectual property, whether registered or applied for, which includes the Licensor patents, patent applications, plant patents and plant patent applications, continuation and continuation in part applications and patents maturing therefrom, and divisional applications and patents maturing therefrom, which includes the Licensor Trademarks (as defined herein), copyrights, promotional materials, know-how, trade secrets, knowledge, documentation, information relating to clinical or other trials, patient data, plant breeders rights, registered and unregistered cannabis varieties and uniquely identifiable strains of Cannabis in all forms (as further detailed hereunder),, including with respect to any forms or strains of Cannabis (collectively known as the “Intellectual Property”) that are currently developed, as specified in more detail in Exhibit B hereof or which may be developed, owned or licensed in the future by Licensor, including Licensor Additional IP (collectively, the “Licensor IP”).
WHEREAS, Licensee is desirous of obtaining from Licensor a license to use the Licensor IP in connection with Licensee’s business, whether currently in existence or not, of producing, researching, developing, promoting, marketing, selling and distributing Pharmaceutical Products (as defined herein), including for such purpose only, the planting, cultivating, growing, harvesting, use and processing of Cannabis, and application and delivery systems, methods and devices relating thereto (the “Pharmaceutical Business”), in the Territory (as defined herein), and Licensor is desirous of granting such a license to use the Licensor IP in connection with Licensee’s business pursuant to terms and conditions of this Agreement.
NOW, THEREFORE , in consideration of the premises and mutual covenants set forth herein, the Parties hereby agree as follows:
Section 1. Definitions . Capitalized terms used herein are as set forth on Exhibit A hereto.
Section 2. Grant of License .
2.1 Grant by Licensor . Subject to the terms and conditions set forth in this Agreement, Licensor hereby grants to Licensee, and Licensee hereby accepts a perpetual, non-revocable (subject to the terms hereof), royalty-free, exclusive, and sub-licensable license (the “License”) to use the Licensor IP and any Third-Party IP (subject to Section 2.10 hereof) solely in connection with the Pharmaceutical Business anywhere in the world excluding the United States (the “Territory”). Licensor shall not use or grant the right to use the Licensor IP to another third-party in connection with the Pharmaceutical Business in the Territory other than to an Affiliate of Licensee.
2.2 Ownership of Intellectual Property and New IP .
(a) Licensor Ownership . Subject to Section 2.3 hereof, Licensor shall (i) continue to own all Licensor IP owned by Licensor prior to April 19, 2015, and (ii) own all Intellectual Property developed after April 19, 2015 solely by Licensor without any specific or direct collaboration with Licensee or its Affiliates ("Licensor Additional IP").
(b) Licensee Ownership . Licensee shall own any and all Intellectual Property and improvements and modifications of the Licensor IP relating to the Pharmaceutical Business developed or acquired on or after April 19, 2015 (i) solely by Licensee, or (ii) jointly or collaboratively with Licensee anywhere in the world (collectively, the “New IP”), except to the extent such New IP is owned by the Pharmaceutical Affiliate, and is subject to that certain License Agreement of even date herewith between Licensor and the Pharmaceutical Affiliate (the “Affiliate Pharmaceutical License Agreement”). The New IP shall be used and/or licensed to third parties by Licensee solely within the Territory and solely in connection with the Pharmaceutical Business; however, the use of the New IP by (a) the Pharmaceutical Affiliate outside of the Territory for its Pharmaceutical Business, pursuant and subject to the Affiliate Pharmaceutical License Agreement; and (b) Tikun Olam LLC, a Delaware company, which is also an Affiliate of Licensee (hereinafter “TO LLC”), outside the Territory, pursuant to the License Agreement dated April 20, 2016, between Licensor and TO LLC (the “US Medical Cannabis License Agreement”), shall be permitted and shall not be a breach of this Agreement.
(c) New IP . Licensee shall have the right to use all New IP owned by it solely in connection with the Pharmaceutical Business, and/or license to third parties the right to use such New IP, solely in connection to the Pharmaceutical Business, in each case solely within the Territory. Licensor shall not have the independent right to use or license to third parties the right to use such New IP owned by Licensee in the Territory in connection with any business similar to or competitive or potentially competitive with the Pharmaceutical Business, but shall be granted a license, pursuant to Section 2.4 below, to use the New IP in the Territory solely in connection with its Cannabis Business. Any Licensor Additional IP not owned by Licensee or its Affiliates shall be subject to the License granted hereunder.
(d) New Strains . If Licensee, in connection with the Pharmaceutical Products or the Pharmaceutical Business, during the Term of this Agreement or thereafter, makes any improvements to the Licensor IP, including by developing new strains, including any Essentially Derived Variety, based on the TO Strains (collectively, the “New Strains”), Licensee shall own all rights, title and interest in such New Strains and the New IP; provided however, that (i) Licensee shall be entitled to use such New Strains only within the Territory and subject to the terms and conditions set forth in this Agreement regarding the use of the TO Strains; (ii) the Pharmaceutical Affiliate shall be entitled to use such New Strains outside of the Territory subject to the terms and conditions set forth in the Affiliate Pharmaceutical License Agreement; and (iii) pursuant to Section 2.4 hereof, Licensor shall be granted an non-revocable (subject to the terms hereof), perpetual, sub-licensable, royalty-free license to use the New Strains, and shall be entitled to use them solely in connection with its Cannabis Business, and not any Pharmaceutical Business, in the Territory.
2.3 Clinical Trials. The results of the Clinical Trials and all Intellectual Property in connection therewith and relating thereto shall be owned (a) by Licensor to the extent they were developed by Licensor prior to April 19, 2015 or developed after April 19, 2015 solely by Licensor without any specific or direct collaboration with Licensee or its Affiliates, including without limitation any direct non- de minimis financial contribution pursuant to Section 7.1(e) hereof, and (b) by Licensee, to the extent developed solely or primarily by Licensee or developed by Licensor on or after April 19, 2015 with specific or direct collaboration with Licensee or its Affiliates, including without limitation any direct non- de minimis financial contribution by Licensee or its Affiliates, anywhere in the world, except to the extent owned by the Pharmaceutical Affiliate pursuant to the Affiliate Pharmaceutical License Agreement or by TO LLC pursuant to the US Medical Cannabis License Agreement.
2.4 Grant by Licensee . Licensee hereby grants to Licensor, and Licensor hereby accepts, a perpetual, non-revocable (subject to the terms hereof), royalty-free, non-exclusive, and sub-licensable license to use the New IP, the New Strains and the results of Clinical Trials, including any improvements and modifications thereof made by Licensee or any other party except Licensor, in each case within the Territory but solely in connection with the Cannabis Business; provided, that the license granted pursuant to this Section 2.4 shall not apply to (a) any portion of Licensee's Intellectual Property which Licensee shall not have made available to TO LLC for use in TO LLC's Cannabis Business (as such term is defined in the US Medical Cannabis License Agreement), (b) any Acquired IP, and (c) any Licensee Excluded IP. For the Purpose of Section 2 of this Agreement, the term Cannabis Business shall exclude any Pharmaceutical Business.
2 |
2.5 Right to Sublicense . Licensee shall have the right to grant sublicenses of any of its rights under this License in connection with the Pharmaceutical Business solely within the Territory. The granting of sublicenses shall be at Licensee's sole and exclusive discretion and Licensee shall have the sole and exclusive power to determine the identity of any sublicensee, the applicable licensee fees or royalty rates, if any, and other terms and conditions of any sublicense.
2.6 Delivery of Licensor IP . To the extent permitted by Applicable Law (including for the avoidance of doubt, the export laws of the State of Israel and the importation laws of other jurisdictions and the importation federal laws and state laws of the United States), Licensor shall provide to Licensee seeds, plants or propagation materials of the strains of Cannabis included in the Licensor IP (the “TO Strains”), for the purpose of reproduction and use thereof by Licensee in accordance with the terms of this Agreement. To the extent such provision is not permitted by Applicable Law, Licensor shall cooperate with Licensee to permit Licensee, to the fullest extent permitted by Applicable Law, to utilize the TO Strains in connection with the Pharmaceutical Products and Licensee’s Pharmaceutical Business.
2.7 Distribution Right of First Refusal . Except to the extent prohibited by Licensor’s agreements with MedReleaf as in effect as of the date hereof, Licensor shall have the right of first refusal to distribute any Licensee Excluded IP outside of the United States in connection with Medical Cannabis Products. In the event that Licensee shall have received a bona fide written offer (the “Offer”) from any third-party (the “Offeror”), to distribute any New IP outside of the United States in connection with Medical Cannabis Products, and Licensee desires to accept the Offer, Licensee shall give written notice (the “Notice”) to Licensor stating that a bona fide offer to distribute certain New IP in connection with Medical Cannabis Products has been made, setting forth the material terms and conditions of the Offer, attaching a copy of the Offer, and acknowledging that Licensor shall have the option, exercisable for a period of thirty (30) days after the giving of the Notice, to distribute in connection with Medical Cannabis Products the New IP that is the subject of the Offer upon comparable terms and conditions as stated in the Offer. If Licensor fails to exercise its option to distribute such New IP in connection with Medical Cannabis Products outside of the United States within the foregoing time period, Licensee shall have the right to consummate the transaction with the Offeror upon terms no less favorable to Licensee than those contained in the Offer. If Licensor exercises its option to distribute the New IP within the foregoing time period, Licensor and Licensee shall execute definitive documents consummating the transaction upon the terms contained in the Offer within sixty (60) days.
2.8 No Assignment of Licensor IP . Notwithstanding the foregoing, the License granted hereunder is not intended to be, and shall not be construed as, an assignment by Licensor to Licensee, in part or in whole, of the ownership of the Licensor IP.
2.9 Pharmaceutical Rights Only . The Parties recognize that, notwithstanding anything implicitly or explicitly to the contrary in this Agreement, the License granted hereunder does not grant any rights with respect to any use of Licensor IP or Licensee IP other than with respect to Licensee's Pharmaceutical Business within the Territory.
2.10 Third-Party IP . If at any time Licensor has a right to use the intellectual property of a third-party (“Third-Party IP”), to the extent permitted by such license or similar agreement, such Third-Party IP shall be deemed to be part of the Licensor IP and subject hereto. Licensor shall use commercially reasonable efforts to permit the use of any Third-Party IP by Licensee.
3 |
Section 3. Consideration; Payment . In consideration of the License granted and the other Services (as hereinafter defined) provided pursuant to this Agreement, Licensee or an Affiliate of Licensee has paid or caused to be paid to Licensor an aggregate of Two Million Five Hundred Thousand U.S. Dollars ($2,500,000) (the “Payment”), of which $500,000 (the “Cayman Payment”) was paid to Licensor on behalf of Licensee. Licensor hereby acknowledges that the Payment was made timely, and constitutes full payment of all obligations under Section VII of the MOU (as defined herein). No royalties or other payments are required hereunder.
Section 4. Term .
4.1 The License granted under this Agreement is perpetual and non-revocable (subject to the terms hereof).
Section 5. Licensor Representations and Warranties .
5.1 Organization of Licensor . Licensor is a corporation duly organized, validly existing and in good standing under the Laws of Israel. Licensor has all requisite power and authority to own, lease and operate its properties and to carry on its business and is duly qualified or licensed to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership, leasing, holding or use of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have a material adverse effect on the ability of Licensor to consummate the transactions contemplated hereby.
5.2 Authority . Subject to Section 8 hereof, Licensor has all requisite corporate power and authority to enter into this Agreement to which it is a party and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Licensor. This Agreement has been duly executed and delivered by Licensor and, assuming the due authorization, execution and delivery by the Licensee, and subject to Section 8 hereof, this Agreement constitutes the valid and binding obligations of Licensor, enforceable against Licensor in accordance with its terms, except as such enforceability may be subject to applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium and similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity.
5.3 Consents . Subject to Section 8 hereof, no consent, waiver, approval, order or authorization of, or registration, declaration or filing with, or notice to, any Governmental Authority, is required by or with respect to Licensor in connection with the execution and delivery of this Agreement by Licensor or the consummation by Licensor of the transactions contemplated hereby except for (a) such consents, approvals, orders, authorizations, registrations, declarations, filings and notices as may be required under Applicable Law and (b) such other filings, authorizations, consents and approvals that if not obtained or made would not have a material adverse effect on the ability of Licensor to consummate the transactions contemplated hereby.
5.4 No Conflict . Subject to Section 8 hereof, the execution and delivery by Licensor of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (a) any provision of the Organizational Documents of Licensor, or (b) any Applicable Law applicable to Licensor or any of its properties (whether tangible or intangible) or assets, except, in the case of clause (b), for such conflicts, violations or defaults as would not individually or in the aggregate reasonably be expected to have a material adverse effect on the ability of Licensor to consummate the transactions contemplated hereby.
4 |
5.5 Intellectual Property . Licensor is the owner or lawful licensee of the Licensor IP and has sufficient authority to grant Licensee the License pursuant to this Agreement. Licensor has not entered into any additional licenses or other arrangements that may limit Licensor’s rights or the rights of Licensee under this Agreement or which may reasonably be expected to lead to a claim of infringement or invalidity regarding any portion of the Licensor IP or its use. Licensor has no knowledge of infringement of, or conflict with, any license or other intellectual property right of any other third-party and there is no known claim pending, filed or threatened against Licensor of infringement, interference or invalidity regarding the Licensor IP or its use. Licensor has not granted and will not at any time during the Term grant or permit to exist any license or other contingent or non-contingent right, title or interest under or relating to the Licensor IP to any of its employees, principal shareholders or family members of Licensor’s principal shareholders or other third parties claiming rights derived from Licensor, that does or will conflict with or otherwise undermine or impair the rights of Licensee hereunder, including any of Licensor's representations, warranties or covenants hereunder. Notwithstanding the foregoing, Licensee acknowledges MedReleaf’s interpretation of the MedReleaf License that it may conduct business within the Territory, so long as it does not make use of "Tikun Olam's Varieties" or the Licensor Trademarks, and the Parties agree that any such activity (to the extent performed by MedReleaf) shall not be deemed a breach of this Agreement by Licensor or any agreement of Licensor with any Affiliate of Licensee.
5.6 Legal Proceedings . There are no actions pending or threatened against or by Licensor or any Affiliate of Licensor that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. Subject to Section 8 hereof, no event has occurred or circumstances exist that may give rise or serve as a basis for any such action. Licensor warrants that its directors, officers, and management employees have not been convicted of any drug-related felony or of a crime related to fraud.
Section 6. Licensee Representations and Warranties .
6.1 Organization of Licensee . Licensee is a company duly organized, validly existing and in good standing under the Laws of the Cayman Islands. Licensee has all requisite power and authority to own, lease and operate its properties and to carry on its business.
6.2 Authority . Subject to Section 8 hereof, Licensee has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby has been duly authorized by all necessary corporate action on the part of Licensee. This Agreement has been duly executed and delivered by Licensee and, assuming the due authorization, execution and delivery by the other Parties hereto (other than Licensee), and subject Section 8 hereof, this Agreement constitutes the valid and binding obligations of Licensee, enforceable against Licensee in accordance with its terms, except as such enforceability may be subject to applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium and similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity.
6.3 Consents . Subject to Section 8 hereof, no consent, waiver, approval, order or authorization of, or registration, declaration or filing with, or notice to, any Governmental Authority, is required by or with respect to Licensee in connection with the execution and delivery of this Agreement or the consummation by Licensee of the transactions contemplated hereby except for (a) such consents, approvals, orders, authorizations, registrations, declarations, filings and notices as may be required under Applicable Law and (b) such other filings, authorizations, consents and approvals that if not obtained or made would not have a material adverse effect on the ability of Licensee to consummate the transactions contemplated hereby.
6.4 No Conflict . Subject to Section 8 hereof, the execution and delivery by Licensee of this Agreement and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (a) any provision of the Organizational Documents of Licensee, or (b) any Applicable Law applicable to Licensee or any of its properties (whether tangible or intangible) or assets, except, in the case of clause (b), for such conflicts, violations or defaults as would not individually or in the aggregate reasonably be expected to have a material adverse effect on the ability of Licensee to consummate the transactions contemplated hereby.
5 |
6.5 Legal Proceedings . There are no actions pending or, to Licensee’s knowledge, threatened against or by Licensee or any Affiliate of Licensee that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. Subject to Section 8 hereof, no event has occurred or circumstances exist that may give rise or serve as a basis for any such action. Licensee warrants that its directors, officers, and management employees have not been convicted of any drug-related felony or of a crime related to fraud.
Section 7. Covenants .
7.1 Licensor Covenants . Licensor shall:
(a) Continue to conduct research and development efforts in connection with the Pharmaceutical Business within Israel and assist Licensee (at its request) with such research and development worldwide;
(b) provide to Licensee and its Affiliates training and assistance with research and development in connection with Licensee’s Pharmaceutical Business (the “Training Services”). In this connection, Licensor shall use a reasonable degree of care ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself, relating to training of the Licensee’s the staff and employees of Licensee, to the extent required or requested by Licensee;
(c) assist Licensee with design and establishment of operations in connection with the cultivation and production of Cannabis extracts for Pharmaceutical Products (collectively, “Design and Operations Services”). In this connection, Licensor shall use a reasonable degree of care ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself in connection with the design, establishment and operation of Licensor’s Cannabis Business, and in any event in a manner and to the extent sufficient to comply with Applicable Law;
(d) assist Licensee in connection with conducting Clinical Trials and provide all related Clinical Trials Services. In this connection, Licensor shall use a reasonable degree of care, ordinarily provided consistent with good industry practices, at no lower standard than Licensor provides for itself in connection with its own clinical trials in Israel related to Cannabis Products, including extracts, and in any event in a manner and to the extent sufficient to comply with Applicable Law; and
(e) devote and pay not less than an aggregate of Three Hundred Seventy-Five Thousand U.S. Dollars ($375,000) to further develop and enhance the Licensor IP, including in connection with (i) patent prosecution, (ii) purchasing of equipment, and (iii) by funding up to Two Hundred Fifty Thousand U.S. Dollars ($250,000) in connection with the Clinical Trials, in amounts equal to funding therefor provided by Licensee and its Affiliates. In addition, Licensee, together with its Affiliates, the Pharmaceutical Affiliate and TO LLC, or such other Affiliates of Licensee as Licensee may determine, shall pay the aggregate remaining costs in connection with such Clinical Trials, if any. The obligations of Licensee and its Affiliates pursuant to this Section 7.1(e) shall be shared as determined by Licensee between Licensee and its Affiliates. The obligations of Licensor, Licensee or any of its Affiliates under this Section 7.1(e) and the obligations of Licensee’s Affiliates under any similar provisions of any other agreements, including the Affiliate License Agreements, shall not be duplicative of each other. Accordingly, the aggregate financial commitment of each of Licensor (on the one hand) and of Licensee and its Affiliates (on the other hand) pursuant to clause (iii) above shall be such Two Hundred Fifty Thousand U.S. Dollars ($250,000), and the amounts required pursuant to the second sentence of this Section 7.1(e) shall be shared among Licensee and its Affiliates. Licensee and Licensor acknowledge and agree that as of the date hereof, Licensor has already contributed $125,000 toward its obligations pursuant to clauses (i) and (ii) of this Section 7.1(e) and shall therefore only be required to contribute an additional $250,000, which shall be applied toward Licensor’s obligation to pay for 50% of the aggregate costs in connection with the Clinical Trials as set forth in clause (iii) above of this Section 7.1(e), any Clinical Trials as set forth in clause (iii) of Section 7.1(e) of the Affiliate Pharmaceutical License Agreement or any Clinical Trials as set forth in clause (iii) of Section 7.1(e) of the US Medical Cannabis License Agreement.
6 |
7.2 Licensee Covenants . Licensee shall:
(a) without prejudice to Section 7.1(e), in connection with the Services provided pursuant to Section 7.1, reimburse Licensor for all reasonable and actual out-of-pocket expenses (the “Expenses”), including the cost of air travel, accommodations and meals for employees of Licensor who in so providing such Services are required to travel outside Israel (not including salaries or other compensation paid to its employees, consultants, or related parties, except as Licensee may otherwise agree in writing), in each case upon submission of appropriate documentation evidencing such Expenses consistent with Licensee’s customary expense reimbursement policies; The obligations of Licensee or any of its Affiliates under this Section 7.2 and the obligations of Licensee’s Affiliates under any similar provisions of the Affiliate License Agreements shall not be duplicative of each other; and
(b) use commercially reasonable efforts to obtain any necessary jurisdictional, governmental, regulatory approvals to the extent required by Applicable Law in connection with the Pharmaceutical Business in the Territory.
Section 8. Regulatory Disclosures .
8.1 The Parties acknowledge and agree that there is (a) an unpredictable regulatory environment in the area of cannabis law and that existing or new laws, interpretations of law, or enforcement policies may adversely impact the Parties’ business and (b) notwithstanding the favorable treatment under the laws of certain jurisdictions, Cannabis is a prohibited controlled substance under the laws of many jurisdictions.
8.2 Legal Risks . The Parties acknowledge and agree that Licensee faces certain legal risk which include, but are not limited to, the following:
(a) Licensee and its suppliers or vendors, including Licensor, could be subject to criminal prosecution at any time pursuant to Applicable Law or other Governmental Authority;
(b) Certain jurisdictions, under Applicable Law or other Governmental Authority, may take actions to stop, hinder, delay or harm Licensee or take other actions that would be detrimental to Licensee; and
(c) This Agreement may be deemed void for illegality in whole or in material part.
7 |
Section 9. Confidentiality .
From time to time during the term of this Agreement, either Party (as the ”Disclosing Party”) may disclose or make available to the other Party (as the ”Receiving Party”) information which is considered proprietary or confidential by that Party, including without limitation: technology, business practices, trade secrets, processes, policies, procedures, techniques, technical information, formulae, plant strains, financial/financing contacts, investors, contractors, specifications, information data, the identity and special needs of customers or potential customers, databases, data, systems, methods of operation, client or customer lists, solicitation leads, marketing or advertising materials, techniques, know-how, processes, cost data, marketing data, business data, technical data and other technical know-how, Intellectual Property, trade secrets, third-party confidential information and other sensitive or proprietary information, whether orally or in written, electronic or other form or media, whether disclosed to the other Party or obtained by such Party through observation or examination of the other Party’s facilities or procedures or materials, and whether or not marked, designated or otherwise identified as “confidential” (collectively, ”Confidential Information”). Confidential Information shall not include information that, at the time of disclosure and as established by documentary evidence: (i) is or becomes generally available to and known by the public other than as a result of, directly or indirectly, any breach of this Section 9 by the Receiving Party or any of its Representatives; (ii) is or becomes available to the Receiving Party on a non-confidential basis from a third-party source, provided that such third-party is not and was not prohibited from disclosing such Confidential Information; (iii) was known by or in the possession of the Receiving Party or its Representatives prior to being disclosed by or on behalf of the Disclosing Party; (iv) was or is independently developed by the Receiving Party without reference to or use, in whole or in part, of any of the Disclosing Party's Confidential Information; or (v) is required to be disclosed pursuant to applicable federal, state or local law, regulation or a valid order issued by a court or Governmental Authority of competent jurisdiction. The Receiving Party shall: (A) protect and safeguard the confidentiality of the Disclosing Party's Confidential Information with at least the same degree of care as the Receiving Party would protect its own Confidential Information, but in no event with less than a commercially reasonable degree of care; (B) not use the Disclosing Party's Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Agreement; and (C) not disclose any such Confidential Information to any person or entity, except to the Receiving Party's Representatives who need to know the Confidential Information to assist the Receiving Party, or act on its behalf, to exercise its rights or perform its obligations under the Agreement. The Receiving Party shall be responsible for any breach of this Section 9 caused by any of its Representatives. On the expiration or termination of the Agreement, the Receiving Party shall promptly return, and shall require its Representatives to return to the Disclosing Party all copies, whether in written, electronic or other form or media, of the Disclosing Party's Confidential Information, or destroy all such copies and certify in writing to the Disclosing Party that such Confidential Information has been destroyed. Neither Party will use any Residual Information for any purpose whatsoever, including without limitation, the development of its own products or business. The Parties’ obligations under this Section 9 shall continue indefinitely and shall survive the termination of this Agreement. In addition to all other remedies available at law, the Disclosing Party may seek equitable relief (including injunctive relief) against the Receiving Party and its Representatives to prevent the breach or threatened breach of this Section 9 and to secure its enforcement.
Section 10. Intellectual Property Matters .
10.1 Inspection and Quality Control . Licensee agrees to affix to all Pharmaceutical Products for sale to third parties (and not Pharmaceutical Products held for internal use) that utilize the Licensor IP and any promotional and packaging material in connection with such Pharmaceutical Products, such Marks and notices of the Licensor IP, as shall be reasonably requested by Licensor, to the extent practicable and consistent with commercial practice. Licensee agrees to obtain Licensor’s specific written instructions with respect to the content and placements of all such notices required pursuant to this Section 10, which Licensor agrees to provide promptly. At all times when Licensee commercially uses the Licensor IP, to the extent practicable and consistent with commercial practice, shall note that Licensee’s use is made under license and shall indicate the owner of the Licensor IP.
10.2 Licensee agrees that Licensor shall have the right, at all reasonable times, upon no less than fifteen (15) Business Day’s prior written notice to Licensee, to inspect the premises of Licensee and elsewhere as Licensor considers necessary in order to verify Licensee's compliance with the terms hereof, including for appropriate quality control with respect to Licensee's use of the Licensor Trademarks.
10.3 Licensee agrees that it will not do or permit any act or thing that would endanger any proprietary right of Licensor with respect to the License granted pursuant to this Agreement and that Licensee will not claim any proprietary interest in the Licensor IP (including the Third-Party IP). Licensee agrees to cooperate with Licensor in registering, protecting and defending the License, including, but not limited to, if so requested by Licensor, executing and filing any and all documents and papers necessary or advisable in order to register or protect the License, including, without limitation, this Agreement or an abstract hereof.
10.4 In utilizing the Licensor IP in accordance with the terms of this Agreement, Licensee shall apply the same standards that Licensee uses for Licensee's own Intellectual Property and shall not utilize any of the Licensor IP (including without limitation, the Licensor Trademarks):
8 |
(a) in such a fashion that would cause confusion with, dilute or damage the reputation or image of Licensor, its products or services; provided however, that Licensee shall not be considered to be in breach of this Section 10.4(a) as a result of the sale by Licensee of Pharmaceutical Products bearing the Licensor name or other Licensor Trademarks; and/or
(b) in connection with any material that is obscene, pornographic, excessively violent, libelous or defamatory.
10.5 Licensee shall have the right, but not the obligation, at its own expense, to take any action it deems advisable in its sole discretion to apply for and prosecute registration of or otherwise protect the Licensor IP (including without limitation, the TO Strains and Licensor Trademarks) and the New IP (including without limitation, New Strains and Essentially Derived Varieties) in connection with the Pharmaceutical Products or the Pharmaceutical Business in the Territory. Licensor agrees to cooperate with Licensee in registering, protecting and defending the Licensor IP, including, but not limited to, if so requested by Licensee, executing and filing any and all documents and instruments necessary or advisable in order to register or protect the Licensor IP. All filings, registrations and applications shall be made in the name of the Party designated as the owner of the applicable Intellectual Property in accordance with the provisions of Section 2.2 hereof.
Section 11. Use of Licensor Trademarks .
11.1 Licensor hereby grants to Licensee and its Affiliates a right and license to use and to sublicense the right to use the Licensor Trademarks in connection with the Pharmaceutical Business, corporate names, and advertising, marketing, promoting and selling of Pharmaceutical Products and other related services within the Territory.
11.2 The Parties recognize the value of the goodwill associated with the Licensor Trademarks, and acknowledge that the Licensor Trademarks and all rights therein, as well as the goodwill which accrues during the term of this Agreement, belongs exclusively to the Licensor, and the Licensee shall not acquire any rights in the Licensor Trademarks, other than as expressly granted in this Agreement. Licensee shall not do anything inconsistent with Licensor's ownership of its Licensor Trademarks. In particular, but without limitation, Licensee shall not attack the validity of the Licensor Trademarks or the Licensor's rights in and to its Licensor Trademarks. Subject to the terms and provisions hereof, the Licensor retains the right to use and to license the use of its Licensor Trademarks for any and all goods or services.
11.3 Licensee shall not misuse or misappropriate any of the Licensor Trademarks. Licensee shall not engage in any conduct that impairs or might tend to impair the validity or enforceability of any of the Licensor Trademarks or any registrations of any of the Licensor Trademarks, or that dilutes or might dilute the distinctive quality of any of the Licensor Trademarks, or that disparages or might disparage any of the Licensor Trademarks. Notwithstanding anything to the contrary contained elsewhere in this Agreement, Licensee may not use any of the Licensor Trademarks on any materials or products unless it has received Licensor's prior written approval for such use, which shall not be unreasonably withheld, delayed or conditioned, except that Licensee shall not be required to obtain such approval in connection with the use of Licensor Trademarks on materials or products which does not materially differ from previously approved uses.
11.4 In addition to each Party’s other rights and remedies under this Agreement or otherwise, Licensee shall upon receipt of notice from the Licensor immediately discontinue any use of, and remove from its premises, all materials bearing any of the Licensor Trademarks, including any signs, labels, stationery, advertising, promotional material and literature that, in Licensor's reasonable opinion, constitutes an improper use of the Licensor Trademarks or reflects non-negligibly adversely on Licensor's reputation or brand image or any of its corporate affiliates or partners or on any of Licensor’s products or services.
9 |
11.5 All graphics, trademarks, service marks, trade names, trade dress, word marks, design marks, slogans and domain names, and all images, logos, artwork, text and other works of authorship (collectively, the “Marks”), created by or on behalf of Licensor that include or refer to the Licensor Trademarks, shall belong exclusively to Licensor, and Licensee assigns Licensor all rights, title and interest in and to said items; provided, that any Marks created by Licensee or its representatives that include or refer to the Licensor Trademarks or which are based on or derived from or combined with any Licensor IP in connection with its business shall be deemed to be Licensee IP, shall be owned by Licensee and shall be used by Licensor pursuant to Section 2.4 hereof subject to all restrictions applicable to New IP. Notwithstanding anything to the contrary herein, all Marks owned by Licensee, to the extent subject to Section 2.4 hereof shall, except with the written consent of Licensee, be used by Licensor in the form created by Licensee without material modification thereto except to the extent required by Applicable Law or applicable Governing Authority.
11.6 Licensee shall not engage in any conduct or take part in any activity that is or might be considered unfair competition or an infringement or other violation of the Licensor's rights in the Licensor Trademarks. Except as otherwise provided herein, Licensee acknowledges that it has no right whatsoever to object to or otherwise prevent the Licensor from allowing any other person to display the Licensor Trademarks or use them as part of any firm, corporation or business name except that Licensor shall not use or permit the use of Licensor Trademarks in the Territory in connection with any business which is similar to or competitive or potentially competitive with the Licensee’s Pharmaceutical Business in the Territory.
Section 12. Third - Party Infringement .
12.1 Report of Infringement . With respect to any Licensor IP subject to the License, including Licensor Trademarks, when information comes to the attention of the Licensee to the effect that any of the licensed rights have been or are threatened to be infringed by a third-party (including any propagation, production or reproduction of the TO Strains or New IP) in violation with the terms of this Agreement, the Licensee shall notify the Licensor in writing of any such infringement or threatened infringement of which it has become aware.
12.2 Action by Licensee . Subject to Section 12.3, in the event of an infringement or threatened infringement by a third-party of the Licensor IP in the Territory, Licensee shall take reasonable action to stop any infringement or otherwise to enforce its rights, and the Licensor shall cooperate in any such action as reasonably requested. If the Licensee initiates legal action against the infringing party, the Licensee shall have the exclusive right to direct and control the litigation and any settlement thereof. Licensor shall not have any rights against the Licensee for damages or other remedy by reason of the Licensee’s alleged failure to prosecute any alleged infringements or imitations by others of the Licensor Trademarks, except as set forth herein. If Licensee does not diligently initiate legal action against the infringing party, then the Licensor shall have the exclusive right to bring suit, direct and control the litigation, and any settlement thereof (solely with respect to Licensor’s rights), at the equal expense of both Parties. The Licensee shall, at its’ expense, cooperate in any such Licensor action and any settlement thereof as reasonably requested.
12.3 Licensor Contribution . In the event that Licensee takes action pursuant to paragraph 12.2 above, Licensor shall pay to Licensee an amount equal to one-half of the costs and expenses (including attorney’s fees and expenses and costs of investigation) relating thereto (the “Infringement Contribution”) up to an aggregate amount equal to $200,000 (the “Cap”), which Cap shall include all of Licensor’s payments to (a) TO LLC pursuant to the US Medical Cannabis License Agreement, and (b) the Pharmaceutical Affiliate pursuant to the Affiliate Pharmaceutical License Agreement, in each case with respect to the similar Infringement Contributions included therein. The Infringement Contribution shall be payable solely by means of offset against any royalties due to Licensor in accordance with Section 3 of the US Medical Cannabis License Agreement (the "MM Royalties"), in which event Licensee and its Affiliates shall determine an appropriate allocation of the applicable Infringement Contribution. Notwithstanding the foregoing, if the aggregate amount of the Infringement Contribution, whether pursuant to this Section 12.3 or under any similar provision under the Affiliate License Agreements shall exceed the Cap, Licensor shall, subject to the foregoing allocation, nevertheless participate in and contribute towards such costs, solely by means of offset against any MM Royalties due to Licensor in accordance with the US Medical Cannabis License Agreement, up to the following amounts: (i) an amount equal to 10% of the first $500,000 of MM Royalties due to Licensor during any calendar year, plus (ii) an amount equal to 15% of any MM Royalties due to Licensor during any calendar year exceeding the first $500,000 of MM Royalties (e.g., in a year in which the total amount of MM Royalties due to Licensor is $800,000, the maximum additional payment on account of the Infringement Contribution shall be $95,000, and if the total required Infringement Contribution is higher than such amount, the balance may only be deducted from MM Royalties due in future years). For removal of doubt, other than consenting to the partial offset of the MM Royalties due to Licensor and their transfer from TO LLC to Licensee in accordance with the provisions of this Agreement and the US Medical Cannabis License Agreement, Licensor shall have no liability towards Licensee for the payment of the Infringement Contribution, nor shall Licensee have any claim or demand against Licensor if TO LLC refuses to or refrains from performing any offset or transfer any amount so offset by it to Licensee.
10 |
12.4 Enforcement of Rights Upon Sale of Land . Should Licensee or any person on its behalf sell, convey, transfer to or otherwise dispose of any real property on which any of the TO Strains or New Strains shall have been cultivated in connection with the Pharmaceutical Products or the Pharmaceutical Business, Licensee shall inform Licensor in writing, in advance of such sale, conveyance, transfer or disposition of the land and provide reasonable details regarding the intended transferee thereof. Licensee shall inform transferee of Licensor's rights pursuant to this Agreement and obtain transferees' undertaking to destroy and not to use in any manner any seeds, plants or propagation materials which may remain in or on the land. Licensee shall be responsible to enforce, at Licensee's expense, any breach by transferee of said undertaking.
Section 13. Indemnification .
13.1 Indemnity by Licensor . Licensor shall defend, indemnify and hold harmless Licensee and its officers, directors, employees, shareholders, agents, successors and assigns from and against any and all Losses, as incurred, resulting from, or arising out of (i) any claim suit, action or proceeding against Licensee which alleges that any Licensor IP or deliverable hereunder infringes upon, misappropriates or violates any patents, copyrights, trademarks or trade secret rights or other proprietary rights of persons, firms or entities who are not parties to this Agreement (an “Infringement Claim”);; (ii) any gross negligence, willful misconduct or misrepresentation by Licensor or its representatives; or (iii) any material breach of this Agreement by Licensor, its officers, directors, employees, principal shareholders or Affiliates. Notwithstanding anything to the contrary in this Agreement, the use of any extracts, seeds, plants or propagation materials of the TO Strains provided by Licensor pursuant to Section 2.6 above, and any reproduction thereof, shall be tested on a regular basis by Licensee, and any use thereof shall be at the sole risk of Licensee with respect to medical risk.
13.2 Indemnity by Licensee . Licensee shall defend, indemnify and hold harmless Licensor and its officers, directors, employees, shareholders, agents, successors and assigns from and against any and all Losses, as incurred, resulting from, or arising out of (i) any claim, suit, action or proceeding against Licensor which alleges that Licensee IP (other than if the claim, suit, action or proceeding results from an Infringement Claim subject to Section 13.1 ) infringes upon, misappropriates or violates any patents, copyrights, trademarks or trade secret rights or other proprietary rights of persons, firms or entities who are not parties to this Agreement; (ii) any gross negligence, willful misconduct or misrepresentation by Licensee or its representatives; or (iii) any material breach of this Agreement by Licensee, its officers, directors, employees, principal members or Affiliates.
13.3 Indemnification by Licensor for Infringement Claims . In the case of an Infringement Claim for indemnification pursuant to Section 13.1(i), Licensee shall promptly notify the indemnifying party in writing of any Infringement Claim and cooperate with Licensor at Licensor’s sole cost and expense. Licensor shall immediately take control of the defense and investigation of such Infringement Claim, assert all reasonable counterclaims, seek to recover all Losses and shall employ counsel of its choice to handle and defend the same, at its sole cost and expense. Licensor shall bear the cost of any related proceedings and shall be entitled to retain all sums recovered in any action for its own account. If Licensor obtains a decision in its favor, and the sums recovered by Licensor are less than Licensor’s legal and other applicable costs and expenses (including but not limited to, costs of investigation) in connection therewith (the “Shortfall”), Licensee shall pay the Shortfall to Licensor. If Licensor does not obtain a decision in its favor, Licensor shall pay all costs in connection with the Infringement Claim, including but not limited to, costs of investigation and reasonable attorneys’ fees and expenses incurred and will indemnify and hold harmless Licensee for any and all Losses incurred by Licensee with respect to its business in connection with such Infringement Claim. Licensor shall not settle any Infringement Claim in a manner that adversely affects the rights of Licensee without the Licensee’s prior written consent, which shall not be unreasonably withheld or delayed. Licensee’s failure to perform any obligations under this Section 13.3 shall not relieve Licensor of its obligations hereunder except to the extent that the Licensor can demonstrate that it has been materially prejudiced as a result of such failure by Licensee. Licensee may participate in and observe the proceedings at its own cost and expense.
11 |
13.4 Procedures for Third-Party Claims . In the case of any claim for indemnification arising from a claim of a third-party other than an Infringement Claim subject to Section 13.3 above (a “Third-Party Claim”), a party seeking indemnification hereunder (each an “Indemnified Party”) shall give prompt written notice, following such Indemnified Party’s receipt of such claim or demand, to the party from which indemnity is sought (each an “Indemnifying Party”) of any claim or demand of which such Indemnified Party has knowledge and as to which it may request indemnification hereunder; provided, however, that failure to give such notice will not affect such Indemnified Party’s rights hereunder unless, and then solely to the extent that, the rights of the Indemnifying Parties from whom indemnity is sought are prejudiced as a result of such failure. The Indemnifying Party shall have the right (and if it elects to exercise such right, shall do so within twenty (20) days after receiving such notice from the Indemnified Party) to defend and to direct the defense against any such claim or demand, in its name or in the name of the Indemnified Party, as the case may be, at the expense of the Indemnifying Party, and with counsel selected by the Indemnifying Party; provided, that the Indemnifying Party shall be entitled to assume control of the defense of such action only if the Indemnifying Party acknowledges in writing its indemnity obligations and assumes and holds the Indemnified Party harmless from and against all Losses resulting from such Third-Party Claim; and provided further that the Indemnifying Party shall not be entitled to assume control of such defense if (i) the Indemnifying Party shall not have notified the Indemnified Party of its exercise of its right to defend such Third-Party claim within such twenty (20) day period; (ii) such claim or demand seeks an injunction or other equitable relief against the Indemnified Party, (iii) the Indemnified Party shall have reasonably concluded that (x) there is a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such claim or demand or (y) the Indemnified Party has one or more defenses not available to the Indemnifying Party, (iv) such claim relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation, or (v) the appropriate court rules that the Indemnifying Party failed or is failing to vigorously prosecute or defend such Third-Party Claim. Notwithstanding anything in this Agreement to the contrary, the Indemnified Party shall, at the expense of the Indemnifying Party, cooperate with the Indemnifying Party, and keep the Indemnifying Party fully informed, in the defense of such claim or demand. The Indemnified Party shall have the right to participate in the defense of any claim or demand with counsel employed at its own expense; provided, however, that, in the case of any claim or demand described in clause (i) or (ii) of the second preceding sentence or as to which the Indemnifying Party shall not in fact have employed counsel to assume the defense of such claim or demand, the reasonable fees and disbursements of such counsel shall be at the expense of the Indemnifying Party. The Indemnifying Party shall have no indemnification obligations with respect to any such claim or demand which shall be settled by the Indemnified Party without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, delayed or conditioned. The Indemnifying Party shall not settle any such claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, delayed or conditioned if such settlement is accompanied by a document releasing the Indemnified Party from all liability with respect to the matter in controversy that is binding, valid and enforceable against all applicable Parties). Notwithstanding the foregoing, if the Indemnified Party fails to object to the settlement within five (5) Business Days of receipt of a written notice from the Indemnifying Party containing the terms and condition of such settlement, the Indemnified Party shall be deemed to have consented to the settlement.
12 |
13.5 Procedures for Inter-Party Claims . In the event that an Indemnified Party determines that it has an indemnification claim against an Indemnifying Party hereunder (other than as a result of a Third-Party Claim or an Infringement Claim), the Indemnified Party shall give prompt written notice thereof to the Indemnifying Party, specifying in reasonable detail, to the extent then known, the amount of such claim and any relevant facts and circumstances relating thereto. The Indemnified Party and the Indemnifying Party shall negotiate in good faith for the thirty (30) day period following receipt of such notice regarding the resolution of any disputed indemnification claims. If no resolution is reached with regard to such disputed claim between the Indemnifying Party and the Indemnified Party within such thirty (30) day period, the Indemnified Party shall, subject to Section 16.5 hereof (but without any duplication of the foregoing 30-day resolution period), be entitled to seek appropriate remedies in accordance with the terms hereof. In the event that the Indemnified Party is required to institute legal proceedings in order to recover its indemnification claims hereunder, the cost of such legal proceedings (including costs of investigation and reasonable attorneys’ fees and disbursements) shall be added to the amount of the indemnification claims payable to the Indemnified Party if the Indemnified Party recovers the indemnification claims in such legal proceedings. In the event that a party hereto claiming to be an Indemnified Party institutes legal proceedings in order to recover indemnification claims hereunder and the applicable court refuses to award any related amounts to such party, such party shall reimburse the defending party for the cost of such legal proceedings (including costs of investigation and reasonable attorneys’ fees and disbursements).
13.6 Recoveries . For purposes of this Section 13, any calculation of Losses shall be net of (i) any insurance proceeds actually received by the Indemnified Party with respect to such Losses (net of any costs of recovery of such insurance proceeds, including premium increases), and (ii) any monies actually received by the Indemnified Party with respect to such Losses pursuant to any indemnification obligations owed thereto by any third parties (net of any costs of recovery of such monies), and shall be exclusive of any amounts paid by Licensor pursuant to Section 12.3).
13.7 Offset . In the event that the Licensee has a Claim against Licensor arising under Section 13 of this Agreement, Licensee shall be entitled to request TO LLC to offset on Licensee’s behalf the amount of such Claim against any amounts due to Licensor pursuant to Section 3 of US Medical Cannabis License Agreement; provided, that (i) any amount so offset shall be separate and apart from, and shall not be subject to any of the limitations set forth in, Section 12.3 hereof or in any corresponding provision of the Affiliate License Agreements, and (ii) such offset shall be exercised in the following manner:
(a) Licensee shall first send to the Licensor a notice (the “Offset Notice”) specifying the amount of Licensee's claim and the manner in which it was calculated, identifying, to the extent applicable, the provisions hereof asserted to give rise to the Claim and briefly identifying the facts which constitute the basis of such obligation or Claim.
(b) Within 30 days after Licensee delivers the Offset Notice to Licensor, Licensor shall deliver to Licensee a written notice (the “Dispute Notice”) identifying in reasonable detail which Claims, or parts thereof, Licensor questions in good faith or does not question in good faith, as the case may be, and the reasons therefor. If within 30 days after giving the Offset Notice, Licensee does not receive a Dispute Notice from Licensor, Licensee shall be entitled to request TO LLC in writing, with a copy to Licensor, to offset the amount of any such Claim against payments due from TO LLC to Licensor pursuant to Section 3 of the US Medical Cannabis License Agreement; provided, that if such Claim is later defeated, defensed, settled or otherwise resolved for a cost to Licensee (the “Claim Resolution Amount”) which is less than the amount offset with respect to such Claim, then Licensee shall promptly instruct TO LLC to remit to Licensor the amount of the difference between the amount of such offset and the Claim Resolution Amount; provided, that if such instruction to TO LLC is not effectuated by TO LLC, then Licensee shall remit such amount directly to Licensor.
(c) If within 30 days after giving the Offset Notice, Licensee receives a Dispute Notice from Licensor, then (i) with respect to any portion of a Claim not questioned, the offset provisions of Section 13.7(b) above shall apply, and (ii) with respect to any portion of a Claim questioned, Licensee shall be entitled to request TO LLC to provisionally offset the amount thereof against MM Royalties due from TO LLC to Licensor pursuant to Section 3 of the US Medical Cannabis Agreement, by depositing any such amount in escrow with legal counsel to TO LLC.
13 |
(d) Any amounts questioned and held in escrow pursuant to Section 13.7(c)(ii) shall be held until six (6) months from the date of Licensee’s receipt of a Dispute Notice from Licensor, unless by such date the Claim becomes subject to a litigation, arbitration or other legal proceeding between the Parties or against one or more of the Parties (a ”Proceeding”). In the event the Claim does not become subject to a Proceeding within 6 months from the date of Licensee’s receipt of a Dispute € (e) Notice from Licensor, the funds held in escrow pursuant to Section 13.7(c)(ii) shall thereupon be promptly delivered to Licensor. In the event the Claim becomes subject to a Proceeding within 6 months from the date of Licensee’s receipt of a Dispute Notice from Licensor, the funds shall continue to be held in escrow until the Claim in respect thereof is resolved by agreement of the parties or an order of a court of competent jurisdiction directs payment of the disputed amount.
(e) Upon resolution of a Claim in accordance with the provisions of Section 13.7(d), the funds held in escrow pursuant to Section 13.7(c)(ii) shall thereupon be promptly delivered to Licensor to the extent required in accordance with the terms of the resolution of such Claim, and to the extent not so required to be so paid over to Licensor shall be paid to Licensee in settlement of its Claim, and all interest or other income, if any, which has been earned with respect to any such cash amount shall be allocated between Licensor and Licensee in proportion to their respective entitlements to such sum. Licensee and Licensor shall have no other responsibility or liability to account for any interest with respect to any amount so withheld or otherwise with respect to any Claim.
13.8 No Punitive, Exemplary or Aggravated Damages . In no event shall either Party be liable to the other Party for any claim for punitive, exemplary or aggravated damages or any indirect or consequential Losses in connection with a breach of this Agreement.
13.9 Survival . The obligations of each Party under this Section 13 shall survive the termination or expiration of this Agreement.
Section 14. Non-Competition .
14.1 During the term of this Agreement and for a period of twelve (12) months following the termination or cancellation of this Agreement, Licensor and any Affiliate thereof, will not market or sell Pharmaceutical Products derived from Cannabis or provide advisory services relating thereto in the Territory without the prior written consent of Licensee, which after a Licensor Exit Event will not be unreasonably withheld, delayed or conditioned; provided, that in such event reasonable provisions are effectuated to protect Licensee’s confidential information and business operations.
14.2 During the term of this Agreement and for a period of twelve (12) months following the termination or cancellation of this Agreement, subject to the Affiliate License Agreements, Licensee and its Affiliates will not, within the Territory, without first obtaining the written consent of Licensor, market or sell Cannabis Products or provide advisory services relating thereto; provided, that the above restriction shall not apply with respect to Acquired IP and Licensee Excluded IP (and with respect to Licensee Excluded IP, subject to Section 2.7).
14.3 The obligations of each Party under this Section 14 run and inure to the benefit of each Party together with their successors and permitted assigns and shall survive the termination or expiration of this Agreement.
14 |
Section 15. Notices . All notices, claims or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and sent to the Parties at the addresses indicated below or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Each such notice or other communication to be given or delivered shall be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered, or (ii) if sent via an internationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one Business Day after deposit with the courier), or (iii) if sent via mail, at the earlier of its receipt or ten (10) days after the same has been deposited in a regularly-maintained government receptacle for the deposit of mail, or (iv) if sent via facsimile, upon confirmation of facsimile transfer, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next Business Day, or (v) if sent via email, PDF or by other electronic mail, upon its delivery, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next Business Day. All notices, claims and other communications hereunder may be given by any other means, but shall not be deemed to have been duly given unless and until it is actually received by the intended recipient.
If to Licensor: | Tikun Olam Ltd. |
183 Gvirol Street | |
Tel Aviv, Israel | |
Attention: Tsachi Cohen, Director & Aharon Lutzky, CEO | |
Fax: +972-3-6006201 | |
Email: tsachi@tikun-olam.co.il; aharon@tikun-olam.co.il | |
with a copy to: | Shenker – Lax Law Offices |
Rogovin Tidhar Tower, | |
11 Menachem Begin Rd., 12th floor | |
Ramat Gan | |
Attention: Oren Shenkar, Adv. | |
Fax: +972-3-6006201 | |
Email: Oren@sl-adv.co.il | |
If to Licensee: | Tikun Olam IP Ltd. |
c/o Trident Trust Company (Cayman) Ltd. | |
P.O. Box 847, Grand Cayman, KY1-1103 | |
Cayman Islands | |
Attention: Mirae Connor | |
Fax: + 1 (345) 949 0881 | |
Email: mconnor@tridenttrust.com and | |
barryfarkas1@gmail.com | |
with a copy to: | Kaufman & Associates, LLC |
200 Motor Parkway, Suite B-13 | |
Hauppauge, New York 11788 | |
Attention: Neil M. Kaufman, Esq. | |
Fax: (516) 650-8771 | |
Email: nkaufman@kaufman-associates.com | |
and | |
bernie@tikunolam.com | |
stephen@tikunolam.com |
Section 16. Miscellaneous .
16.1 Cooperation . Both Parties agree reasonably to cooperate with and assist each other in connection with the License granted under this Agreement and the development and success of Licensee’s Pharmaceutical Business within the Territory.
15 |
16.2 Prior Agreements/Oral Modification . Except as otherwise provided herein, this Agreement supersedes all prior agreements and constitutes the entire agreement and understanding between the Parties or otherwise with respect to the subject matter of this Agreement, including without limitation that certain Memorandum of Understanding dated as of April 19, 2015 between Licensor and Innocuous, LLC, a New York limited liability company, as amended by that certain letter agreement dated as of September 17, 2015 (the “MOU”). This Agreement may not be amended, modified in any manner or terminated orally or by course of conduct; no amendment, modification, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the Parties against whom the same is sought to be enforced. In the event of any explicit or implicit contradiction between the terms of this Agreement and the terms of the MedReleaf License which are applicable to Licensor or relate to the Tikun Olam IP (as defined in the MedReleaf License) the provisions of this Agreement shall prevail as between the Parties hereto.
16.3 Attorney’s Fees . Each party shall bear its own costs and expenses in connection with (a) the negotiation, execution and delivery of this Agreement and (b) any judicial or other action at law or equity that is brought by one of the Parties to this Agreement to enforce or interpret the provisions of this Agreement, in each case except as otherwise provided herein.
16.4 Governing Law; Jurisdiction . This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflict of laws provisions thereof. The Parties agree that, in the event of any action or suit as to any matters of dispute between the Parties, service of any process may be made upon the other Party in the same manner as the giving of notices under Section 16 of this Agreement. Notwithstanding anything to the contrary contained herein, in the event that any provision of this Agreement is unenforceable under the laws of the State of New York, and such provision is enforceable under the laws of any other state or jurisdiction, the Parties expressly agree that said provision shall be interpreted and construed under the laws of that state or jurisdiction.
16.5 Dispute Resolution . In the event of any dispute, claim, question, or disagreement arising from or relating to this Agreement or the breach thereof, the Parties hereto shall use their best efforts to settle the dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both Parties. If the dispute cannot be settled through negotiation within a period of seven (7) days, the Parties agree to attempt in good faith to settle the dispute through mediation, administered by a mediator mutually agreeable to both Parties, before resorting to arbitration. If they do not reach such solution, or an agreed upon mediator cannot be identified, within a period of thirty (30) days, then, upon notice by either Party to the other, all disputes, claims, questions, or differences shall be finally settled by arbitration administered by the American Arbitration Association, in New York, New York, in accordance with the provisions of that organization’s Commercial Arbitration Rules. The dispute shall be heard and determined by a panel of three (3) arbitrators, unless otherwise agreed by the Parties. In such case, each Party shall each select one (1) arbitrator. The arbitrator selected by the claimant and the arbitrator selected by respondent shall, within ten (10) days of their appointment, select a third neutral arbitrator. In the event that they are unable to do so, or if for any reason the three (3) arbitrators are not timely empanelled, the Parties, or either of them, or their attorneys, may request that the American Arbitration Association appoint the third or any other necessary arbitrator. Prior to the commencement of hearings, each of the arbitrators appointed shall provide an oath or undertaking of impartiality. The United States Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant hereto. Notwithstanding any provision hereof, any applicable law or public policy considerations, including without limitation any possible illegality or unenforceability of this Agreement or any portion hereof due to the subject matter hereof, the arbitrators shall interpret this Agreement giving full effect to the terms and provisions hereof. All charges of the American Arbitration Association or any mediator shall be borne equally by the Parties, and each Party hereby agrees to pay all such charges promptly upon request therefor, and if any Party shall fail to do so, the other Party shall be permitted to apply towards such charges any amounts otherwise due to the non-paying Party. The Parties to the arbitration proceeding shall bear their own respective expenses incurred in connection therewith, including, but not limited to, legal fees and expenses.
16 |
16.6 Successors and Assigns; Assignment .
(a) The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Unless clearly inapplicable, all references in this Agreement to a Party shall be deemed to include any such Party’s successors and assigns. No Party to this Agreement will have the right to assign its rights or obligations under this Agreement without the prior written consent of the other Party; provided, however, that (i) Licensee shall be permitted to assign its rights or obligations under this Agreement to any Affiliate of Licensee, and (ii) in the event of sale or transfer by Licensee of all or substantially all of its assets, this Agreement may be assigned to any successor or assignee thereof, except that the rights and obligations under this Agreement may not be assigned by Licensee in connection therewith without Licensor’s prior written consent prior to September 30, 2018, unless at the time of such assignment (y) the Enterprise Value (as defined below) of Licensee and the Pharmaceutical Affiliate on a consolidated basis in connection with such sale transaction equals or exceeds fifty million dollars ($50,000,000), or (z), the combined Enterprise Value of TO LLC, the Pharmaceutical Affiliate and Licensee, in each case on a consolidated basis, equals or exceeds two hundred fifty million dollars ($250,000,000).
(b) For purposes of this Section 16.6, the “Enterprise Value” of the Pharmaceutical Affiliate, TO LLC and Licensee shall be equal to (i) the pre-transaction value of such company in connection with or immediately prior to the sale of such company or its business (whether in connection with a sale of membership interests, or assets or a merger or consolidation) or (ii) if no such sale transaction has occurred, then the post -transaction value in connection with its most recent financing transaction; provided, however; that if the Parties do not agree on the determination of such Enterprise Value within ten (10) Business Days from the date that a proposed assignment by a Party subject to this Section 16.6 is disclosed by such Party to the other Party, then the determination thereof shall be made by the appointment by mutual agreement of an impartial United States recognized firm of independent certified public accountants or recognized valuation professionals (a “Valuator”), which Valuator shall be instructed to deliver a detailed report containing its calculation of the Enterprise Value (in connection with which calculation of Enterprise Value of the Valuator shall not include any minority discount) and within thirty (30) days after its engagement, which Valuator’s determination of Enterprise Value shall be final and binding. If one or more of the Parties objects or does not agree to the appointment of a Valuator within ten (10) Business Days after request by the other Party, the selection of the Valuator shall be submitted to binding arbitration pursuant to Section 16.5 hereof. The decision of the Valuator may be entered in any court having jurisdiction in New York and the costs and expenses incurred in connection with the arbitration shall be borne equally by the Parties.
(c) For purposes of this Section 16.6 and only this Section 16.6, a merger, consolidation or similar business combination as a result of which the members or stockholders owning a majority of the voting power of a company prior to the consummation thereof own less than a majority of the voting power of the surviving company in connection with such transaction shall be considered to be a sale of all or substantially all the assets of such company.
16.7 Third-Party Beneficiaries . Licensee’s Affiliates are third-party beneficiaries of Licensee’s rights under this Agreement, and shall be entitled to enforce such rights as provided herein. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties to this Agreement, or the Parties’ respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
17 |
16.8 Construction; Headings; Severability . The language of all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning, and not strictly for or against any of the Parties. This Agreement has been subject to negotiations among all Parties hereto and each party has been advised to seek such Party’s separate counsel, and, as such, this Agreement shall be deemed prepared by both Parties. Any ambiguities shall not be deemed to be construed against either party hereto. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any Applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the greatest extent possible to carry out the intentions of the Parties hereto. Notwithstanding anything to the contrary herein, including without limitation Section 16.2 hereof, if the License granted pursuant to this Agreement is or becomes invalid at any time or for any reason whatsoever, the License granted pursuant to the MOU shall be reinstated and be in full force and effect, subject to any other applicable provisions hereof and thereof, and the Parties will as between themselves continue to perform in good faith their obligations under this Agreement as closely as possible. As used in this Agreement, the term “or” shall be deemed to include the term “and/or” and the singular or plural number shall be deemed to include the other whenever the context so indicates or requires.
16.9 Force Majeure. Neither Party shall be responsible or liable for any delays in the performance of any duties under this Agreement which are not the fault or within the reasonable control of that Party including, but not limited to, fire, flood, natural disasters, acts of God, delays in deliveries by common carriers, governmental acts or orders, late deliveries of products or goods or furnishing of services by third-party vendors, civil disorders, acts of terrorism, or strikes and any other labor-related disruption, where such Party has communicated in writing the circumstances of said event to the other Party and taken any and all appropriate action to mitigate the effects of said event, and in any event, the time period for the performance of an obligation hereunder shall be extended for the amount of time of the delay or impossibility.
16.10 Waiver of Breach . The waiver by any Party of a breach of any provision of this Agreement by the other Parties must be in writing and shall not operate or be construed as a waiver of any subsequent breach by such other party. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.
16.11 Currency . Unless otherwise indicated, all dollar amounts in this Agreement are expressed in lawful dollars of the United States.
16.12 Right and Remedies . No right or remedy conferred upon or reserved to the Parties by this Agreement is intended to be, nor shall be deemed, exclusive of any other right or remedy herein or by law or equity provided or permitted, but each shall be cumulative of every other right or remedy.
16.13 Counterparts; Faxed or E-Mailed 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. Any executed signature page delivered by facsimile or e-mail transmission shall be binding to the same extent as an original executed signature page, with regard to this Agreement or any amendment thereto.
16.14 Recitals . The Recitals set forth above are hereby incorporated in and made a part of this Agreement by this reference.
Section 17. Offset . Other than as provided in Sections, 12.3 and 13.7 above, Licensee may not offset and may not request TO LLC to offset any amounts due to Licensor hereunder or under the US Medical Cannabis License Agreement from any claim it may have against Licensor, unless Licensee shall have obtained a final and binding judgement against Licensor by a court of competent jurisdiction issued within the framework of the Arbitration set forth in Section 16.5 above, or otherwise approved in writing by Licensor.
Section 18. Publicity . Both Parties shall reasonably cooperate in connection with issuing press releases or promotional or marketing material to the public or third parties in connection with matters subject hereto.
(Signature page to follow)
18 |
IN WITNESS WHEREOF , the Parties hereto have duly executed this License Agreement as of the day and year first written above.
Tikun Olam Ltd. |
By: | /s/ Tsachi Cohen | |
Name: | ||
Title: |
Tikun Olam IP Ltd. | |
B y : TO HOLDING GROUP LLC, Manager | |
B y : T.O. GLOBAL LLC, Manager |
By: | /s/ Bernard Sucher | |
Name: Bernard Sucher | ||
Title: Chief Executive Officer |
19 |
Exhibit 10.9
Tikun Olam IP Ltd.
c/o Trident Trust Company (Cayman) Ltd.
P.O. Box 847, Grand Cayman, KY1-1103
Cayman Islands
December 9, 2018
Tikun Olam Ltd.
183 Ibn Gvirol Street,
Tel Aviv, Israel
Attention: Mr. Tsachi Cohen, Director
Re: Amendment to the License Agreement
Reference is made in this letter agreement (the " Letter ") to the License Agreement, dated as of April 13, 2017 (the " License Agreement "), by and between Tikun Olam Ltd., an Israeli corporation (" Licensor "), and Tikun Olam IP Ltd., a Cayman Islands company (the " Licensee ") (each a " Party " and together, the " Parties ").
Each of the Parties hereby agrees to the following amendment of the License Agreement (the " First Amendment "):
1. | All terms used herein and not defined shall have the meaning ascribed to them in the License Agreement. |
2. | A new Section shall be added after Section 3, as follows: |
"3A. Additional Consideration for Over the Counter Products Pharmaceutical Products
Notwithstanding the provisions of Section 3 above, in the event that Licensee shall develop any Pharmaceutical Products which may be sold in any jurisdiction within the Territory other than Canada (an " Applicable Jurisdiction ") over the counter (i.e., without a need for a doctor's prescription) (each an " OTC Product ") then, if the OTC Product reasonably competes with a product with substantially similar composition of active components sold by Licensor or any licensee of Licensor (other than Licensee) conducting business in such Applicable Jurisdiction pursuant to an effective legal license, permit or similar authority, Licensee shall pay to Licensor a royalty of two percent (2%) of the Net Sales of such OTC Product sold in the Applicable Jurisdiction (the " OTC Royalties "). The OTC Royalties shall be paid to Licensor annually, no later than March 31 st of each calendar year with respect to the Net Sales recognized during the previous year. The payment shall be accompanied by a written report signed by an officer or manager of Licensee, setting forth in reasonable detail the name of each OTC Product, the Applicable Jurisdiction and the Net Sales of such OTC Product in such Applicable Jurisdiction during the relevant reporting period.
For the purpose of this Section 3A, the term " Net Sales " shall mean the revenue of Licensee generated from sales of all OTC Products in each Applicable Jurisdiction for which OTC Royalties are due, whether such sales are evidenced by cash, check, credit, charge, account, barter or exchange, net of returns, discounts and allowances, and shall not include any sales or use taxes, VAT, excise or similar taxes, freight or delivery charges or other amounts collected on behalf of third parties."
3. | The definition of “Pharmaceutical Product” in Exhibit A (Section 55) of the License Agreement is hereby deleted in its entirety and replaced with the following: |
1 |
" “ Pharmaceutical Product ” shall mean, with respect to each jurisdiction in which it is sold or intended for sale (the " Applicable Jurisdiction "), any cannabis-based product, compound or medicine which under the laws of the Applicable Jurisdiction would be regulated and subject to approval and restrictions in the same manner and degree and for specific indications as an approved or registered pharmaceutical product (“ Pharmaceutical-Level Regulation ”), whether or not prescribed or used for that specific indication, and whether used or sold pursuant to a prescription or over the counter; provided, however, that for purposes of this Agreement: (a) the following shall not be considered a “Pharmaceutical Product”: (i) cannabis plants (including flowers) in their natural form; (ii) food supplements containing cannabis as part of their ingredients, unless they are subject in the Applicable Jurisdiction to Pharmaceutical-Level Regulation; (iii) cosmetic products containing cannabis as part of their ingredients, unless they are subject in the Applicable Jurisdiction to Pharmaceutical-Level Regulation; and (iv) cannabis-based toothpastes, (b) cannabis-based extracts, oils and mixtures shall not be considered a “Pharmaceutical Product”, unless and to the extent such extracts, oils or mixtures are or were subject in the Applicable Jurisdiction to Pharmaceutical-Level Regulation or have potency levels equal to or higher than an identical or substantially similar product which is subject in the Applicable Jurisdiction to Pharmaceutical-Level Regulation, and (c) notwithstanding the foregoing, in the event that identical or substantially similar cannabis-based products can be sold in any Applicable Jurisdiction as both a pharmaceutical product which is subject to Pharmaceutical-Level Regulation and as a medical or adult use cannabis product which is not subject to Pharmaceutical-Level Regulation, for purposes of this Agreement, the form of such cannabis-based product which is permitted to be sold without being subject to Pharmaceutical-Level Regulation shall not be considered a “Pharmaceutical Product”. "
3. | Except for the provision which was amended in accordance with the terms of this First Amendment, the remainder of the terms and conditions of the License Agreement shall continue in full force and effect and shall apply, mutatis mutandis , to this First Amendment . |
4. | Miscellaneous . This Letter may be executed in multiple counterparts which, taken together, shall constitute one and the same agreement. In the event of a conflict between the provisions of this Letter and the License Agreement, the provisions of this Letter shall prevail. This Letter may be amended only with the written consent of all of the parties hereto. This Letter shall be subject to Section 16.4 (Governing Law; Jurisdiction) and 16.5 (Dispute Resolution) as set forth in the License Agreement. |
Please indicate your agreement with the above by signing and returning to us the enclosed copy of this Letter.
Sincerely, | ||
Tikun Olam IP Ltd. | ||
By: | /s/ Berel Farkas | |
Berel Farkas | ||
Director |
ACCEPTED AND AGREED AS OF | ||
THE DATE FIRST WRITTEN ABOVE: | ||
Tikun Olam Ltd. | ||
By: | /s/ Tsachi Cohen | |
Tsachi Cohen | ||
Director |
2 |
Exhibit 10.10
AMENDED AND RESTATED SUBLICENSE AGREEMENT (U.S.)
This Amended and Restated Sublicense Agreement (this “ Agreement ”) is made effective as of January 12, 2018 (the “ Effective Date ”) by and between TO Pharmaceuticals USA LLC, a Delaware limited liability company (“ TOP ”) and Tikkun Pharma, Inc., a Delaware corporation (“ TP ”). Each of TOP and TP may be referred to as a “ Party ” and collectively as the “ Parties ”. This Agreement amends, supersedes, and restates the prior Sublicense Agreement between the parties dated September 11, 2017 (the “ Prior Sublicense ”) in its entirety, and the Prior Sublicense shall have no further force or effect as of the Effective Date.
RECITALS
WHEREAS, TOP and Bezalel Partners, LLC (“ Bezalel ”) previously entered into that certain Shareholder Agreement (the “ SHA ”) dated as of September 11, 2017, pursuant to which Bezalel and TOP agreed to invest in TP;
WHEREAS, the SHA required TOP to sublicense to TP certain rights in-licensed from Tikun Olam Ltd., an Israeli corporation with registration number 514263771 (“ TOL ”) as set forth in the Prior Sublicense; and
WHEREAS, TOP, Bezalel, and TP have agreed to have a separate entity control the development of certain rights previously sublicensed to TP in the Prior Sublicense (specifically, those rights related to treatment of cancer indications), and so wish to amend and restate the Prior Sublicense to clarify that TP’s sublicensed rights exclude such cancer-related rights, as set forth herein.
NOW, THEREFORE, in consideration of the above and the promises and covenants contained herein and in the SHA, the Parties agree as follows:
1. | DEFINITIONS. |
1.1. “ Cannabis ” means indica, sativa or other forms of the marijuana and hemp plants, hemp products and any compounds, or mixtures or combinations thereof, isolated or derived from marijuana, cannabis or hemp plants, along with any synthetic version of such compounds, mixtures, or combinations.
1.2. “ Intellectual Property ” means any inventions, plant breeds, works of authorship, trademarks and service marks, including the goodwill therein, trade secrets, know-how, documentation, and information, together with any worldwide rights in or to any of the foregoing under patent, plant patent, plant breeders, copyright, trademark, trade secret, or other intellectual or industrial property laws.
1.3. “ Limited Pharmaceutical Business ” means the business, whether currently in existence or not, of producing, researching, developing, promoting, marketing, selling, distributing and otherwise commercializing Pharmaceutical Products (as defined herein) included in or derived from the Sublicensed IP, to prevent, manage and treat autoimmune diseases, disorders, or symptoms related thereto, provided however, that the Limited Pharmaceutical Business will not include any of the above as it relates to Crohn’s Disease, coeliac diseases, any type of colitis (including without limitation microscopic and ulcerative colitis) and any and all digestive and Inflammatory Bowel Diseases (IBD), each together with any disorders or symptoms related thereto.
1.4. “ Pharmaceutical Products ” means any product, compound, medicine or therapeutic which is subject to regulation as a drug, medicine or controlled substance by the United States Food and Drug Administration.
1 |
1.5. “ Sublicensed IP ” means any intellectual property, whether registered or applied for, including patents, patent applications, plant patents and plant patent applications, continuation and continuation in part applications and patents maturing therefrom, and divisional applications and patents maturing therefrom, Sublicensed Marks (as defined herein), copyrights, promotional materials, know-how, trade secrets, knowledge, documentation, information relating to clinical or other trials, patient data, plant breeders rights, registered and unregistered Cannabis varieties and uniquely identifiable strains of Cannabis in all forms (as further detailed hereunder) that are currently licensed to TOP from TOL under the TOL License, or that may be subsequently licensed to TOP from TOL, or that are or may subsequently be otherwise developed or acquired at any time by TOP. For avoidance of doubt, for all Sublicensed IP sublicensed to TP by TOP under the TOL License, in no event shall the scope of rights in such Sublicensed IP extend beyond the rights licensed by TOL to TOP pursuant to the TOL License. For the avoidance of doubt, any intellectual property developed or acquired by TP at any time outside the scope of the rights sublicensed under this Agreement shall not be Sublicensed IP.
1.6. “ Sublicensed Marks ” means the TOL-owned trademarks, trade names, logos, service marks, designs, emblems, signs, slogans, other similar designations of source or original and general intangibles of like nature, whether registered, applied for or not, together with the goodwill relating thereto.
1.7. “ Term ” has the meaning given to it in Section 3.1.
1.8. “ TOL License ” means the License Agreement between TOL and TOP dated as of April 13, 2017.
2. SUBLICENSED IP.
2.1. Grant .
a. TOP grants to TP a perpetual, non-revocable (subject to the terms hereof), fully paid, royalty-free, exclusive sublicense to make, have made, use, sell, have sold, offer for sale, import, reproduce, distribute, display, perform, create derivatives work from, and otherwise fully use and exploit the Sublicensed IP in the United States in connection with the Limited Pharmaceutical Business. For avoidance of doubt, to the extent TOP develops or acquires any Sublicensed IP after the Effective Date that is not owned by TP, such Sublicensed IP shall be automatically sublicensed by TOP to TP pursuant to this Section 2.1(a). The aforesaid sublicense(s) shall not be further sublicensable without the express written consent of TOP, which will not be unreasonably withheld, delayed, or conditioned. For the avoidance of doubt, TP may engage third parties to assist in developing and commercializing Pharmaceutical Products in connection with the Limited Pharmaceutical Business (“ TP Contractors ”).
b. TP shall not contest the TOL License, the Intellectual Property covered by the TOL License, the validity of the Sublicensed IP or the rights of TOL or TOP in the Sublicensed IP, except in relation to any claims asserted by TOL or TOP against TP or an affiliate thereof.
c. TP shall not use the Sublicensed IP in any fashion that would cause confusion with, dilute or damage the reputation or image of TOL or TOP, their products or services; provided, however, that TP shall not be considered to be in breach of this section as a result of the sale by TP of Pharmaceutical Products bearing the TOL name or other TOL trademarks.
d. Condition Subsequent . The Parties agree that TOP shall use its reasonable efforts seek the written consent to this Agreement by TOL, provided , that (i) such consent shall not be required to close this Agreement and (ii) the Parties hereto agree to make any reasonable amendments that may be required by TOL.
2 |
2.2. Exclusivity . The Parties acknowledge that the TOL License grants TOP certain exclusive rights, which TOP is hereby sublicensing exclusively to TP solely under Section 2.1. If TOL breaches or attempts to breach its obligation of exclusivity by licensing any of the Sublicensed IP to any third party for use in connection with the Limited Pharmaceutical Business, TOP will promptly take all reasonable action, up to and including filing a lawsuit on its and TP’s behalf, to prevent such breach of exclusivity. If TOP fails to take such action, TP may, at its sole expense, file suit on behalf of itself and the applicable TOP and, if reasonably necessary for standing or other legal reasons, TOP will join such suit.
2.3. Sublicensed Marks .
a. The Parties recognize the value of the goodwill associated with the Sublicensed Marks, and acknowledge that the Sublicensed Marks and all rights therein, as well as the goodwill which accrues during the term of this Agreement, belongs exclusively to TOL, and TP shall not acquire any rights in the Sublicensed Marks, other than as expressly granted in this Agreement. TP shall not do anything inconsistent with TOL's ownership of its Sublicensed Marks. In particular, but without limitation, TP shall not attack the validity of the Sublicensed Marks or TOL's rights in and to its Sublicensed Marks except in relation to any claims asserted by TOL or TOP against TP or an affiliate thereof.
b. TP shall not misuse or misappropriate any of the Sublicensed Marks. TP shall not engage in any conduct that impairs or might tend to impair the validity or enforceability of any of the Sublicensed Marks or any registrations of any of the Sublicensed Marks, or that dilutes or might dilute the distinctive quality of any of the Sublicensed Marks, or that disparages or might disparage any of the Sublicensed Marks. Notwithstanding anything to the contrary contained elsewhere in this Agreement, TP may not use any of the Sublicensed Marks on any materials or products unless it has received TOL’s prior written approval for such use, except that TP shall not be required to obtain such approval in connection with the use of Sublicensed Marks on materials or products which does not materially differ from previously approved uses.
c. In addition to each Party’s other rights and remedies under this Agreement or otherwise, upon receipt of notice from TOL, TP shall immediately discontinue any use of, and remove from its premises, all materials bearing any of the Sublicensed Marks, including any signs, labels, stationery, advertising, promotional material and literature that, in the reasonable opinion of TOL, constitutes an improper use of the Sublicensed Marks or reflects non-negligibly adversely on TOL’s reputation or brand image or any of its corporate affiliates or partners or on any of its products or services.
d. All graphics, trademarks, service marks, trade names, trade dress, word marks, design marks, slogans and domain names, and all images, logos, artwork, text and other works of authorship (collectively, the “ Marks ” ) that include or refer to the Sublicensed Marks, shall belong exclusively to TOL or TOP as the case may be and all use of the Marks by TP, and the goodwill thereto, shall inure to their benefit.
e. TP agrees to affix to all Pharmaceutical Products, and related promotional and packaging materials, for sale to third parties (and not Pharmaceutical Products held for internal use) that utilize the Sublicensed Marks, such Sublicensed Marks and notices as shall be reasonably requested by TOP, to the extent practicable and consistent with commercial practice. TP agrees to obtain specific written instructions with respect to the content and placements of all such notices. At all times when TP commercially uses the Sublicensed Marks, to the extent practicable and consistent with commercial practice, TP shall note that its use is made under license and shall indicate the owner of the Sublicensed Marks.
3 |
f. TP agrees that TOP shall have the right, at all reasonable times, upon no less than fifteen (15) Business Day’s prior written notice to TP, to inspect the premises, and books and records owned by or under the control of TP during regular business hours as TOP considers necessary in order to verify TP’s compliance with the terms hereof, including for appropriate quality control with respect to TP’s use of the Sublicensed Marks.
g. Notwithstanding the foregoing, the sublicense granted to TP hereunder is not intended to be, and shall not be construed as, an assignment by TOL or TOP to TP, in part or in whole, of the ownership of the Sublicensed IP.
h. The Parties recognize that, notwithstanding anything implicitly or explicitly to the contrary in this Agreement, the sublicense granted hereunder does not grant any rights with respect to any use of the Sublicensed IP other than with respect to the Limited Pharmaceutical Business within the Territory.
2.4. Commercialization Plan .
a. On or before June 11, 2018, TP shall prepare, in consultation with TOP, and provide to the board of directors of TP (the “Board”) a mutually acceptable commercialization plan (including the revised annual Commercialization Plans referenced below, the “Commercialization Plan”) covering the development and commercialization of the Sublicensed IP for the Limited Pharmaceutical Business, in accordance with applicable law and setting forth the specific activities and delivery dates thereunder. For the purposes of clarification, the Commercialization Plan will include but not be limited to (i) a selection, or process for selection, of one or more indications to pursue based on the data in-hand or known at such time, (ii) a list of appropriate studies with specific Cannabis-related indications and deadlines for initiating one or more such studies, (iii) a list of one or more inventions for which patent rights should be pursued if appropriate; and (iv) brand management, opportunity assessment, pricing, forecasting, market analysis, tactics and strategies. The Parties shall cooperate in good faith to update the Commercialization Plan annually within sixty (60) days after the end of each calendar year during the Term. Upon submission, the Board will have up to thirty (30) calendar days to review such plan. With respect to the Commercialization Plan, subject to a thirty (30) calendar day cure period, a breach of this Section 2.4 will be deemed material breach of this Agreement.
b. TP shall use its commercially reasonable efforts to promote and develop the Limited Pharmaceutical Business in accordance with the Commercialization Plan and shall be responsible for all costs and expenses incurred in connection with developing and commercializing Pharmaceutical Products in connection with the Limited Pharmaceutical Business. For the avoidance of doubt, any failure to substantially implement any annual Commercialization Plan in accordance with the terms and schedule thereof shall be considered a material breach of this Agreement.
2.5. Information . From time to time, upon TP’s request, TOP will provide a list of the Sublicensed IP and other information reasonably necessary to allow TP to exercise its rights granted in Section 2.1. TOP will promptly notify TP if the scope of the Sublicensed IP as it pertains Limited Pharmaceutical Business is materially increased or decreased, and notwithstanding anything to the contrary herein, TP will not be liable for any acts or omissions caused by TOP’s delay in providing such notice.
3. TERM AND TERMINATION.
3.1. Term . This Agreement commences on the Effective Date and continues until the earliest of: (i) termination by any Party in accordance with Section 3.2 below, or (ii) the date on which the last of the Sublicensed IP expires or is otherwise no longer effective (the “ Term ”).
4 |
3.2. Termination . Either Party may terminate this Agreement immediately upon: (i) a material breach of this Agreement by the other Party, if such breach is not cured within thirty (30) calendar days after written notice from the non-breaching Party; or (ii) a voluntary petition in bankruptcy is filed by the other Party, an involuntary petition in bankruptcy is filed with respect to the other Party, or any petition, application or other pleading is filed or any proceeding is commenced seeking he appointment of a trustee, receiver or liquidator for the other Party.
3.3. Effect of Expiration or Termination . Upon the expiration of this Agreement or its termination by TOP, TP shall cease and thereafter refrain from all use of the Sublicensed IP, including the Sublicensed Marks, except that TP shall have thirty (30) calendar days from expiration or termination of this Agreement to discontinue use and registration of the term “Tikun” as part of its trade name. Upon the termination of this Agreement by TP pursuant to Section 3.2, all licensed rights in the Sublicensed IP will automatically become perpetual and irrevocable for as long as any such right is granted by TOL: (i) to TOP; (ii) to an entity affiliated with TOL or TOP or with substantially similar ownership; or (iii) to any other entity if such grant of rights is intended to avoid this provision. Upon any expiration or termination of this Agreement, the Receiving Party of any Confidential Information shall also destroy or return all Confidential Information to the Disclosing Party.
3.4. Survival . Sections 3.3, 4, 8, 9 and 10 of this Agreement will survive any termination or expiration of this Agreement.
4. CONFIDENTIALITY.
4.1. Definition . “ Confidential Information ” means any and all proprietary, non-public information disclosed by one Party (the “ Disclosing Party ”) to another Party (the “ Receiving Party ” ) which a reasonable person would understand to be confidential, including without limitation technical, financial, and other business information. For the avoidance of doubt, this Agreement and the TOL License shall be considered Confidential Information.
4.2. Obligations . The Receiving Party will hold the Confidential Information in confidence using at least the same degree of care it uses to protect its own confidential information, but in no event less than reasonable care. The Receiving Party will only use Confidential Information as needed to exercise its rights under this Agreement, and will only disclose Confidential Information to its affiliates, directors, officers, employees and contractors, as well as its financial and legal advisors and potential investors, who have a need to know such Confidential Information in connection with this Agreement and who are bound by confidentiality obligations at least as restrictive as those contained herein. Any disclosure of the TOL License in accordance with this Section shall be subject to the prior written consent of TOP, which consent will not be unreasonably withheld or delayed.
4.3. Exceptions . Confidential Information does not include information that the Receiving Party can demonstrate is: (i) in the public domain or subsequently enters the public domain through no fault of the Receiving Party; (ii) disclosed to the Receiving Party by a third party without any breach of confidentiality obligations; (iii) known to the Receiving Party at the time of disclosure by the Disclosing Party; or (iv) developed independently by the Receiving Party, without use of or reference to any Confidential Information of the Disclosing Party. The Receiving Party may disclose Confidential Information to the extent necessary to comply with a valid legal or government order or requirement, provided that it will provide the Disclosing Party reasonable prior notice and cooperate with the Disclosing Party (at the Disclosing Party’s sole expense) with any reasonable effort to challenge or limit the ordered or requested disclosure.
5 |
4.4. Publicity . The Parties shall reasonably cooperate in connection with issuing press releases or promotional or marketing material to the public or third parties in connection with the provisions of this Agreement; provided that TP will have the right to issue press releases related to the studies and other commercial activities it conducts, provided, further, that neither Party will publish any Confidential Information without the prior written consent of the other Party, which consent will not be unreasonably withheld, delayed, or conditioned. TP shall not refer to either TOP or TOL in any such releases or materials without the prior written consent of such entity, which will not be unreasonably withheld or delayed.
5. OWNERSHIP.
5.1. Developments . Except as may be limited by the TOL License, the Intellectual Property in all improvements and modifications of the Sublicensed IP developed or acquired by TP, with or without involvement of TOP, in relation to the Limited Pharmaceutical Business (collectively, “ New IP ”) will be owned by TP, and TOP hereby assigns and will be automatically deemed to have assigned, to TP any right, title and interest it may have in and to such New IP. TP hereby grants, and will automatically be deemed to grant, to TOP, a perpetual, royalty free, non-exclusive license to use and exploit such New IP outside of the Limited Pharmaceutical Business. To the extent a TOL License prohibits such ownership of certain New IP, such New IP will be automatically be assigned to either TOP or TOL as required by the TOL License and deemed part of the Sublicensed IP for purposes of the sublicense granted in Section 2.1.
5.2. Enforcement; Patent Prosecution . TP will be responsible for, at its sole expense and control, using commercially reasonable efforts to: (i) prosecute patents, copyrights, and trademarks for New IP owned by TP; and (ii) protect the New IP from material third party infringement, violation, or misappropriation in connection with the Limited Pharmaceutical Business; provided in each case that TOP will provide all reasonably necessary cooperation and information in such efforts by TP, and TOP will join such suit(s) if required for TP to have legal standing in such litigation. Any award solely with regards to any New IP will be distributed entirely to TP.
6. REPRESENTATIONS AND WARRANTIES.
6.1. Mutual . Each Party represents and warrants that: (i) it is an entity duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation; (ii) it has all requisite power and authority to enter into this Agreement and consummate the transactions contemplated herein; and (iii) the execution, delivery, and performance of this Agreement does not and will not conflict with any violation of applicable law or of any other agreements with a third party.
6.2. TOP . TOP represents and warrants that: (i) it is the lawful licensee of the Sublicensed IP and, has sufficient authority to grant TP the sublicenses granted under this Agreement; (ii) that the execution, delivery, and performance by it of this Sublicense Agreement does not require the approval of any governmental authority nor the application for or filing of or for any license, permit, approval, waiver, no action, or similar permission from any governmental authority; (iii) it has not entered into any additional sublicenses or other arrangements that may limit its rights or the rights of TP under this Agreement or which may reasonably be expected to lead to a claim of infringement or invalidity regarding any portion of the Sublicensed IP or its use; (iv) it has no knowledge of infringement of, or conflict with, any license or other intellectual property right of any other third-party, and there is no known claim pending, filed or threatened related to infringement, ownership, misappropriation, or invalidity regarding the Sublicensed IP or its use; and (v) it has not granted and will not at any time during the Term grant or permit to exist any sublicense or other contingent or non-contingent right, title or interest under or relating to the Sublicensed IP in connection with the Limited Pharmaceutical Business to any individual or entity, that does or will conflict with or otherwise undermine or impair the exclusive rights of TP hereunder. Notwithstanding the foregoing, TOP may use or sublicense the Sublicensed IP outside of the Limited Pharmaceutical Business.
6 |
6.3. TOL License. TOP hereby covenants that it will not take any acts, or fail to act, in any way that results in a material modification, limitation, loss, or termination of the rights granted by TOL that are sublicensed hereunder.
7. INFRINGEMENT BY THIRD-PARTIES.
7.1. Report of Infringement . With respect to any Sublicensed IP, when information comes to the attention of TP to the effect that any of the licensed rights have been or are threatened to be infringed by a third party, TP shall promptly notify TOP in writing of any such infringement or threatened infringement of which it has become aware.
7.2. Enforcement . TOP or TOL, as applicable, will take, at its own expense, any action it deems advisable in good faith to protect the Sublicensed IP. In the event of an infringement or threatened infringement by a third party of the Sublicensed IP, TOP or TOL, as applicable, shall have the exclusive option to direct and control the litigation and any settlement thereof. TP shall cooperate at its own expense with TOP in protecting and defending the Sublicensed IP. In the event that neither TOP nor TOL prosecutes such alleged infringement or violation of the Sublicensed IP, TP shall have the right, but not the obligation, to enforce such Sublicensed IP at its own expense. TOP hereby agrees, on their own behalf and on behalf of TOL, to join in such suit if required for proper standing. If TP has brought such an action, any award will be distributed entirely to TP.
8. INDEMNIFICATION.
8.1 By TOP . TOP will indemnify, defend, and hold harmless TP, and its officers, directors, members, managers, and employees from any losses, liabilities, damages, penalties, awards, settlements, costs, and expenses, including reasonable attorneys’ fees, (collectively, “ Losses ”) incurred in relation to a third-party claim arising out of any: (i) gross negligence, willful misconduct, or violation of applicable law by the indemnifying Party; (ii) personal injury, death, or loss of or damage to property caused by the indemnifying Party; (iii) breach of any representations and warranties by the indemnifying Party in Section 6; or (iv) any modification or termination of the applicable TOL License which may materially affect TP’s rights under this Agreement, unless TP has given prior written consent to such modification or termination, which will not be unreasonably withheld or delayed.
8.2 By TP . TP will indemnify, defend, and hold harmless TOP and its officers, directors, members, managers, and employees, from any Losses incurred in relation to a third-party claim arising out of any: (i) gross negligence, willful misconduct, or violation of applicable law by TP or the TP Contractors; (ii) personal injury, death, or loss of or damage to property caused by TP or the TP Contractors; or (iii) breach of any representations and warranties by TP in Section 6. TP will indemnify, defend, and hold harmless TOP and its officers, directors, members, managers, and employees from any Losses incurred in relation to any claim by TOL against TOP arising out of the TOL License related to activities of TP or the TP Contractors with regards to the Limited Pharmaceutical Business. TP’s obligations under this Section 8.2 will not apply to the extent a claim is related to TOP’s breach of, or actions beyond the scope of, the TOL License or this Agreement.
7 |
8.3 Procedures . The Party entitled to indemnification for a claim hereunder (the “ Indemnified Party ”) will promptly give written notice to the other Party (the “ Indemnifying Party ”) of such claim, provided that a delay will not affect the Indemnifying Party’s obligations except to the extent such delay is materially prejudicial to it. The Indemnified Party will give the Indemnifying Party full control of the defense upon request, and will provide all cooperation and information reasonable requested by the Indemnifying Party in relation to the defense. The Indemnifying Party will not, without the Indemnified Party’s prior written consent, enter into any settlement that imposes any non-monetary obligations or liability on the Indemnified Party.
9. LIMITATION OF LIABILITY.
EXCEPT FOR A PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 8 OR FOR ANY MODIFICATION OR TERMINATION OF A TOL LICENSE THAT MAY MATERIALLY AFFECT TP’S RIGHTS UNDER THIS AGREEMENT WITHOUT THE ADVANCE WRITTEN CONSENT OF TP, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY SHALL BE LIABLE TO THE OTHER FOR ANY PUNITIVE, EXEMPLARY OR AGGRAVATED, OR ANY INDIRECT OR CONSEQUENTIAL DAMAGES, IN CONNECTION WITH A BREACH OF THIS AGREEMENT.
10. GENERAL.
10.1 Bankruptcy . The licenses and sublicenses granted to TP hereunder for the Limited Pharmaceutical Business are, for purposes of section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property,” as that term is defined in section 101 of the Bankruptcy Code. Nothing in this agreement limits TP’s rights under section 365(n), and TP is not making an election under section 365(n) hereunder.
10.2 Cooperation . The Parties agree to reasonably cooperate with and assist each other in connection with the sublicense granted under this Agreement and the development and success of commercializing the Sublicensed IP in connection with the Limited Pharmaceutical Business, including in executing documents and joining in any litigation as needed to ensure proper standing for such litigation.
10.3 Notices . Any notices sent hereunder will be sent by e-mail and internationally-recognized overnight or two (2) day courier to the following addresses, which may be updated at any time upon ten (10) calendar days’ prior written notice to the other Party:
If to TOP : | TO Pharmaceuticals USA LLC |
77 Water Street, 8 th Floor | |
New York, New York 10005 | |
Attn: Chief Executive Officer | |
Fax: (646) 722-4101 | |
Email: IR@tikunolam.us | |
with copies to: | Leason Ellis LLP |
One Barker Avenue, Fifth Floor | |
White Plains, New York 10601 | |
Attention: Peter S. Sloane, Esq. | |
Email: sloane@leasonellis.com | |
and copies to: | bernie@tikunolam.com and stephen@tikunolam.com |
If to TP : | Tikkun Pharma, Inc |
2917 Avenue I | |
Brooklyn, New York 11220 | |
Email: Jeff.Wolfson@haynesboone.com |
8 |
All notices hereunder may be given by any other means, but shall not be deemed to have been duly given unless and until it is actually received by the intended recipient.
10.4 Governing Law . THIS AGREEMENT, AND ANY DISPUTE RELATED TO OR ARISING THEREFROM, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF NEW YORK.
10.5 Dispute Resolution . In the event of any dispute, claim, question, or disagreement (“ Dispute ”) arising from or relating to this Agreement or the breach thereof, the Parties hereto shall use their best efforts to settle the dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to all Parties. All Disputes not resolved within fifteen (15) days by good faith negotiation shall be finally settled by arbitration administered by the American Arbitration Association, in New York, New York, in accordance with the provisions of that organization’s Commercial Arbitration Rules. The dispute shall be heard and determined by a panel of three (3) arbitrators, unless otherwise agreed by the Parties. In such case, each Party shall each select one (1) arbitrator. The arbitrator selected by the claimant and the arbitrator selected by respondent shall, within ten (10) days of their appointment, select a third neutral arbitrator. In the event that they are unable to do so, or if for any reason the three (3) arbitrators are not timely empanelled, the Parties, or either of them, or their attorneys, may request that the American Arbitration Association appoint the third or any other necessary arbitrator. Prior to the commencement of hearings, each of the arbitrators appointed shall provide an oath or undertaking of impartiality. The United States Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant hereto. Notwithstanding any provision hereof, any applicable law or public policy considerations, including without limitation any possible illegality or unenforceability of this Agreement or any portion hereof due to the subject matter hereof, the arbitrators shall interpret this Agreement giving full effect to the terms and provisions hereof. All charges of the American Arbitration Association or any mediator shall be borne equally by the Parties, and each Party hereby agrees to pay all such charges promptly upon request therefor, and if any Party shall fail to do so, the other Party shall be permitted to apply towards such charges any amounts otherwise due to the non-paying Party. The Parties to the arbitration proceeding shall bear their own respective expenses incurred in connection therewith, including, but not limited to, legal fees and expenses.
10.6 Waiver . The waiver by any Party of any breach of covenant will not be construed to be a waiver of any succeeding breach or any other covenant. All waivers must be in writing, and signed by the Party waiving its rights. This Agreement may be modified only by a written instrument executed by authorized representatives of the Parties sought to be bound.
10.7 Assignment . Neither Party may assign or transfer this Agreement, in whole or in part, without the prior written consent of the other Party, which consent will not be unreasonably withheld or delayed. Any purported assignment or transfer in violation of this section will be null and void. This Agreement will inure to the benefit of, and be binding upon the Parties, together with their respective legal representatives, successors, and assigns, as permitted herein.
10.8 No Third-Party Beneficiaries . Nothing in this Agreement confers any rights or remedies upon any third party.
9 |
10.9 Severability . If any provision of this Agreement is held to be invalid, void, unenforceable, or unconstitutional by a court of competent jurisdiction, the remaining provisions shall continue in full force without being impaired or invalidated.
10.10 Entire Agreement . This Agreement and the attached Schedule constitutes the entire agreement between the Parties with respect to the subject matter herein, and supersedes all prior agreements, proposals, negotiations, representations or communications relating to such subject matter. The Parties acknowledge that they have not been induced to enter into this Agreement by any representations or promises not specifically stated herein.
10.11 Execution; Counterparts . This Agreement may be executed in counterparts, including electronic counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. The headings of the various sections of this Agreement have been inserted for reference only and shall not be deemed to be a part of this Agreement.
The Parties hereby execute this Agreement as of the Effective Date.
TIKKUN PHARMA, INC. | TO PHARMACEUTICALS USA LLC | |||
By: To Pharmaceuticals LLC. its manager | ||||
By: To Holding Group LLC, its manager | ||||
By: To Global LLC, its manager | ||||
By: | /s/ David Stefansky | By: | /s/ Bernard Sucher | |
Name: | David Stefansky | Name: | Bernard Sucher | |
Title: | Executive Vice Chairman | Title: | Chief Executive Officer |
[Signature Page to Amended and Restated Sublicense Agreement]
Exhibit 10.11
AMENDED AND RESTATED SUBLICENSE AGREEMENT (NON-U.S.)
This Amended and Restated Sublicense Agreement (this “ Agreement ”) is made effective as of January 12, 2018 (the “ Effective Date ”) by and between Tikun Olam IP Ltd., a Cayman Islands company (“ TOCI ”) and Tikkun Pharma, Inc., a Delaware corporation (“ TP ”). Each of TOCI and TP may be referred to as a “ Party ” and collectively as the “ Parties ”. This Agreement amends, supersedes, and restates the prior Sublicense Agreement between the parties dated September 11, 2017 (the “ Prior Sublicense ”) in its entirety, and the Prior Sublicense shall have no further force or effect as of the Effective Date.
RECITALS
WHEREAS, TOCI and Bezalel Partners, LLC (“ Bezalel ”) previously entered into that certain Shareholder Agreement (the “ SHA ”) dated as of September 11, 2017, pursuant to which Bezalel and TOCI agreed to invest in TP;
WHEREAS, the SHA required TOCI to sublicense to TP certain rights in-licensed from Tikun Olam Ltd., an Israeli corporation with registration number 514263771 (“ TOL ”) as set forth in the Prior Sublicense; and
WHEREAS, TOCI, Bezalel, and TP have agreed to have a separate entity control the development of certain rights previously sublicensed to TP in the Prior Sublicense (specifically, those rights related to treatment of cancer indications), and so wish to amend and restate the Prior Sublicense to clarify that TP’s sublicensed rights exclude such cancer-related rights, as set forth herein.
NOW, THEREFORE, in consideration of the above and the promises and covenants contained herein and in the SHA, the Parties agree as follows:
1. DEFINITIONS.
1.1. “ Cannabis ” means indica, sativa or other forms of the marijuana and hemp plants, hemp products and any compounds, or mixtures or combinations thereof, isolated or derived from marijuana, cannabis or hemp plants, along with any synthetic version of such compounds, mixtures, or combinations.
1.2. “ Intellectual Property ” means any inventions, plant breeds, works of authorship, trademarks and service marks, including the goodwill therein, trade secrets, know-how, documentation, and information, together with any worldwide rights in or to any of the foregoing under patent, plant patent, plant breeders, copyright, trademark, trade secret, or other intellectual or industrial property laws.
1.3. “ Limited Pharmaceutical Business ” means the business, whether currently in existence or not, of producing, researching, developing, promoting, marketing, selling, distributing and otherwise commercializing Pharmaceutical Products (as defined herein) included in or derived from the Sublicensed IP, to prevent, manage and treat autoimmune diseases, disorders, or symptoms related thereto, provided however, that the Limited Pharmaceutical Business will not include any of the above as it relates to Crohn’s Disease, coeliac diseases, any type of colitis (including without limitation microscopic and ulcerative colitis) and any and all digestive and Inflammatory Bowel Diseases (IBD), each together with any disorders or symptoms related thereto.
1.4. “ Pharmaceutical Products ” means any product, compound, medicine or therapeutic which is subject to regulation as a drug, medicine or controlled substance by a foreign equivalent of the United States Food and Drug Administration.
1 |
1.5. “ Sublicensed IP ” means any intellectual property, whether registered or applied for, including patents, patent applications, plant patents and plant patent applications, continuation and continuation in part applications and patents maturing therefrom, and divisional applications and patents maturing therefrom, Sublicensed Marks (as defined herein), copyrights, promotional materials, know-how, trade secrets, knowledge, documentation, information relating to clinical or other trials, patient data, plant breeders rights, registered and unregistered Cannabis varieties and uniquely identifiable strains of Cannabis in all forms (as further detailed hereunder) that are currently licensed to TOCI from TOL under the TOL License, or that may be subsequently licensed to TOCI from TOL, or that are or may subsequently be otherwise developed or acquired at any time by TOCI. For avoidance of doubt, for all Sublicensed IP sublicensed to TP by TOCI under the TOL License, in no event shall the scope of rights in such Sublicensed IP extend beyond the rights licensed by TOL to TOCI pursuant to the TOL License. For the avoidance of doubt, any intellectual property developed or acquired by TP at any time outside the scope of the rights sublicensed under this Agreement shall not be Sublicensed IP.
1.6. “ Sublicensed Marks ” means the TOL-owned trademarks, trade names, logos, service marks, designs, emblems, signs, slogans, other similar designations of source or original and general intangibles of like nature, whether registered, applied for or not, together with the goodwill relating thereto.
1.7. “ Term ” has the meaning given to it in Section 3.1.
1.8. “ TOL License ” means the License Agreement between TOL and TOCI dated as of April 13, 2017.
2. SUBLICENSED IP.
2.1. Grant .
a. TOCI grants to TP a perpetual, non-revocable (subject to the terms hereof), fully paid, royalty-free, exclusive sublicense to make, have made, use, sell, have sold, offer for sale, import, reproduce, distribute, display, perform, create derivatives work from, and otherwise fully use and exploit the Sublicensed IP anywhere in the world outside of the United States in connection with the Limited Pharmaceutical Business. For avoidance of doubt, to the extent TOCI develops or acquires any Sublicensed IP after the Effective Date that is not owned by TP, such Sublicensed IP shall be automatically sublicensed by TOCI to TP pursuant to this Section 2.1(a). The aforesaid sublicense(s) shall not be further sublicensable without the express written consent of TOCI, which will not be unreasonably withheld, delayed, or conditioned. For the avoidance of doubt, TP may engage third parties to assist in developing and commercializing Pharmaceutical Products in connection with the Limited Pharmaceutical Business (“ TP Contractors ”).
b. TP shall not contest the TOL License, the Intellectual Property covered by the TOL License, the validity of the Sublicensed IP or the rights of TOL or TOCI in the Sublicensed IP, except in relation to any claims asserted by TOL or TOCI against TP or an affiliate thereof.
c. TP shall not use the Sublicensed IP in any fashion that would cause confusion with, dilute or damage the reputation or image of TOL or TOCI, their products or services; provided, however, that TP shall not be considered to be in breach of this section as a result of the sale by TP of Pharmaceutical Products bearing the TOL name or other TOL trademarks.
d. Condition Subsequent . The Parties agree that TOCI shall use its reasonable efforts seek the written consent to this Agreement by TOL, provided , that (i) such consent shall not be required to close this Agreement and (ii) the Parties hereto agree to make any reasonable amendments that may be required by TOL.
2 |
2.2. Exclusivity . The Parties acknowledge that the TOL License grants TOCI certain exclusive rights, which TOCI is hereby sublicensing exclusively to TP solely under Section 2.1. If TOL breaches or attempts to breach its obligation of exclusivity by licensing any of the Sublicensed IP to any third party for use in connection with the Limited Pharmaceutical Business, TOCI will promptly take all reasonable action, up to and including filing a lawsuit on its and TP’s behalf, to prevent such breach of exclusivity. If TOCI fails to take such action, TP may, at its sole expense, file suit on behalf of itself and the applicable TOCI and, if reasonably necessary for standing or other legal reasons, TOCI will join such suit.
2.3. Sublicensed Marks .
a. The Parties recognize the value of the goodwill associated with the Sublicensed Marks, and acknowledge that the Sublicensed Marks and all rights therein, as well as the goodwill which accrues during the term of this Agreement, belongs exclusively to TOL, and TP shall not acquire any rights in the Sublicensed Marks, other than as expressly granted in this Agreement. TP shall not do anything inconsistent with TOL's ownership of its Sublicensed Marks. In particular, but without limitation, TP shall not attack the validity of the Sublicensed Marks or TOL's rights in and to its Sublicensed Marks except in relation to any claims asserted by TOL or TOCI against TP or an affiliate thereof.
b. TP shall not misuse or misappropriate any of the Sublicensed Marks. TP shall not engage in any conduct that impairs or might tend to impair the validity or enforceability of any of the Sublicensed Marks or any registrations of any of the Sublicensed Marks, or that dilutes or might dilute the distinctive quality of any of the Sublicensed Marks, or that disparages or might disparage any of the Sublicensed Marks. Notwithstanding anything to the contrary contained elsewhere in this Agreement, TP may not use any of the Sublicensed Marks on any materials or products unless it has received TOL’s prior written approval for such use, except that TP shall not be required to obtain such approval in connection with the use of Sublicensed Marks on materials or products which does not materially differ from previously approved uses.
c. In addition to each Party’s other rights and remedies under this Agreement or otherwise, upon receipt of notice from TOL, TP shall immediately discontinue any use of, and remove from its premises, all materials bearing any of the Sublicensed Marks, including any signs, labels, stationery, advertising, promotional material and literature that, in the reasonable opinion of TOL, constitutes an improper use of the Sublicensed Marks or reflects non-negligibly adversely on TOL’s reputation or brand image or any of its corporate affiliates or partners or on any of its products or services.
d. All graphics, trademarks, service marks, trade names, trade dress, word marks, design marks, slogans and domain names, and all images, logos, artwork, text and other works of authorship (collectively, the “ Marks ”) that include or refer to the Sublicensed Marks, shall belong exclusively to TOL or TOCI as the case may be and all use of the Marks by TP, and the goodwill thereto, shall inure to their benefit.
e. TP agrees to affix to all Pharmaceutical Products, and related promotional and packaging materials, for sale to third parties (and not Pharmaceutical Products held for internal use) that utilize the Sublicensed Marks, such Sublicensed Marks and notices as shall be reasonably requested by TOCI, to the extent practicable and consistent with commercial practice. TP agrees to obtain specific written instructions with respect to the content and placements of all such notices. At all times when TP commercially uses the Sublicensed Marks, to the extent practicable and consistent with commercial practice, TP shall note that its use is made under license and shall indicate the owner of the Sublicensed Marks.
3 |
f. TP agrees that TOCI shall have the right, at all reasonable times, upon no less than fifteen (15) Business Day’s prior written notice to TP, to inspect the premises, and books and records owned by or under the control of TP during regular business hours as TOCI considers necessary in order to verify TP’s compliance with the terms hereof, including for appropriate quality control with respect to TP’s use of the Sublicensed Marks.
g. Notwithstanding the foregoing, the sublicense granted to TP hereunder is not intended to be, and shall not be construed as, an assignment by TOL or TOCI to TP, in part or in whole, of the ownership of the Sublicensed IP.
h. The Parties recognize that, notwithstanding anything implicitly or explicitly to the contrary in this Agreement, the sublicense granted hereunder does not grant any rights with respect to any use of the Sublicensed IP other than with respect to the Limited Pharmaceutical Business within the Territory.
2.4. Commercialization Plan .
a. On or before June 11, 2018, TP shall prepare, in consultation with TOCI, and provide to the board of directors of TP (the “Board”) a mutually acceptable commercialization plan (including the revised annual Commercialization Plans referenced below, the “Commercialization Plan”) covering the development and commercialization of the Sublicensed IP for the Limited Pharmaceutical Business, in accordance with applicable law and setting forth the specific activities and delivery dates thereunder. For the purposes of clarification, the Commercialization Plan will include but not be limited to (i) a selection, or process for selection, of one or more indications to pursue based on the data in-hand or known at such time, (ii) a list of appropriate studies with specific Cannabis-related indications and deadlines for initiating one or more such studies, (iii) a list of one or more inventions for which patent rights should be pursued if appropriate; and (iv) brand management, opportunity assessment, pricing, forecasting, market analysis, tactics and strategies. The Parties shall cooperate in good faith to update the Commercialization Plan annually within sixty (60) days after the end of each calendar year during the Term. Upon submission, the Board will have up to thirty (30) calendar days to review such plan. With respect to the Commercialization Plan, subject to a thirty (30) calendar day cure period, a breach of this Section 2.4 will be deemed material breach of this Agreement.
b. TP shall use its commercially reasonable efforts to promote and develop the Limited Pharmaceutical Business in accordance with the Commercialization Plan and shall be responsible for all costs and expenses incurred in connection with developing and commercializing Pharmaceutical Products in connection with the Limited Pharmaceutical Business. For the avoidance of doubt, any failure to substantially implement any annual Commercialization Plan in accordance with the terms and schedule thereof shall be considered a material breach of this Agreement.
2.5. Information . From time to time, upon TP’s request, TOCI will provide a list of the Sublicensed IP and other information reasonably necessary to allow TP to exercise its rights granted in Section 2.1. TOCI will promptly notify TP if the scope of the Sublicensed IP as it pertains Limited Pharmaceutical Business is materially increased or decreased, and notwithstanding anything to the contrary herein, TP will not be liable for any acts or omissions caused by TOCI’s delay in providing such notice.
4 |
3. TERM AND TERMINATION.
3.1. Term . This Agreement commences on the Effective Date and continues until the earliest of: (i) termination by any Party in accordance with Section 3.2 below, or (ii) the date on which the last of the Sublicensed IP expires or is otherwise no longer effective (the “ Term ”).
3.2. Termination . Either Party may terminate this Agreement immediately upon: (i) a material breach of this Agreement by the other Party, if such breach is not cured within thirty (30) calendar days after written notice from the non-breaching Party; or (ii) a voluntary petition in bankruptcy is filed by the other Party, an involuntary petition in bankruptcy is filed with respect to the other Party, or any petition, application or other pleading is filed or any proceeding is commenced seeking he appointment of a trustee, receiver or liquidator for the other Party.
3.3. Effect of Expiration or Termination . Upon the expiration of this Agreement or its termination by TOCI, TP shall cease and thereafter refrain from all use of the Sublicensed IP, including the Sublicensed Marks, except that TP shall have thirty (30) calendar days from expiration or termination of this Agreement to discontinue use and registration of the term “Tikun” as part of its trade name. Upon the termination of this Agreement by TP pursuant to Section 3.2, all licensed rights in the Sublicensed IP will automatically become perpetual and irrevocable for as long as any such right is granted by TOL: (i) to TOCI; (ii) to an entity affiliated with TOL or TOCI or with substantially similar ownership; or (iii) to any other entity if such grant of rights is intended to avoid this provision. Upon any expiration or termination of this Agreement, the Receiving Party of any Confidential Information shall also destroy or return all Confidential Information to the Disclosing Party.
3.4. Survival . Sections 3.3, 4, 8, 9 and 10 of this Agreement will survive any termination or expiration of this Agreement.
4. CONFIDENTIALITY.
4.1. Definition . “ Confidential Information ” means any and all proprietary, non-public information disclosed by one Party (the “ Disclosing Party ”) to another Party (the “ Receiving Party ”) which a reasonable person would understand to be confidential, including without limitation technical, financial, and other business information. For the avoidance of doubt, this Agreement and the TOL License shall be considered Confidential Information.
4.2. Obligations . The Receiving Party will hold the Confidential Information in confidence using at least the same degree of care it uses to protect its own confidential information, but in no event less than reasonable care. The Receiving Party will only use Confidential Information as needed to exercise its rights under this Agreement, and will only disclose Confidential Information to its affiliates, directors, officers, employees and contractors, as well as its financial and legal advisors and potential investors, who have a need to know such Confidential Information in connection with this Agreement and who are bound by confidentiality obligations at least as restrictive as those contained herein. Any disclosure of the TOL License in accordance with this Section shall be subject to the prior written consent of TOCI, which consent will not be unreasonably withheld or delayed.
4.3. Exceptions . Confidential Information does not include information that the Receiving Party can demonstrate is: (i) in the public domain or subsequently enters the public domain through no fault of the Receiving Party; (ii) disclosed to the Receiving Party by a third party without any breach of confidentiality obligations; (iii) known to the Receiving Party at the time of disclosure by the Disclosing Party; or (iv) developed independently by the Receiving Party, without use of or reference to any Confidential Information of the Disclosing Party. The Receiving Party may disclose Confidential Information to the extent necessary to comply with a valid legal or government order or requirement, provided that it will provide the Disclosing Party reasonable prior notice and cooperate with the Disclosing Party (at the Disclosing Party’s sole expense) with any reasonable effort to challenge or limit the ordered or requested disclosure.
5 |
4.4. Publicity . The Parties shall reasonably cooperate in connection with issuing press releases or promotional or marketing material to the public or third parties in connection with the provisions of this Agreement; provided that TP will have the right to issue press releases related to the studies and other commercial activities it conducts, provided, further, that neither Party will publish any Confidential Information without the prior written consent of the other Party, which consent will not be unreasonably withheld, delayed, or conditioned. TP shall not refer to either TOCI or TOL in any such releases or materials without the prior written consent of such entity, which will not be unreasonably withheld or delayed.
5. OWNERSHIP.
5.1. Developments . Except as may be limited by the TOL License, the Intellectual Property in all improvements and modifications of the Sublicensed IP developed or acquired by TP, with or without involvement of TOCI, in relation to the Limited Pharmaceutical Business (collectively, “ New IP ”) will be owned by TP, and TOCI hereby assigns and will be automatically deemed to have assigned, to TP any right, title and interest it may have in and to such New IP. TP hereby grants, and will automatically be deemed to grant, to TOCI, a perpetual, royalty free, non-exclusive license to use and exploit such New IP outside of the Limited Pharmaceutical Business. To the extent a TOL License prohibits such ownership of certain New IP, such New IP will be automatically be assigned to either TOCI or TOL as required by the TOL License and deemed part of the Sublicensed IP for purposes of the sublicense granted in Section 2.1.
5.2. Enforcement; Patent Prosecution . TP will be responsible for, at its sole expense and control, using commercially reasonable efforts to: (i) prosecute patents, copyrights, and trademarks for New IP owned by TP; and (ii) protect the New IP from material third party infringement, violation, or misappropriation in connection with the Limited Pharmaceutical Business; provided in each case that TOCI will provide all reasonably necessary cooperation and information in such efforts by TP, and TOCI will join such suit(s) if required for TP to have legal standing in such litigation. Any award solely with regards to any New IP will be distributed entirely to TP.
6. REPRESENTATIONS AND WARRANTIES.
6.1. Mutual . Each Party represents and warrants that: (i) it is an entity duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation; (ii) it has all requisite power and authority to enter into this Agreement and consummate the transactions contemplated herein; and (iii) the execution, delivery, and performance of this Agreement does not and will not conflict with any violation of applicable law or of any other agreements with a third party.
6.2. TOCI . TOCI represents and warrants that: (i) it is the lawful licensee of the Sublicensed IP and, has sufficient authority to grant TP the sublicenses granted under this Agreement; (ii) that the execution, delivery, and performance by it of this Sublicense Agreement does not require the approval of any governmental authority nor the application for or filing of or for any license, permit, approval, waiver, noaction, or similar permission from any governmental authority; (iii) it has not entered into any additional sublicenses or other arrangements that may limit its rights or the rights of TP under this Agreement or which may reasonably be expected to lead to a claim of infringement or invalidity regarding any portion of the Sublicensed IP or its use; (iv) it has no knowledge of infringement of, or conflict with, any license or other intellectual property right of any other third-party, and there is no known claim pending, filed or threatened related to infringement, ownership, misappropriation, or invalidity regarding the Sublicensed IP or its use; and (v) it has not granted and will not at any time during the Term grant or permit to exist any sublicense or other contingent or non-contingent right, title or interest under or relating to the Sublicensed IP in connection with the Limited Pharmaceutical Business to any individual or entity, that does or will conflict with or otherwise undermine or impair the exclusive rights of TP hereunder. Notwithstanding the foregoing, TOCI may use or sublicense the Sublicensed IP outside of the Limited Pharmaceutical Business.
6 |
6.3. TOL License. TOCI hereby covenants that it will not take any acts, or fail to act, in any way that results in a material modification, limitation, loss, or termination of the rights granted by TOL that are sublicensed hereunder.
7. INFRINGEMENT BY THIRD-PARTIES.
7.1. Report of Infringement . With respect to any Sublicensed IP, when information comes to the attention of TP to the effect that any of the licensed rights have been or are threatened to be infringed by a third party, TP shall promptly notify TOCI in writing of any such infringement or threatened infringement of which it has become aware.
7.2. Enforcement . TOCI or TOL, as applicable, will take, at its own expense, any action it deems advisable in good faith to protect the Sublicensed IP. In the event of an infringement or threatened infringement by a third party of the Sublicensed IP, TOCI or TOL, as applicable, shall have the exclusive option to direct and control the litigation and any settlement thereof. TP shall cooperate at its own expense with TOCI in protecting and defending the Sublicensed IP. In the event that neither TOCI nor TOL prosecutes such alleged infringement or violation of the Sublicensed IP, TP shall have the right, but not the obligation, to enforce such Sublicensed IP at its own expense. TOCI hereby agrees, on their own behalf and on behalf of TOL, to join in such suit if required for proper standing. If TP has brought such an action, any award will be distributed entirely to TP.
8. INDEMNIFICATION.
8.1 By TOCI. TOCI will indemnify, defend, and hold harmless TP, and its officers, directors, members, managers, and employees from any losses, liabilities, damages, penalties, awards, settlements, costs, and expenses, including reasonable attorneys’ fees, (collectively, “ Losses ”) incurred in relation to a third-party claim arising out of any: (i) gross negligence, willful misconduct, or violation of applicable law by the indemnifying Party; (ii) personal injury, death, or loss of or damage to property caused by the indemnifying Party; (iii) breach of any representations and warranties by the indemnifying Party in Section 6; or (iv) any modification or termination of the applicable TOL License which may materially affect TP’s rights under this Agreement, unless TP has given prior written consent to such modification or termination, which will not be unreasonably withheld or delayed.
8.2 By TP . TP will indemnify, defend, and hold harmless TOCI and its officers, directors, members, managers, and employees, from any Losses incurred in relation to a third-party claim arising out of any: (i) gross negligence, willful misconduct, or violation of applicable law by TP or the TP Contractors; (ii) personal injury, death, or loss of or damage to property caused by TP or the TP Contractors; or (iii) breach of any representations and warranties by TP in Section 6. TP will indemnify, defend, and hold harmless TOCI and its officers, directors, members, managers, and employees from any Losses incurred in relation to any claim by TOL against TOCI arising out of the TOL License related to activities of TP or the TP Contractors with regards to the Limited Pharmaceutical Business. TP’s obligations under this Section 8.2 will not apply to the extent a claim is related to TOCI’s breach of, or actions beyond the scope of, the TOL License or this Agreement.
7 |
8.3 Procedures . The Party entitled to indemnification for a claim hereunder (the “ Indemnified Party ”) will promptly give written notice to the other Party (the “ Indemnifying Party ”) of such claim, provided that a delay will not affect the Indemnifying Party’s obligations except to the extent such delay is materially prejudicial to it. The Indemnified Party will give the Indemnifying Party full control of the defense upon request, and will provide all cooperation and information reasonable requested by the Indemnifying Party in relation to the defense. The Indemnifying Party will not, without the Indemnified Party’s prior written consent, enter into any settlement that imposes any non-monetary obligations or liability on the Indemnified Party.
9. LIMITATION OF LIABILITY.
EXCEPT FOR A PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 8 OR FOR ANY MODIFICATION OR TERMINATION OF A TOL LICENSE THAT MAY MATERIALLY AFFECT TP’S RIGHTS UNDER THIS AGREEMENT WITHOUT THE ADVANCE WRITTEN CONSENT OF TP, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY SHALL BE LIABLE TO THE OTHER FOR ANY PUNITIVE, EXEMPLARY OR AGGRAVATED, OR ANY INDIRECT OR CONSEQUENTIAL DAMAGES, IN CONNECTION WITH A BREACH OF THIS AGREEMENT.
10. GENERAL.
10.1 Bankruptcy . The licenses and sublicenses granted to TP hereunder for the Limited Pharmaceutical Business are, for purposes of section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property,” as that term is defined in section 101 of the Bankruptcy Code. Nothing in this agreement limits TP’s rights under section 365(n), and TP is not making an election under section 365(n) hereunder.
10.2 Cooperation . The Parties agree to reasonably cooperate with and assist each other in connection with the sublicense granted under this Agreement and the development and success of commercializing the Sublicensed IP in connection with the Limited Pharmaceutical Business, including in executing documents and joining in any litigation as needed to ensure proper standing for such litigation.
10.3 Notices . Any notices sent hereunder will be sent by e-mail and internationally-recognized overnight or two (2) day courier to the following addresses, which may be updated at any time upon ten (10) calendar days’ prior written notice to the other Party:
If to TOCI : | Tikun Olam IP Ltd. |
c/o Trident Trust Company (Cayman) Ltd. | |
P.O. Box 847, Grand Cayman, KY1-1103 | |
Cayman Islands | |
Attention: Mirae Connor | |
Fax: + 1 (345) 949 0881 | |
Email: mconnor@tridenttrust.com and | |
IR@tikunolam.com | |
with copies to: | Leason Ellis LLP |
One Barker Avenue, Fifth Floor | |
White Plains, New York 10601 | |
Attention: Peter S. Sloane, Esq. | |
Email: sloane@leasonellis.com |
8 |
and copies to: | bernie@tikunolam.com and stephen@tikunolam.com |
If to TP : | Tikkun Pharma, Inc |
2917 Avenue I | |
Brooklyn, New York 11220 | |
Email: Jeff.Wolfson@haynesboone.com |
All notices hereunder may be given by any other means, but shall not be deemed to have been duly given unless and until it is actually received by the intended recipient.
10.4 Governing Law . THIS AGREEMENT, AND ANY DISPUTE RELATED TO OR ARISING THEREFROM, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF NEW YORK.
10.5 Dispute Resolution . In the event of any dispute, claim, question, or disagreement (“ Dispute ”) arising from or relating to this Agreement or the breach thereof, the Parties hereto shall use their best efforts to settle the dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to all Parties. All Disputes not resolved within fifteen (15) days by good faith negotiation shall be finally settled by arbitration administered by the American Arbitration Association, in New York, New York, in accordance with the provisions of that organization’s Commercial Arbitration Rules. The dispute shall be heard and determined by a panel of three (3) arbitrators, unless otherwise agreed by the Parties. In such case, each Party shall each select one (1) arbitrator. The arbitrator selected by the claimant and the arbitrator selected by respondent shall, within ten (10) days of their appointment, select a third neutral arbitrator. In the event that they are unable to do so, or if for any reason the three (3) arbitrators are not timely empanelled, the Parties, or either of them, or their attorneys, may request that the American Arbitration Association appoint the third or any other necessary arbitrator. Prior to the commencement of hearings, each of the arbitrators appointed shall provide an oath or undertaking of impartiality. The United States Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant hereto. Notwithstanding any provision hereof, any applicable law or public policy considerations, including without limitation any possible illegality or unenforceability of this Agreement or any portion hereof due to the subject matter hereof, the arbitrators shall interpret this Agreement giving full effect to the terms and provisions hereof. All charges of the American Arbitration Association or any mediator shall be borne equally by the Parties, and each Party hereby agrees to pay all such charges promptly upon request therefor, and if any Party shall fail to do so, the other Party shall be permitted to apply towards such charges any amounts otherwise due to the nonpaying Party. The Parties to the arbitration proceeding shall bear their own respective expenses incurred in connection therewith, including, but not limited to, legal fees and expenses.
10.6 Waiver . The waiver by any Party of any breach of covenant will not be construed to be a waiver of any succeeding breach or any other covenant. All waivers must be in writing, and signed by the Party waiving its rights. This Agreement may be modified only by a written instrument executed by authorized representatives of the Parties sought to be bound.
10.7 Assignment . Neither Party may assign or transfer this Agreement, in whole or in part, without the prior written consent of the other Party, which consent will not be unreasonably withheld or delayed. Any purported assignment or transfer in violation of this section will be null and void. This Agreement will inure to the benefit of, and be binding upon the Parties, together with their respective legal representatives, successors, and assigns, as permitted herein.
9 |
10.8 No Third-Party Beneficiaries . Nothing in this Agreement confers any rights or remedies upon any third party.
10.9 Severability . If any provision of this Agreement is held to be invalid, void, unenforceable, or unconstitutional by a court of competent jurisdiction, the remaining provisions shall continue in full force without being impaired or invalidated.
10.10 Entire Agreement . This Agreement and the attached Schedule constitutes the entire agreement between the Parties with respect to the subject matter herein, and supersedes all prior agreements, proposals, negotiations, representations or communications relating to such subject matter. The Parties acknowledge that they have not been induced to enter into this Agreement by any representations or promises not specifically stated herein.
10.11 Execution; Counterparts . This Agreement may be executed in counterparts, including electronic counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. The headings of the various sections of this Agreement have been inserted for reference only and shall not be deemed to be a part of this Agreement.
The Parties hereby execute this Agreement as of the Effective Date.
TIKKUN PHARMA, INC. | TIKUN OLAM IP LTD. | |||
By: TO Pharmaceuticals LLC, its manager | ||||
By: To Holding Group LLC, its manager | ||||
By: TO Global LLC, its manager | ||||
By: | /s/ David Stefansky | By: | /s/ Bernard Sucher | |
Name: | David Stefansky | Name: | Bernard Sucher | |
Title: | Executive Vice Chairman | Title: | Chief Executive Officer |
[Signature Page to Amended and Restated Sublicense Agreement]
Exhibit 10.12
SUBLICENSE AGREEMENT (U.S.)
This Sublicense Agreement (this “ Agreement ”) is made effective as of January 12, 2018 (the “ Effective Date ”) by and between TO Pharmaceuticals USA LLC, a Delaware limited liability company (“ TOP ”) and Jay Pharma, Inc., a Canadian corporation (“ JP ”). Each of TOP and JP may be referred to as a “ Party ” and collectively as the “ Parties ”.
RECITALS
WHEREAS, pursuant to the Shareholder Agreement (the “ SHA ”) dated of even date herewith between Bezalel Partners, LLC (“ Bezalel ”) and TOP, Bezalel and TOP have agreed to invest in JP; and
WHEREAS, the SHA requires TOP to sublicense to JP certain rights that it has in-licensed from Tikun Olam Ltd., an Israeli corporation with registration number 514263771 (“ TOL ”) as set forth herein.
NOW, THEREFORE, in consideration of the above and the promises and covenants contained herein and in the SHA, the Parties agree as follows:
1. | DEFINITIONS. |
1.1. “ Cannabis ” means indica, sativa or other forms of the marijuana and hemp plants, hemp products and any compounds, or mixtures or combinations thereof, isolated or derived from marijuana, cannabis or hemp plants, along with any synthetic version of such compounds, mixtures, or combinations.
1.2. “ Intellectual Property ” means any inventions, plant breeds, works of authorship, trademarks and service marks, including the goodwill therein, trade secrets, know-how, documentation, and information, together with any worldwide rights in or to any of the foregoing under patent, plant patent, plant breeders, copyright, trademark, trade secret, or other intellectual or industrial property laws.
1.3. “ Limited Pharmaceutical Business ” means the business, whether currently in existence or not, of producing, researching, developing, promoting, marketing, selling, distributing and otherwise commercializing Pharmaceutical Products (as defined herein) included in or derived from the Sublicensed IP, for the prevention, treatment, and/or management of cancer and diseases, disorders, or symptoms related thereto.
1.4. “ Pharmaceutical Products ” means any product, compound, medicine or therapeutic which is subject to regulation as a drug, medicine or controlled substance by the United States Food and Drug Administration.
1.5. “ Sublicensed IP ” means any intellectual property, whether registered or applied for, including patents, patent applications, plant patents and plant patent applications, continuation and continuation in part applications and patents maturing therefrom, and divisional applications and patents maturing therefrom, Sublicensed Marks (as defined herein), copyrights, promotional materials, know-how, trade secrets, knowledge, documentation, information relating to clinical or other trials, patient data, plant breeders rights, registered and unregistered Cannabis varieties and uniquely identifiable strains of Cannabis in all forms (as further detailed hereunder) that are currently licensed to TOP from TOL under the TOL License, or that may be subsequently licensed to TOP from TOL, or that are or may subsequently be otherwise developed or acquired at any time by TOP. For avoidance of doubt, for all Sublicensed IP sublicensed to JP by TOP under the TOL License, in no event shall the scope of rights in such Sublicensed IP extend beyond the rights licensed by TOL to TOP pursuant to the TOL License. For the avoidance of doubt, any intellectual property developed or acquired by JP at any time outside the scope of the rights sublicensed under this Agreement shall not be Sublicensed IP.
1 |
1.6. “ Sublicensed Marks ” means the TOL-owned trademarks, trade names, logos, service marks, designs, emblems, signs, slogans, other similar designations of source or original and general intangibles of like nature, whether registered, applied for or not, together with the goodwill relating thereto.
1.7. “ Term ” has the meaning given to it in Section 3.1.
1.8. “ TOL License ” means the License Agreement between TOL and TOP dated as of April 13, 2017.
2. | SUBLICENSED IP. |
2.1. | Grant . |
a. TOP grants to JP a perpetual, non-revocable (subject to the terms hereof), fully paid, royalty-free, exclusive sublicense to make, have made, use, sell, have sold, offer for sale, import, reproduce, distribute, display, perform, create derivatives work from, and otherwise fully use and exploit the Sublicensed IP in the United States in connection with the Limited Pharmaceutical Business. For avoidance of doubt, to the extent TOP develops or acquires any Sublicensed IP after the Effective Date that is not owned by JP, such Sublicensed IP shall be automatically sublicensed by TOP to JP pursuant to this Section 2.1(a). The aforesaid sublicense(s) shall not be further sublicensable without the express written consent of TOP, which will not be unreasonably withheld, delayed, or conditioned. For the avoidance of doubt, JP may engage third parties to assist in developing and commercializing Pharmaceutical Products in connection with the Limited Pharmaceutical Business (“ JP Contractors ”).
b. JP shall not contest the TOL License, the Intellectual Property covered by the TOL License, the validity of the Sublicensed IP or the rights of TOL or TOP in the Sublicensed IP, except in relation to any claims asserted by TOL or TOP against JP or an affiliate thereof.
c. JP shall not use the Sublicensed IP in any fashion that would cause confusion with, dilute or damage the reputation or image of TOL or TOP, their products or services; provided, however, that JP shall not be considered to be in breach of this section as a result of the sale by JP of Pharmaceutical Products bearing the TOL name or other TOL trademarks.
d. Condition Subsequent . The Parties agree that TOP shall use its reasonable efforts seek the written consent to this Agreement by TOL, provided , that (i) such consent shall not be required to close this Agreement and (ii) the Parties hereto agree to make any reasonable amendments that may be required by TOL.
2.2. Exclusivity . The Parties acknowledge that the TOL License grants TOP certain exclusive rights, which TOP is hereby sublicensing exclusively to JP solely under Section 2.1. If TOL breaches or attempts to breach its obligation of exclusivity by licensing any of the Sublicensed IP to any third party for use in connection with the Limited Pharmaceutical Business, TOP will promptly take all reasonable action, up to and including filing a lawsuit on its and JP’s behalf, to prevent such breach of exclusivity. If TOP fails to take such action, JP may, at its sole expense, file suit on behalf of itself and the applicable TOP and, if reasonably necessary for standing or other legal reasons, TOP will join such suit.
2 |
2.3. | Sublicensed Marks . |
a. The Parties recognize the value of the goodwill associated with the Sublicensed Marks, and acknowledge that the Sublicensed Marks and all rights therein, as well as the goodwill which accrues during the term of this Agreement, belongs exclusively to TOL, and JP shall not acquire any rights in the Sublicensed Marks, other than as expressly granted in this Agreement. JP shall not do anything inconsistent with TOL’s ownership of its Sublicensed Marks. In particular, but without limitation, JP shall not attack the validity of the Sublicensed Marks or TOL’s rights in and to its Sublicensed Marks except in relation to any claims asserted by TOL or TOP against JP or an affiliate thereof.
b. JP shall not misuse or misappropriate any of the Sublicensed Marks. JP shall not engage in any conduct that impairs or might tend to impair the validity or enforceability of any of the Sublicensed Marks or any registrations of any of the Sublicensed Marks, or that dilutes or might dilute the distinctive quality of any of the Sublicensed Marks, or that disparages or might disparage any of the Sublicensed Marks. Notwithstanding anything to the contrary contained elsewhere in this Agreement, JP may not use any of the Sublicensed Marks on any materials or products unless it has received TOL’s prior written approval for such use, except that JP shall not be required to obtain such approval in connection with the use of Sublicensed Marks on materials or products which does not materially differ from previously approved uses.
c. In addition to each Party’s other rights and remedies under this Agreement or otherwise, upon receipt of notice from TOL, JP shall immediately discontinue any use of, and remove from its premises, all materials bearing any of the Sublicensed Marks, including any signs, labels, stationery, advertising, promotional material and literature that, in the reasonable opinion of TOL, constitutes an improper use of the Sublicensed Marks or reflects non-negligibly adversely on TOL’s reputation or brand image or any of its corporate affiliates or partners or on any of its products or services.
d. All graphics, trademarks, service marks, trade names, trade dress, word marks, design marks, slogans and domain names, and all images, logos, artwork, text and other works of authorship (collectively, the “ Marks ”) that include or refer to the Sublicensed Marks, shall belong exclusively to TOL or TOP as the case may be and all use of the Marks by JP, and the goodwill thereto, shall inure to their benefit.
e. JP agrees to affix to all Pharmaceutical Products, and related promotional and packaging materials, for sale to third parties (and not Pharmaceutical Products held for internal use) that utilize the Sublicensed Marks, such Sublicensed Marks and notices as shall be reasonably requested by TOP, to the extent practicable and consistent with commercial practice. JP agrees to obtain specific written instructions with respect to the content and placements of all such notices. At all times when JP commercially uses the Sublicensed Marks, to the extent practicable and consistent with commercial practice, JP shall note that its use is made under license and shall indicate the owner of the Sublicensed Marks.
f. JP agrees that TOP shall have the right, at all reasonable times, upon no less than fifteen (15) Business Day’s prior written notice to JP, to inspect the premises, and books and records owned by or under the control of JP during regular business hours as TOP considers necessary in order to verify JP’s compliance with the terms hereof, including for appropriate quality control with respect to JP’s use of the Sublicensed Marks.
g. Notwithstanding the foregoing, the sublicense granted to JP hereunder is not intended to be, and shall not be construed as, an assignment by TOL or TOP to JP, in part or in whole, of the ownership of the Sublicensed IP.
3 |
h. The Parties recognize that, notwithstanding anything implicitly or explicitly to the contrary in this Agreement, the sublicense granted hereunder does not grant any rights with respect to any use of the Sublicensed IP other than with respect to the Limited Pharmaceutical Business within the Territory.
2.4. | Commercialization Plan . |
a. On or before June 11, 2018, JP shall prepare, in consultation with TOP, and provide to the board of directors of JP (the “Board”) a mutually acceptable commercialization plan (including the revised annual Commercialization Plans referenced below, the “Commercialization Plan”) covering the development and commercialization of the Sublicensed IP for the Limited Pharmaceutical Business, in accordance with applicable law and setting forth the specific activities and delivery dates thereunder. For the purposes of clarification, the Commercialization Plan will include but not be limited to (i) a selection, or process for selection, of one or more indications to pursue based on the data in-hand or known at such time, (ii) a list of appropriate studies with specific Cannabis-related indications and deadlines for initiating one or more such studies, (iii) a list of one or more inventions for which patent rights should be pursued if appropriate; and (iv) brand management, opportunity assessment, pricing, forecasting, market analysis, tactics and strategies. The Parties shall cooperate in good faith to update the Commercialization Plan annually within sixty (60) days after the end of each calendar year during the Term. Upon submission, the Board will have up to thirty (30) calendar days to review such plan. With respect to the Commercialization Plan, subject to a thirty (30) calendar day cure period, a breach of this Section 2.4 will be deemed material breach of this Agreement.
b. JP shall use its commercially reasonable efforts to promote and develop the Limited Pharmaceutical Business in accordance with the Commercialization Plan and shall be responsible for all costs and expenses incurred in connection with developing and commercializing Pharmaceutical Products in connection with the Limited Pharmaceutical Business. For the avoidance of doubt, any failure to substantially implement any annual Commercialization Plan in accordance with the terms and schedule thereof shall be considered a material breach of this Agreement.
2.5. Information . From time to time, upon JP’s request, TOP will provide a list of the Sublicensed IP and other information reasonably necessary to allow JP to exercise its rights granted in Section 2.1. TOP will promptly notify JP if the scope of the Sublicensed IP as it pertains Limited Pharmaceutical Business is materially increased or decreased, and notwithstanding anything to the contrary herein, JP will not be liable for any acts or omissions caused by TOP’s delay in providing such notice.
3. | TERM AND TERMINATION. |
3.1. Term . This Agreement commences on the Effective Date and continues until the earliest of: (i) termination by any Party in accordance with Section 3.2 below, or (ii) the date on which the last of the Sublicensed IP expires or is otherwise no longer effective (the “ Term ”).
3.2. Termination . Either Party may terminate this Agreement immediately upon: (i) a material breach of this Agreement by the other Party, if such breach is not cured within thirty (30) calendar days after written notice from the non-breaching Party; or (ii) a voluntary petition in bankruptcy is filed by the other Party, an involuntary petition in bankruptcy is filed with respect to the other Party, or any petition, application or other pleading is filed or any proceeding is commenced seeking he appointment of a trustee, receiver or liquidator for the other Party.
4 |
3.3. Effect of Expiration or Termination . Upon the expiration of this Agreement or its termination by TOP, JP shall cease and thereafter refrain from all use of the Sublicensed IP, including the Sublicensed Marks. Upon the termination of this Agreement by JP pursuant to Section 3.2, all licensed rights in the Sublicensed IP will automatically become perpetual and irrevocable for as long as any such right is granted by TOL: (i) to TOP; (ii) to an entity affiliated with TOL or TOP or with substantially similar ownership; or (iii) to any other entity if such grant of rights is intended to avoid this provision. Upon any expiration or termination of this Agreement, the Receiving Party of any Confidential Information shall also destroy or return all Confidential Information to the Disclosing Party.
3.4. Survival . Sections 3.3, 4, 8, 9 and 10 of this Agreement will survive any termination or expiration of this Agreement.
4. | CONFIDENTIALITY. |
4.1. Definition . “ Confidential Information ” means any and all proprietary, non-public information disclosed by one Party (the “ Disclosing Party ”) to another Party (the “ Receiving Party ”) which a reasonable person would understand to be confidential, including without limitation technical, financial, and other business information. For the avoidance of doubt, this Agreement and the TOL License shall be considered Confidential Information.
4.2. Obligations . The Receiving Party will hold the Confidential Information in confidence using at least the same degree of care it uses to protect its own confidential information, but in no event less than reasonable care. The Receiving Party will only use Confidential Information as needed to exercise its rights under this Agreement, and will only disclose Confidential Information to its affiliates, directors, officers, employees and contractors, as well as its financial and legal advisors and potential investors, who have a need to know such Confidential Information in connection with this Agreement and who are bound by confidentiality obligations at least as restrictive as those contained herein. Any disclosure of the TOL License in accordance with this Section shall be subject to the prior written consent of TOP, which consent will not be unreasonably withheld or delayed.
4.3. Exceptions . Confidential Information does not include information that the Receiving Party can demonstrate is: (i) in the public domain or subsequently enters the public domain through no fault of the Receiving Party; (ii) disclosed to the Receiving Party by a third party without any breach of confidentiality obligations; (iii) known to the Receiving Party at the time of disclosure by the Disclosing Party; or (iv) developed independently by the Receiving Party, without use of or reference to any Confidential Information of the Disclosing Party. The Receiving Party may disclose Confidential Information to the extent necessary to comply with a valid legal or government order or requirement, provided that it will provide the Disclosing Party reasonable prior notice and cooperate with the Disclosing Party (at the Disclosing Party’s sole expense) with any reasonable effort to challenge or limit the ordered or requested disclosure.
4.4. Publicity . The Parties shall reasonably cooperate in connection with issuing press releases or promotional or marketing material to the public or third parties in connection with the provisions of this Agreement; provided that JP will have the right to issue press releases related to the studies and other commercial activities it conducts, provided, further, that neither Party will publish any Confidential Information without the prior written consent of the other Party, which consent will not be unreasonably withheld, delayed, or conditioned. JP shall not refer to either TOP or TOL in any such releases or materials without the prior written consent of such entity, which will not be unreasonably withheld or delayed.
5 |
5. | OWNERSHIP. |
5.1. Developments . Except as may be limited by the TOL License, the Intellectual Property in all improvements and modifications of the Sublicensed IP developed or acquired by JP, with or without involvement of TOP, in relation to the Limited Pharmaceutical Business (collectively, “ New IP ”) will be owned by JP, and TOP hereby assigns and will be automatically deemed to have assigned, to JP any right, title and interest it may have in and to such New IP. JP hereby grants, and will automatically be deemed to grant, to TOP, a perpetual, royalty free, non-exclusive license to use and exploit such New IP outside of the Limited Pharmaceutical Business. To the extent a TOL License prohibits such ownership of certain New IP, such New IP will be automatically be assigned to either TOP or TOL as required by the TOL License and deemed part of the Sublicensed IP for purposes of the sublicense granted in Section 2.1.
5.2. Enforcement; Patent Prosecution . JP will be responsible for, at its sole expense and control, using commercially reasonable efforts to: (i) prosecute patents, copyrights, and trademarks for New IP owned by JP; and (ii) protect the New IP from material third party infringement, violation, or misappropriation in connection with the Limited Pharmaceutical Business; provided in each case that TOP will provide all reasonably necessary cooperation and information in such efforts by JP, and TOP will join such suit(s) if required for JP to have legal standing in such litigation. Any award solely with regards to any New IP will be distributed entirely to JP.
6. | REPRESENTATIONS AND WARRANTIES. |
6.1. Mutual . Each Party represents and warrants that: (i) it is an entity duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation; (ii) it has all requisite power and authority to enter into this Agreement and consummate the transactions contemplated herein; and (iii) the execution, delivery, and performance of this Agreement does not and will not conflict with any violation of applicable law or of any other agreements with a third party.
6.2. TOP . TOP represents and warrants that: (i) it is the lawful licensee of the Sublicensed IP and, has sufficient authority to grant JP the sublicenses granted under this Agreement; (ii) that the execution, delivery, and performance by it of this Sublicense Agreement does not require the approval of any governmental authority nor the application for or filing of or for any license, permit, approval, waiver, no-action, or similar permission from any governmental authority; (iii) it has not entered into any additional sublicenses or other arrangements that may limit its rights or the rights of JP under this Agreement or which may reasonably be expected to lead to a claim of infringement or invalidity regarding any portion of the Sublicensed IP or its use; (iv) it has no knowledge of infringement of, or conflict with, any license or other intellectual property right of any other third-party, and there is no known claim pending, filed or threatened related to infringement, ownership, misappropriation, or invalidity regarding the Sublicensed IP or its use; and (v) it has not granted and will not at any time during the Term grant or permit to exist any sublicense or other contingent or non-contingent right, title or interest under or relating to the Sublicensed IP in connection with the Limited Pharmaceutical Business to any individual or entity, that does or will conflict with or otherwise undermine or impair the exclusive rights of JP hereunder. Notwithstanding the foregoing, TOP may use or sublicense the Sublicensed IP outside of the Limited Pharmaceutical Business.
6.3. TOL License. TOP hereby covenants that it will not take any acts, or fail to act, in any way that results in a material modification, limitation, loss, or termination of the rights granted by TOL that are sublicensed hereunder.
6 |
7. | INFRINGEMENT BY THIRD-PARTIES. |
7.1 Report of Infringement . With respect to any Sublicensed IP, when information comes to the attention of JP to the effect that any of the licensed rights have been or are threatened to be infringed by a third party, JP shall promptly notify TOP in writing of any such infringement or threatened infringement of which it has become aware.
7.2 Enforcement . TOP or TOL, as applicable, will take, at its own expense, any action it deems advisable in good faith to protect the Sublicensed IP. In the event of an infringement or threatened infringement by a third party of the Sublicensed IP, TOP or TOL, as applicable, shall have the exclusive option to direct and control the litigation and any settlement thereof. JP shall cooperate at its own expense with TOP in protecting and defending the Sublicensed IP. In the event that neither TOP nor TOL prosecutes such alleged infringement or violation of the Sublicensed IP, JP shall have the right, but not the obligation, to enforce such Sublicensed IP at its own expense. TOP hereby agrees, on their own behalf and on behalf of TOL, to join in such suit if required for proper standing. If JP has brought such an action, any award will be distributed entirely to JP.
8. | INDEMNIFICATION. |
8.1 By TOP . TOP will indemnify, defend, and hold harmless JP, and its officers, directors, members, managers, and employees from any losses, liabilities, damages, penalties, awards, settlements, costs, and expenses, including reasonable attorneys’ fees, (collectively, “ Losses ”) incurred in relation to a third-party claim arising out of any: (i) gross negligence, willful misconduct, or violation of applicable law by the indemnifying Party; (ii) personal injury, death, or loss of or damage to property caused by the indemnifying Party; (iii) breach of any representations and warranties by the indemnifying Party in Section 6; or (iv) any modification or termination of the applicable TOL License which may materially affect JP’s rights under this Agreement, unless JP has given prior written consent to such modification or termination, which will not be unreasonably withheld or delayed.
8.2 By JP . JP will indemnify, defend, and hold harmless TOP and its officers, directors, members, managers, and employees, from any Losses incurred in relation to a third-party claim arising out of any: (i) gross negligence, willful misconduct, or violation of applicable law by JP or the JP Contractors; (ii) personal injury, death, or loss of or damage to property caused by JP or the JP Contractors; or (iii) breach of any representations and warranties by JP in Section 6. JP will indemnify, defend, and hold harmless TOP and its officers, directors, members, managers, and employees from any Losses incurred in relation to any claim by TOL against TOP arising out of the TOL License related to activities of JP or the JP Contractors with regards to the Limited Pharmaceutical Business. JP’s obligations under this Section 8.2 will not apply to the extent a claim is related to TOP’s breach of, or actions beyond the scope of, the TOL License or this Agreement.
8.3 Procedures . The Party entitled to indemnification for a claim hereunder (the “ Indemnified Party ”) will promptly give written notice to the other Party (the “ Indemnifying Party ”) of such claim, provided that a delay will not affect the Indemnifying Party’s obligations except to the extent such delay is materially prejudicial to it. The Indemnified Party will give the Indemnifying Party full control of the defense upon request, and will provide all cooperation and information reasonable requested by the Indemnifying Party in relation to the defense. The Indemnifying Party will not, without the Indemnified Party’s prior written consent, enter into any settlement that imposes any non-monetary obligations or liability on the Indemnified Party.
9. | LIMITATION OF LIABILITY. |
EXCEPT FOR A PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 8 OR FOR ANY MODIFICATION OR TERMINATION OF A TOL LICENSE THAT MAY MATERIALLY AFFECT JP’S RIGHTS UNDER THIS AGREEMENT WITHOUT THE ADVANCE WRITTEN CONSENT OF JP, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY SHALL BE LIABLE TO THE OTHER FOR ANY PUNITIVE, EXEMPLARY OR AGGRAVATED, OR ANY INDIRECT OR CONSEQUENTIAL DAMAGES, IN CONNECTION WITH A BREACH OF THIS AGREEMENT.
7 |
10. | GENERAL. |
10.1 Bankruptcy . The licenses and sublicenses granted to JP hereunder for the Limited Pharmaceutical Business are, for purposes of section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property,” as that term is defined in section 101 of the Bankruptcy Code. Nothing in this agreement limits JP’s rights under section 365(n), and JP is not making an election under section 365(n) hereunder.
10.2 Cooperation . The Parties agree to reasonably cooperate with and assist each other in connection with the sublicense granted under this Agreement and the development and success of commercializing the Sublicensed IP in connection with the Limited Pharmaceutical Business, including in executing documents and joining in any litigation as needed to ensure proper standing for such litigation.
10.3 Notices . Any notices sent hereunder will be sent by e-mail and internationally-recognized overnight or two (2) day courier to the following addresses, which may be updated at any time upon ten (10) calendar days’ prior written notice to the other Party:
If to TOP : | TO Pharmaceuticals USA LLC |
77 Water Street, 8 th Floor
New York, New York 10005
Attn: Chief Executive Officer
Fax: (646) 722-4101
Email: IR@tikunolam.us
with copies to: | Leason Ellis LLP |
One Barker Avenue, Fifth Floor
White Plains, New York 10601
Attention: Peter S. Sloane, Esq.
Email: sloane@leasonellis.com
and copies to: | bernie@tikunolam.com and stephen@tikunolam.com |
If to JP : | Jay Pharma, Inc |
181 Bay Street, Suite 4400
Brookfield Place
Toronto, ON M5J 2T3
Email: Jeff.Wolfson@haynesboone.com
All notices hereunder may be given by any other means, but shall not be deemed to have been duly given unless and until it is actually received by the intended recipient.
10.4 Governing Law . THIS AGREEMENT, AND ANY DISPUTE RELATED TO OR ARISING THEREFROM, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF NEW YORK.
8 |
10.5 Dispute Resolution . In the event of any dispute, claim, question, or disagreement (“ Dispute ”) arising from or relating to this Agreement or the breach thereof, the Parties hereto shall use their best efforts to settle the dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to all Parties. All Disputes not resolved within fifteen (15) days by good faith negotiation shall be finally settled by arbitration administered by the American Arbitration Association, in New York, New York, in accordance with the provisions of that organization’s Commercial Arbitration Rules. The dispute shall be heard and determined by a panel of three (3) arbitrators, unless otherwise agreed by the Parties. In such case, each Party shall each select one (1) arbitrator. The arbitrator selected by the claimant and the arbitrator selected by respondent shall, within ten (10) days of their appointment, select a third neutral arbitrator. In the event that they are unable to do so, or if for any reason the three (3) arbitrators are not timely empanelled, the Parties, or either of them, or their attorneys, may request that the American Arbitration Association appoint the third or any other necessary arbitrator. Prior to the commencement of hearings, each of the arbitrators appointed shall provide an oath or undertaking of impartiality. The United States Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant hereto. Notwithstanding any provision hereof, any applicable law or public policy considerations, including without limitation any possible illegality or unenforceability of this Agreement or any portion hereof due to the subject matter hereof, the arbitrators shall interpret this Agreement giving full effect to the terms and provisions hereof. All charges of the American Arbitration Association or any mediator shall be borne equally by the Parties, and each Party hereby agrees to pay all such charges promptly upon request therefor, and if any Party shall fail to do so, the other Party shall be permitted to apply towards such charges any amounts otherwise due to the non-paying Party. The Parties to the arbitration proceeding shall bear their own respective expenses incurred in connection therewith, including, but not limited to, legal fees and expenses.
10.6 Waiver . The waiver by any Party of any breach of covenant will not be construed to be a waiver of any succeeding breach or any other covenant. All waivers must be in writing, and signed by the Party waiving its rights. This Agreement may be modified only by a written instrument executed by authorized representatives of the Parties sought to be bound.
10.7 Assignment . Neither Party may assign or transfer this Agreement, in whole or in part, without the prior written consent of the other Party, which consent will not be unreasonably withheld or delayed. Any purported assignment or transfer in violation of this section will be null and void. This Agreement will inure to the benefit of, and be binding upon the Parties, together with their respective legal representatives, successors, and assigns, as permitted herein.
10.8 No Third-Party Beneficiaries . Nothing in tills Agreement confers any rights or remedies upon any third party.
10.9 Severability . If any provision of this Agreement is held to be invalid, void, unenforceable, or unconstitutional by a court of competent jurisdiction, the remaining provisions shall continue in full force without being impaired or invalidated.
10.10 Entire Agreement . This Agreement and the attached Schedule constitutes the entire agreement between the Parties with respect to the subject matter herein, and supersedes all prior agreements, proposals, negotiations, representations or communications relating to such subject matter. The Parties acknowledge that they have not been induced to enter into this Agreement by any representations or promises not specifically stated herein.
9 |
10.11 Execution; Counterparts . This Agreement may be executed in counterparts, including electronic counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. The headings of the various sections of this Agreement have been inserted for reference only and shall not be deemed to be a part of this Agreement.
The Parties hereby execute this Agreement as of the Effective Date.
JAY PHARMA, INC. | TO PHARMACEUTICALS USA LLC | |||
By: TO Pharmaceuticals LLC, its manager | ||||
By: To Holding Group LLC, its manager | ||||
By: TO Global LLC, its manager | ||||
By: | /s/ Yaron Conforti | By: | /s/ Bernard Sucher | |
Name: | Yaron Conforti | Name: | Bernard Sucher | |
Title: | Director | Title: | Chief Executive Officer |
10 |
Exhibit 10.13
SUBLICENSE AGREEMENT (NON-U.S.)
This Sublicense Agreement (this “ Agreement ”) is made effective as of January 12, 2018 (the “ Effective Date ”) by and between Tikun Olam IP Ltd., a Cayman Islands company (“ TOCI ”) and Jay Pharma, Inc., a Canadian corporation (“ JP ”). Each of TOCI and JP may be referred to as a “ Party ” and collectively as the “ Parties ”.
RECITALS
WHEREAS, pursuant to the Shareholder Agreement (the “ SHA ”) dated of even date herewith between Bezalel Partners, LLC (“ Bezalel ”) and TOCI, Bezalel and TOCI have agreed to invest in JP; and
WHEREAS, the SHA requires TOCI to sublicense to JP certain rights that it has in-licensed from Tikun Olam Ltd., an Israeli corporation with registration number 514263771 (“ TOL ”) as set forth herein.
NOW, THEREFORE, in consideration of the above and the promises and covenants contained herein and in the SHA, the Parties agree as follows:
1. | DEFINITIONS. |
1.1. “ Cannabis ” means indica, sativa or other forms of the marijuana and hemp plants, hemp products and any compounds, or mixtures or combinations thereof, isolated or derived from marijuana, cannabis or hemp plants, along with any synthetic version of such compounds, mixtures, or combinations.
1.2. “ Intellectual Property ” means any inventions, plant breeds, works of authorship, trademarks and service marks, including the goodwill therein, trade secrets, know-how, documentation, and information, together with any worldwide rights in or to any of the foregoing under patent, plant patent, plant breeders, copyright, trademark, trade secret, or other intellectual or industrial property laws.
1.3. “ Limited Pharmaceutical Business ” means the business, whether currently in existence or not, of producing, researching, developing, promoting, marketing, selling, distributing and otherwise commercializing Pharmaceutical Products (as defined herein) included in or derived from the Sublicensed IP, for the prevention, treatment, and/or management of cancer and diseases, disorders, or symptoms related thereto.
1.4. “ Pharmaceutical Products ” means any product, compound, medicine or therapeutic which is subject to regulation as a drug, medicine or controlled substance by a foreign equivalent of the United States Food and Drug Administration.
1.5. “ Sublicensed IP ” means any intellectual property, whether registered or applied for, including patents, patent applications, plant patents and plant patent applications, continuation and continuation in part applications and patents maturing therefrom, and divisional applications and patents maturing therefrom, Sublicensed Marks (as defined herein), copyrights, promotional materials, know-how, trade secrets, knowledge, documentation, information relating to clinical or other trials, patient data, plant breeders rights, registered and unregistered Cannabis varieties and uniquely identifiable strains of Cannabis in all forms (as further detailed hereunder) that are currently licensed to TOCI from TOL under the TOL License, or that may be subsequently licensed to TOCI from TOL, or that are or may subsequently be otherwise developed or acquired at any time by TOCI. For avoidance of doubt, for all Sublicensed IP sublicensed to JP by TOCI under the TOL License, in no event shall the scope of rights in such Sublicensed IP extend beyond the rights licensed by TOL to TOCI pursuant to the TOL License. For the avoidance of doubt, any intellectual property developed or acquired by JP at any time outside the scope of the rights sublicensed under this Agreement shall not be Sublicensed IP.
1 |
1.6. “ Sublicensed Marks ” means the TOL-owned trademarks, trade names, logos, service marks, designs, emblems, signs, slogans, other similar designations of source or original and general intangibles of like nature, whether registered, applied for or not, together with the goodwill relating thereto.
1.7. “ Term ” has the meaning given to it in Section 3.1.
1.8. “ TOL License ” means the License Agreement between TOL and TOCI dated as of April 13, 2017.
2. | SUBLICENSED IP. |
2.1. | Grant . |
a. TOCI grants to JP a perpetual, non-revocable (subject to the terms hereof), fully paid, royalty-free, exclusive sublicense to make, have made, use, sell, have sold, offer for sale, import, reproduce, distribute, display, perform, create derivatives work from, and otherwise fully use and exploit the Sublicensed IP anywhere in the world outside of the United States in connection with the Limited Pharmaceutical Business. For avoidance of doubt, to the extent TOCI develops or acquires any Sublicensed IP after the Effective Date that is not owned by JP, such Sublicensed IP shall be automatically sublicensed by TOCI to JP pursuant to this Section 2.1(a). The aforesaid sublicense(s) shall not be further sublicensable without the express written consent of TOCI, which will not be unreasonably withheld, delayed, or conditioned. For the avoidance of doubt, JP may engage third parties to assist in developing and commercializing Pharmaceutical Products in connection with the Limited Pharmaceutical Business (“ JP Contractors ”).
b. JP shall not contest the TOL License, the Intellectual Property covered by the TOL License, the validity of the Sublicensed IP or the rights of TOL or TOCI in the Sublicensed IP, except in relation to any claims asserted by TOL or TOCI against JP or an affiliate thereof.
c. JP shall not use the Sublicensed IP in any fashion that would cause confusion with, dilute or damage the reputation or image of TOL or TOCI, their products or services; provided, however , that JP shall not be considered to be in breach of this section as a result of the sale by JP of Pharmaceutical Products bearing the TOL name or other TOL trademarks.
d. Condition Subsequent . The Parties agree that TOCI shall use its reasonable efforts seek the written consent to this Agreement by TOL, provided, that (i) such consent shall not be required to close this Agreement and (ii) the Parties hereto agree to make any reasonable amendments that may be required by TOL.
2.2. Exclusivity . The Parties acknowledge that the TOL License grants TOCI certain exclusive rights, which TOCI is hereby sublicensing exclusively to JP solely under Section 2.1. If TOL breaches or attempts to breach its obligation of exclusivity by licensing any of the Sublicensed IP to any third party for use in connection with the Limited Pharmaceutical Business, TOCI will promptly take all reasonable action, up to and including filing a lawsuit on its and JP’s behalf, to prevent such breach of exclusivity. If TOCI fails to take such action, JP may, at its sole expense, file suit on behalf of itself and the applicable TOCI and, if reasonably necessary for standing or other legal reasons, TOCI will join such suit.
2 |
2.3. | Sublicensed Marks . |
a. The Parties recognize the value of the goodwill associated with the Sublicensed Marks, and acknowledge that the Sublicensed Marks and all rights therein, as well as the goodwill which accrues during the term of this Agreement, belongs exclusively to TOL, and JP shall not acquire any rights in the Sublicensed Marks, other than as expressly granted in this Agreement. JP shall not do anything inconsistent with TOL’s ownership of its Sublicensed Marks. In particular, but without limitation, JP shall not attack the validity of the Sublicensed Marks or TOL’s rights in and to its Sublicensed Marks except in relation to any claims asserted by TOL or TOCI against JP or an affiliate thereof.
b. JP shall not misuse or misappropriate any of the Sublicensed Marks. JP shall not engage in any conduct that impairs or might tend to impair the validity or enforceability of any of the Sublicensed Marks or any registrations of any of the Sublicensed Marks, or that dilutes or might dilute the distinctive quality of any of the Sublicensed Marks, or that disparages or might disparage any of the Sublicensed Marks. Notwithstanding anything to the contrary contained elsewhere in this Agreement, JP may not use any of the Sublicensed Marks on any materials or products unless it has received TOL’s prior written approval for such use, except that JP shall not be required to obtain such approval in connection with the use of Sublicensed Marks on materials or products which does not materially differ from previously approved uses.
c. In addition to each Party’s other rights and remedies under this Agreement or otherwise, upon receipt of notice from TOL, JP shall immediately discontinue any use of, and remove from its premises, all materials bearing any of the Sublicensed Marks, including any signs, labels, stationery, advertising, promotional material and literature that, in the reasonable opinion of TOL, constitutes an improper use of the Sublicensed Marks or reflects non-negligibly adversely on TOL’s reputation or brand image or any of its corporate affiliates or partners or on any of its products or services.
d. All graphics, trademarks, service marks, trade names, trade dress, word marks, design marks, slogans and domain names, and all images, logos, artwork, text and other works of authorship (collectively, the “ Marks ”) that include or refer to the Sublicensed Marks, shall belong exclusively to TOL or TOCI as the case may be and all use of the Marks by JP, and the goodwill thereto, shall inure to their benefit.
e. JP agrees to affix to all Pharmaceutical Products, and related promotional and packaging materials, for sale to third parties (and not Pharmaceutical Products held for internal use) that utilize the Sublicensed Marks, such Sublicensed Marks and notices as shall be reasonably requested by TOCI, to the extent practicable and consistent with commercial practice. JP agrees to obtain specific written instructions with respect to the content and placements of all such notices. At all times when JP commercially uses the Sublicensed Marks, to the extent practicable and consistent with commercial practice, JP shall note that its use is made under license and shall indicate the owner of the Sublicensed Marks.
f. JP agrees that TOCI shall have the right, at all reasonable times, upon no less than fifteen (15) Business Day’s prior written notice to JP, to inspect the premises, and books and records owned by or under the control of JP during regular business hours as TOCI considers necessary in order to verify JP’s compliance with the terms hereof, including for appropriate quality control with respect to JP’s use of the Sublicensed Marks.
g. Notwithstanding the foregoing, the sublicense granted to JP hereunder is not intended to be, and shall not be construed as, an assignment by TOL or TOCI to JP, in part or in whole, of the ownership of the Sublicensed IP.
h. The Parties recognize that, notwithstanding anything implicitly or explicitly to the contrary in this Agreement, the sublicense granted hereunder does not grant any rights with respect to any use of the Sublicensed IP other than with respect to the Limited Pharmaceutical Business within the Territory.
3 |
2.4. | Commercialization Plan . |
a. On or before June 11, 2018, JP shall prepare, in consultation with TOCI, and provide to the board of directors of JP (the “Board”) a mutually acceptable commercialization plan (including the revised annual Commercialization Plans referenced below, the “Commercialization Plan”) covering the development and commercialization of the Sublicensed IP for the Limited Pharmaceutical Business, in accordance with applicable law and setting forth the specific activities and delivery dates thereunder. For the purposes of clarification, the Commercialization Plan will include but not be limited to (i) a selection, or process for selection, of one or more indications to pursue based on the data in-hand or known at such time, (ii) a list of appropriate studies with specific Cannabis-related indications and deadlines for initiating one or more such studies, (iii) a list of one or more inventions for which patent rights should be pursued if appropriate; and (iv) brand management, opportunity assessment, pricing, forecasting, market analysis, tactics and strategies. The Parties shall cooperate in good faith to update the Commercialization Plan annually within sixty (60) days after the end of each calendar year during the Term. Upon submission, the Board will have up to thirty (30) calendar days to review such plan. With respect to the Commercialization Plan, subject to a thirty (30) calendar day cure period, a breach of this Section 2.4 will be deemed material breach of this Agreement.
b. JP shall use its commercially reasonable efforts to promote and develop the Limited Pharmaceutical Business in accordance with the Commercialization Plan and shall be responsible for all costs and expenses incurred in connection with developing and commercializing Pharmaceutical Products in connection with the Limited Pharmaceutical Business. For the avoidance of doubt, any failure to substantially implement any annual Commercialization Plan in accordance with the terms and schedule thereof shall be considered a material breach of this Agreement.
2.5. Information . From time to time, upon JP’s request, TOCI will provide a list of the Sublicensed IP and other information reasonably necessary to allow JP to exercise its rights granted in Section 2.1. TOCI will promptly notify JP if the scope of the Sublicensed IP as it pertains Limited Pharmaceutical Business is materially increased or decreased, and notwithstanding anything to the contrary herein, JP will not be liable for any acts or omissions caused by TOCI’s delay in providing such notice.
3. | TERM AND TERMINATION. |
3.1. Term . This Agreement commences on the Effective Date and continues until the earliest of: (i) termination by any Party in accordance with Section 3.2 below, or (ii) the date on which the last of the Sublicensed IP expires or is otherwise no longer effective (the “Term ” ).
3.2. Termination . Either Party may terminate this Agreement immediately upon: (i) a material breach of this Agreement by the other Party, if such breach is not cured within thirty (30) calendar days after written notice from the non-breaching Party; or (ii) a voluntary petition in bankruptcy is filed by the other Party, an involuntary petition in bankruptcy is filed with respect to the other Party, or any petition, application or other pleading is filed or any proceeding is commenced seeking he appointment of a trustee, receiver or liquidator for the other Party.
4 |
3.3. Effect of Expiration or Termination . Upon the expiration of this Agreement or its termination by TOCI, JP shall cease and thereafter refrain from all use of the Sublicensed IP, including the Sublicensed Marks. Upon the termination of this Agreement by JP pursuant to Section 3.2, all licensed rights in the Sublicensed IP will automatically become perpetual and irrevocable for as long as any such right is granted by TOL: (i) to TOCI; (ii) to an entity affiliated with TOL or TOCI or with substantially similar ownership; or (iii) to any other entity if such grant of rights is intended to avoid this provision. Upon any expiration or termination of this Agreement, the Receiving Party of any Confidential Information shall also destroy or return all Confidential Information to the Disclosing Party.
3.4. Survival . Sections 3.3, 4, 8, 9 and 10 of this Agreement will survive any termination or expiration of this Agreement.
4. | CONFIDENTIALITY. |
4.1. Definition . “ Confidential Information ” means any and all proprietary, non-public information disclosed by one Party (the “ Disclosing Party ”) to another Party (the “ Receiving Party ” ) which a reasonable person would understand to be confidential, including without limitation technical, financial, and other business information. For the avoidance of doubt, this Agreement and the TOL License shall be considered Confidential Information.
4.2. Obligations . The Receiving Party will hold the Confidential Information in confidence using at least the same degree of care it uses to protect its own confidential information, but in no event less than reasonable care. The Receiving Party will only use Confidential Information as needed to exercise its rights under this Agreement, and will only disclose Confidential Information to its affiliates, directors, officers, employees and contractors, as well as its financial and legal advisors and potential investors, who have a need to know such Confidential Information in connection with this Agreement and who are bound by confidentiality obligations at least as restrictive as those contained herein. Any disclosure of the TOL License in accordance with this Section shall be subject to the prior written consent of TOCI, which consent will not be unreasonably withheld or delayed.
4.3. Exceptions . Confidential Information does not include information that the Receiving Party can demonstrate is: (i) in the public domain or subsequently enters the public domain through no fault of the Receiving Party; (ii) disclosed to the Receiving Party by a third party without any breach of confidentiality obligations; (iii) known to the Receiving Party at the time of disclosure by the Disclosing Party; or (iv) developed independently by the Receiving Party, without use of or reference to any Confidential Information of the Disclosing Party. The Receiving Party may disclose Confidential Information to the extent necessary to comply with a valid legal or government order or requirement, provided that it will provide the Disclosing Party reasonable prior notice and cooperate with the Disclosing Party (at the Disclosing Party’s sole expense) with any reasonable effort to challenge or limit the ordered or requested disclosure.
4.4. Publicity . The Parties shall reasonably cooperate in connection with issuing press releases or promotional or marketing material to the public or third parties in connection with the provisions of this Agreement; provided that JP will have the right to issue press releases related to the studies and other commercial activities it conducts, provided, further that neither Party will publish any Confidential Information without the prior written consent of the other Party, which consent will not be unreasonably withheld, delayed, or conditioned. JP shall not refer to either TOCI or TOL in any such releases or materials without the prior written consent of such entity, which will not be unreasonably withheld or delayed.
5 |
5. | OWNERSHIP. |
5.1. Developments . Except as may be limited by the TOL License, the Intellectual Property in all improvements and modifications of the Sublicensed IP developed or acquired by JP, with or without involvement of TOCI, in relation to the Limited Pharmaceutical Business (collectively, “ New IP ”) will be owned by JP, and TOCI hereby assigns and will be automatically deemed to have assigned, to JP any right, title and interest it may have in and to such New IP. JP hereby grants, and will automatically be deemed to grant, to TOCI, a perpetual, royalty free, non-exclusive license to use and exploit such New IP outside of the Limited Pharmaceutical Business. To the extent a TOL License prohibits such ownership of certain New IP, such New IP will be automatically be assigned to either TOCI or TOL as required by the TOL License and deemed part of the Sublicensed IP for purposes of the sublicense granted in Section 2.1.
5.2. Enforcement; Patent Prosecution . JP will be responsible for, at its sole expense and control, using commercially reasonable efforts to: (i) prosecute patents, copyrights, and trademarks for New IP owned by JP; and (ii) protect the New IP from material third party infringement, violation, or misappropriation in connection with the Limited Pharmaceutical Business; provided in each case that TOCI will provide all reasonably necessary cooperation and information in such efforts by JP, and TOCI will join such suit(s) if required for JP to have legal standing in such litigation. Any award solely with regards to any New IP will be distributed entirely to JP.
6. | REPRESENTATIONS AND WARRANTIES. |
6.1. Mutual . Each Party represents and warrants that: (i) it is an entity duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation; (ii) it has all requisite power and authority to enter into this Agreement and consummate the transactions contemplated herein; and (iii) the execution, delivery, and performance of this Agreement does not and will not conflict with any violation of applicable law or of any other agreements with a third party.
6.2. TOCI . TOCI represents and warrants that: (i) it is the lawful licensee of the Sublicensed IP and, has sufficient authority to grant JP the sublicenses granted under this Agreement; (ii) that the execution, delivery, and performance by it of this Sublicense Agreement does not require the approval of any governmental authority nor the application for or filing of or for any license, permit, approval, waiver, no-action, or similar permission from any governmental authority; (iii) it has not entered into any additional sublicenses or other arrangements that may limit its rights or the rights of JP under this Agreement or which may reasonably be expected to lead to a claim of infringement or invalidity regarding any portion of the Sublicensed IP or its use; (iv) it has no knowledge of infringement of, or conflict with, any license or other intellectual property right of any other third-party, and there is no known claim pending, filed or threatened related to infringement, ownership, misappropriation, or invalidity regarding the Sublicensed IP or its use; and (v) it has not granted and will not at any time during the Term grant or permit to exist any sublicense or other contingent or non-contingent right, title or interest under or relating to the Sublicensed IP in connection with the Limited Pharmaceutical Business to any individual or entity, that does or will conflict with or otherwise undermine or impair the exclusive rights of JP hereunder. Notwithstanding the foregoing, TOCI may use or sublicense the Sublicensed IP outside of the Limited Pharmaceutical Business.
6.3. TOL License. TOCI hereby covenants that it will not take any acts, or fail to act, in any way that results in a material modification, limitation, loss, or termination of the rights granted by TOL that are sublicensed hereunder.
6 |
7. | INFRINGEMENT BY THIRD-PARTIES |
7.1 Report of Infringement . With respect to any Sublicensed IP, when information comes to the attention of JP to the effect that any of the licensed rights have been or are threatened to be infringed by a third party, JP shall promptly notify TOCI in writing of any such infringement or threatened infringement of which it has become aware.
7.2 Enforcement . TOCI or TOL, as applicable, will take, at its own expense, any action it deems advisable in good faith to protect the Sublicensed IP. In the event of an infringement or threatened infringement by a third party of the Sublicensed IP, TOCI or TOL, as applicable, shall have the exclusive option to direct and control the litigation and any settlement thereof. JP shall cooperate at its own expense with TOCI in protecting and defending the Sublicensed IP. In the event that neither TOCI nor TOL prosecutes such alleged infringement or violation of the Sublicensed IP, JP shall have the right, but not the obligation, to enforce such Sublicensed IP at its own expense. TOCI hereby agrees, on their own behalf and on behalf of TOL, to join in such suit if required for proper standing. If JP has brought such an action, any award will be distributed entirely to JP.
8. | INDEMNIFICATION. |
8.1 By TOCI. TOCI will indemnify, defend, and hold harmless JP, and its officers, directors, members, managers, and employees from any losses, liabilities, damages, penalties, awards, settlements, costs, and expenses, including reasonable attorneys’ fees, (collectively, “ Losses ”) incurred in relation to a third-party claim arising out of any: (i) gross negligence, willful misconduct, or violation of applicable law by the indemnifying Party; (ii) personal injury, death, or loss of or damage to property caused by the indemnifying Party; (iii) breach of any representations and warranties by the indemnifying Party in Section 6; or (iv) any modification or termination of the applicable TOL License which may materially affect JP’s rights under this Agreement, unless JP has given prior written consent to such modification or termination, which will not be unreasonably withheld or delayed.
8.2 By JP . JP will indemnify, defend, and hold harmless TOCI and its officers, directors, members, managers, and employees, from any Losses incurred in relation to a third-party claim arising out of any: (i) gross negligence, willful misconduct, or violation of applicable law by JP or the JP Contractors; (ii) personal injury, death, or loss of or damage to property caused by JP or the JP Contractors; or (iii) breach of any representations and warranties by JP in Section 6. JP will indemnify, defend, and hold harmless TOCI and its officers, directors, members, managers, and employees from any Losses incurred in relation to any claim by TOL against TOCI arising out of the TOL License related to activities of JP or the JP Contractors with regards to the Limited Pharmaceutical Business. JP’s obligations under this Section 8.2 will not apply to the extent a claim is related to TOCI’s breach of, or actions beyond the scope of, the TOL License or this Agreement.
8.3 Procedures . The Party entitled to indemnification for a claim hereunder (the “ Indemnified Party ”) will promptly give written notice to the other Party (the “ Indemnifying Party ”) of such claim, provided that a delay will not affect the Indemnifying Party’s obligations except to the extent such delay is materially prejudicial to it. The Indemnified Party will give the Indemnifying Party full control of the defense upon request, and will provide all cooperation and information reasonable requested by the Indemnifying Party in relation to the defense. The Indemnifying Party will not, without the Indemnified Party’s prior written consent, enter into any settlement that imposes any non-monetary obligations or liability on the Indemnified Party.
7 |
9. | LIMITATION OF LIABILITY. |
EXCEPT FOR A PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 8 OR FOR ANY MODIFICATION OR TERMINATION OF A TOL LICENSE THAT MAY MATERIALLY AFFECT JP’S RIGHTS UNDER THIS AGREEMENT WITHOUT THE ADVANCE WRITTEN CONSENT OF JP, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY SHALL BE LIABLE TO THE OTHER FOR ANY PUNITIVE, EXEMPLARY OR AGGRAVATED, OR ANY INDIRECT OR CONSEQUENTIAL DAMAGES, IN CONNECTION WITH A BREACH OF THIS AGREEMENT.
10. | GENERAL. |
10.1 Bankruptcy . The licenses and sublicenses granted to JP hereunder for the Limited Pharmaceutical Business are, for purposes of section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property,” as that term is defined in section 101 of the Bankruptcy Code. Nothing in this agreement limits JP’s rights under section 365(n), and JP is not making an election under section 365(n) hereunder.
10.2 Cooperation . The Parties agree to reasonably cooperate with and assist each other in connection with the sublicense granted under this Agreement and the development and success of commercializing the Sublicensed IP in connection with the Limited Pharmaceutical Business, including in executing documents and joining in any litigation as needed to ensure proper standing for such litigation.
10.3 Notices . Any notices sent hereunder will be sent by e-mail and internationally-recognized overnight or two (2) day courier to the following addresses, which may be updated at any time upon ten (10) calendar days’ prior written notice to the other Party:
If to TOCI : | Tikun Olam IP Ltd. |
c/o Trident Trust Company (Cayman) Ltd.
P.O. Box 847, Grand Cayman, KY1-1103
Cayman Islands
Attention: Mirae Connor
Fax: + 1 (345) 949 0881
Email: mconnor@tridenttrust.com and
IR@tikunolam.com
with copies to: | Leason Ellis LLP |
One Barker Avenue, Fifth Floor
White Plains, New York 10601
Attention: Peter S. Sloane, Esq.
Email: sloane@leasonellis.com
and copies to: | bernie@tikunolam.com and stephen@tikunolam.com |
If to JP : | Jay Pharma, Inc |
181 Bay Street, Suite 4400
Brookfield Place
Toronto, ON M5J 2T3
Email: Jeff.Wolfson@haynesboone.com
All notices hereunder may be given by any other means, but shall not be deemed to have been duly given unless and until it is actually received by the intended recipient.
8 |
10.4 Governing Law . THIS AGREEMENT, AND ANY DISPUTE RELATED TO OR ARISING THEREFROM, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF NEW YORK.
10.5 Dispute Resolution . In the event of any dispute, claim, question, or disagreement (“ Dispute ”) arising from or relating to this Agreement or the breach thereof, the Parties hereto shall use their best efforts to settle the dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to all Parties. All Disputes not resolved within fifteen (15) days by good faith negotiation shall be finally settled by arbitration administered by the American Arbitration Association, in New York, New York, in accordance with the provisions of that organization’s Commercial Arbitration Rules. The dispute shall be heard and determined by a panel of three (3) arbitrators, unless otherwise agreed by the Parties. In such case, each Party shall each select one (1) arbitrator. The arbitrator selected by the claimant and the arbitrator selected by respondent shall, within ten (10) days of their appointment, select a third neutral arbitrator. In the event that they are unable to do so, or if for any reason the three (3) arbitrators are not timely empanelled, the Parties, or either of them, or their attorneys, may request that the American Arbitration Association appoint the third or any other necessary arbitrator. Prior to the commencement of hearings, each of the arbitrators appointed shall provide an oath or undertaking of impartiality. The United States Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant hereto. Notwithstanding any provision hereof, any applicable law or public policy considerations, including without limitation any possible illegality or unenforceability of this Agreement or any portion hereof due to the subject matter hereof, the arbitrators shall interpret this Agreement giving full effect to the terms and provisions hereof. All charges of the American Arbitration Association or any mediator shall be borne equally by the Parties, and each Party hereby agrees to pay all such charges promptly upon request therefor, and if any Party shall fail to do so, the other Party shall be permitted to apply towards such charges any amounts otherwise due to the non-paying Party. The Parties to the arbitration proceeding shall bear their own respective expenses incurred in connection therewith, including, but not limited to, legal fees and expenses.
10.6 Waiver . The waiver by any Party of any breach of covenant wall not be construed to be a waiver of any succeeding breach or any other covenant. All waivers must be in writing, and signed by the Party waiving its rights. This Agreement may be modified only by a written instrument executed by authorized representatives of the Parties sought to be bound.
10.7 Assignment . Neither Party may assign or transfer this Agreement, in whole or in part, without the prior written consent of the other Party, which consent will not be unreasonably withheld or delayed. Any purported assignment or transfer in violation of this section will be null and void. This Agreement will inure to the benefit of, and be binding upon the Parties, together with their respective legal representatives, successors, and assigns, as permitted herein.
10.8 No Third-Party Beneficiaries . Nothing in this Agreement confers any rights or remedies upon any third party.
10.9 Severability . If any provision of this Agreement is held to be invalid, void, unenforceable, or unconstitutional by a court of competent jurisdiction, the remaining provisions shall continue in full force without being impaired or invalidated.
9 |
10.10 Entire Agreement . This Agreement and the attached Schedule constitutes the entire agreement between the Parties with respect to the subject matter herein, and supersedes all prior agreements, proposals, negotiations, representations or communications relating to such subject matter. The Parties acknowledge that they have not been induced to enter into this Agreement by any representations or promises not specifically stated herein.
10.11 Execution; Counterparts . This Agreement may be executed in counterparts, including electronic counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. The headings of the various sections of this Agreement have been inserted for reference only and shall not be deemed to be a part of this Agreement.
The Parties hereby execute this Agreement as of the Effective Date.
JAY PHARMA, INC. | TIKUN OLAM IP LTD. | |||
By: TO Pharmaceuticals LLC, its manager | ||||
By: To Holding Group LLC, its manager | ||||
By: TO Global LLC, its manager | ||||
By: | /s/ Yaron Conforti | By: | /s/ Bernard Sucher | |
Name: | Yaron Conforti | Name: | Bernard Sucher | |
Title: | Director | Title: | Chief Executive Officer |
10 |
Exhibit 10.14
MASTER INTERCOMPANY SERVICES AGREEMENT
This MASTER INTERCOMPANY SERVICES AGREEMENT (this “ Agreement ”) is made and entered into as of January 1, 2018, by and among certain subsidiaries of T.O. GLOBAL LLC, a New York Limited Liability Company (“ Parent ”) providing services (as set forth in Schedule B hereto, collectively, the “ Service Providers ”) and certain subsidiaries of Parent receiving such services (as set forth in Schedule B hereto, collectively, the “ Service Recipients ”).
WITNESSETH :
WHEREAS the Service Providers desire and are willing to provide, or cause to be provided, to the Service Recipients, certain services as set forth herein and in the Schedules hereto during the periods set forth herein and in the Schedules hereto;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
TERMS AND CONDITIONS
1. | Agreement to Provide Services . |
1.1. Agreement . Upon the terms and subject to the conditions contained herein and in the Schedules attached hereto (each, as it may be amended from time to time, a “ Schedule ”), the Service Providers hereby agree to provide, or cause their affiliates to provide, to the Service Recipients the services (as set forth in Schedule A, the “ Services ”) listed in the Schedules. Each of the Services shall be provided and accepted in accordance with the terms, limitations and conditions set forth herein and in the Schedules.
1.2. Scope of Services . The parties agree that upon the terms and subject to the conditions contained herein, additional or new services which are not currently contemplated in this Agreement may be added to the Schedules from time to time. Any new or additional services undertaken by the Service Providers to the Service Recipients shall be provided for a fee that includes the cost plus applicable operating margin (as may be determined from time to time) as more fully described in Section 2 , and any such transactions shall be conducted on an arm’s-length basis.
1.3. Review of Services . The parties agree that: (i) the scope, frequency and manner of delivery of the Services detailed herein are subject to periodic review by the parties; (ii) changes to any of the Services (including the addition or deletion of services) may be made at any time if agreed to by the parties; and (iii) this Agreement may be amended from time to time according to the terms set out in herein.
1.4. | Right to Deliver and Request Instructions . |
a. | Each Service Recipient, acting through any of its authorized officers, may from time to time deliver to a Service Provider instructions with respect to matters arising under this Agreement, and the Service Provider shall follow such instructions provided they are consistent with the terms and conditions of this Agreement. |
b. | At any time, any Service Provider may, if it reasonably deems it necessary or appropriate, request instructions from a Service Recipient, within a reasonable period prior to the time necessary for taking action with respect to any matter contemplated by this Agreement, and may defer action thereon pending receipt of such instructions. Any action taken by a Service Provider, its officers, directors, employees, agents or representatives in accordance with the instructions of a Service Recipient, or failure to act by a Service Provider pending the receipt of such instructions after request therefor, shall be deemed to be proper conduct within the scope of service authority under this Agreement. |
1 |
1.5. Service Designees . Each Service Provider may perform the services to be provided hereunder through its own officers and employees, or through agents, independent contractors or other parties designated by it; provided, however, that each Service Provider will remain liable hereunder as if it has performed such services directly.
2. | Cost Sharing . |
2.1. Each Service Recipient agrees to bear and to pay its share of the Net Costs as defined in Section 2.2 below and, as contemplated by this Agreement, make payment arrangements with the Service Provider on an arm’s length basis for all activities covered by this Agreement for each calendar month.
2.2. The Parent or its designee shall compute the costs that it incurs in connection with providing Services under this Agreement (its “ Net Costs ”) in accordance with the following formula: Net Costs = Direct Costs + Indirect Costs
“ Direct Costs ” means the sum of all external and all internal direct costs incurred by a Service Provider and directly attributable to a particular Service provided to a particular Service Recipient.
“ Indirect Costs ” means all external and all internal indirect costs incurred by the Service Provider in providing the Services to the Service Recipients, which cannot be directly attributed to a particular Service provided to a particular Service Recipient, including but not limited to salaries and bonuses, wages for permanent and temporary employees, expatriate costs (where applicable), facilities charges (including office rent, depreciation, maintenance, utilities and supplies), travel costs, pension benefits, insurance benefits, depreciation of fixed assets and all expenses to third parties incurred in connection with the Services, excluding value added tax, withholding taxes and/or similar levies, which shall be paid by the respective Service Provider, if legally required.
3. Reporting; Timing of Payments . Each Service Provider shall submit a statement to each applicable Service Recipient no later than twenty (20) calendar days after the end of each calendar [month/quarter/half] (unless otherwise agreed to by the parties), with respect to the amount of Net Costs payable by such Service Recipient for such month (a “ Statement ”). Such Statement shall set forth in reasonable detail: (i) the Direct Costs incurred in providing each Service to such Service Recipient and (ii) the Indirect Costs incurred in providing each Service to such Service Recipient. Unless any such Service Recipient disagrees as to the amounts payable as set forth in the Statement, all Statements shall be settled not later than forty-five (45) calendar days following receipt by the Service Recipient from the Service Provider of such Statement relating to the Services provided. In the event of any disagreement between the Service Providers and the Service Recipients with respect to any Statement or any amounts owed thereunder, the parties hereto agree to negotiate in good faith to resolve such dispute.
4. Standards for Performance of Service . Each Service Provider shall perform its obligations hereunder in a prudent and efficient manner and in accordance with applicable law and good industry practice.
5. | Access to Employees and Information . |
5.1. Access . At the request of any Service Recipient, each Service Provider shall, and shall cause its affiliates to, use its reasonable best efforts to provide for consultation with the Service Recipient, shortly after such request, its employees providing Services hereunder. At the request of any Service Recipient, each Service Provider shall, and shall cause its affiliates to, make available information relating to such Service Provider’s business.
2 |
5.2. Inspection . Each Service Provider hereby agrees that, upon reasonable notice from any Service Recipient, it shall make its books and records with respect to Services and payment therefor available to the Service Recipient and its representatives for inspection during normal business hours at such Service Provider’s principal place of business.
6. Force Majeure . No party shall be liable for any failure of performance attributable to acts, events or causes (including, but not limited to, war, riot, rebellion, civil disturbances, power failures, failure of telephone lines and equipment, flood, storm, fire and earthquake or other acts of God or conditions or events of nature, or any law, order, proclamation, regulation, ordinance, demand or requirement of any governmental authority) beyond its control that prevent in whole or in part performance by such party hereunder. The affected provisions and/or other requirements of this Agreement shall be suspended during the period of such disability and no Service Provider shall have any liability to any Service Recipient or any other party in connection therewith other than by reason of breach or nonfulfillment of its covenants in this Section 6 . The Service Providers shall make all reasonable efforts to remove such disability as soon as and to the extent reasonably possible and to assist the Service Recipients in finding third parties to provide affected Services during the period of such disability.
7. Indemnification . The Service Recipients shall indemnify, defend and hold harmless the Service Providers, their affiliates, their officers, directors, employees, agents and representatives from and against any and all losses, liabilities, claims, damages, actions, fines, penalties, expenses or costs (including court costs and reasonable attorneys’ fees) (“ Losses ”) suffered or incurred by any such Person arising from or in connection with any Service Providers’ performance or non-performance of any covenant, agreement or obligation of the Service Provider hereunder, other than by reason of the Service Providers’ or any of their affiliates’ gross negligence, willful misconduct or bad faith. This Section 7 shall survive any termination or expiration of this Agreement.
8. New Service Providers and Service Recipients . Additional subsidiaries of Parent may become Service Providers or Service Recipients, as the case may be, under this Agreement. The Parent shall then sign an entry or similar agreement with such subsidiary.
9. | Term and Termination . |
9.1. Term of Services . The term of this Agreement shall be one (1) year beginning from the date of completion of the transactions contemplated by the Purchase Agreements, provided that such term shall renew automatically for successive terms of one (1) year unless the Parent provides written notice to the other parties hereto that this Agreement shall not be renewed at least fifteen (15) days prior to the expiration of any one (1) year term.
9.2. Termination by Parent . The Parent may terminate this Agreement, or any part of this Agreement, at any time upon sixty (60) days prior written notice to the parties hereto.
9.3. Termination by Other Parties . Each of the Service Providers and Service Recipients may terminate its interest in this Agreement for a subsequent calendar year by providing written notice to the Parent not less than sixty (60) days prior to the end of any calendar year. The dismissal of a single Service Provider or Service Recipient will not affect the validity of the Agreement as a whole.
9.5. Termination on Material Breach . This Agreement shall terminate with respect to any party hereto that breaches its obligations herein if such breach remains uncured for thirty (30) days after such party receives written notice of the breach from the Parent.
3 |
9.6. Automatic Termination . This Agreement shall terminate automatically, without any notice or other action whatsoever on the part of any party hereto, as to any party and such party’s subsidiaries that (i) becomes the subject of any voluntary petition in bankruptcy or other voluntary proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors; (ii) becomes the subject of an involuntary petition in bankruptcy or any other involuntary proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors, if such petition or proceeding is not dismissed within thirty (30) days of the filing or initiation thereof; (iii) is in default under any agreement or indenture governing indebtedness of such party.
10. | General Provisions . |
10.1. Assignment; Successors and Assigns . Except as set forth below, this Agreement and the rights and obligations hereunder shall not be assigned or transferred in whole or in part by any party hereto without the written consent of the Parent. Any attempted assignment or delegation in contravention hereof shall be null and void. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto.
10.2. No Third-Party Beneficiaries . Except for Persons entitled to indemnification under Section 7 hereof, this Agreement is for the sole benefit of the parties hereto, and nothing herein expressed or implied shall give or be construed to give to any Person or entity, other than the parties hereto, any legal or equitable rights hereunder.
10.3. Remedies . Except as otherwise expressly provided herein, none of the remedies set forth in this Agreement is intended to be exclusive, and each party shall have all other remedies now or hereafter existing at law or in equity or by statute or otherwise, and the election of any one or more remedies shall not constitute a waiver of the right to pursue other available remedies. Nothing contained herein shall be deemed to be a limitation on any remedies that otherwise may exist or be available to any party under the Purchase Agreements or any other related agreement.
10.4. Interpretation; Definitions . The headings contained in this Agreement or in any Schedule hereto are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. When a reference is made in this Agreement to Articles, Sections or Schedules, such reference shall be to an Article or Section of or Schedule to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the first paragraph of this Agreement. The words “hereof,” “hereby,” “herein,” “hereunder” and similar terms in this Agreement shall refer to this Agreement as a whole (including the Schedules) and not to any particular Section in which such words appear. All references herein to dollar amounts shall be deemed to be references to U.S. Dollars.
10.5. Amendments . The parties hereto will periodically review this Agreement as to the reasonableness of its terms and, in any case, not later than three (3) months after the end of Parent’s accounting year. Such review may be evidenced by documentation reasonably acceptable to the Parent. No amendment to this Agreement shall be effective unless it shall be in writing and signed by Parent and each party to be bound by the proposed amendment, provided that any Schedule hereto may be amended by the Parent provided that the Parent provides written notice to each party to be bound by the proposed amendment and that no such notified party objects in writing to such amendment within seven (7) calendar days of receipt of notice thereof.
10.6. Cooperation . The Service Recipients will provide all information that the Service Providers reasonably request for performance of services pursuant hereto, and the Service Recipients will cooperate with any reasonable request of the Service Providers in connection with the performance of services pursuant hereto.
4 |
10.7. Counterparts . This Agreement and any amendments hereto may be executed by facsimile and in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other party.
10.8. Severability . If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
10.9. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the choice of law principles of such State.
10.10. Waiver . Except as otherwise provided in this Agreement, any failure of any of the parties hereto to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Any consent given by any party pursuant to this Agreement shall be valid only if contained in a written consent signed by such party.
10.11. Notices . All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by telecopy, or by postage prepaid, registered, certified or express mail or by reputable overnight courier service and shall be deemed given when delivered by hand or upon receipt of telecopy confirmation if sent by facsimile, three days after mailing (one (1) Business Day in the case of guaranteed overnight express mail or guaranteed overnight courier service), at the address for the entity receiving such notice that is kept by and may be requested from the Parent, which Parent shall keep an accurate and current record of the addresses of all entities party hereto. Any party hereto may change its address in the records of the Parent by providing written instructions to the Parent specifying the new address of such entity. The address of the Parent is: 77 Water Street, 8 th Fl, New York, NY 10005.
10.12. Authority . None of the parties hereto shall act or represent or hold itself out as having authority to act as an agent or partner of the other party, or in any way bind or commit the other party to any obligations. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture, agency, trust or other association of any kind, each party being individually responsible only for its obligations as set forth in this Agreement.
10.13. Schedules . All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.
10.14. Entire Agreement . This Agreement (including the Schedules hereto) contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, relating to such subject matter.
[Signature Page Follows ]
5 |
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above mentioned.
T.O. GLOBAL LLC
By: | /s/ Bernard Sucher | |
Bernard Sucher, CEO |
TO HOLDINGS GROUP LLC
BY: T.O. GLOBAL LLC, MANAGER
By: | /s/ Bernard Sucher | |
Bernard Sucher, CEO |
FOR AND ON BEHALF OF
TIKUN OLAM LLC (and each of its Subsidiaries indicated on Schedule B)
TO HOLDINGS GROUP LLC
BY: T.O. GLOBAL LLC, MANAGER
By: | /s/ Bernard Sucher | |
Bernard Sucher, CEO |
FOR AND ON BEHALF OF
TO PHARMACEUTICALS LLC (and each of its Subsidiaries indicated on Schedule B)
TO HOLDINGS GROUP LLC
BY: T.O. GLOBAL LLC, MANAGER
By: | /s/ Bernard Sucher | |
Bernard Sucher, CEO |
ISRAEL LIAISON HOLDING GROUP LTD
By: | /s/ Peretz Charach | |
Name: | ||
Title: |
6 |
Exhibit 10.15
TO Pharmaceuticals LLC
77 Water Street, Suite 821
New York, New York 10005
September 26, 2018
T.O. Global LLC
77 Water Street, Suite 821
New York, New York 10005
Re: Acknowledgement of $1,036,256.12 owed by TO Pharmaceuticals LLC, a Delaware limited liability company (“TOP”), to T.O. Global LLC, a New York limited liability company (the “Company”, together with TOP, each a “Party” and collectively known as the “Parties), pursuant to that certain Master Intercompany Services Agreement, dated as of January 1, 2018 (the “MICS Agreement”)
Gentlemen:
This letter agreement (this “Letter Agreement”) sets forth the agreement between the Parties with respect to certain matters set forth herein. In consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Acknowledgment of Advancement . Each Party hereby acknowledges and agrees that as of the date hereof, TOP owes the Company an amount equal to $1,036,256.12 in connection with certain services performed and funding provided by the Company from time to time for the benefit of TOP and its subsidiaries (the “Debt”), pursuant to the terms and conditions of the MICS Agreement. A Statement (as defined in the MICS Agreement) is attached hereto as Exhibit A. The Parties hereby acknowledge and agree that the delivery of such Statement shall be sufficient to satisfy the terms and conditions of Section 3 of the MICS Agreement.
2. Conversion of Debt . The Parties hereby acknowledge and agree that, at the sole option of the Company, the Debt may be converted into Class A Units of TOP (“Conversion Units”), in an amount equal to up to six percent (6%) of the aggregate issued and outstanding membership interests of TOP, at a rate of 0.05790074% per $10,000 of Debt so converted, such amount to be calculated on a fully diluted basis as of the date of conversion.
3. Issuance of Conversion Units . As promptly as practicable after the conversion of the Debt, each of TOP and the Company shall execute a joinder to the Amended and Restated Operating Agreement of TOP, substantially in the form attached hereto as Exhibit B (the “Operating Agreement”). Upon TOP’s receipt of the executed joinder to the Operating Agreement, the Company shall be bound by, and subject to, all of the terms and provisions of the Operating Agreement.
4. Consent and Other Instruments . Each Party hereby represents and warrants that such Party irrevocably and unconditionally (a) consents to the transactions referred to herein, and (b) shall, without further consideration, execute and deliver to the other such other instruments as may be necessary and shall take such corporate or other action as the other may reasonably request to carry out the transactions referred to hereinabove and contemplated herein and otherwise effectuate the terms and provisions of this Agreement.
5. Binding . This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. No assignment shall relieve the assigning party of any of its obligations hereunder.
Please confirm your agreement with the foregoing by executing below.
Very truly yours,
TO PHARMACEUTICALS LLC
By: | /s/ Bernard sucher | |
Name: Bernard sucher | ||
Title: Manager |
Acknowledged and agreed to by:
T.O. GLOBAL LLC
By: | /s/ Bernard sucher | |
Name: Bernard sucher | ||
Title: Chief Executive |
2 |
Exhibit 10.16
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of March 9, 2016 is by and between TO Pharmaceuticals LLC, a Delaware limited liability company (the “Company”) and Sidney Taubenfeld, an individual residing at 247 West 87th Street, Apt. 7G, New York, New York 10024 (the “Employee”).
WITNESSETH:
WHEREAS , the Company, together with its subsidiaries, owns the exclusive licenses to exploit Tikun Olam Ltd.’s intellectual property, including without limitation its proprietary cannabis genetics in connection with pharmaceuticals worldwide (the “Business”);
WHEREAS , the Company desires to hire Employee to serve as the executive vice president of the Company, and Employee desires to become employed as the executive vice president of the Company, by the Company, all on the terms and conditions set forth below.
NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Retention of Services; Term . The Company hereby retains the services of Employee, and Employee agrees to furnish such services, upon the terms and conditions hereinafter set forth. Subject to earlier termination on the terms and conditions hereinafter provided, and further subject to certain provisions hereof which survive the term of the employment of Employee by the Company, the term of this Agreement shall commence on the date hereof (the “Commencement Date”) and continue for a period of two (2) years thereafter (the “Initial Term”); provided , however , unless otherwise terminated by either party hereto upon prior written notice to the other party not later than sixty (60) days prior to the expiration of the then-current term of this Agreement, this Agreement shall continue by its terms for an additional one (1) year term (each, a “Renewal Term” and, together with the Initial Term, the “Term”).
2. Duties and Extent of Services During Period of Employment . During the Term of employment, Employee shall: (a) be employed by the Company as Executive Vice President or in such other position or positions as the Board of Directors of the Company (the “Board”) shall determine; (b) manage the Company’s Business and perform such duties and services as are commensurate with Employee’s position or as may be otherwise directed by the Board; (c) devote his full time business efforts to serve the Company; (d) perform all duties incident to Employee’s position to the best of Employee’s ability and in compliance with the policies and procedures of the Company; (e) report directly to the Chief Executive Officer of the Company or such other officer of the Company as may be determined by the Board; and (f) perform Employee’s responsibilities and duties hereunder at the office of the Company located in New York metropolitan area (or wherever the Board may determine), subject, however, to the travel requirements of Employee’s position, as shall be determined from time to time by the Company.
3. Remuneration . During the Term, the Company shall pay to Employee as compensation for Employee’s services hereunder:
(a) Base salary at a rate of one hundred sixty eight thousand dollars ($168,000.00) annually, commencing on the Commencement Date, payable in a manner consistent with the Company’s payroll practices.
(b) The Company shall issue to Employee a warrant to purchase 500 units of membership interests of the Company (the “Units”), in the form attached hereto as Exhibit A .
(c) The Company hereby represents that as of the date hereof it has 9,500 Units issued and outstanding.
(d) The Units shall be subject to the terms and provisions of that certain Unit Repurchase Agreement of even date herewith, in the form attached hereto as Exhibit B .
4. Employee Benefits; Expenses .
(a) During the Term of this Agreement, the Company may, in its sole discretion, provide Employee the right to participate in the Company’s then existing medical and dental insurance and other employee benefit plans and policies on the same terms as are then generally available to the Company’s executive and managerial employees.
(b) The Company shall reimburse Employee, in accordance with the practice followed from time to time for other officers of the Company, for all reasonable and necessary business and traveling expenses, and other disbursements incurred by Employee for or on behalf of the Company in the performance of Employee’s duties hereunder, upon presentation by Employee to the Company of an appropriate accounting or documentation of such.
5. Disability . This Agreement may be terminated at the option of the Company if, as a result of any physical or mental disability, Employee is unable to perform substantially all of Employee’s major duties hereunder for a continuous period of four months or at least ninety (90) days in any consecutive period of one hundred eighty (180) days. Employee shall continue to receive Employee’s full salary plus bonus payments, if any, payable to Employee under Section 3 hereof regardless of any illness or incapacity, unless and until this Agreement is terminated. If Employee’s employment is terminated pursuant to this Section 5, Employee (or Employee’s personal representative, in the case of Employee’s death) shall be entitled to receive Employee’s full salary through the effective date of termination.
6. Confidential Information; Proprietary Rights .
(a) In the course of Employee's employment by the Company, Employee will have access to and possession of valuable and important confidential or proprietary data or information of the Company and/or persons or entities (each, an “Affiliate”) controlling, controlled by or under common control of the Company and their respective operations. Employee will not, during Employee's employment by the Company or at any time thereafter, divulge or communicate to any person, nor shall Employee direct any other employee, representative or agent of the Company or any of its Affiliates to divulge or communicate to any person or entity (other than to a person or entity bound by confidentiality obligations similar to those contained herein and other than as necessary in performing Employee’s duties hereunder) or use to the detriment of the Company, or any of its Affiliates or for the benefit of any other person or entity, including, without limitation, any competitor, supplier, licensor, licensee or customer of the Company, any of its Affiliates, any of such confidential or proprietary data or information or make or remove any copies thereof, whether or not marked or otherwise identified as “confidential” or “secret.” Employee shall take all reasonable precautions in handling the confidential or proprietary data or information within the Company to a strict need-to-know basis and shall comply with any and all security systems and measures adopted from time to time by the Company to protect the confidentiality of confidential or proprietary data or information.
(b) The term "confidential or proprietary data or information" as used in this Agreement shall mean information not generally available to the public, including, without limitation, all customer information, database information, personnel information, financial information, account lists or other account information, names, telephone numbers or addresses, supplier or vendor lists, trade secrets, patented or other proprietary information, forms, information regarding operations, systems, methods, processes, financing, services, strains, genetics, cultivation techniques or processes, manufacturing, processing, extraction, distribution, storage, transportation, know how, computer and any other processed or collated data, computer programs, pricing, marketing and advertising data.
2 |
(c) Employee will at all times promptly disclose to the Company in such form and manner as the Company may reasonably require, any inventions, improvements or procedural or methodological innovations, including, without limitation, those relating to programs, methods, forms, systems, services, designs, marketing ideas, products or processes (whether or not capable of being trademarked, copyrighted or patented) conceived or developed or created by Employee during or in connection with Employee’s employment with the Company and which in any way relate to the Business of the Company (the "Intellectual Property"). Employee agrees that all such Intellectual Property shall be the sole property of the Company and shall be "work made for hire" as defined in 17 U.S.C. § 101. Employee hereby assigns all of Employee’s right, title and interest to the Intellectual Property to the Company. Employee further agrees that Employee, without charge, will execute such instruments and perform such acts as may reasonably be requested by the Company to transfer to and perfect in the Company all legally protectable rights in such Intellectual Property. To the extent any moral rights or other Intellectual Property rights are not legally transferable to the Company, Employee hereby waives and agrees to never assert any such rights against the Company or any of its Affiliates, even after termination of employment with the Company.
(d) All written materials, books, records and documents made by Employee or coming into Employee’s possession during Employee’s employment by the Company concerning any products, processes or systems used, developed, investigated, purchased, sold or considered by the Company or any of its Affiliates or otherwise concerning the Business or affairs of the Company or any of its Affiliates, including, without limitation, any files, customer records such as names, telephone numbers, addresses and e-mail addresses, lists, firm records, brochures and literature, shall be the sole property of the Company, shall not be removed from the Company’s premises or transmitted to third parties by Employee, and upon termination of Employee’s employment by the Company, or upon request of the Company during Employee’s employment by the Company, Employee shall promptly deliver the same to the Company. In addition, upon termination of Employee’s employment by the Company, Employee will deliver to the Company all other Company property in Employee’s possession or under Employee’s control, including, but not limited to, financial statements, marketing and sales data, customer and supplier lists and information, account lists and other account information, database information, plans, designs and other documents, and Employee shall not retain any electronically stored versions of the same.
(e) During the Term of this Agreement, Employee shall comply in all respects with all applicable federal and state securities laws, including without limitation with respect to insider trading, and all policies and codes of conduct or ethics of the Company and its Affiliates with respect thereto.
7. Non-Competition .
(a) During the Term of this Agreement and one (1) year thereafter (except in the event that Employee’s employment hereunder is terminated without “cause”) (the "Restricted Period"), Employee shall not, without the written consent of the Company, directly or indirectly, (i) become associated with, render services to, invest in, represent, advise or otherwise participate in as an officer, employee, director, stockholder, partner, member, promoter, agent of, consultant for or otherwise, any business which is conducted anyone in world and which is competitive with the Business conducted by the Company; or (ii) for Employee’s own account or for the account of any other person or entity (A) interfere with the Company’s relationship with any of its suppliers, customers, accounts, brokers, representatives or agents or (B) solicit or transact any business with any customer, account or supplier of the Company who or which transacts, has transacted or proposes to transact business with the Company at any time during the Term of this Agreement; or (iii) employ or otherwise engage, or solicit, entice or induce on behalf of Employee or any other person or entity, the services, retention or employment of any person who has been an employee, principal, partner, stockholder, sales representative, trainee, consultant to or agent of the Company within one year of the date of such offer or solicitation. Notwithstanding any provisions in this Section 7, (1) this Section 7 shall not prohibit Employee from purchasing or owning up to five percent (5%) of the outstanding capital stock of a company which has a class of securities registered under Section 12 of the Securities Act of 1934, as amended and (2) to the extent not inconsistent with Employee’s obligations under this Agreement, Employee may engage in charitable or civic activities and make passive investments which are non-competitive and non-conflicting with the Company’s Business.
3 |
(b) If any one or more of the restrictions contained in this Section 7 shall for any reason be held to be unreasonable with regard to time, duration, geographic scope or activity, the parties contemplate and hereby agree that such restriction shall be modified and shall be enforced to the full extent compatible with applicable law. The parties hereto intend that the covenants contained in this Section 7 shall be deemed a series of separate covenants for each country, state, county and city. If, in any judicial proceeding, a court shall refuse to enforce all the separate covenants deemed included in this Section 7 because, taken together, they cover too extensive a geographic area, the parties intend that those of such covenants (taken in order of the cities, counties, states and countries therein which are least populous) which if eliminated would permit the remaining separate covenants to be enforced in such proceeding shall, for the purpose of such proceeding, be deemed eliminated from the provisions of this Section 7.
8. Remedies . Employee acknowledges that the covenants contained in Sections 6 and 7 are fair and reasonable in order to protect the Company’s Business and were a material and necessary inducement for the Company to agree to the terms of this Agreement and to the employment of Employee by the Company. Employee further acknowledges that any remedy at law for any breach or threatened or attempted breach of the covenants contained in Sections 6 and 7 may be inadequate and that the violation of any of the covenants contained in Sections 6 and 7 will cause irreparable and continuing damage to the Company. Accordingly, the Company shall be entitled to specific performance or any other mode of injunctive and/or other equitable relief to enforce its rights hereunder, including, without limitation, an order restraining any further violation of such covenants, or any other relief a court might award, without the necessity of showing any actual damage or irreparable harm or the posting of any bond or furnishing of other security, and that such injunctive relief shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. The covenants in Sections 6 and 7 shall run in favor of the Company and its Affiliates, successors and assigns. The provisions of Sections 6 and 7 and this Section 8 shall survive the termination of this Agreement.
9. Termination .
(a) The Company may terminate Employee’s services hereunder "for cause" by delivering to Employee not less than ten (10) days prior to the date on which the termination is to be effective, a written notice of termination for cause specifying the act, acts or failure to act that constitute the cause. For the purposes of this agreement, “for cause” shall mean: (i) any act of material fraud or embezzlement adversely affecting the financial, market, reputation or other interests of the Company, (ii) in the event of a conviction of or plea of guilty or nolo contendere by Employee for any felony or other serious crime or crime involving moral turpitude, or any knowing violation of any federal or state banking, securities or tax law or regulation, (iii) any refusal to perform or willful misconduct or gross negligence in connection with Employee’s duties hereunder, if such refusal or willful misconduct or gross negligence is not cured within twenty (20) days after written notice thereof, or (iv) any material breach by Employee of this Agreement if such material breach is not cured within twenty (20) days after written notice thereof.
(b) The Company may also terminate Employee’s services: (i) in the event that Employee dies or the Company places Employee on disability status pursuant to Section 5 hereof, or (ii) upon a determination by the Board, in its reasonable discretion, within nine (9) months after the date hereof, that Employee has failed to achieve his performance goals as set forth in Exhibit B hereto within the first six (6) months after the date hereof (the “Threshold Obligation”).
4 |
(c) In the event that (i) the Company terminates Employee’s employment hereunder "for cause" as set forth in Section 9(a), (ii) the Company terminates Employee’s employment pursuant to Section 9(b), or (iii) Employee voluntarily terminates Employee’s employment by the Company, the Company shall pay to Employee any unpaid compensation payable pursuant to Section 3 hereof, which payment (y) shall include all compensation earned up until and including the date on which the termination is effective and (z) shall be made within thirty (30) days after the termination date, and no other compensation shall be payable to Employee.
(d) If the Company terminates Employee’s employment hereunder for any reason other than "for cause" as set forth in Section 9(a) or pursuant to Section 9(b) hereof, the Company shall pay to Employee compensation payable pursuant to Section 3 hereof for the lesser of (y) six (6) months, or (z) the remaining Term of this Agreement. Employee and the Company acknowledge that the foregoing provisions of this Section 9(d) are reasonable and are based upon the facts and circumstances of the parties at the time of entering into this Agreement, and with due regard to future expectations.
10. Representations and Warranties of Employee . Employee hereby represents and warrants to the Company, and acknowledges that such representations and warranties are material inducements to the Company entering into this Agreement, as follows:
(a) Employee has the legal capacity to execute and deliver, and has duly executed and delivered, this Agreement.
(b) Employee is not subject to any restrictive covenant or confidentiality obligations to any former employer or contractor of Employee; and the obligations and duties undertaken by Employee hereunder, will not conflict with, constitute a breach of or otherwise violate the terms of any other agreement to which Employee is a party. Employee is not required to obtain the consent of any person, firm, corporation or other entity in order to enter into and perform Employee’s obligations under this Agreement.
(c) As of the date hereof, Employee does not have any ownership interest in and is not employed by any company or entity (other than the Company) which is engaged in the Business.
(d) to the knowledge of Employee, Employee is not the subject of any grand jury, prosecutorial, legislative, administrative or other investigation or inquiry by any governmental agency or authority.
11. Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:
If to the Company:
TO Pharmaceuticals LLC
One Old Country Road
Carle Place, New York 11514
Newark, Delaware 19713
Fax: (646) 786–4005
Email: barryfarkas1@gmail.com
Attention: Barry Farkas
5 |
With a copy to:
Abrams, Fensterman, Fensterman,
Eisman, Formato, Ferrara & Wolf LLP
1111 Marcus Avenue, Suite 107
Lake Success, New York 11042
Facsimile: (516) 368-6638
Email: nkaufman@abramslaw.com
Attention: Neil Kaufman, Esq.
If to Employee:
Sidney Taubenfeld
247 West 87th Street, Apt. 7G
New York, New York 10024
Email: staub18@yahoo.com
With a copy to:
Michael Schneider, Esq.
11 East 44 th Street – 19 th Fl.
New York, New York 10017
Telephone: (212) 888-2100
Facsimile: (646) 461-1781
Email: michael@mslaw-us.com
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day, or (iv) if sent via electronic mail, upon its delivery, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.
12. Successors and Assigns; Third Party Beneficiaries . This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and unless clearly inapplicable, all references herein to the Company shall be deemed to include any such successor. In addition, this Agreement shall be binding upon and inure to the benefit of Employee and Employee’s heirs, executors, legal representatives and assigns; provided, however, that the obligations of Employee hereunder may not be delegated without the prior written approval of the Company. In the event of any consolidation or merger of the Company into or with any other company during the Term of this Agreement, person or entity during the Term of this Agreement, such successor company shall assume this Agreement and become obligated to perform all of the terms and provisions hereof applicable to the Company, and Employee's obligations hereunder shall continue in favor of such successor company.
13. Acknowledgment . Employee acknowledges that Employee has carefully read this Agreement, has had an opportunity to consult counsel regarding this Agreement.
6 |
14. Waiver of Jury Trial .
EACH PARTY TO THIS AGREEMENT HEREBY UNCONDITIONALLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY RELATED DOCUMENTS, ANY DEALINGS BETWEEN OR AMONG THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.
15. Enforcement . It is the desire and intent of the parties hereto that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, to the extent that a restriction contained in this Agreement is more restrictive than permitted by the laws of any jurisdiction where this Agreement may be subject to review and interpretation, the terms of such restriction, for the purpose only of the operation of such restriction in such jurisdiction, shall be the maximum restriction allowed by the laws of such jurisdiction and such restriction shall be deemed to have been revised accordingly herein.
16. Miscellaneous . This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of New York, without regard to conflicts of laws. The parties hereto hereby irrevocably submit to the exclusive jurisdiction of any New York State or Federal court sitting in Kings County, New York over any suit, action or proceeding arising out of or relating to this Agreement. This Agreement contains the entire agreement of the parties relating to the subject matter hereof and supersedes any other agreements entered into between Employee and the Company prior to the date of this Agreement relating thereto. This Agreement may not be altered, modified, amended or terminated except by a written instrument signed by each of the parties hereto. No term or provision hereof shall be deemed waived and no breach consented to or excused, unless such waiver, consent or excuse shall be in writing and signed by the party claimed to have waived, consented or excused. A consent, waiver or excuse of any breach shall not constitute a consent to, waiver or, or excuse of any other or subsequent breach whether or not of the same kind of the original breach. If any provision of this Agreement shall be held by a court of competent jurisdiction to be contrary to law or public policy, the remaining provisions shall remain in full force and effect. This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one and the same agreement. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
[SIGNATURE PAGE TO FOLLOW]
7 |
IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the day of and year first above written.
COMPANY: |
TO PHARMACUETICALS LLC | ||
B y: TO HOLDING GROUP LLC , Manage r | ||
By: TO INVESTOR LLC , Manager |
By: | /s/ Berel Farkas | |
Name: | Berel Farkas | |
Title: | Authorized Signatory |
EMPLOYEE: |
/s/ Sidney Taubenfeld | ||
Sidney Taubenfeld |
8 |
Exhibit 10.17
TO Pharmaceuticals LLC
77 Water Street, 8 th floor
New York, New York 10005
October 19, 2018
Mr. Seth Yakatan
PO Box 2140
Manhattan Beach, CA 90267
MANAGEMENT CONSULTING AGREEMENT
Dear Seth:
We are very pleased to offer you the position of Interim Chief Executive Officer (“CEO”) of TO Pharmaceuticals LLC, a Delaware limited liability company (the “Company”), effective as of October 1, 2018. This offer of is conditioned on your satisfactory completion of certain requirements, as more fully explained in this letter. Your role as CEO will be subject to the terms and conditions set forth in this letter, which supersede anything said or communicated to you during any discussions or correspondence about your employment with the Company or its affiliates. Your firm, Sutherland Paige and Associates, Inc. D/B/A Katan Associates, International (“Katan”), will be engaged as an consultant and independent contractor to the Company to provide your services on an interim basis until you and the Company enter into a definitive employment agreement (the “Employment Agreement”).
Your position with the Company will be full-time, effective immediately. This will be an exempt executive position. In your capacity as CEO, you will perform duties and responsibilities that are reasonable and consistent with such position, and as may be assigned to you from time to time by the Company’s board of managers (the “Board”) or its designees, in connection with which you will be generally responsible for the Company’s operations and affairs, including without limitation completion of its financial statements, financing activities and the Company’s merger with a public company or other public listing. You agree to devote as much time as is required and best efforts to the performance of your duties and to the furtherance of the Company's interests, and to be subject to the Company’s customary confidentiality and work-for-hire provisions. The Company acknowledges that Katan and Seth Yakatan may be involved in other projects during the term of this agreement and that such efforts may require some of Seth Yakatan’s time and attention, which will not unreasonably interfere with his duties to the Company.
In consideration of your services, Katan will receive a salary of $12,500 per month; provided, that until the Company raises at least $3,000,000 in gross proceeds from one or more financing transactions (the “3M Financing”) after the date hereof (not including any advances to the Company from T.O. Global LLC or any affiliate thereof), the Company will pay Katan at a rate of $5,000 per month in cash billable each month and payable within 15 days of presentation of invoices, and the remaining $7,500 per month will be deferred. The deferred amount shall be payable solely out of the proceeds of the $3M Financing. In addition, the Company will reimburse you or Katan for reasonable business expenses you incur on behalf of the Company, including travel expenses, upon submission of evidence thereof consistent with the Company’s expense reimbursement policy.
1 |
In addition, you will become eligible for participation in the equity of the Company’s successor through a grant of options to purchase common stock of such successor. The exercise price of such options shall be based on a fair market value determined by the equity value of such successor in connection its round of financing (the “Concurrent Financing”) to be raised substantially concurrently with having a class of equity securities (the “Public Stock”) listed for trading on Nasdaq (the “Listing”; and collectively with Concurrent Financing, referred to herein as “Going Public”); however, all options shall be issued with a cashless exercise feature. Your aggregate option grant would be for 3% of the Public Stock, after giving effect to Going Public, subject to vesting as follows:
(a) | One-third upon (i) (A) the Listing, and (B) such successor having raised at least $10,000,000 from the Concurrent Financing; and (ii) you having been employed by the Company for at least six months after Going Public; |
(b) | One-third upon (i) the product of (A) the number of issued and outstanding shares of Public Stock, and (B) the volume weighted average of the closing price of the Public Stock for a period of 20 consecutive trading days, equalling or exceeding $100,000,000 on or prior to June 30, 2019, and (ii) you having been employed by the Company for at least 1 year after Going Public; and |
(c) | One-third upon the Company’s completion of two phase 2 clinical studies with a plan for FDA new drug approval through a phase 3 study in the USA. |
Until the execution and delivery of the Employment Agreement, your engagement and position as interim CEO will be at-will, meaning that you or the Company may terminate the relationship at any time, with or without cause, and with or without notice. The Company acknowledges that regardless of termination, any historical cash or accrual amounts owed to the Company shall be payable and due in accordance with the terms hereof. The Company cannot wilfully terminate this Agreement for the express purpose of avoiding vesting of the option subject to paragraph (a) above.
This offer is contingent upon:
(a) Verification of your right to work in the United States, as demonstrated by your completion of the I-9 form upon hire and your submission of acceptable documentation (as noted on the I-9 form) verifying your identity and work authorization within three days of starting employment;
(b) Satisfactory completion of a background investigation, for which the required notice and consent forms are attached to this letter; and
(c) Your execution of the Company’s customary confidentiality and work-for-hire agreement and employee handbook;
This offer will be withdrawn if any of the above conditions are not satisfied.
2 |
By accepting this offer, you confirm that you are able to accept your responsibilities and carry out the work that it would involve without breaching any legal restrictions on your activities, such as restrictions imposed by a current or former employer or client. You also confirm that you will inform the Company about any such restrictions and provide the Company with as much information about them as possible, including any agreements between you and your current or former employer or client describing such restrictions on your activities. Such activities shall be disclosed in Exhibit A to this Agreement.
You further confirm that you will not remove or take any documents or proprietary data or materials of any kind, electronic or otherwise, with you from your current or former employer or client(s) to the Company without written authorization from your current or former employer and/or client(s), nor will you use or disclose any such confidential information during the course and scope of your employment with the Company. If you have any questions about the ownership of particular documents or other information, discuss such questions with your former employer and/or client(s) before removing or copying the documents or information.
This Offer Letter shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws principles thereof. State and federal courts sitting in the City of New York shall have exclusive jurisdiction to hear any dispute arising under this Offer Letter.
All of us at the Company are excited at the prospect of you joining our team. If you have any questions about the above details, please call me immediately. If you wish to accept this position, please sign below and return this letter agreement to me within 3 days. This offer is open for you to accept until October 21, 2018, at which time it will be deemed to be withdrawn.
3 |
I look forward to hearing from you.
Yours sincerely,
TO PHARMACEUTICALS LLC
By: | /s/ Bernard Sucher | ||
Name: | Bernard Sucher | ||
Title: | Authorized Representative |
Accepted:
/s/ Seth Yakatan | ||
Seth Yakatan |
4 |
Exhibit 10.18
CONSULTING AGREEMENT
THIS AGREEMENT is made effective as of November 1, 2018, by and among TO Pharmaceuticals LLC, a Delaware limited liability company (the “Company” ), having a place of business at 77 Water Street, 8th Floor, Suite 821, New York, New York 10005, and Broom Street Associates, LLC, having a place of business at 902 N. Broom Street, Wilmington, DE 19806 (the “Consultant”).
RECITALS
WHEREAS , the Company is a pharmaceutical company engaged in the business of discovering, developing and commercializing drugs for the treatment of various diseases, disorders and medical conditions; and
WHEREAS , Consultant has knowledge and experience in the research, development regulatory approval and commercialization of pharmaceutical products; and
WHEREAS , the Company desires to engage Consultant for the purpose of obtaining the assistance and advice of Mitchell Glass, MD (“Glass”) and Consultant in connection with the development of the Company’s pharmaceutical products, including over-the-counter, including without limitation, development strategy, clinical development plans, study designs, protocols, CMC requirements and regulatory drug approvals.
NOW, THEREFORE , in consideration of the above recitals and the mutual promises, covenants and conditions set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. | Engagement. The Company hereby engages Consultant, and Consultant hereby accepts such engagement, upon the terms, covenants and conditions set forth in this Agreement. |
2. | Services to be Performed by Consultant . Consultant hereby agrees to provide to the Company product development services and advice for the Company’s products, as reasonably requested by the Company and agreed by the parties hereto, including: (i) providing general consultancy on all of the Company’s product development activities, including as it relates to both pharmaceutical and over-the-counter products, (ii) providing input and guidance in connection with all facets of the Company’s clinical development strategy and plans regarding such products, (iii) assisting the Company in the preparation, review and submission of development-related documents, including without limitation, as it relates to the intellectual property of the Company, Investigational New Drug Applications, New Drug Applications or documents of a similar nature, (iv) assisting in any fundraising discussions, and (v) providing other services as may be reasonably designated by the Company. Consultant shall, through its principal, Dr. Mitchell Glass, provide all services under this Agreement in a diligent, effective, trustworthy and professional manner. Dr. Glass, as a principal of the Consultant, agrees to devote significant time and effort to perform these services for the Company and to provide periodic updates on his performance of Services to the Company and as requested by the Company. The services described in this Section 2 and performed under this Agreement will hereinafter be referred to collectively as the “Services.” |
3. | Status of Consultant. Consultant enters into this Agreement as an independent contractor and not as an employee or agent of the Company or any affiliate thereof, and shall remain so throughout the term of this Agreement. Consultant shall supply all materials and equipment required to perform the Services. Consultant shall be responsible for providing, at its own expense, disability and unemployment insurance, workers’ compensation, training, permits, and licenses for Consultant and acknowledges that it is not eligible to receive any insurance or other benefits available to employees of the Company. Consultant shall be responsible for and shall pay all taxes due to any federal, state or local governmental authority in respect of all amounts paid hereunder, and Consultant shall indemnify and hold harmless the Company for any failure to do so. Neither Consultant nor its members, managers, employees or otherwise, including Glass, shall have any authority to act for, represent or bind the Company or any affiliate thereof in any manner, except as may be expressly agreed to by the Company in writing from time to time. |
4. | No Partnership or Agency Relationship. This Agreement does not constitute and will not be construed as creating an agency or constituting a partnership or joint venture between the Company and Consultant or any other form of legal association which would impose liability upon one party for the act or failure to act of the other party. Neither the Company nor Consultant or its employees or otherwise will have any right to obligate or bind each other in any manner whatsoever. |
5. | Representations, Warranties and Covenants. Dr. Glass, a principal of the Consultant, and the Consultant, hereby represent, warrant and covenant to the Company that (i) it has the power and authority to enter into this Agreement and shall comply with all relevant federal, state, local and non-U.S. laws in connection with the performance of the Services, (ii) Glass has the capacity to enter into this Agreement, and (iii) entering into this Agreement, and the obligations and duties undertaken by Consultant and Glass hereunder, will not conflict with, constitute a breach of or otherwise violate the terms of any other agreement to which Consultant and/or Glass is a party. |
6. | Company Representation. The Company represents and warrants to the Consultant that it has the power and authority to enter into this Agreement. |
7. | Compensation for Services. The Company will pay to Consultant such compensation in connection with the Services rendered by Consultant to or for the Company during the term of this Agreement as described below in this Section 7 (the “Compensation”). In addition, Consultant will be reimbursed for all reasonable and customary direct travel and other out-of-pocket expenses incurred in connection with the Services performed by Consultant (the “Expenses”); provided, that any expenses in excess of $300 will be submitted to the Company in advance for approval. All Expenses will be properly documented and billed at cost and without mark-up. The Company agrees to reimburse Consultant for Expenses within 30 days of its receipt of properly documented requests for reimbursement. |
7.1 | The Consultant’s Compensation will be computed based on a fee of $10,000 per month for the performance of Services, payable in arrears at a rate of $5,000 in cash and $5,000 in equity of the Company. Consultant will invoice the Company monthly. The equity will be deferred and calculated based on a formula to be provided by the Company. |
7.2 | Deferred Compensation will be paid contingent upon the Company successfully closing one or more external financing transactions with aggregate gross proceeds of not less than $3,000,000. |
7.3 | Consultant acknowledges and agrees that (i) the Compensation set forth in this Section 7 will be the sole compensation for the performance of Services by Consultant, and (ii) the Company will have no obligation whatsoever to pay Consultant any other compensation or reimburse Consultant for any Expenses not expressly set forth in this Section 7. |
2 |
8. | Term. This Agreement will become effective on the date first stated above (the “Effective Date”) and, unless sooner terminated as provided herein, will continue in full force and effect for a period of six (6) months. |
9. | Termination . Either the Company or Consultant may terminate this Agreement upon thirty (30) days written notice to the other party. This Agreement will terminate automatically on the occurrence of any of the following events: bankruptcy, dissolution or insolvency of the Company or Consultant. Upon termination of the Agreement for any reason, Consultant will use reasonable commercial efforts to transition activities to the Company and will be compensated for any reasonable unreimbursed Expenses and for Services performed up to the date of termination of this Agreement. |
10. | Post-Termination Rights and Obligations. Upon termination of this Agreement for any reason, the rights and obligations of the parties hereto will terminate, except the Company’s obligations under Section 7 (Compensation for Services) and the parties’ respective rights and obligations under Section 11 (Intellectual Property), Section 12 (Confidential Information) and Section 13 (Indemnification), all of which will survive termination of this Agreement. |
11. | Intellectual Property. Consultant acknowledges and agrees that the Company possesses, and will continue to possess, information that has been created, discovered or developed by the Company, or has otherwise become known to the Company, and/or in which property rights are owned, assigned to or otherwise controlled by the Company (“Background Information”). Consultant will promptly disclose to the Company all intellectual property, including, but not limited to, any inventions, improvements or procedural or methodological innovations, programs, methods, forms, systems, services, designs, including any formulae, processes, techniques, know-how, data, patents or applications for patents, or trade secrets conceived, developed, created, reduced to practice, made or learned by Consultant, its employees or otherwise, whether individually or in conjunction with others, resulting from performance of the Services (“Intellectual Property”). Consultant agrees that all Background Information and any and all Intellectual Property conceived, developed or created by Consultant, its employees or otherwise, including Glass, or the Company during the term of this Agreement in connection with the Services shall be the sole property of the Company, and that Consultant hereby assigns, and shall cause the assignment of by its employees or otherwise, all of its or his right, title and interest to any Background Information and Intellectual Property to the Company. Consultant further agrees that Consultant will, and shall cause any applicable employees or otherwise, including Glass, to, execute such instruments and perform such acts as may reasonably be requested by the Company to transfer to and perfect in the Company all legally protectable rights in such Background Information and Intellectual Property. To the extent any moral rights or other Intellectual Property rights are not legally transferable to the Company, each of Consultant and Glass hereby waives and agrees to never assert any such rights against the Company or any of its affiliates, even after termination of this Agreement, including but not limited to claims for copyright or trademark infringement, infringement of moral rights within the law. |
12. | Confidential Information. Consultant will, and shall cause its employees or otherwise to, comply with the terms of the Confidentiality and Non-Use Agreement executed by the parties effective November 1, 2018, as it may be amended (the “NDA”). |
3 |
13. | Indemnification. |
12.1. | Indemnification by Company . The Company agrees to and does hereby indemnify, save and hold Consultant harmless from and against any and all liability, loss, damage, claim, lawsuit, judgment, cost, or expenses (including reasonable attorneys’ fees), resulting from, arising out of or related to any material breach of this Agreement by the Company. |
12.2. | Indemnification by Consultant and Glass . Each of Consultant and Glass agrees to and does hereby indemnify, save and hold the Company harmless from and against any and all liability, loss, damage, claim, lawsuit, judgment, cost, or expenses (including reasonable attorneys’ fees), resulting from, arising out of or related to the performance of the Services by Consultant or its employees otherwise, including Glass, or any material breach of this Agreement by Consultant or its employees otherwise, including Glass, unless if caused by illegal activity by Company except if arising or derived from or related to any violation of the Controlled Substances Act (as amended) relating to the cultivation, processing, distribution, sale or possession of cannabis or cannabis-related products. |
14. | Tax Consequences. Consultant agrees to obtain the advice of independent tax counsel (or has determined not to obtain such advice, having had adequate opportunity to do so) regarding the federal and state income tax consequences of the receipt of payments under this Agreement. Consultant acknowledges that it has not relied and will not rely upon any advice or representation by the Company or by its employees or representatives with respect to the tax treatment of the payments under this Agreement. |
15. | Arbitration. Except as otherwise set forth herein, all claims and disputes between or among the parties hereto relating in any way to this Agreement or its performance, interpretation, validity or breach, or to any other rights, duties or obligations between the Company and Consultant, whether or not arising under this Agreement, will be settled by final and binding arbitration in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association. Demand for arbitration will be made within six (6) months after the dispute in question has arisen or be forever barred. Arbitration will be in New York, New York, before a single neutral arbitrator from the Association’s panel. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction. Each party will bear its own costs and attorneys’ fees and one-half of the cost of arbitration, regardless of which party is determined to be the prevailing party. Notwithstanding the foregoing, with respect to any obligations pursuant to Section 12 hereof, any party hereto may apply to the New York State Supreme Court located in New York County for a provisional remedy, including but not limited to a temporary restraining order or a preliminary injunction. The application for or enforcement of any provisional remedy by a party shall not operate as a waiver of the agreement to submit a dispute to binding arbitration pursuant to this provision. |
16. | Notices. All notices, requests, demands and other communications called for by this Agreement will be in writing and will be deemed to have been given upon delivery if delivered by hand, via email (the receipt of which is electronically confirmed) or overnight mail express, or three (3) days after such notice is deposited in the U.S. mail, certified mail, return receipt requested, postage prepaid: |
If to the Company, then to Seth Yakatan, CEO, at the address set forth above.
If to Consultant then to Mitchell Glass, MD, at the address set forth above.
4 |
17. | Assignment. Consultant may assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of the Company. Any attempted assignment or delegation without such consent is void and without effect. |
18. | Waiver. The waiver by a party of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach. |
19. | Amendment. This Agreement may not be modified except by written instrument signed by all parties hereto. |
20. | Severability. The provisions of this Agreement are severable. The invalidity of any provision will not affect the validity of other provisions of this Agreement. |
21. | Binding Effect. This Agreement will be binding upon and will inure to the benefit of the parties hereto and their respective successors and assigns. |
22. | Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties with respect thereto. |
23. | Governing Law. This Agreement and the rights and obligations of the parties hereunder will be construed in accordance with, and will be governed by, the laws of the State of New York. |
24. | Counterparts. This Agreement may be executed in one or more counterparts, each of which will be considered an original, but all of which together will constitute one and the same instrument. |
IN WITNESS WHEREOF, the parties hereto have signed this Agreement effective as of the date first above written.
TO PHARMACEUTICALS LLC | BROOM STREET ASSOCIATES, LLC |
By: | /s/ Seth Yakatan | By: | /s/ Mitchell Glass | ||
SETH YAKATAN | MITCHELL GLASS, MD | ||||
CHIEF EXECUTIVE OFFICER | Principal | ||||
ACKNOWLEDGED AND AGREED TO
WITH RESPECT TO THE FOREGOING OBLIGATIONS: |
|||||
/s/ Mitchell Glass | |||||
MITCHELL GLASS, MD | |||||
5 |
Exhibit 10.19
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS.
VOID AFTER 5:00 P.M. ON MARCH 9, 2023
TO PHARMACEUTICALS LLC
WARRANT TO PURCHASE UNITS
Carle Place, New York
Certificate No. 1
THIS IS TO CERTIFY THAT, for value received, Sidney Taubenfeld, an individual residing at 247 West 87th Street, Apt. 7G, New York, New York 10024 (the “Warrantholder”), is entitled, subject to the provisions and upon the terms and conditions set forth herein, to purchase from TO PHARMACEUTICALS LLC, a Delaware limited liability (the “Company”), up to 500 units (the “Warrant Units”) of the membership interests of the Company (“Units”), at an exercise price equal to $700 per Unit (the “Exercise Price”) at the times and in the manner set forth below.
As provided herein, the Exercise Price and the number of Warrant Units which may be purchased upon the exercise of this Warrant are, upon the happening of certain events, subject to modification and adjustment.
The rights of the registered holder of this Warrant shall be subject to the following further terms and conditions:
1. | Exercise of Warrant; Payment of Exercise Price . |
(a) | Exercise of Warrant . |
(i) While this Warrant remains outstanding, this Warrant shall be exercisable, in whole or in part, as of the date hereof (the “Exercisability Date”), with the exercise form attached as Exhibit A hereto (the “Exercise Form”) duly executed by the Warrantholder or by the Warrantholder’s duly authorized attorney-in-fact, at the principal office of the Company, or at such other office or agency in the United States as the Company may designate by notice in writing to the Warrantholder (in either event, the “Company Offices”), accompanied by payment in accordance with Section 1(b), of the aggregate Exercise Price payable for the Warrant Units being purchased. If the Warrantholder exercises the Warrant for fewer than all of the Warrant Units issuable in accordance with this Warrant, the Company shall, upon each exercise prior to the Expiration Date, execute and deliver to the Warrantholder a new Warrant (dated as of the date hereof) evidencing the balance of the Units that remain subject to issuance upon the exercise of this Warrant. This Warrant shall expire on the seventh (7 th ) anniversary of the date hereof (the “Expiration Date”), and thereupon the Warrantholder shall surrender this Warrant.
(ii) On the date of exercise of this Warrant, upon the the Warrantholder exercising same in compliance with the terms hereof, and if previous to such exercise the Warrantholder is not a party to the operating agreement of the Company, upon the execution and delivery to the Company of the joinder agreement in the form attached hereto as Exhibit B , the Warrantholder shall be deemed to have become the holder of record for all purposes of the Units to which the exercise relates.
(iii) As soon as practicable after the exercise of all or part of this Warrant, the Company, at its expense (including the payment by it of any applicable issue taxes), will cause to be issued in the name of and delivered to the Warrantholder a certificate or certificates evidencing the number of duly authorized, validly issued, fully paid and nonassessable Units to which the Warrantholder shall be entitled upon such exercise, if the units of membership interests of the Company are certificated as of such time.
(iv) Any portion of this Warrant, except as otherwise provided in paragraph (b) below, shall become exercisable at the times and in the amounts set forth below (with respect to each tranche and sub-tranche of exercisability, the “Exercisability Date”) until this Warrant expires, so long as the Warrantholder is an employee of the Company or one of its subsidiaries, or Tikun Olam Holding Group LLC, a New York limited liability company (“TOHG”, and together with the Company and its subsidiaries herein referred to as the “Company Group”) as of the Exercisability Date. Except as otherwise provided in paragraphs (b)(i) through (iii) below, upon the termination of the employment by the Company Group of Warrantholder for any reason (whether by the Company Group or by Warrantholder), any portion of this Warrant that is not exercisable as of such termination shall be automatically cancelled and surrendered to the Company:
Number of Units | Exercisability Date | |
75 | September 9, 2016 | |
50 | March 9, 2017 | |
175* (15.9091 per month*) | On the 9 th day of each of April 2017 through February 2018 | |
200 | March 9, 2018 | |
100 | The Company having a valuation of $100 million or more** | |
100 | The Company having a valuation of $200 million or more** |
** For these purposes, the Company’s valuation will be equal to the pre-transaction equity value of the Company in connection with its most recently completed financing transaction.
(b) | Certain Limitations . |
(i) The portion of this Warrant that is exercisable for 75 Units on September 9, 2016 (the “75 Warrant Tranche”) shall remain exercisable by the Warrantholder or his successors or assigns for the period from the Exercisability Date until this Warrant expires regardless of whether the Warrantholder is an employee of the Company Group as of the date of such exercise, except in the following circumstances:
(A) If prior to the first anniversary of the date hereof, the employment of Warrantholder has been terminated by the Company Group “for cause” as set forth in section 9(a) of that certain Employment Agreement of even date herewith between the Company and Warrantholder (the “Employment Agreement”); or
(B) If prior to the first anniversary of the date hereof, the Warrantholder voluntarily terminates his employment with the Company Group.
(ii) If prior to the Exercisability Date for the initial 75 Warrant Tranche, the Warrantholder dies or becomes Disabled, then the 75 Warrant Tranche shall be automatically cancelled and surrendered to the Company.
(iii) Except as provided by paragraph (ii) above, if prior to the Exercisability Date for the initial 75 Warrant Tranche, the employment by the Company Group of Warrantholder has been terminated without cause as set forth in section 9(a) of the Employment Agreement, the 75 Warrant Tranche shall remain exercisable through the Expiration Date.
2 |
(iv) The portions of this Warrant that are exercisable for 100 Units, upon the occurrence of the Company having a valuation in excess of $100 million or $200 million, respectively (collectively, the “200 Warrant Tranche”) shall remain exercisable by the Warrantholder or his successors or assigns for the period from the Exercisability Date until this Warrant expires, except if at any time the employment of Warrantholder has been terminated by the Company Group “for cause” as set forth in section 9(a) of the Employment Agreement. Any portion of the 200 Warrant Tranche that has not been exercised as of the date of such termination for cause, if such termination should occur after the second anniversary of the date hereof, shall be automatically cancelled and surrendered to the Company.
(v) This Warrant and any Units issued pursuant to this Warrant are subject to the terms and conditions of that certain Repurchase Agreement of even date herewith between the Company and the Warrantholder during the term of such agreement.
(vi) This Warrant shall become immediately exercisable upon (a) the acquisition of a majority of the voting power of the Company by a person or entity or group of persons or entities by means of any transaction or series of related transactions (including without limitation any stock acquisition, reorganization, merger or consolidation, but excluding any sale of stock for capital raising purposes); or (b) a sale or other disposition of all or substantially all of the assets of the Company (and any subsidiaries, taken as a whole) by means of any transaction or series of related transactions, except where such sale, lease or other disposition is to a wholly-owned subsidiary of the Company.
(c) Payment of Exercise Price . Payment of the Exercise Price shall be made, at the option of the Warrantholder as expressed in the Exercise Form, by the following methods:
(i) by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such aggregate Exercise Price for Warrant Units being purchased hereunder;
(ii) by instructing the Company to withhold a number of Warrant Units then issuable upon exercise of this Warrant with an aggregate fair market value (“Fair Market Value”), as determined in good faith by the Board of Directors of the Company as of the Exercise Date, equal to the aggregate Exercise Price for Warrant Units being purchased hereunder;
(iii) by surrendering to the Company (x) Warrant Units previously acquired by the Warrantholder with an aggregate Fair Market Value as of the Exercise Date equal to the aggregate Exercise Price for Warrant Units being purchased hereunder and/or (y) other securities of the Company having a value as of the Exercise Date equal to the aggregate Exercise Price for Warrant Units being purchased hereunder (which value in the case of debt securities shall be the principal amount thereof plus accrued and unpaid interest, in the case of preferred stock shall be the liquidation value thereof plus accumulated and unpaid dividends, and in the case of Units shall be the Fair Market Value thereof); or
(iv) any combination of the foregoing.
In the event of any withholding of Warrant Units or surrender of other equity securities pursuant to clause (c)(ii), or (iii) above where the number of Units whose value is equal to the aggregate Exercise Price is not a whole number, the number of Units withheld by or surrendered to the Company shall be rounded up to the nearest whole unit and the Company shall make a cash payment to the Warrantholder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a Unit being so withheld by or surrendered to the Company in an amount equal to the product of (x) such incremental fraction of a Unit being so withheld or surrendered multiplied by (y) in the case of Units, the Fair Market Value per Warrant Unit as of the Exercise Date, and, in all other cases, the value thereof as of the Exercise Date determined in accordance with clause (iii)(y) above.
2. | Issuance of Units; Reservation of Units . |
(a) The Company covenants and agrees that all Units which may be issued upon the exercise of all or part of this Warrant will, upon issuance in accordance with the terms hereof, be validly issued and free from all taxes, liens and charges with respect to the issue thereof.
3 |
(b) The Company further covenants and agrees that if any Units to be reserved for the purpose of the issuance of Units upon the exercise of this Warrant require registration with, or approval of, any governmental authority under any federal or state law before such Units may be validly issued or delivered upon exercise, then the Company will promptly use its best efforts to effect such registration or obtain such approval, as the case may be.
3. Adjustments of Exercise Price, Number and Character of Warrant Units, and Number of Warrants .
The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the happening of the events enumerated in this Section 3.
(a) Distributions, Subdivisions and Combinations . In case the Company shall at any time on or before the Expiration Date:
(i) pay or make a distribution in Units or other securities of the Company to holders of all its outstanding Units;
(ii) subdivide or reclassify the outstanding Units into a greater number of Units;
(iii) combine the outstanding Units into a smaller number of Units; or
(iv) issue by reclassification of its Units other securities of the Company (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation),
then the number and kind of securities purchasable upon exercise of this Warrant outstanding immediately prior thereto shall be adjusted so that the Warrantholder shall be entitled to receive the kind and number of Units or other securities of the Company which the Warrantholder would have owned or have been entitled to receive after the happening of any of the events described above had this Warrant been exercised in full immediately prior to the earlier of the happening of such event or any record date in respect thereto. In the event of any adjustment of the number of Units or other securities of the Company purchasable upon the exercise of this Warrant pursuant to this Paragraph 3(a), the Exercise Price shall be adjusted to be the amount resulting from dividing the number of Units (including fractional Units) covered by this Warrant immediately after such adjustment into the total amount payable upon exercise of this Warrant in full immediately prior to such adjustment. An adjustment made pursuant to this Paragraph 3(a) shall become effective immediately after the effective date of such event retroactive to the record date for any such event. Such adjustment shall be made successively whenever any event listed above shall occur.
(b) Extraordinary Dividends . In case the Company shall at any time on or before the Expiration Date fix a record date for the issuance of rights, options, or warrants to all holders of its outstanding Units, entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Units (or securities exchangeable for or convertible into Units) at a price per Unit (or having an exchange or conversion price per Unit, with respect to a security exchangeable for or convertible into Units) which is lower than the current Exercise Price per Unit (as defined in Paragraph 3(d) below) on such record date, then the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, of which (i) the numerator shall be the number of Units outstanding on such record date plus the number of Units which the aggregate offering price of the total number of Units so to be offered (or the aggregate initial exchange or conversion price of the exchangeable or convertible securities so to be offered) would purchase at such current Exercise Price and (ii) the denominator shall be the number of Units outstanding on such record date plus the number of additional Units to be offered for subscription or purchase (or into which the exchangeable or convertible securities so to be offered are initially exchangeable or convertible). Such adjustment shall become effective at the close of business on such record date; however, to the extent that Units (or securities exchangeable for or convertible into Units) are not delivered after the expiration of such rights, options, or warrants, the Exercise Price shall be readjusted (but only with respect to any portion of this Warrant exercised after such expiration) to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights, options, or warrants been made upon the basis of delivery of only the number of Units (or securities exchangeable for or convertible into Units) actually issued. In case any subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company and shall be described in a statement mailed to the Warrantholder. Units owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation.
4 |
(c) Extraordinary Distributions . In case the Company shall at any time after the original date of issuance of this Warrant distribute to all holders of its Units (including any such distribution made in connection with a consolidation or merger in which the Company is the surviving corporation) evidences of its indebtedness or assets (excluding cash dividends and distributions payable out of consolidated net income or earned surplus in accordance with New York law and dividends or distributions payable in Units of stock described in Paragraph 3(a) above) or rights, options, or warrants or exchangeable or convertible securities containing the right to subscribe for or purchase Units (or securities exchangeable for or convertible into Units), then the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date for such distribution by a fraction, of which (i) the numerator shall be the current Exercise Price per Unit of the portion of the evidences of indebtedness or assets so to be distributed or of such rights, options or warrants applicable to one Unit and (ii) the denominator shall be such current Exercise Price per Unit. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for such transaction.
(d) Minimum Adjustment . Except as hereinafter provided, no adjustment of the Exercise Price hereunder shall be made if such adjustment results in a change of the Exercise Price then in effect of less than one dollar ($1.00) per unit. Any adjustment of less than one dollar ($1.00) per unit of any Exercise Price shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, together with adjustment or adjustments so carried forward, amounts to one dollar ($1.00) per unit or more. However, upon exercise of this Warrant, the Company shall make all necessary adjustments (to the nearest cent) not theretofore made to the Exercise Price up to and including the effective date upon which this Warrant is exercised.
(e) Notice of Adjustments . Whenever the Exercise Price shall be adjusted pursuant to this Section 3, the Company shall promptly deliver a certificate signed by the President or a Vice President and by the Chief Financial Officer, Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of the Company made any determination hereunder), by first class mail postage prepaid to each Warrantholder.
(f) Capital Reorganizations and Other Reclassifications . In case of any capital reorganization of the Company, or of any reclassification of the Units (other than a reclassification, subdivision or combination of Units referred to in Paragraph 3(a)), this Warrant shall, after such capital reorganization, reclassification of Units, consolidation, merger, or sale, be immediately exercisable, upon the terms and conditions specified in this Warrant, for the kind, amount and number of Units or other securities, assets, or cash to which a holder of the number of Units purchasable (at the time of such capital reorganization, reclassification of Units, consolidation, merger or sale) upon exercise of this Warrant would have been entitled to receive upon such capital reorganization, reclassification of Units, consolidation, merger, or sale; and in any such case, if necessary, the provisions set forth in this Section 3 with respect to the rights and interests thereafter of the Warrantholder shall be appropriately adjusted so as to be applicable, as nearly equivalent as possible, to any Units or other securities, assets, or cash thereafter deliverable on the exercise of this Warrant. The Company shall not effect any such consolidation, merger, or sale, unless prior to or simultaneously with the consummation thereof the successor corporation or entity (if other than the Company) resulting from such consolidation or merger or the corporation or entity purchasing such assets or other appropriate corporation or entity shall assume, by written instrument, the obligation to deliver to the Warrantholder such Units, securities, assets, or cash as, in accordance with the foregoing provisions, such holders may be entitled to purchase and the other obligations hereunder. The subdivision or combination of Units at any time outstanding into a greater or lesser number of Units shall not be deemed to be a reclassification of the Units for purposes of this Paragraph 3(f).
5 |
(g) Adjustments to Other Securities . In the event that at any time, as a result of an adjustment made pursuant to this Section 3, the Warrantholder shall become entitled to purchase any Units or securities of the Company other than the Units, thereafter the number of such other Units or securities so purchasable upon exercise of each Warrant and the exercise price for such Units or securities shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as possible to the provisions with respect to the Units contained in Paragraphs 3(a) through (d), inclusive.
(h) Deferral of Issuance of Additional Units in Certain Circumstances . In any case in which this Section 3 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event issuing to the Warrantholder exercised after such record date the Units, if any, issuable upon such exercise over and above the Units, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided , however , that the Company shall deliver as soon as practicable to such holder a due bill or other appropriate instrument provided by the Company evidencing such holder’s right to receive such additional Units upon the occurrence of the event requiring such adjustment.
(i) Initial Investment . Notwithstanding the foregoing, the number of Units for which this Warrant shall be exercisable and the Exercise Price shall not adjusted in connection with the initial investment of up to $500,000 by or on behalf of the member of the Company.
4. Replacement of Securities . If this Warrant shall be lost, stolen, mutilated or destroyed, the Company shall, on such terms as to indemnity or otherwise as the Company may in its discretion reasonably impose, issue a new warrant of like tenor or date representing in the aggregate the right to subscribe for and purchase the number of Units which may be subscribed for and purchased hereunder. Any such new warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed warrant shall be at any time enforceable by anyone.
5. Registration . This Warrant shall be numbered and shall be registered in a register (the “Warrant Register”) maintained at the Company Offices as they are issued. The Warrant Register shall list the name, address and Social Security or other Federal Identification Number, if any, of all warrantholders. The Company shall be entitled to treat the Warrantholder as set forth in the Warrant Register as the owner in fact of this Warrant as set forth therein for all purposes and shall not be bound to recognize any equitable or other claim to or interest in this Warrant on the part of any other person, and shall not be liable for any registration or transfer of this Warrant that is registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration of transfer, or with such knowledge of such facts that its participation therein amounts to bad faith.
6. Transfer . NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT HAS BEEN ACQUIRED, AND ANY UNITS OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR THIS WARRANT AND/OR SUCH UNITS OR OTHER SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH UNITS OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.
6 |
7. Exchange of Warrant . This Warrant may be exchanged for another warrant entitling the Warrantholder thereof to purchase a like aggregate number of Units as this Warrant entitles such Warrantholder to purchase. A Warrantholder desiring to so exchange this Warrant shall make such request in writing delivered to the Company, and shall surrender this Warrant therewith. Thereupon, the Company shall execute and deliver to the person entitled thereto a new warrant or warrants, as the case may be, as so requested.
8. Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:
If to the Company:
TO PHARMACEUTICALS LLC
One Old Country Road
Carle Place, New York 11514
Fax: (646) 786–4005
Email: barryfarkas1@gmail.com
Attention: Barry Farkas
With a copy to:
Abrams, Fensterman, Fensterman,
Eisman, Formato, Ferrara & Wolf, LLP
1111 Marcus Avenue, Suite 107
Lake Success, New York 11042
Telephone: (516) 328-2300
Facsimile: (516) 328-6638
Attention: Neil M. Kaufman
Email: nkaufman@abramslaw.com
If to the Warrantholder:
Sidney Taubenfeld
247 West 87th Street, Apt. 7G
New York, New York 10024
Email: staub18@yahoo.com
With a copy to:
Michael Schneider, Esq.
11 East 44 th Street – 19 th Fl.
New York, New York 10017
Telephone: (212) 888-2100
Facsimile: (646) 461-1781
Email: michael@mslaw-us.com
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day, or (iv) if sent via electronic mail, upon its delivery, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.
7 |
9. Miscellaneous . This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant is deemed to have been delivered in the State of New York and shall be construed and enforced in accordance with and governed by the laws of such State, without regard to its conflicts of laws principles. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.
10. Expiration . Unless as hereinafter provided, the right to exercise this Warrant shall expire at the Expiration Date.
[Signature Page Follows]
8 |
TO PHARMACEUTICALS LLC
[SIGNATURE PAGE TO WARRANT TO PURCHASE UNITS
Dated: March 9, 2015
TO PHARMACUETICALS LLC | |||
B y: TO HOLDING GROUP LLC , Manager | |||
By: TO INVESTOR LLC , Manager | |||
By: | /s/ Berel Farkas | ||
Name: | Berel Farkas | ||
Title: | Authorize Signatory | ||
EMPLOYEE: | |||
/s/ Sidney Taubenfeld | |||
Sidney Taubenfeld |
9 |
Exhibit 10.20
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS.
VOID AFTER 5:00 P.M. ON NOVEMBER 1, 2023
TO PHARMACEUTICALS LLC
WARRANT TO PURCHASE UNITS
New York, New York
Certificate No. 2
THIS IS TO CERTIFY THAT, for value received, Bernard Sucher, an individual residing at 715 Sevilla Avenue, Coral Gables, Florida 33134-5627 (the “Warrantholder”), is entitled, subject to the provisions and upon the terms and conditions set forth herein, to purchase from TO Pharmaceuticals LLC, a Delaware limited liability (the “Company”), up to 5,593 Class A Units (the “Warrant Units”) of the Company (“Units”), at an exercise price equal to $15.11 per Unit (the “Exercise Price”) at the times and in the manner set forth below.
As provided herein, the Exercise Price and the number of Warrant Units which may be purchased upon the exercise of this Warrant are, upon the happening of certain events, subject to modification and adjustment.
The rights of the registered holder of this Warrant shall be subject to the following further terms and conditions:
1. | Exercise of Warrant; Payment of Exercise Price . |
(a) | Exercise of Warrant . |
(i) While this Warrant remains outstanding, this Warrant shall be fully exercisable, in whole or in part, as of the date hereof (the “Exercisability Date”), upon submission by the Warrantholder to the Company of the exercise form attached as Exhibit A hereto (the “Exercise Form”) duly executed by the Warrantholder or by the Warrantholder’s duly authorized attorney-in-fact, at the principal office of the Company, or at such other office or agency in the United States as the Company may designate by notice in writing to the Warrantholder (in either event, the “Company Offices”), accompanied by payment in accordance with Section 1(b), of the aggregate Exercise Price payable for the Warrant Units being purchased. If the Warrantholder exercises the Warrant for fewer than all of the Warrant Units issuable in accordance with this Warrant, the Company shall, upon each exercise prior to the Expiration Date, execute and deliver to the Warrantholder a new Warrant (dated as of the date hereof) evidencing the balance of the Units that remain subject to issuance upon the exercise of this Warrant. This Warrant shall expire on the fifth (5 th ) anniversary of the date hereof (the “Expiration Date”), and thereupon the Warrantholder shall surrender this Warrant.
1 |
(ii) On the date of exercise of this Warrant, upon the Warrantholder exercising the same in compliance with the terms hereof, and if previous to such exercise the Warrantholder is not a party to the operating agreement of the Company, upon the execution and delivery to the Company of the joinder agreement in the form attached hereto as Exhibit B , the Warrantholder shall be deemed to have become the holder of record for all purposes of the Units to which the exercise relates.
(iii) As soon as practicable after the exercise of all or part of this Warrant, the Company, at its expense (including the payment by it of any applicable issue taxes), will cause to be issued in the name of and delivered to the Warrantholder a certificate or certificates evidencing the number of duly authorized, validly issued, fully paid and nonassessable Units to which the Warrantholder shall be entitled upon such exercise, if the units of membership interests of the Company are certificated as of such time.
(b) Payment of Exercise Price . Payment of the Exercise Price shall be made, at the option of the Warrantholder as expressed in the Exercise Form, by the following methods:
(i) by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such aggregate Exercise Price for Warrant Units being purchased hereunder;
(ii) by instructing the Company to withhold a number of Warrant Units then issuable upon exercise of this Warrant with an aggregate fair market value (“Fair Market Value”), as determined in good faith by the Board of Managers of the Company as of the Exercise Date, equal to the aggregate Exercise Price for Warrant Units being purchased hereunder;
(iii) by surrendering to the Company (x) Warrant Units previously acquired by the Warrantholder with an aggregate Fair Market Value as of the Exercise Date equal to the aggregate Exercise Price for Warrant Units being purchased hereunder and/or (y) other securities of the Company having a value as of the Exercise Date equal to the aggregate Exercise Price for Warrant Units being purchased hereunder (which value in the case of debt securities shall be the principal amount thereof plus accrued and unpaid interest, in the case of preferred units shall be the liquidation value thereof plus accumulated and unpaid distributions, and in the case of Units shall be the Fair Market Value thereof); or
(iv) any combination of the foregoing.
In the event of any withholding of Warrant Units or surrender of other equity securities pursuant to clause (b)(ii) or (iii) above where the number of Units whose value is equal to the aggregate Exercise Price is not a whole number, the number of Units withheld by or surrendered to the Company shall be rounded up to the nearest whole Unit and the Company shall make a cash payment to the Warrantholder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a Unit being so withheld by or surrendered to the Company in an amount equal to the product of (x) such incremental fraction of a Unit being so withheld or surrendered multiplied by (y) in the case of Units, the Fair Market Value per Warrant Unit as of the Exercise Date, and, in all other cases, the value thereof as of the Exercise Date determined in accordance with clause (iii)(y) above.
2. | Issuance of Units; Reservation of Units . |
(a) The Company covenants and agrees that all Units which may be issued upon the exercise of all or part of this Warrant will, upon issuance in accordance with the terms hereof, be validly issued and free from all taxes, liens and charges with respect to the issue thereof.
(b) The Company further covenants and agrees that if any Units to be reserved for the purpose of the issuance of Units upon the exercise of this Warrant require registration with, or approval of, any governmental authority under any federal or state law before such Units may be validly issued or delivered upon exercise, then the Company will promptly use its best efforts to effect such registration or obtain such approval, as the case may be.
2 |
3. | Adjustments of Exercise Price, Number and Character of Warrant Units, and Number of Warrants . |
The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the happening of the events enumerated in this Section 3.
(a) Distributions, Subdivisions and Combinations . In case the Company shall at any time on or before the Expiration Date:
(i) pay or make a distribution in Units or other securities of the Company to holders of all its outstanding Units;
(ii) subdivide or reclassify the outstanding Units into a greater number of Units;
(iii) combine the outstanding Units into a smaller number of Units; or
(iv) issue by reclassification of its Units other securities of the Company (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation),
then the number and kind of securities purchasable upon exercise of this Warrant outstanding immediately prior thereto shall be adjusted so that the Warrantholder shall be entitled to receive the kind and number of Units or other securities of the Company which the Warrantholder would have owned or have been entitled to receive after the happening of any of the events described above had this Warrant been exercised in full immediately prior to the earlier of the happening of such event or any record date in respect thereto. In the event of any adjustment of the number of Units or other securities of the Company purchasable upon the exercise of this Warrant pursuant to this Paragraph 3(a), the Exercise Price shall be adjusted to be the amount resulting from dividing the number of Units (including fractional Units) covered by this Warrant immediately after such adjustment into the total amount payable upon exercise of this Warrant in full immediately prior to such adjustment. An adjustment made pursuant to this Paragraph 3(a) shall become effective immediately after the effective date of such event retroactive to the record date for any such event. Such adjustment shall be made successively whenever any event listed above shall occur.
(b) Extraordinary Distributions .
(i) In case the Company shall at any time on or before the Expiration Date fix a record date for the issuance of rights, options, or warrants to all holders of its outstanding Units, entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Units (or securities exchangeable for or convertible into Units) at a price per Unit (or having an exchange or conversion price per Unit, with respect to a security exchangeable for or convertible into Units) which is lower than the current Exercise Price per Unit (as defined in Paragraph 3(d) below) on such record date, then the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, of which (i) the numerator shall be the number of Units outstanding on such record date plus the number of Units which the aggregate offering price of the total number of Units so to be offered (or the aggregate initial exchange or conversion price of the exchangeable or convertible securities so to be offered) would purchase at such current Exercise Price and (ii) the denominator shall be the number of Units outstanding on such record date plus the number of additional Units to be offered for subscription or purchase (or into which the exchangeable or convertible securities so to be offered are initially exchangeable or convertible). Such adjustment shall become effective at the close of business on such record date; however, to the extent that Units (or securities exchangeable for or convertible into Units) are not delivered after the expiration of such rights, options, or warrants, the Exercise Price shall be readjusted (but only with respect to any portion of this Warrant exercised after such expiration) to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights, options, or warrants been made upon the basis of delivery of only the number of Units (or securities exchangeable for or convertible into Units) actually issued. In case any subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Managers of the Company and shall be described in a statement mailed to the Warrantholder. Units owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation.
3 |
(ii) In case the Company shall at any time after the original date of issuance of this Warrant distribute to all holders of its Units (including any such distribution made in connection with a consolidation or merger in which the Company is the surviving corporation) evidences of its indebtedness or assets (excluding distributions payable out of consolidated net income or earned surplus in accordance with New York law and distributions payable in Units described in Paragraph 3(a) above) or rights, options, or warrants or exchangeable or convertible securities containing the right to subscribe for or purchase Units (or securities exchangeable for or convertible into Units), then the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date for such distribution by a fraction, of which (i) the numerator shall be the current Exercise Price per Unit of the portion of the evidences of indebtedness or assets so to be distributed or of such rights, options or warrants applicable to one Unit and (ii) the denominator shall be such current Exercise Price per Unit. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for such transaction.
(c) Minimum Adjustment . Except as hereinafter provided, no adjustment of the Exercise Price hereunder shall be made if such adjustment results in a change of the Exercise Price then in effect of less than one dollar ($1.00) per Unit. Any adjustment of less than one dollar ($1.00) per Unit of any Exercise Price shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, together with adjustment or adjustments so carried forward, amounts to one dollar ($1.00) per Unit or more. However, upon exercise of this Warrant, the Company shall make all necessary adjustments (to the nearest cent) not theretofore made to the Exercise Price up to and including the effective date upon which this Warrant is exercised.
(d) Notice of Adjustments . Whenever the Exercise Price shall be adjusted pursuant to this Section 3, the Company shall promptly deliver a certificate signed by the Chief Executive Officer, President or a Vice President and by the Chief Financial Officer, Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Managers of the Company made any determination hereunder), in accordance with the provisions of Section 8 hereof.
(e) Capital Reorganizations and Other Reclassifications . In case of any capital reorganization of the Company, or of any reclassification of the Units (other than a reclassification, subdivision or combination of Units referred to in Paragraph 3(a)), this Warrant shall, after such capital reorganization, reclassification of Units, consolidation, merger, or sale, be immediately exercisable, upon the terms and conditions specified in this Warrant, for the kind, amount and number of Units or other securities, assets, or cash to which a holder of the number of Units purchasable (at the time of such capital reorganization, reclassification of Units, consolidation, merger or sale) upon exercise of this Warrant would have been entitled to receive upon such capital reorganization, reclassification of Units, consolidation, merger, or sale; and in any such case, if necessary, the provisions set forth in this Section 3 with respect to the rights and interests thereafter of the Warrantholder shall be appropriately adjusted so as to be applicable, as nearly equivalent as possible, to any Units or other securities, assets, or cash thereafter deliverable on the exercise of this Warrant. The Company shall not effect any such consolidation, merger, or sale, unless prior to or simultaneously with the consummation thereof the successor corporation or entity (if other than the Company) resulting from such consolidation or merger or the corporation or entity purchasing such assets or other appropriate corporation or entity shall assume, by written instrument, the obligation to deliver to the Warrantholder such Units, securities, assets, or cash as, in accordance with the foregoing provisions, such holders may be entitled to purchase and the other obligations hereunder. The subdivision or combination of Units at any time outstanding into a greater or lesser number of Units shall not be deemed to be a reclassification of the Units for purposes of this Paragraph 3(f).
4 |
(f) Adjustments to Other Securities . In the event that at any time, as a result of an adjustment made pursuant to this Section 3, the Warrantholder shall become entitled to purchase any Units or securities of the Company other than the Units, thereafter the number of such other Units or securities so purchasable upon exercise of each Warrant and the exercise price for such Units or securities shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as possible to the provisions with respect to the Units contained in Paragraphs 3(a) through (c), inclusive.
(g) Deferral of Issuance of Additional Units in Certain Circumstances . In any case in which this Section 3 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event issuing to the Warrantholder exercised after such record date the Units, if any, issuable upon such exercise over and above the Units, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided , however , that the Company shall deliver as soon as practicable to such holder a due bill or other appropriate instrument provided by the Company evidencing such holder’s right to receive such additional Units upon the occurrence of the event requiring such adjustment.
4. Replacement of Securities . If this Warrant shall be lost, stolen, mutilated or destroyed, the Company shall, on such terms as to indemnity or otherwise as the Company may in its discretion reasonably impose, issue a new warrant of like tenor or date representing in the aggregate the right to subscribe for and purchase the number of Units which may be subscribed for and purchased hereunder. Any such new warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed warrant shall be at any time enforceable by anyone.
5. Registration . This Warrant shall be numbered and shall be registered in a register (the “Warrant Register”) maintained at the offices of the Company as they are issued. The Warrant Register shall list the name, address and Social Security or other Federal Identification Number, if any, of all warrantholders. The Company shall be entitled to treat the Warrantholder as set forth in the Warrant Register as the owner in fact of this Warrant as set forth therein for all purposes and shall not be bound to recognize any equitable or other claim to or interest in this Warrant on the part of any other person, and shall not be liable for any registration or transfer of this Warrant that is registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration of transfer, or with such knowledge of such facts that its participation therein amounts to bad faith.
6. Transfer . NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT HAS BEEN ACQUIRED, AND ANY UNITS OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR THIS WARRANT AND/OR SUCH UNITS OR OTHER SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH UNITS OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.
5 |
7. Exchange of Warrant . This Warrant may be exchanged for another warrant entitling the Warrantholder thereof to purchase a like aggregate number of Units as this Warrant entitles such Warrantholder to purchase. A Warrantholder desiring to so exchange this Warrant shall make such request in writing delivered to the Company, and shall surrender this Warrant therewith. Thereupon, the Company shall execute and deliver to the person entitled thereto a new warrant or warrants, as the case may be, as so requested.
8. Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:
If to the Company:
TO PHARMACEUTICALS LLC
77 Water Street, 8 th Floor
New York, New York 10005
Email: seth@katanassociates.com
Attention: CEO
With a copy to:
Kaufman & Associates, LLC
190 Motor Parkway, Suite 202
Hauppauge, New York 11788
Telephone: (631) 972-0042
Facsimile: (631) 410-1007
Attention: Neil M. Kaufman
Email: nkaufman@kaufman-associates.com
If to the Warrantholder:
Bernard Sucher
715 Sevilla Avenue
Coral Gables, Florida 33134-5627
Email: bernie@tikunolam.com
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day, or (iv) if sent via electronic mail, upon its delivery, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.
6 |
9. Miscellaneous . This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant is deemed to have been delivered in the State of New York and shall be construed and enforced in accordance with and governed by the laws of such State, without regard to its conflicts of laws principles. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.
10. Expiration . Unless as hereinafter provided, the right to exercise this Warrant shall expire at the Expiration Date.
[Signature Page Follows]
7 |
Dated: November 1, 2018
TO PHARMACEUTICALS LLC | ||
By: | /s/ Seth Yakatan | |
Seth Yakatan | ||
Chief Executive Officer |
8 |
Exhibit 10.21
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS.
VOID AFTER 5:00 P.M. ON NOVEMBER 1, 2023
TO PHARMACEUTICALS LLC
WARRANT TO PURCHASE UNITS
New York, New York
Certificate No. 3
THIS IS TO CERTIFY THAT, for value received, Bernard Sucher, an individual residing at 715 Sevilla Avenue, Coral Gables, Florida 33134-5627 (the “Warrantholder”), is entitled, subject to the provisions and upon the terms and conditions set forth herein, to purchase from TO Pharmaceuticals LLC, a Delaware limited liability (the “Company”), up to 5,594 Class A Units (the “Warrant Units”) of the Company (“Units”), at an exercise price equal to $45.32 per Unit (the “Exercise Price”) at the times and in the manner set forth below.
As provided herein, the Exercise Price and the number of Warrant Units which may be purchased upon the exercise of this Warrant are, upon the happening of certain events, subject to modification and adjustment.
The rights of the registered holder of this Warrant shall be subject to the following further terms and conditions:
1. | Exercise of Warrant; Payment of Exercise Price . |
(a) | Exercise of Warrant . |
(i) While this Warrant remains outstanding, this Warrant shall be fully exercisable, in whole or in part, as of the date hereof (the “Exercisability Date”), upon submission by the Warrantholder to the Company of the exercise form attached as Exhibit A hereto (the “Exercise Form”) duly executed by the Warrantholder or by the Warrantholder’s duly authorized attorney-in-fact, at the principal office of the Company, or at such other office or agency in the United States as the Company may designate by notice in writing to the Warrantholder (in either event, the “Company Offices”), accompanied by payment in accordance with Section 1(b), of the aggregate Exercise Price payable for the Warrant Units being purchased. If the Warrantholder exercises the Warrant for fewer than all of the Warrant Units issuable in accordance with this Warrant, the Company shall, upon each exercise prior to the Expiration Date, execute and deliver to the Warrantholder a new Warrant (dated as of the date hereof) evidencing the balance of the Units that remain subject to issuance upon the exercise of this Warrant. This Warrant shall expire on the fifth (5 th ) anniversary of the date hereof (the “Expiration Date”), and thereupon the Warrantholder shall surrender this Warrant.
1 |
(ii) On the date of exercise of this Warrant, upon the Warrantholder exercising the same in compliance with the terms hereof, and if previous to such exercise the Warrantholder is not a party to the operating agreement of the Company, upon the execution and delivery to the Company of the joinder agreement in the form attached hereto as Exhibit B , the Warrantholder shall be deemed to have become the holder of record for all purposes of the Units to which the exercise relates.
(iii) As soon as practicable after the exercise of all or part of this Warrant, the Company, at its expense (including the payment by it of any applicable issue taxes), will cause to be issued in the name of and delivered to the Warrantholder a certificate or certificates evidencing the number of duly authorized, validly issued, fully paid and nonassessable Units to which the Warrantholder shall be entitled upon such exercise, if the units of membership interests of the Company are certificated as of such time.
(b) Payment of Exercise Price . Payment of the Exercise Price shall be made, at the option of the Warrantholder as expressed in the Exercise Form, by the following methods:
(i) by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such aggregate Exercise Price for Warrant Units being purchased hereunder;
(ii) by instructing the Company to withhold a number of Warrant Units then issuable upon exercise of this Warrant with an aggregate fair market value (“Fair Market Value”), as determined in good faith by the Board of Managers of the Company as of the Exercise Date, equal to the aggregate Exercise Price for Warrant Units being purchased hereunder;
(iii) by surrendering to the Company (x) Warrant Units previously acquired by the Warrantholder with an aggregate Fair Market Value as of the Exercise Date equal to the aggregate Exercise Price for Warrant Units being purchased hereunder and/or (y) other securities of the Company having a value as of the Exercise Date equal to the aggregate Exercise Price for Warrant Units being purchased hereunder (which value in the case of debt securities shall be the principal amount thereof plus accrued and unpaid interest, in the case of preferred units shall be the liquidation value thereof plus accumulated and unpaid distributions, and in the case of Units shall be the Fair Market Value thereof); or
(iv) any combination of the foregoing.
In the event of any withholding of Warrant Units or surrender of other equity securities pursuant to clause (b)(ii) or (iii) above where the number of Units whose value is equal to the aggregate Exercise Price is not a whole number, the number of Units withheld by or surrendered to the Company shall be rounded up to the nearest whole Unit and the Company shall make a cash payment to the Warrantholder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a Unit being so withheld by or surrendered to the Company in an amount equal to the product of (x) such incremental fraction of a Unit being so withheld or surrendered multiplied by (y) in the case of Units, the Fair Market Value per Warrant Unit as of the Exercise Date, and, in all other cases, the value thereof as of the Exercise Date determined in accordance with clause (iii)(y) above.
2 |
2. | Issuance of Units; Reservation of Units . |
(a) The Company covenants and agrees that all Units which may be issued upon the exercise of all or part of this Warrant will, upon issuance in accordance with the terms hereof, be validly issued and free from all taxes, liens and charges with respect to the issue thereof.
(b) The Company further covenants and agrees that if any Units to be reserved for the purpose of the issuance of Units upon the exercise of this Warrant require registration with, or approval of, any governmental authority under any federal or state law before such Units may be validly issued or delivered upon exercise, then the Company will promptly use its best efforts to effect such registration or obtain such approval, as the case may be.
3. | Adjustments of Exercise Price, Number and Character of Warrant Units, and Number of Warrants . |
The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the happening of the events enumerated in this Section 3.
(a) Distributions, Subdivisions and Combinations . In case the Company shall at any time on or before the Expiration Date:
(i) pay or make a distribution in Units or other securities of the Company to holders of all its outstanding Units;
(ii) subdivide or reclassify the outstanding Units into a greater number of Units;
(iii) combine the outstanding Units into a smaller number of Units; or
(iv) issue by reclassification of its Units other securities of the Company (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation),
then the number and kind of securities purchasable upon exercise of this Warrant outstanding immediately prior thereto shall be adjusted so that the Warrantholder shall be entitled to receive the kind and number of Units or other securities of the Company which the Warrantholder would have owned or have been entitled to receive after the happening of any of the events described above had this Warrant been exercised in full immediately prior to the earlier of the happening of such event or any record date in respect thereto. In the event of any adjustment of the number of Units or other securities of the Company purchasable upon the exercise of this Warrant pursuant to this Paragraph 3(a), the Exercise Price shall be adjusted to be the amount resulting from dividing the number of Units (including fractional Units) covered by this Warrant immediately after such adjustment into the total amount payable upon exercise of this Warrant in full immediately prior to such adjustment. An adjustment made pursuant to this Paragraph 3(a) shall become effective immediately after the effective date of such event retroactive to the record date for any such event. Such adjustment shall be made successively whenever any event listed above shall occur.
3 |
(b) Extraordinary Distributions .
(i) In case the Company shall at any time on or before the Expiration Date fix a record date for the issuance of rights, options, or warrants to all holders of its outstanding Units, entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Units (or securities exchangeable for or convertible into Units) at a price per Unit (or having an exchange or conversion price per Unit, with respect to a security exchangeable for or convertible into Units) which is lower than the current Exercise Price per Unit (as defined in Paragraph 3(d) below) on such record date, then the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, of which (i) the numerator shall be the number of Units outstanding on such record date plus the number of Units which the aggregate offering price of the total number of Units so to be offered (or the aggregate initial exchange or conversion price of the exchangeable or convertible securities so to be offered) would purchase at such current Exercise Price and (ii) the denominator shall be the number of Units outstanding on such record date plus the number of additional Units to be offered for subscription or purchase (or into which the exchangeable or convertible securities so to be offered are initially exchangeable or convertible). Such adjustment shall become effective at the close of business on such record date; however, to the extent that Units (or securities exchangeable for or convertible into Units) are not delivered after the expiration of such rights, options, or warrants, the Exercise Price shall be readjusted (but only with respect to any portion of this Warrant exercised after such expiration) to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights, options, or warrants been made upon the basis of delivery of only the number of Units (or securities exchangeable for or convertible into Units) actually issued. In case any subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Managers of the Company and shall be described in a statement mailed to the Warrantholder. Units owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation.
(ii) In case the Company shall at any time after the original date of issuance of this Warrant distribute to all holders of its Units (including any such distribution made in connection with a consolidation or merger in which the Company is the surviving corporation) evidences of its indebtedness or assets (excluding distributions payable out of consolidated net income or earned surplus in accordance with New York law and distributions payable in Units described in Paragraph 3(a) above) or rights, options, or warrants or exchangeable or convertible securities containing the right to subscribe for or purchase Units (or securities exchangeable for or convertible into Units), then the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date for such distribution by a fraction, of which (i) the numerator shall be the current Exercise Price per Unit of the portion of the evidences of indebtedness or assets so to be distributed or of such rights, options or warrants applicable to one Unit and (ii) the denominator shall be such current Exercise Price per Unit. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for such transaction.
(c) Minimum Adjustment . Except as hereinafter provided, no adjustment of the Exercise Price hereunder shall be made if such adjustment results in a change of the Exercise Price then in effect of less than one dollar ($1.00) per Unit. Any adjustment of less than one dollar ($1.00) per Unit of any Exercise Price shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, together with adjustment or adjustments so carried forward, amounts to one dollar ($1.00) per Unit or more. However, upon exercise of this Warrant, the Company shall make all necessary adjustments (to the nearest cent) not theretofore made to the Exercise Price up to and including the effective date upon which this Warrant is exercised.
4 |
(d) Notice of Adjustments . Whenever the Exercise Price shall be adjusted pursuant to this Section 3, the Company shall promptly deliver a certificate signed by the Chief Executive Officer, President or a Vice President and by the Chief Financial Officer, Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Managers of the Company made any determination hereunder), in accordance with the provisions of Section 8 hereof.
(e) Capital Reorganizations and Other Reclassifications . In case of any capital reorganization of the Company, or of any reclassification of the Units (other than a reclassification, subdivision or combination of Units referred to in Paragraph 3(a)), this Warrant shall, after such capital reorganization, reclassification of Units, consolidation, merger, or sale, be immediately exercisable, upon the terms and conditions specified in this Warrant, for the kind, amount and number of Units or other securities, assets, or cash to which a holder of the number of Units purchasable (at the time of such capital reorganization, reclassification of Units, consolidation, merger or sale) upon exercise of this Warrant would have been entitled to receive upon such capital reorganization, reclassification of Units, consolidation, merger, or sale; and in any such case, if necessary, the provisions set forth in this Section 3 with respect to the rights and interests thereafter of the Warrantholder shall be appropriately adjusted so as to be applicable, as nearly equivalent as possible, to any Units or other securities, assets, or cash thereafter deliverable on the exercise of this Warrant. The Company shall not effect any such consolidation, merger, or sale, unless prior to or simultaneously with the consummation thereof the successor corporation or entity (if other than the Company) resulting from such consolidation or merger or the corporation or entity purchasing such assets or other appropriate corporation or entity shall assume, by written instrument, the obligation to deliver to the Warrantholder such Units, securities, assets, or cash as, in accordance with the foregoing provisions, such holders may be entitled to purchase and the other obligations hereunder. The subdivision or combination of Units at any time outstanding into a greater or lesser number of Units shall not be deemed to be a reclassification of the Units for purposes of this Paragraph 3(f).
(f) Adjustments to Other Securities . In the event that at any time, as a result of an adjustment made pursuant to this Section 3, the Warrantholder shall become entitled to purchase any Units or securities of the Company other than the Units, thereafter the number of such other Units or securities so purchasable upon exercise of each Warrant and the exercise price for such Units or securities shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as possible to the provisions with respect to the Units contained in Paragraphs 3(a) through (c), inclusive.
(g) Deferral of Issuance of Additional Units in Certain Circumstances . In any case in which this Section 3 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event issuing to the Warrantholder exercised after such record date the Units, if any, issuable upon such exercise over and above the Units, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided , however , that the Company shall deliver as soon as practicable to such holder a due bill or other appropriate instrument provided by the Company evidencing such holder’s right to receive such additional Units upon the occurrence of the event requiring such adjustment.
5 |
4. Replacement of Securities . If this Warrant shall be lost, stolen, mutilated or destroyed, the Company shall, on such terms as to indemnity or otherwise as the Company may in its discretion reasonably impose, issue a new warrant of like tenor or date representing in the aggregate the right to subscribe for and purchase the number of Units which may be subscribed for and purchased hereunder. Any such new warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed warrant shall be at any time enforceable by anyone.
5. Registration . This Warrant shall be numbered and shall be registered in a register (the “Warrant Register”) maintained at the offices of the Company as they are issued. The Warrant Register shall list the name, address and Social Security or other Federal Identification Number, if any, of all warrantholders. The Company shall be entitled to treat the Warrantholder as set forth in the Warrant Register as the owner in fact of this Warrant as set forth therein for all purposes and shall not be bound to recognize any equitable or other claim to or interest in this Warrant on the part of any other person, and shall not be liable for any registration or transfer of this Warrant that is registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration of transfer, or with such knowledge of such facts that its participation therein amounts to bad faith.
6. Transfer . NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT HAS BEEN ACQUIRED, AND ANY UNITS OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR THIS WARRANT AND/OR SUCH UNITS OR OTHER SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS WARRANT AND SUCH UNITS OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.
7. Exchange of Warrant . This Warrant may be exchanged for another warrant entitling the Warrantholder thereof to purchase a like aggregate number of Units as this Warrant entitles such Warrantholder to purchase. A Warrantholder desiring to so exchange this Warrant shall make such request in writing delivered to the Company, and shall surrender this Warrant therewith. Thereupon, the Company shall execute and deliver to the person entitled thereto a new warrant or warrants, as the case may be, as so requested.
8. Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:
If to the Company:
TO PHARMACEUTICALS LLC
77 Water Street, 8 th Floor
New York, New York 10005
Email: seth@katanassociates.com
Attention: CEO
6 |
With a copy to:
Kaufman & Associates, LLC
190 Motor Parkway, Suite 202
Hauppauge, New York 11788
Telephone: (631) 972-0042
Facsimile: (631) 410-1007
Attention: Neil M. Kaufman
Email: nkaufman@kaufman-associates.com
If to the Warrantholder:
Bernard Sucher
715 Sevilla Avenue
Coral Gables, Florida 33134-5627
Email: bernie@tikunolam.com
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day, or (iv) if sent via electronic mail, upon its delivery, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.
9. Miscellaneous . This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant is deemed to have been delivered in the State of New York and shall be construed and enforced in accordance with and governed by the laws of such State, without regard to its conflicts of laws principles. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.
10. Expiration . Unless as hereinafter provided, the right to exercise this Warrant shall expire at the Expiration Date.
[Signature Page Follows]
7 |
Dated: November 1, 2018
TO PHARMACEUTICALS LLC | ||
By: | /s/ Seth Yakatan | |
Seth Yakatan | ||
Chief Executive Officer |
8 |
Exhibit 21.1
List of Subsidiaries of the Registrant
Expected Subsidiaries of the Registrant Following the Spin-Off
Name of Subsidiary | Jurisdiction of Organization | |
AQ TOP, LLC | Delaware |
Expected Subsidiaries of the Registrant Following the Merger
Name of Subsidiary | Jurisdiction of Organization | |
TO Pharmaceuticals LLC | Delaware |
Exhibit 23.1
Independent Registered Public Accounting Firm’s Consent
We consent to the inclusion in this Registration Statement of AquaMed Technologies, Inc. (A Segment of Alliqua BioMedical, Inc.) (the “Company”) on Form S-1 of our report dated January 8, 2019, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern with respect to our audits of the financial statements of AquaMed Technologies, Inc. as of December 31, 2017 and 2016 and for each of the two years in the period ended December 31, 2017, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading “Experts” in such Prospectus.
/s/ Marcum llp
Marcum llp
New York, NY
January 8, 2019
Exhibit 23.2
Independent Registered Public Accounting Firm’s Consent
We consent to the inclusion in this Registration Statement of AquaMed Technologies, Inc. on Form S-1 of our report dated January 8, 2019, which includes an explanatory paragraph as to TO Pharmaceuticals LLC’s ability to continue as a going concern, with respect to our audits of the consolidated financial statements of TO Pharmaceuticals LLC and Subsidiaries as of December 31, 2017 and 2016 and for each of the two years in the period ended December 31, 2017, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading “Experts” in such Prospectus.
/s/ Marcum llp
Marcum llp
New York, NY
January 8, 2019