Exhibit 2.3
ADVANCED INHALATION THERAPIES (AIT) LTD
514609387
RED MAPLE LTD
515544419
:
29/12/2016
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Date of Report (Date of earliest event reported):
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January 13, 2017
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Delaware
(State or other
jurisdiction of incorporation)
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333-207220
(Commission
File Number)
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47-3812456
(I.R.S. Employer
Identification No.)
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2 Derech Meir Weisgal
Rehovot, 763205 Israel
(Address of principal executive offices) (zip code)
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+972.8.684.3313
(Registrant's telephone number, including area code)
KokiCare, Inc.
26716 Via Colina
Stevenson Ranch, CA 91381
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(Former name or former address, if changed since last report.)
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Page No.
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Security Ownership of Certain Beneficial Owners and Management
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| 66 | ||
| 69 | ||
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Certain Relationships and Related Transactions, and Director Independence
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Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters
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| 74 | ||
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the results of our research and development activities, including uncertainties relating to the discovery of potential product candidates and the preclinical and clinical testing of our product candidates; the early stage of our product candidates presently under development;
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our ability to obtain and, if obtained, maintain regulatory approval of our current product candidates, and any of our other future product candidates, and any related restrictions, limitations, and/or warnings in the label of any approved product candidate;
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our need for substantial additional funds in order to continue our operations, and the uncertainty of whether we will be able to obtain the funding we need; our ability to retain or hire key scientific or management personnel; our ability, with partners, to validate, develop and obtain regulatory approval of companion diagnostics for our product candidates;
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our ability to protect our intellectual property rights that are valuable to our business, including patent and other intellectual property rights; our dependence on third- party manufacturers, suppliers, research organizations, testing laboratories and other potential collaborators; our ability to develop successful sales and marketing capabilities in the future as needed;
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the size and growth of the potential markets for any of our approved product candidates, and the rate and degree of market acceptance of any of our approved product candidates; competition in our industry; and regulatory developments in the United States and foreign countries.
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Optimization to deliver a high 160 ppm, anti-microbial dosage of NO, whereas existing formulations of NO currently on the market consist of an NO concentration of approximately 20 ppm;
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Equipped with a monitoring system that continuously monitors system parameters (e.g., NO, NO2 and FiO2 concentrations) as well as patient parameters (e.g. vital signs, MetHemoglobin and OxyHemoglobin percentages);
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Positive flow (as opposed to negative pressure) – we believe that positive flow allows for more direct and controlled delivery of a high dosage NO formulation;
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Provides constant flow of our NO formulation, thereby effectively and adequately covering the surface area of the lung to eliminate bacteria, viruses, fungi and other microbes;
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Programmable and able to deliver different dosage regimens for a wide range of lung infections;
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Systems will be designed to be convenient and portable; and
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Will be administered non-invasively through a facial mask, which has the potential to address large, underserved chronic-care markets, such as CF.
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The antimicrobial and signaling properties of the NO molecule delivered to the lungs suggest the potential for application in a wide range of respiratory diseases. In contrast to the often arduous and slow drug discovery process for small molecules, the use of NO in medicine is well known, and therefore the identification of NO product candidates has been, and we expect will continue to be, much simpler, quicker and less costly.
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The FDA approved the use of an NO formulation as an inhaled drug for the treatment of pulmonary hypertension in newborns in 1999. More than a decade of clinical experience with safe delivery, monitoring and understanding of NO in the clinical environment for vascular uses has been documented.
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NO is naturally produced by the immune system and acts as a first line of defense against infectious diseases. Therapeutic use of NO for viral and bacterial co-infections would potentially improve the effectiveness of antimicrobial and anti-viral treatments by mimicking the body's natural defense mechanism and thereby directly reduce viral infectivity, as well as antibiotic drug resistant bacteria.
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Bronchiolitis. Phase 1 safety studies have been successfully completed at the hospital of the University of British Columbia. More significantly, we recently completed a Phase 2, double blind, randomized study conducted in Israel in infants with bronchiolitis. In May 2014, we submitted a pre-IND letter to the FDA in which we requested certain feedback. The FDA responded to our request in June 2014, and we perceive their response as favorable. The FDA agreed that the safety profile of NO is well understood, and that the existing pre-clinical data should be sufficient to support an Investigational New Drug (IND) application. We intend to commence a non U.S.-based Phase 3 clinical trial as soon as we secure appropriate funding, and later on, we plan to commence a Phase 3 study in the United States.
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NTM in CF patients. We recently perform an open label, compassion study in Israel of NTM in CF patients who are over 10 years old. We expect to commence a non U.S.-based Phase 2 clinical trial in 2017. In addition, we intend to submit an IND to the FDA in 2017 and expect to commence a U.S.-based Phase 3 clinical trial in 2018. The Phase 2 and the Phase 3 studies will be designed as Open label and multicenter trials to assess the safety and efficacy of our NO formulation treatment along with antibiotic treatment compared to standard antibiotic treatment without our NO treatment in NTM patients older than ten years of age. The study's endpoints are expected to include assessment of safety and tolerability, CFU level, clinical improvement and lung function.
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CF-Related Lung Infections. We recently completed a Phase 2 open label, multi-center study in Israel of CF patients who are over 10 years old.
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devices and methods for delivering NO formulations to a patient at steady and alternating concentrations (80-400 ppm), including intermittent delivery of NO;
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a device and methods for treatment of surface infections; and
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use of NO as a mucolytic agent and for treatment and disinfection of biofilms.
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methods and devices for treating a human subject by intermittent delivery of about 160 ppm NO while showing that such a delivery can be effected while various physiological parameters of the subject remain unchanged;
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methods and devices for treating a human subject by intermittent delivery of about 160 ppm NO, aimed at treating subjects suffering or being prone to suffer from various diseases and disorders that are treatable by delivering NO formulations to the respiratory tract, including diseases such as bronchiolitis, CF, asthma, COPD and nosocomial infections; and
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devices and systems configured for delivering NO formulations to the respiratory tract, including large and small volume systems, and stationary and portable systems.
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completion of extensive preclinical laboratory tests;
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completion of preclinical animal studies, all performed in accordance with the FDA's Good Laboratory Practices (GLP) regulations and the United States Department of Agriculture's Animal Welfare Act and implementing regulations;
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submission to the FDA of an investigational new drug application (IND), which must become effective before human clinical trials may begin in the United States;
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performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for each proposed indication;
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performance of additional studies, such as pharmacokinetics, to support the desired product label;
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submission to the FDA of an NDA after completion of all necessary clinical trials;
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a determination by the FDA that the NDA is sufficiently complete to be accepted for review;
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satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities at which the product is produced and tested to assess compliance with current cGMP requirements; and
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FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States.
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Phase 3 Clinical Trials
. These are commonly referred to as pivotal studies. When Phase 2 evaluations demonstrate that a dose range of the product is effective and has an acceptable safety profile, Phase 3 clinical trials are undertaken in large patient populations to further evaluate dosage, provide substantial evidence of clinical efficacy and further test for safety in an expanded and diverse patient population, often at multiple, geographically dispersed clinical trial centers.
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we are a development-stage biopharmaceutical company and have a limited operating history on which to assess our business, have incurred significant losses since our inception, including a net loss of $2.7 million for the nine months ended September 30, 2016, and an accumulated deficit of approximately $12.6 million, and anticipate that we will continue to incur significant losses for the foreseeable future;
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we are unable to predict the extent of future losses or when we will become profitable based on the sale of any product, if at all. Even if we succeed in developing and commercializing our product candidates, we may never generate revenue to sustain profitability;
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we have no source of revenue, we expect that we will need to raise additional funding before we can expect to become profitable from sales of our products;
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we are heavily dependent upon the success of our product candidates, which are in the early stages of clinical development, and we cannot provide any assurance that the FDA or other regulatory agencies will allow us to conduct further clinical trials;
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we are in the process of developing our NOxSysBS
TM
proprietary delivery system, and unexpected delays will adversely impact the timing of our U.S.-based clinical trials;
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we might be unable to develop product candidates that will achieve commercial success in a timely and cost-effective manner, or ever;
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our competitors may develop or commercialize products faster or more successfully than us;
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because some of our the target patient populations of our product candidates are small, we must be able to successfully identify patients and achieve a significant market share to maintain profitability and growth;
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our reliance on third parties to help conduct our pre-clinical studies and clinical trials;
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we do not have any products approved for sale by the FDA or any other regulatory agencies, and we cannot provide any assurance that any of our product candidates will receive regulatory approval;
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if we are unable to obtain and maintain effective intellectual property rights for our technologies, product candidates or any future product candidates, we may not be able to compete effectively in our markets; and
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our future success depends in part upon our ability to retain our executive and scientific teams, and to attract, retain and motivate other qualified personnel.
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the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical studies;
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we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate's safety-benefit ratio for its proposed indication is acceptable;
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the FDA may determine that the population studied in the clinical program was not sufficiently broad or representative to assure safety in the full population for which we seek approval;
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the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical studies;
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the data collected from clinical studies of our product candidates may not be sufficient to support the submission of a NDA in the United States or elsewhere;
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the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications or facilities of third-party manufacturers with which we contract for clinical and commercial supplies;
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the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval; and
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competitors may obtain orphan drug exclusivity for CF before we do, thus potentially delaying our entry into certain markets for a number of years.
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inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of human clinical studies;
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delays in reaching a consensus with regulatory agencies on study design;
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delays in reaching agreement on acceptable terms with prospective contract research organizations (CROs) and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites;
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delays in obtaining required Institutional Review Board (IRB) approval at each clinical study site;
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imposition of a clinical hold by regulatory agencies, after review of an investigational new drug (IND) application, or equivalent application, or an inspection of our clinical study operations or study sites;
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delays in recruiting suitable patients to participate in our clinical studies;
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difficulty collaborating with patient groups and investigators;
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failure by our CROs, other third parties or us to adhere to clinical study requirements;
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failure to perform in accordance with the FDA's good clinical practices requirements, or applicable regulatory guidelines in other countries;
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delays in having patients complete participation in a study or return for post-treatment follow-up;
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patients dropping out of a study;
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occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits;
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changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;
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the cost of clinical studies of our product candidates being greater than we anticipate;
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clinical studies of our product candidates producing negative or inconclusive results, which may result in us deciding, or regulators requiring us, to conduct additional clinical studies or abandon product development programs; and
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delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical studies or the inability to do any of the foregoing.
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regulatory authorities may withdraw approvals of such product;
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regulatory authorities may require additional warnings on the label;
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we may be required to create a Risk Evaluation and Mitigation Strategy (REMS) plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers and/or other elements to assure safe use;
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we could be sued and held liable for harm caused to patients; and
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our reputation may suffer.
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issue warning letters;
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impose civil or criminal penalties;
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suspend or withdraw regulatory approval;
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suspend any of our ongoing clinical studies;
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refuse to approve pending applications or supplements to approved applications submitted by us;
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impose restrictions on our operations, including closing our contract manufacturers' facilities; or
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seize or detain products, or require a product recall.
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the safety and efficacy of the product as demonstrated in clinical studies and potential advantages over competing treatments;
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the prevalence and severity of any side effects, including any limitations or warnings contained in a product's approved labeling;
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the clinical indications for which approval is granted;
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relative convenience and ease of administration;
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the cost of treatment, particularly in relation to competing treatments;
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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the strength of marketing and distribution support and timing of market introduction of competitive products;
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publicity concerning our products or competing products and treatments; and
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sufficient third-party insurance coverage and reimbursement.
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the scope of rights granted under the license agreement and other interpretation-related issues;
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the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
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the sublicensing of patent and other rights;
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our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
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the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and
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the priority of invention of patented technology.
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our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates;
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we may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;
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our product candidates may not succeed in preclinical or clinical testing;
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our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval;
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competitors may develop alternatives that render our product candidates obsolete or less attractive;
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product candidates we develop may be covered by third parties' patents or other exclusive rights;
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the market for a product candidate may change during our program so that such a product may become unreasonable to continue to develop;
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a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
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a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.
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the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;
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federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent;
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the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;
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HIPAA, as amended by the Health Information Technology and Clinical Health Act (HITECH), and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;
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the federal physician sunshine requirements under the Health Care Reform Laws requires manufacturers of drugs, devices and medical supplies to report annually to the U.S. Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and
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state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
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multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses;
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failure by us to obtain regulatory approvals for the use of our products in various countries;
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additional potentially relevant third-party patent rights;
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complexities and difficulties in obtaining protection and enforcing our intellectual property;
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difficulties in staffing and managing foreign operations;
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complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;
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limits in our ability to penetrate international markets;
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financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;
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natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions;
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certain expenses including, among others, expenses for travel, translation and insurance; and
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regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act (FCPA), its books and records provisions or its anti-bribery provisions.
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The product candidates we seek to pursue, and our ability to obtain rights to develop, commercialize and market those product candidates;
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our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;
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actual or anticipated adverse results or delays in our clinical trials;
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our failure to commercialize our product candidates, if approved;
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unanticipated serious safety concerns related to the use of any of our product candidates;
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adverse regulatory decisions;
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additions or departures of key scientific or management personnel;
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changes in laws or regulations applicable to our product candidates, including without limitation clinical trial requirements for approvals;
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disputes or other developments relating to patents and other proprietary rights and our ability to obtain patent protection for our product candidates;
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our dependence on third parties, including CROs as well as our potential partners that provide us with companion diagnostic products; failure to meet or exceed any financial guidance or expectations regarding development milestones that we may provide to the public;
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actual or anticipated variations in quarterly operating results;
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failure to meet or exceed the estimates and projections of the investment community;
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overall performance of the equity markets and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies;
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conditions or trends in the biotechnology and biopharmaceutical industries;
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introduction of new products offered by us or our competitors;
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announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;
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our ability to maintain an adequate rate of growth and manage such growth; issuances of debt or equity securities;
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sales of our common stock by us or our stockholders in the future, or the perception that such sales could occur;
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trading volume of our common stock; ineffectiveness of our internal control over financial reporting or disclosure controls and procedures;
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general political and economic conditions;
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effects of natural or man- made catastrophic events; and
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other events or factors, many of which are beyond our control.
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providing that directors may be removed by stockholders only for cause;
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limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;
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authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; and
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limiting the liability of, and providing indemnification to, our directors and officers.
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☐
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prices, rights, preferences and privileges of the convertible preferred shares;
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☐
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current business conditions and projections;
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☐
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the Company's stage of development;
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☐
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the likelihood of a liquidity event for the ordinary shares underlying these options, such as an initial public offering or sale of the Company, given prevailing market conditions; and
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☐
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any adjustments necessary due to the lack of marketability of the ordinary shares;
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Nine months ended September 30,
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Year ended
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||||||||||||||
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(in thousands of U.S. dollars)
|
2016
|
2015
|
December 31,
|
December 31,
|
||||||||||||
|
|
(unaudited)
|
(unaudited)
|
2015
|
2014
|
||||||||||||
|
|
||||||||||||||||
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Research and development expenses
|
573
|
1,433
|
1,620
|
1,167
|
||||||||||||
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General and administrative expenses
|
523
|
495
|
589
|
989
|
||||||||||||
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Costs related to aborted IPO
|
621
|
-
|
-
|
-
|
||||||||||||
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Operating loss
|
1,717
|
1,928
|
2,209
|
2,156
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|
||||||||||||||||
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Financial expense, net
|
990
|
713
|
994
|
411
|
||||||||||||
|
Revaluation of warrants to purchase Series A Preferred Shares
|
-
|
152
|
152
|
2,055
|
||||||||||||
|
|
||||||||||||||||
|
Loss before taxes on Income
|
2,707
|
2,793
|
3,355
|
4,622
|
||||||||||||
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Taxes on income
|
39
|
117
|
127
|
-
|
||||||||||||
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Net comprehensive loss
|
2,746
|
2,910
|
3,482
|
4,622
|
||||||||||||
|
|
Nine months ended September 30,
|
Year ended
|
||||||||||||||
|
(in thousands of U.S. dollars)
|
2016
|
2015
|
December 31,
|
December 31,
|
||||||||||||
|
|
(unaudited)
|
(unaudited)
|
2015
|
2014
|
||||||||||||
|
|
||||||||||||||||
|
Cost to third-party clinical consultants and expenses related
to conducting clinical and preclinical trials
|
85
|
595
|
623
|
566
|
||||||||||||
|
Salaries and related personnel
|
125
|
232
|
266
|
196
|
||||||||||||
|
Share-based compensation
|
190
|
268
|
331
|
185
|
||||||||||||
|
Patents
|
116
|
58
|
64
|
99
|
||||||||||||
|
Other
|
57
|
280
|
336
|
121
|
||||||||||||
|
Total
|
573
|
1,433
|
1,620
|
1,167
|
||||||||||||
|
|
Nine months ended September 30,
|
Year ended December 31,
|
||||||||||||||
|
(in thousands of U.S. dollars)
|
2016
|
2015
|
2015
|
2014
|
||||||||||||
|
|
(unaudited)
|
(unaudited)
|
||||||||||||||
|
Net cash provided by (used in):
|
||||||||||||||||
|
Operating activities
|
(415
|
)
|
(1,530
|
)
|
(1,658
|
)
|
(1,883
|
)
|
||||||||
|
Investing activities
|
3
|
(6
|
)
|
(7
|
)
|
(18
|
)
|
|||||||||
|
Financing activities
|
303
|
1,564
|
1,633
|
2,039
|
||||||||||||
|
Net increase (decrease) in cash and cash equivalents
|
(109
|
)
|
28
|
(32
|
)
|
138
|
||||||||||
|
•
|
the progress and costs of our preclinical studies, clinical trials and other research and development activities;
|
|
|
•
|
the scope, prioritization and number of our clinical trials and other research and development programs;
|
|
|
•
|
the costs and timing of obtaining regulatory approval for our product candidates;
|
|
|
•
|
the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;
|
|
|
•
|
the costs of, and timing for, strengthening our manufacturing agreements for production of sufficient clinical quantities of our product candidates;
|
|
|
•
|
the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally;
|
|
|
•
|
the costs of acquiring or undertaking the development and commercialization efforts for additional, future therapeutic applications of our product candidates;
|
|
|
•
|
the magnitude of our general and administrative expenses; and
|
|
|
•
|
any cost that we may incur under current and future in- and out-licensing arrangements relating to our product candidates.
|
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
|
|
Ron Bentsur
|
|
50
|
|
Executive Chairman of the Board of Directors
|
|
Amir Avniel
|
|
42
|
|
President and Chief Executive Officer and Director
|
|
Yossef Av-Gay
|
|
53
|
|
Chief Scientific Officer and Director
|
|
Racheli Vizman
|
|
35
|
|
Chief Operation Officer
|
|
David Grossman
|
|
40
|
|
Director
|
|
Ari Raved
|
|
62
|
|
Director
|
|
Jerome B. Zeldis
|
|
65
|
|
Director
|
|
Steven A. Lisi
|
46 | Director |
|
(in thousands of U.S. dollars)
|
Year ended December 31 2015
|
Nine months ended September 30 2016
|
||
|
Salary
|
Option Awards
|
Salary
|
Option Awards
|
|
|
Racheli Vizman
|
138
|
57
|
120
|
47
|
|
Amir Avniel
|
198
|
-
|
182
|
-
|
|
Jerry Zeldis
|
-
|
47
|
-
|
66
|
|
David Grossman
|
-
|
-
|
-
|
26
|
|
|
•
|
|
we are current in our SEC filings,
|
|
|
•
|
|
certain manner of sale provisions,
|
|
|
•
|
|
filing of Form 144, and
|
|
|
•
|
|
volume limitations limiting the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of the total number of outstanding shares. A person who has ceased to be an affiliate at least three months immediately preceding the sale and who has owned such shares of common stock for at least one year is entitled to sell the shares under Rule 144 without regard to any of the limitations described above.
|
|
|
•
|
|
volume limitations limiting the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of the total number of outstanding shares. A person who has ceased to be an affiliate at least three months immediately preceding the sale and who has owned such shares of common stock for at least one year is entitled to sell the shares under Rule 144 without regard to any of the limitations described above.
|
| · |
permit our Board of Directors to issue up to 10,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate (including dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and dissolution preferences);
|
| · |
provide that, subject to the rights of any series of preferred stock to elect directors, directors may only be removed, subject to any limitation imposed by law, by the holders of at least
2
⁄
3
of the voting power of all of our then- outstanding shares of the capital stock entitled to vote generally at an election of directors;
|
| · |
provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by a vote of a majority of directors then in office; and
|
| · |
do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose).
|
|
·
|
increase the number of authorized shares of our common stock from 50,000,000 shares to 100,000,000 shares and increase the number of authorized shares of our preferred stock from 5,000,000 shares to 10,000,000 shares;
|
|
|
Dated: January 20, 2017
|
AIT THERAPEUTICS, INC.
|
|
By:
/s/Amir Avniel
Name:
Amir Avniel
Title:
Chief Executive Officer
|
|
Exhibit Number
|
Description |
|
|
2.1
|
Agreement and Plan of Merger and Reorganization, dated December 29, 2016, by and between AIT Therapeutics, Inc. (formerly known as KokiCare, Inc.), Red Maple Ltd.., and Advanced Inhalation Therapies (AIT) Ltd.
|
|
|
2.2
|
Amendment No. 1 to Agreement and Plan of Merger and Reorganization, dated January 12, 2017, by and between AIT Therapeutics, Inc. (formerly known as KokiCare, Inc.) and Advanced Inhalation Therapies (AIT) Ltd.
|
|
|
2.3
|
Merger Completion Certificate, dated December 29, 2016, by and among Red Maple Ltd. and Advanced Inhalation Therapies (AIT) Ltd.
|
|
|
3.1
|
Amended and Restated Articles of Incorporation of AIT Therapeutics, Inc.
|
|
|
3.2
|
Amended and Restated Bylaws of AIT Therapeutics, Inc.
|
|
|
4.1
|
Form of Common Stock certificate.
|
|
|
10.1
|
Amended and Restated Agreement for the Transfer and Assumption of Obligations Under the Securities Purchase and Registration Rights Agreements, dated January 12, 2017, by and between AIT Therapeutics, Inc. (formerly known as KokiCare, Inc.) and Advanced Inhalation Therapies (AIT) Ltd.
|
|
|
10.2
|
Form of Securities Purchase and Registration Rights Agreement Dated December 29, 2016 by and Advanced Inhalation Therapies (AIT) Ltd. and certain purchasers
|
|
|
10.3
|
Form of Warrant to Purchase Common Stock by and between AIT Therapeutics, Inc. and certain purchasers
|
|
|
10.4
|
Advanced Inhalation Therapies (AIT) Ltd. 2013 Share Option Plan, as amended and restated as of the closing of the Merger as a Stock Incentive Plan of AIT Therapeutics, Inc.
|
|
|
10.5
|
Agreement, dated August 3, 2015, by and between AIT Ltd. and Ron Bentsur
|
|
|
10.6
|
Employment Agreement, dated September 9, 2012, by and between AIT Ltd. and Racheli Vizman
|
|
|
10.7
|
Addendum to Employment Agreement, dated May 30, 2013, by and between the Company and Racheli Vizman
|
|
|
10.8^
|
Addendum to Employment Agreement, dated April 8, 2014, by and between the Company and Racheli Vizman
|
|
|
10.6
|
Addendum to Employment Agreement, dated July 12, 2015, by and between the Company and Racheli Vizman
|
|
|
10.7
|
License Agreement, dated November 1, 2011, by and between AIT Ltd. and the University of British Columbia
|
|
|
10.8
|
Non-Exclusive License Agreement, dated October 22, 2013, by and between AIT Ltd. and SensorMedics Corporation (CareFusion)
|
|
|
10.9
|
Services Agreement, dated June 11, 2015, by and between AIT Ltd. and Guberman Consulting Ltd.
|
|
|
10.10
|
Option Agreement, dated August 31, 2015, by and between AIT Ltd. and Pulmonox Technologies Corporation
|
|
|
10.11
|
Amendment No. 10 dated December 31, 2016, to Option Agreement between AIT Ltd. and Pulmonox Technologies Corporation
|
|
|
10.12
|
Agreement dated June 24, 2016 between AIT Ltd. and Steven Lisi | |
|
21.1
|
List of Subsidiaries.
|
|
|
99.1
|
Unaudited condensed financial statements of Advanced Inhalation Therapies (AIT) Ltd. for the nine months ended September 30, 2016 and 2015.
|
|
|
99.2
|
Audited financial statements of Advanced Inhalation Therapies (AIT) Ltd. for the years ended December 31, 2015 and 2014.
|
|
|
99.3
|
Pro forma financial information of AIT Therapeutics, Inc. and its wholly owned subsidiary Advanced Inhalation Therapies (AIT) Ltd.
|
|
|
Ait Therapeutics, Inc.
By: _________________________________
Name:
Title:
Red Maple Ltd.
By: _________________________________
Name:
Title:
Advanced Inhalation Therapies (AIT) Ltd.
By: _________________________________
Name:
Title:
|
|
Position
|
Name
|
|
Chief Executive Officer
|
Amir Avniel
|
|
Chief Financial Officer
|
Amir Avniel
|
|
Secretary
|
David Grossman
|
|
Chairman of the Board
|
Ron Bentzur
|
|
Member of Board of Directors
|
Dr. Jerome B. Zeldis
|
|
Member of Board of Directors
|
David Grossman
|
|
Member of Board of Directors
|
Amir Avniel
|
|
Member of Board of Directors
|
Prof. Yossef Av-Gay
|
|
Member of Board of Directors
|
Ari Raved
|
|
Member of Board of Directors
|
Steven Lisi
|
|
AIT THERAPEUTICS, INC.
By:______________________________
Name: Jason Lane
Title: Chief Executive Officer
|
ADVANCED INHALATION THERAPIES LTD.
By:______________________________
Name: Amir Avniel
Title: President and CEO
|
| AIT Therapeutics, Inc. | |||
|
By:
|
/s/ Jason Lane | ||
| Jason Lane, | |||
| President and Chief Executive Officer | |||
|
ARTICLE I
|
OFFICES
|
Page
1
|
|
Section 1.
|
Registered Office
|
1
|
|
Section 2.
|
Other Offices
|
1
|
|
ARTICLE II
|
CORPORATE SEAL
|
1
|
|
Section 3.
|
Corporate Seal
|
1
|
|
ARTICLE III
|
STOCKHOLDERS’ MEETINGS
|
1
|
|
Section 4.
|
Place Of Meetings
|
1
|
|
Section 5.
|
Annual Meetings
|
1
|
|
Section 6.
|
Special Meetings
|
5
|
|
Section 7.
|
Notice Of Meetings
|
6
|
|
Section 8.
|
Quorum
|
7
|
|
Section 9.
|
Adjournment And Notice Of Adjourned Meetings
|
7
|
|
Section 10.
|
Voting Rights
|
8
|
|
Section 11.
|
Joint Owners Of Stock
|
8
|
|
Section 12.
|
List Of Stockholders
|
8
|
|
Section 13.
|
Action Without Meeting
|
8
|
|
Section 14.
|
Organization
|
8
|
|
ARTICLE IV
|
DIRECTORS
|
9
|
|
Section 15.
|
Number And Term Of Office
|
9
|
|
Section 16.
|
Powers
|
9
|
|
Section 17.
|
Board of Directors.
|
9
|
|
Section 18.
|
Vacancies
|
10
|
|
Section 19.
|
Resignation
|
10
|
|
Section 20.
|
Removal
|
11
|
|
Section 21.
|
Meetings
|
11
|
|
Section 22.
|
Quorum And Voting
|
12
|
|
Section 23.
|
Action Without Meeting
|
12
|
|
Section 24.
|
Fees And Compensation
|
12
|
|
Section 25.
|
Committees
|
12
|
|
Section 27.
|
Organization
|
14
|
|
ARTICLE V
|
OFFICERS
|
14
|
|
Section 28.
|
Officers Designated
|
14
|
|
Section 29.
|
Tenure And Duties Of Officers
|
14
|
|
Section 30.
|
Delegation Of Authority
|
16
|
|
Section 31.
|
Resignations
|
16
|
|
Section 32.
|
Removal
|
16
|
|
ARTICLE VI
|
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION
|
16
|
|
Section 33.
|
Execution Of Corporate Instruments
|
16
|
|
Section 34.
|
Voting Of Securities Owned By The Corporation
|
17
|
|
ARTICLE VII
|
SHARES OF STOCK
|
17
|
|
Section 35.
|
Form And Execution Of Certificates
|
17
|
|
Section 36.
|
Lost Certificates
|
17
|
|
Section 37.
|
Transfers
|
17
|
|
Section 38.
|
Fixing Record Dates
|
18
|
|
Section 39.
|
Registered Stockholders
|
18
|
|
ARTICLE III
|
OTHER SECURITIES OF THE CORPORATION
|
18
|
|
Section 40.
|
Execution Of Other Securities
|
18
|
|
ARTICLE IX
|
DIVIDENDS
|
19
|
|
Section 41.
|
Declaration Of Dividends
|
19
|
|
Section 42.
|
Dividend Reserve
|
19
|
|
ARTICLE X
|
FISCAL YEAR
|
19
|
|
Section 43.
|
Fiscal Year
|
19
|
|
ARTICLE XI
|
INDEMNIFICATION
|
20
|
|
Section 44.
|
Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents
|
20
|
|
ARTICLE XII
|
NOTICES
|
23
|
|
Section 45.
|
Notices
|
23
|
|
ARTICLE XIII
|
AMENDMENTS
|
24
|
|
Section 46.
|
24
|
|
|
ARTICLE XIV
|
LOANS TO OFFICERS
|
24
|
|
Section 47.
|
Loans To Officers
|
24
|
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________________ hereby sell, assign and transfer unto
| Dated | ||
|
|
||
|
|
||
| NOTICE: |
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
|
|
|
1.
|
Assignment and Assumption
. Subject to the condition precedent in Section 2 herein, the Company does hereby assign, transfer and convey to Parent, and Parent does hereby accept and assume, all of the Company’s rights and obligations, whether accrued as of the date hereof or hereafter arising, under the SPA.
|
|
2.
|
Condition Precedent
. This Agreement shall become effective immediately upon the Effective Time of the Merger Agreement (which shall occur immediately following the Financing Closing), as set forth on the Merger Agreement (the “
Effective Date
”).
|
|
3.
|
Representation and Warranty of Parent
. Parent represents and warrants, as of the Effective Date, as follows:
|
|
a.
|
Parent has full power and authority, and has obtained all necessary consents and approvals to enter into this Agreement and to exercise its rights and perform its obligations hereunder, and all corporate and other actions required to authorize its execution of this Agreement and the performance of its obligations hereunder have been duly taken.
|
|
b.
|
The Merger Agreement, as amended, and the Amendment No. 1 to the Merger Agreement are in full force and effect and enforceable against Parent.
|
|
c.
|
When issued, the Parent Common Shares and the Parent Warrants issued to the Investors upon submission of their Ordinary Shares of the Company and Company Warrants by the Company, and the Parent Common Shares issued to the Investors upon exercise of the Parent Warrants, will be duly authorized and validly issued, and (other than in the case of the Parent Warrants) fully paid and non-assessable.
|
|
d.
|
When issued, the Parent Warrants will be duly executed and delivered by, and will binding on, and enforceable against, Parent.
|
|
4.
|
Representations
and Warranty of the Company
. The Company represents and warrants, as of the Effective Date, as follows:
|
|
a.
|
The Company has full power and authority, and has obtained all necessary consents and approvals to enter into this Agreement and to exercise its rights and perform its obligations hereunder, and all corporate and other actions required to authorize its execution of this Agreement and the performance of its obligations hereunder have been duly taken.
|
|
b.
|
The Merger Agreement, as amended, and the Amendment No. 1 to the Merger Agreement are in full force and effect and enforceable against the Company.
|
|
c.
|
When issued, the Ordinary Shares of the Company and Company Warrants issued by the Company to the Investors will be duly authorized, validly issued, fully paid and non-assessable.
|
|
d.
|
When issued, the Company Warrants issued by the Company will be duly executed and delivered and will binding on, and enforceable against Company.
|
|
5.
|
Obligations of the Company
. Other than as specifically provided herein, the provisions of this Agreement shall not be construed, interpreted or applied as releasing or restricting the obligations of the Company under the SPAs.
|
| 6. |
Miscellaneous
.
|
| a. |
Parent shall do, execute and perform and to procure to be done, executed and performed all such further acts, deeds, documents and things as the Investors under the SPA may require from time to time to effectively assign, transfer and convey all of the Company’s rights and obligations, whether accrued as of the date hereof or hereafter arising, under the SPA and the Warrants, and otherwise to give to the Investors the full benefit of this Agreement, the SPA and the Warrants.
|
| b. |
This Agreement shall be governed by and construed under the laws of the State of New York, without regard to principles of conflicts of law thereunder.
|
| c. |
If any provision or part of a provision of this Agreement or its application to any party hereto shall be, or be found by any authority of competent jurisdiction to be, invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions or parts of such provisions of this Agreement, all of which shall remain in full force and effect.
|
| d. |
This Agreement may be executed in one or more counterparts, and by the different parties in separate 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 instrument.
|
| e. |
This Agreement may not be amended, modified or supplemented, except in a writing signed by each of the parties hereto.
|
| f. |
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The Investors are intended third party beneficiaries of this Agreement, entitled to the enforce this Agreement as if parties hereto.
|
| g. |
This Agreement and any agreement, document or instrument attached hereto or referred to herein among the parties hereto integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect of the subject matter hereof. In the event of any conflict between the terms, conditions and provisions of this Agreement and any such agreement, document
|
|
|
Ait Therapeutics, Inc.
By: ______________________________
Name: Jason Lane
Title: Chief Executive Officer
Advanced Inhalation Therapies (AIT) Ltd.
By: ______________________________
Name: Amir Avniel
Title: Chief Executive Officer
|
|
Article I. DEFINITIONS
|
2 |
|
1.1 Definitions
|
2
|
|
Article II. PURCHASE AND SALE
|
8 |
|
2.1 Escrow Agreement; Closing
|
8
|
|
2.2 Closing Deliveries.
|
8
|
|
Article III. REPRESENTATIONS AND WARRANTIES
|
9 |
|
3.1 Representations and Warranties of the Company
|
9
|
|
3.2 Representations and Warranties of the Investors
|
17
|
|
Article IV. OTHER AGREEMENTS OF THE PARTIES
|
20 |
|
4.1 Transfer Restrictions.
|
20
|
|
4.2 Use of Proceeds
|
22
|
|
4.3 Shareholder Rights Plan
|
22
|
|
4.4 Form D and Blue Sky
|
22
|
|
4.5 Resale Registration
|
23
|
|
4.6 Prohibitions on Dividends, Etc.
|
29
|
|
4.7 Subsequent Equity Sales
|
30
|
|
4.8 Satisfaction of Closing Conditions
|
30
|
|
4.9 Public Disclosure
|
30
|
|
4.10 Non-Public Information
|
31
|
|
4.11 Listing of Ordinary Shares; DTC
|
31
|
|
4.12 Registration Under Section 12; Maintenance of Reporting Status
|
31
|
|
4.13 Reservation of Ordinary Shares
|
32
|
|
Article V. CONDITIONS
|
32 |
|
5.1 Conditions Precedent to the Obligations of the Investors
|
32
|
|
5.2 Conditions Precedent to the Obligations of the Company
|
34
|
|
Article VI. INDEMNIFICATION
|
35 |
|
6.1 Indemnification.
|
35
|
|
6.2 Contribution
|
37
|
|
Article VII. MISCELLANEOUS
|
38 |
|
7.1 Remedies
|
38
|
|
7.2 Termination
|
38
|
|
7.3 Fees and Expenses
|
38
|
|
7.4 Entire Agreement; Further Assurances
|
38
|
|
7.5 Notices
|
38
|
|
7.6 Amendments; Waivers
|
39
|
|
7.7 Construction
|
39
|
|
7.8 Successors and Assigns
|
39
|
|
7.9 No Third-Party Beneficiaries
|
40
|
|
7.10 Governing Law; Venue; Waiver of Jury Trial
|
40
|
|
7.11 Survival
|
41
|
|
7.12 Execution
|
41
|
|
7.13 Severability
|
41
|
|
7.14 Independent Nature of Investors’ Obligations and Rights
|
41
|
|
7.15 Replacement of Securities
|
42
|
|
7.16 Interpretative Matters
|
42
|
|
|
Advanced Inhalation Therapies Ltd.
By: _________________________________
Name: _______________________________
Title: ________________________________
Address for Notice:
________________________
________________________
________________________
Facsimile No.: _________________________
Telephone No.: ________________________
Attn: ________________________________
With a copy to:
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Suite 4400
Miami, FL 33131
Facsimile No.: 305.961.5756
Telephone No.: 305.579.0756
Attn: Robert L. Grossman and Drew M. Altman
|
|
|
Name of Investor:
_____________________________________________________
By: __________________________________________________
Name: ________________________________________________
Title: _________________________________________________
Number of Purchased Units: ________________________________
Address: ______________________________________________
______________________________________________________
______________________________________________________
Telephone No.: __________________________________________
Facsimile No.: ___________________________________________
Email Address: __________________________________________
Delivery Instructions (if different than above):
c/o: __________________________________________________
Address: ______________________________________________
______________________________________________________
Telephone No.: _________________________________________
Facsimile No. : __________________________________________
Other Special Instructions:_________________________________
|
|
A
|
Instruction Sheet for Investors
|
|
A-1
|
Stock Certificate Questionnaire
|
|
A-2
|
Investor Certificate
|
|
B
|
Form of Warrant
|
|
A.
|
Complete the following items in the Securities Purchase and Registration Rights Agreement:
|
|
|
1.
|
Complete and execute the Investor Signature Page. The Securities Purchase and Registration Rights Agreement must be executed by an individual authorized to bind the Investor.
|
|
|
2.
|
Exhibit A-1 - Stock Certificate Questionnaire:
|
|
|
Provide the information requested by the Stock Certificate Questionnaire;
|
||
|
3
|
Exhibit A-2 - Investor Certificate:
|
|
|
Provide the information requested by the Investor Certificate.
|
||
|
4.
|
Return, via facsimile or email, the signed Securities Purchase and Registration Rights Agreement, including the properly completed Exhibits A-1 and A-2 to:
Email: __________________________
|
|
|
Facsimile: _______________________
|
||
|
Telephone: ______________________
|
||
|
Attn: ___________________________
|
||
|
5.
|
After completing instruction number four (4) above, deliver the original signed Securities Purchase and Registration Rights Agreement, including the properly completed Exhibits A-1 and A-2 to:
|
|
|
570 Lexington Ave
11th Floor
New York, NY 10022
Attn: Amy Cooper
|
||
|
B.
|
Instructions regarding the wire transfer of funds for the purchase of the Units will be sent by facsimile or email to the Investor by the Company at a later date.
|
|
|
Please provide us with the following information:
|
|
||
|
1.
|
The exact name that the Purchased Securities are to be registered in (this is the name that will appear on the stock certificate(s)). You may use a nominee name if appropriate:
|
____________________________________________
|
|
|
2.
|
The relationship between the Investor in the Purchased Securities and the Registered Holder listed in response to item 1 above:
|
____________________________________________
|
|
|
3.
|
The mailing address, telephone and telecopy number and email address of the Registered Holder listed in response to item 1 above:
|
|
____________________________________________
____________________________________________
____________________________________________
____________________________________________
|
|
4.
|
The Tax Identification Number of the Registered Holder listed in response to item 1 above:
|
____________________________________________ |
|
___
|
1.
|
A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity;
|
|
___
|
2.
|
A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934;
|
|
___
|
3.
|
An insurance company as defined in Section 2(13) of the Securities Act;
|
|
___
|
4.
|
An investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act;
|
|
___
|
5.
|
A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;
|
|
___
|
6.
|
A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
|
|
___
|
7.
|
An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
|
|
___
|
8.
|
A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
|
|
___
|
9.
|
Any partnership, limited liability company or corporation or any organization described in Section 501(c)(3) of the Internal Revenue Code or similar business trust, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000;
|
|
___
|
10.
|
A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Exchange Act;
|
|
___
|
11.
|
A “qualified institutional buyer” as defined by Rule 144A under the Securities Act;
|
|
___
|
12.
|
An entity in which all of the equity owners qualify under any of the above subparagraphs (or each such equity owner is a natural person who either (i) has an individual net worth, or joint net worth with such person’s spouse, in excess of $1,000,000 (exclusive of such person’s primary residence) or (ii) had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year). If the undersigned belongs to this investor category only, list the equity owners of the undersigned, and, with respect to each equity owner that is not a natural person, the investor category which each such equity owner satisfies:
________________________________________
(Continue on a separate piece of paper, if necessary.) |
|
Dated:__________________________, 2016
|
|
__________________________________
|
|
Print Name of Investor
|
|
__________________________________
|
|
Name:
|
|
Title:
|
|
(Signature and title of authorized officer, partner or trustee)
|
|
Effective Date: []
|
Void After: [] |
| (i) |
“
Affiliate
” means any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, a person, as such terms are used and construed in Rule 144 promulgated under the Securities Act of 1933, as amended (the “
Securities Act
”);
|
| (ii) |
“
Business Day
” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York, New York, are authorized or required by law or executive order to close;
|
| (iii) |
“
Exercise Period
” means the period commencing on the date hereof and ending at 5:00 P.M., New York City time, on the Expiration Date, unless sooner terminated as provided herein;
|
| (iv) |
“
Common Stock
” means (A) the Company’s common stock, and (B) any shares in the capital of the Company into which such common stock shall have been changed or any shares in the capital of the Company resulting from a reclassification of such common stock.
|
| (v) |
“
Person
” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof and any other legal entity.
|
| (vi) |
“
Standard Settlement Period
” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the common Stock as in effect on the date of delivery of the Notice of Exercise.
|
| (vii) |
“
Trading Market
” means whichever of the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, the OTCQB, the OTCQX, the OTCPink or the OTCBB on which the Common Stock is listed or quoted for trading on the date in question.
|
| (viii) |
“
Trading Day
” means (a) a day on which the Common Stock is traded on a Trading Market (other than the OTCQB, the OTCQX, the OTCPink or the OTCBB), or (b) if the Common Stock is not listed or quoted on any such Trading Market, a day on which the Common Stock are quoted on the OTCQB, OTCQX, OTCPink or the OTCBB; provided, that if the Common Stock is not listed or quoted as set forth in the immediately preceding clauses (a) or (b), then Trading Day shall mean a Business Day.
|
| (ix) |
“
Weighted Average Price
” means, for any security as of any date, the U.S. dollar volume-weighted average price for such security on its primary Trading Market during the period beginning at 9:30 a.m., New York City time (or such other time as the Trading Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City time (or such other time as the Trading Market publicly announces is the official close of trading), as reported by Bloomberg Markets (or any successor thereto, “
Bloomberg
”) through its “Volume at Price” functions, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York City time (or such other time as such over-the-counter market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City time (or such other time as such over-the-counter market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Group, Inc. (or any successor thereto). If the Weighted Average Price cannot be calculated for such security on such date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the primary Trading Market is located in a country other than the United States, the Weighted Average Price shall be calculated in U.S. Dollars using the spot rate for the purchase of the applicable foreign currency at the close of business on the immediately preceding Business Day in New York, New York published in the Wall Street Journal. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction that occurs during any period for which the Weighted Average Price is being determined.
|
|
|
X =
|
Y * (A - B)
|
|
|
A
|
| with: | X = |
the number of Warrant Shares to be issued to the Holder
|
| Y = |
the number of Warrant Shares with respect to which the Warrant is being exercised
|
| A = |
the last Weighted Average Price immediately preceding the time of delivery of the Notice of Exercise giving rise to the applicable “cashless exercise”, as set forth in the applicable Notice of Exercise (to clarify, the “last Weighted Average Price” will be the last Weighted Average Price as calculated over an entire Trading Day such that, if this Warrant is exercised at a time that the primary Trading Market is open, then the prior Trading Day’s Weighted Average Price shall be used in this calculation)
|
| B = |
the then-current Exercise Price of the Warrant
|
| (A) |
any shares of stock or other securities that are at any time directly or indirectly convertible into or exchangeable for shares of Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or
|
| (B) |
additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, combination of shares or similar corporate rearrangement (other than shares of Common Stock issued as a stock split or adjustments covered by the terms of
Section 3(a)(i)
), then and in each such case, the Exercise Price and the number of Warrant Shares to be obtained upon exercise of this Warrant shall be adjusted proportionately, and the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of Warrant Shares receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to above) that such Holder would hold on the date of such exercise had such Holder been the holder of record of such Warrant Shares as of the date on which holders of shares of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property. The Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this
Section 3(a)(ii)
. Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 3(a)(ii)
with respect to any dividend or distribution that the Holder receives pursuant to
Section 8
.
|
|
AIT THERAPEUTICS INC.
|
|||
|
Date
|
By:
|
|
|
| Name: Amir Avniel | |||
| Title: CEO | |||
|
Calculation Under Section 3(d)
|
Calculation Under Section 3(g)
|
||
|
Remaining Term
|
Number of calendar days from date of the issuance of the Option (the “Option Date”) until the last date on which the Option may be exercised (the “Option Term”).
|
Number of calendar days from date of public announcement of the Organic Change until the last date on which the Warrant may be exercised (the “Remaining Warrant Term”).
|
|
|
Interest Rate
|
A risk-free interest rate corresponding to the US$ LIBOR/Swap rate for a period equal to the Option Term.
|
A risk-free interest rate corresponding to the US$ LIBOR/Swap rate for a period equal to the Remaining Warrant Term.
|
|
|
Cost to Borrow
|
Zero
|
Zero
|
|
|
Volatility
|
The greater of 100% and the historical volatility for the 100 Trading Day period ending on the Option Date, obtained from the HVG or similar function on Bloomberg.
|
The greater of 100% and the arithmetic mean of the historical volatility for the 10, 50 and 100 Trading Day periods ending on the next succeeding Trading Day following the date of the first public announcement of the Organic Change, obtained from the HVG or similar function on Bloomberg.
|
|
|
Stock Price
|
The Weighted Average Price of the Common Stock on the Option Date.
|
The greatest of (1) the closing price of the Common Stock on the primary Trading Market (“Closing Market Price”) on the Trading Day immediately preceding the date on which the Organic Change is consummated, (2) the first Closing Market Price following the first public announcement of the Organic Change, or (3) the Closing Market Price as of the Trading Day immediately preceding the first public announcement of the Organic Change, in each case appropriately adjusted for any share dividends, share splits, share combinations, recapitalizations or similar events occurring prior to the consummation of the Organic Change.
|
|
Name
|
_________________________________________
|
|
Social Security or Federal Employer Identification Number (if applicable)
|
_________________________________________
|
|
Address
|
_________________________________________
_________________________________________
_________________________________________
_________________________________________
|
|
Name
|
_________________________________________
|
|
Social Security or Federal Employer Identification Number (if applicable)
|
_________________________________________
|
|
Address
|
_________________________________________
_________________________________________
_________________________________________
_________________________________________
|
|
|
Name of Holder (print): _______________________
(Signature): ________________________________
(By:) _____________________________________
(Title:) ____________________________________
Dated:_____________________________________
|
|
Name of Assignee
|
Address
|
Number of Shares
|
|
|
Name of Holder (print): _______________________
(Signature): ________________________________
(By:) _____________________________________
(Title:) ____________________________________
|
Exhibit 10.4
Personal Employment Agreement
This Personal Employment Agreement (" Agreement ")is entered into on September 09, 2012, by and between Advanced Inhalation Therapies (AIT) Ltd. (the "Company ")and Mrs. Racheli Vizman (the "Employee ").
WHEREAS, the Company wishes to employ the Employee, and the Employee wishes to be employed by the Company, as of the Commencement Date (as such term is defined hereunder); and
WHEREAS, the parties desire to state the terms and conditions of the Employee's employment by the Company, as set forth below.
NOW, THEREFORE, in consideration of the mutual premises, covenants and other agreements contained herein, the parties hereby agree as follows:
| 1. | Position . |
| 1.1. | The Employee shall serve in the position of COO (the "Position ") and shall be under the direction of the CEO of the Company and in the event no CEO is appointed , under the direction of the Board of Directors of the Company. The Employee undertakes to perform the duties and responsibilities, as are normally incident to the position held by Employee and commensurate with Employee's background, education and professional standing and as shall otherwise be instructed by the Company's CEO. The Employee shall perform his duties diligently, conscientiously and in furtherance of the Company's best interests. |
| 2. | Scope of Employment . |
| 2.1. | The Employee shall be employed by the Company on a part time basis . The Employee's scope of work shall be 75 % of a full time position (the "Scope of Work ").The Employee further undertakes to devote, in the Scope of Work, her entire business time, exclusively to t he performance of her dutie s in the Company . |
| 3. | Employee's Representations and Warranties. |
| 3.1. | The Employee represents and warrants that the execution and delivery of this Agreement and the fulfillment of its terms: (i) will not constitute a default under or conflict with any agreement or other instrument to which he is a party or by which he is bound; (ii) do not require the consent of a ny person or entity . Further , with respect to any past engagement of the Employee with third parties (for purposes hereof, such third parties shall be referred to as "Other Employers "),the Employee represents, warrants and undertakes that: (a) his engagement with the Company is and/or will not be in breach of any of his undertakings toward Other Employers, and (b) he will not disclose to the Company , nor use , in provision of any services to the Company, any proprietary or confidential information belonging to any Other Employer. |
| 3.2. | The Employee agrees and undertakes to immediately inform the Company of any matter that may in any way raise a conflict of interest between the Employee and the Company. During his employment with the Company, the Employee shall not receive any payment, compensation or benefit from any third party in connection, directly or indirectly, with his position in the Company . |
| 3.3. | The Employee acknowledges and agrees that all information technology systems of the Company to which he shall have access are the sole and exclusive property of the Company, and that all such systems are and shall be monitored by the Company regularly, at its discretion. Employee understands that he should have no expectation of privacy in his use of such systems. |
| - 1 - |
| 4. | Term and Termination . |
| 4.1. | The Employee's employment with the Company shall commence on M a y 6 th , 2012 (the "Commencement Date "),and will continue until terminated by either party at any time at such party's discretion with or without cause. |
| 4.2. | Either party may terminate this Agreement and the employment relationship hereunder at any time by giving the other party a prior written notice of sixty (60) days (the " Notice Period "). During the Notice Period the Company will continue to pay the Employee's Salary, as provided in Section 6 below, in effect at the time of the termination and provide continuation coverage for all other benefits and compensations that are part of this Agreement |
| 4.3. | Notwithstanding the aforesaid, in the event of a Cause (as defined hereafter) the Company will be entitled to terminate this Agreement immediately and this Agreement and the employment relationship will be deemed effectively terminated as of the time of delivery of such notice (subject to any minimal mandatory notice requirement under applicable law). The term "Cause" means (i) theft, embezzlement or other similar act by Employee of any tangible or intangible asset of the Company or any customer, supplier or investor of the Company; (ii) conviction of any felony involving dishonesty; (iii) a material breach by the Employee of or the contesting by Employee of the validity of the terms of any written agreement between the Company and Employee, or any written policy of the Company known by and applicable to all its employees, but a mere mistake in business judgment shall not constitute cause; (iv) any case of dismissal under circumstances which justify dismissal without severance pay according to the Israeli Law; or (v) willful failure by Employee t o follow the i nstructions of its supervisor or the Board of Directors of the Company to the extent such instructions are reasonably related to the business of the Company and the services provided by the Employee, are given in good faith to promote the interest of the Company, would not require Employee to commit any illegal act and are not given to provide the Company with cause for terminating Consultant; provided, however, that "Cause" shall not mean or include the Company's termination of Employee's employment under this Section 4.3(iii) and (v), if such action (a) is isolated, insubstantial or inadvertent or (b) is remedied promptly by Employee, if such cure is possible, within no more than fourteen days after receipt of notice from the Company of such issue(s). |
| 4.4. | During the period following notice of termination by either party, the Employee will cooperate with the Company and use the Employee's best efforts to assist the integration into the Company's organization of the person or persons who will assume the Employee's responsibilities. |
| 5. | Proprietary Information; Confidentiality and Non - Competition . |
| 5.1. | The Employee hereby agrees to the provisions of the Proprietary Information, Confidentiality and Non-Competition Agreement attached in Exhibit A hereto and simultaneously executes a copy thereof, the terms of which will survive termination of this Agreement. |
| 6. | Compensation . |
| 6.1. | The Company will pay the Employee as compensation for the employment services hereunder, an aggregate monthly salary in the amount of NIS 22,000 (the " Salary "). Notwithstanding anything to the contrary, it is hereby clarified that the Salary shall be amended upon the next equity financing in the Company, all subject to the approval of the Board of Directors of the Company. |
| - 2 - |
| 6.2. | The Employee acknowledge and agree that his employment with the Company is a management position and requires a special degree of personal trust, and that the law known as "Work and Rest Hours, 1951" (" Chok shot Avoda Vemenucha ") shall not apply to his employment with the Company. Accordingly, the Salary payable to the Employee is a gross global salary inclusive of remuneration for working overtime and on days of rest, and all cost to the Company. The Employee acknowledge and agrees that unless expressly specified in this Agreement he shall not be entitled to any further remuneration or payment whatsoever other than the Salary and benefits expressly provided herein, regardless of any current or future custom between the Company and its employees. |
| 6.3 | An amount equals to 10% of the Salary shall be considered special compensation for Employee's compliance with his non-compete obligations set forth in Exhibit A attached hereto. |
| 6.4. | Notwithstanding the aforesaid, upon the commencement of a Phase IIB clinical trial by the Company, the Employee shall receive a one time bonus in the amount equal to NIS 60,000 (the" Bonus "). |
| 6.5. | Subject to the requirements under applicable law, the Employee shall cooperate with the Company in maintaining a record of the number of hours of work performed, in accordance with the Company's policy and instructions. |
| 6.6. | Except as specifically set forth herein, the Salary includes any and all payments to which Employee is entitled hereunder and under any applicable laws, regulations or agreements, including without limitation commuting expenses. Payment of the Salary will be made no later than the 9th day of each calendar month after the month for which the Salary is paid, after deduction of applicable taxes and any amounts deductible under this Agreement. |
| 6. 7. | Options |
| 6.7.1. | Subject to the approval of the Company's Board of Directors (the " Board ”), the Employee shall be issued options to purchase Ordinary Shares of the Company , representing 1.33 % of the issued and outstanding share capital, available through the Company's ESOP (as defined below) (the " Options "), subject to any dilution and subject to the following conditions: |
| 6.7.2. | The Options shall be granted in accordance with an Option Agreement to be signed between the Employee and the Company and shall be at all times subject to (i) all the terms of such incentive employees share option plan (" ESOP ") as shall be adopted by the Company at its sole discretion (ii) any terms and conditions as shall be determined and altered from time to time by the Board or any of its committees at their sole discretion, and (iii) any terms and conditions as provided in any agreement or arrangement the Company may enter from time to time including agreements and arrangements with Investment Banks or Underwriters. |
| 6.7.3. | Any tax liability in connection with the Options (including with respect to the grant, exercise, sell of the Option or the share receivable upon their exercise) shall be borne solely by the Employee. |
| 6.7.4. | Unless otherwise determined by the Board, the Options shall vest monthly over a vesting period of 36 (thirty six) months commencing as of the Commencement Date (the " Vesting Period "), so that ____ Options shall vest on ____, 2012 and _____ Options shall vest upon the end of each consecutive monthly period thereafter (collectively, the " Monthly Vesting "), provided that during the term of such Vesting Period, this Agreement remains in full force and the Employee remains an Employee by the Company on such date. |
| - 3 - |
| 6.7.5. | Upon termination of this Agreement (for any reason other than for 'cause', as defined in Section 4.2), the vested Options shall be exercisable for a successive period of twenty four (24) months from the date of the Termination Notice and shall be deemed cancelled if not exercised prior thereto. |
Social Benefits .
| 6.8. | As of the Commencement Date the Company will, on a monthly basis, pay to a pension scheme for the benefit of the Employee and shall deduct from the Employee's Salary a respective payment towards such pension scheme (the "Pension Scheme "), all with respect to the entire Salary. The Company will be entitled to select the Pension Scheme manager or insurance agent at its discretion. The Company shall pay towards a loss of working ability component in accordance with the Company's general arrangement. Subject to applicable law, except if requested otherwise by the Employee, the Pension Scheme shall be of a managers' insurance type and the contribution to such insurance will be as follows: (i) the Company will pay an amount equal to 5% (five percent) of the Salary towards a fund for . life insurance and pension, and shall deduct from the Employee's Salary an amount equal to 5% (five percent) of the Salary and pay such amount towards the Pension Scheme on the Employee's behalf; (ii) the Company will pay an amount of up to 2.5% (two percent and one half of a percent), of the Salary towards a fund for the event of loss of working ability (" Ovdan Kosher Avoda "); and (iii) the Company will pay an amount equal to 8 1/3% (eight percent and one third of a percent) of the Salary towards a severance compensation. The Employee may request a different type of Pension Scheme, provided that the total payments by the Company towards such scheme will not be greater than the total payments by the Company set forth above in this Section 7.1. For the avoidance of doubt, no amount remitted by the Company in respect of this paragraph will be considered as part of the Salary for purposes of any deduction therefrom or calculations of severance pay. |
As of the Start Date all payments to the Pension Scheme will be made in compliance with Section 14 of the Severance Compensation Law, 1963 (" Section 14 "), and in accordance with the general approval of the Labor Minister dated June 9, 1998, promulgated under said Section 14, a copy of which is attached hereby as Exhibit B , and the terms of Section 14 and said general approval will apply to the relationship hereunder. Therefore, the ownership of the Pension Scheme will be transferred to the Employee following termination of employment and the Company will not be entitled to retrieve any of the funds it transferred to the Pension Scheme, other than in accordance with Section 14 and said general approval, and the transfer of the Pension Scheme to the ownership of the Employee will be the full and only compensation to be paid by the Company to the Employee in such circumstances in respect of severance pay.
| 6.9. | The Company and the Employee will maintain an advanced study fund (Keren Hishtalmut). The Company will contribute to such fund an amount equal to 7.5% of the Salary and will deduct from the net Salary and transfer to such fund an amount equal to 2.5% the Salary, provided that the total monthly contributed amount will not exceed the maximum amount exempted from tax payment under applicable laws. For the avoidance of doubt, no amount remitted by the Company in respect of this paragraph will be considered as part of the Salary for purposes of any deduction therefrom or calculations of severance pay. |
| - 4 - |
| 7. | Vacation . |
| 7.1. | Subject to the provision of the Annual Vacation Law-1951, the Employee shall be entitled to a paid annual vacation of 22 working days with respect to each twelve (12) month period of her employment, up to a maximum of 28 days at any given time (i.e., at any given time, the Employee will have accrued no more than 28 days).The Company will be entitled to direct use of the vacation days, at its discretion. The Employee shall be entitled to accumulate unused vacation days in accordance with applicable law. The Employee will not be entitled to redemption of accumulated and unused vacation days, except in accordance with applicable law in the event of termination of employment. |
| 8. | Recreation Pay and Sick Leave . |
| 8.1. | The Employee will be entitled to recreation pay (Dmei Havra'a) and sick leave payment in accordance with applicable law. |
| 9. | Expenses . |
| 9.1. | The Company will reimburse the Employee for business expenses borne by the Employee, provided that such expenses were approved in advance by the Company or otherwise in accordance with the Company's expense policy, and against valid invoices furnished by the Employee to the Company. |
| 10. | Additional Benefits . |
| 10.1. | Car Expenses |
| The Company shall reimburse the Employee for necessary and customary Car expenses incurred by the Employee and approved by the Company, in accordance with terms and conditions set forth in the Company's Car Policy. |
| 10.2. | Cellular phone |
| While the Employee is employed by the Company, the Company shall maintain for the Employee a portable cellular phone for professional use. The Company shall bear the expenses of the usage of such cellular phone by the Employee, and shall also bear the applicable tax liability for the grant of use of the Company Mobile Phone according to the Company's policy regarding usage limitations of mobile phone that will be set by the company from time to time. |
11. Tax. The Company shall deduct from the Salary all national insurance fees, health insurance fees, income tax and any other amounts required by law, all in accordance with applicable law.
12. General . Headings in this Agreement are included for reference purposes only and are not to be used in interpreting this Agreement. The e x hibits to this Agreement constitute an integral part thereof. Subject to applicable law, no collective bargaining agreement will apply to the relationship between the parties. No failure, delay of forbearance of either party in exercising any power or right hereunder will in any way restrict or diminish such party's rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms of conditions hereof. In the event it is determined under any applicable law that a certain provision set forth in this Agreement is invalid or unenforceable, such determination will not affect the remaining provisions of this Agreement unless the business purpose of this Agreement is substantially frustrated thereby. This Agreement constitutes the entire understanding and agreement between the parties and supersedes any and all prior discussions, agreements and correspondence with regard to the subject matter hereof except for any pre-existing agreements regarding assignment of inventions and/or confidentiality (if any), and may not be amended, modified or supplemented in any respect, except by a subsequent writing executed by both parties. The Employee acknowledges and confirms that all terms of Employee's employment are personal and confidential, and undertakes to keep such term in confidence and refrain from disclosing such terms to any third party.
| - 5 - |
This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Israel, and the sole and exclusive place of jurisdiction in any matter arising out of or in connection with this Agreement shall be applicable courts in Tel-Aviv.
The Employee acknowledges that this Agreement, together with the Exhibits thereto, constitutes a due notice to the Employee of the terms of employment, as required under law.
Employee hereby declares that she understands the English language and that she does not need a translation into another language and that she has read and understood everything stated in this agreement and its appendices.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
| ADVANCED INHALATION THERAPIES (AIT) LTD | RACHELI VIZMAN | ||
| /s/ Pini Ben Elazar | /s/ Racheli Vizman | ||
| By: Pini Ben Elazar | Signature | ||
| Title: Chairman | |||
| - 6 - |
Exhibit A
This NONDISCLOSURE AGREEMENT (the " Agreement ") is made and entered into as of ___ of ______, 2012 (the "Effective Date") between Advanced Inhalation Therapies (AIT) Ltd. a corporation formed under the laws of the State of Israel (the " Company "), and Mrs. Racheli Vizman, (the " Recipient "), hereby agree as follows:
| 1. | The parties have entered into an employment agreement whereby the Recipient is an employee of the Company (the " Business Relationship "). |
| 2. | To further the Business Relationship between the parties, it may be necessary that the Company disclose to Recipient certain Confidential Information. As used herein, " Confidential Information " shall mean information which is disclosed by the Company to Recipient by any means (including without limitation, in written or other tangible form (including on magnetic media) , orally or visually) and which should reasonably have been understood by Recipient because of notice on the material, the circumstances of disclosure or the nature of the information itself, to be proprietary or confidential to the Company or a third party. |
| 3. | Recipient shall not disclose Confidential Information to any person or entity except its employees or consultants, or those of its wholly-owned companies (directly or indirectly), who are required to have the Confidential Information in order to assist it in acting as contemplated by the Business Relationship, and only to the extent necessary. Prior to disclosing any Confidential Information to such employees or · consultants, Recipient shall have ensured that they are aware of the provisions of this Agreement and have signed non-disclosure agreements with non-use and non-disclosure terms substantially similar to those contained in this Agreement. The Recipient shall bear full responsibility and liability for the actions of such employees and consultants concerning the Confidential Information, at all times, regardless of termination of any labor , employment or other relationship with any such employees and consultants. Recipient shall treat the Confidential Information as strictly confidential and with at least the degree of care that it treats similar materials of its own in order to prevent unauthorized disclosure of Confidential Information to others , or a higher standard of care if reasonable under the circumstances. |
| 4. | Recipient shall not use Confidential Information for its own use or for any purpose except as contemplated by the Business Relationship. |
| 5. | Without derogating from the Company's rights under law or under this Agreement, Recipient shall immediately notify the Company upon discovery of loss or unauthorized disclosure or use of Confidential Information. |
| 6. | The obligations of paragraphs 3, 4 and 5 hereof shall not apply to any particular portion of the Confidential Information that is: |
| 7. | (a) in the public domain at the time of the Company's communication thereof to Recipient or enters the public domain through no breach of Recipient; |
| (b) is demonstrated by reasonable documented proof to be in Recipient's possession before receipt from the Company; |
| (c) Independently developed by Recipient without the use of or reference to the Company's Confidential Information, as shown by reasonable documented proof; |
| (d) communicated by the Company to a third party free of any obligation of confidence; |
| (e) rightfully received by Recipient from a third party that has an independent right to disclose the information; |
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| (f) required to be disclosed pursuant to law, regulation or court order, provided that Recipient (i) promptly notifies the Company in writing prior to making any such disclosure in order to facilitate the Company's seeking a protective order or other appropriate remedy from the proper authority; and (ii) thereafter furnishes only that portion of the Confidential Information which is required; |
| 8. | The obligations undertaken by Recipient under paragraphs 3, 4 and 5 hereof with respect to Confidential Information provided prior to e x piration or termination of this Agreement shall remain in full force and effect indefinitely and shall survive any such termination or expiration. |
| 9. | The Confidential Information furnished to Recipient by the Company under this Agreement , including without limitation documents, drawings, models, apparatus, sketches, designs, lists, disks, video cassettes and other materials, (a) shall remain the property of the Company and (b) is provided on an "AS IS" basis, with no warranties of any kind, express or implied, being given by the Company with respect to such information. Nothing contained herein shall be construed as giving Recipient any license or rights with respect to the Confidential Information and such materials. Recipient shall make no copies of the Confidential Information and such materials except for the purposes of the Business Relationship or as otherwise permitted herein, and it shall reproduce the Company's proprietary rights notices on any such approved copies, in the same manner in which such notices were set forth in or on the original. Upon termination or e x piration of this Agreement, or upon the written request of the Company at any time, any Confidential Information, any copies made thereof and any materials containing any portion of any Confidential Information, to the extent that they remain in the possession of Recipient, its employees, consultants and controlled companies, shall be returned promptly by Recipient to the Company (except those materials which are legally privileged) , or, on the Company's request, shall be destroyed by Recipient and ceased to be used by Recipient or any of the entities referred to above. Upon the Company's request , an officer of Recipient shall certify in writing that Recipient has complied with the preceding sentence. |
| 10. | Neither this Agreement nor the disclosure or receipt of Confidential Information shall constitute or imply any promise or intention by either party to enter into any further agreement with the other, including, without limitation, with respect to the Business Relationship. |
| 11. | During the term of the Business Relationship and for a period of one (1) year thereafter, Recipient will not, directly or indirectly, engage in any employment or business activity, or hold an interest in any business, which is competitive with the business of the Company, provided, however, that Recipient may purchase or otherwise acquire up to (but not more than) five percent (5%) of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange Recipient further agrees that for the period of the Business Relationship and for a period of one (1) year thereafter, Recipient will not (a) induce any employee of the Company to leave the employ of the Company, (b) induce any customer, supplier, licensee, or business relation of the Company to cease doing business with the Company |
| 12. | This Agreement shall be construed in accordance with the laws of the State of Israel. The competent court of Tel-Aviv-Jaffa in Israel shall have exclusive jurisdiction with respect to any dispute and action arising under or in relation to this Agreement. |
| 13. | Recipient acknowledges that a breach of this Agreement would result in irreparable harm to the Company, the extent of which would be difficult to ascertain, and in any event monetary damages alone would be inadequate in the event of such a breach. Accordingly, in the event of a breach of this Agreement the Company shall be entitled to injunctive or other equitable relief as the court deems appropriate, without the necessity of the Company showing posting a bond. Any such relief shall be in addition to, and not in place of, any other appropriate relief to which the Company may be entitled. |
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| 14. | The provisions of this Agreement are independent of and severable from each other. If any provision, or portion thereof, is found to be invalid or unenforceable for any reason, that provision, or portion, shall be deemed modified to the extent necessary to make it valid and operative and in a manner most closely representing the intention of the parties as expressed herein, or if it cannot be so modified, then eliminated, and the remainder of the Agreement shall continue in full force and effect as if the Agreement had been signed with the invalid portion so modified or eliminated. |
| 15. | This Agreement contains the entire agreement of the parties hereto and supersedes any and all prior understandings, arrangements and agreements between them, whether oral or written, with respect to the subject matter hereof. This Agreement may not be amended or in any manner modified except by a written instrument signed by both parties. Failure to enforce any provision of this Agreement shall not constitute a waiver of any term hereof. |
| 16. | Recipient shall not assign any of its rights or obligations hereunder, without the prior written consent of the Company, which consent may be freely withheld . |
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the Effective Date .
| COMPANY | RECIPIENT | |||
| Signature: | /s/ Pini Ben Elazar | Signature: | /s/ Racheli Vizman | |
| Name: Pini Ben Elazar | Name: Racheli Vizman | |||
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Exhibit 10.5
ADDENDUM TO PERSONAL EMPLOYMENT AGREEMENT
Dated May 30, 2013
By and between
Advanced Inhalation Therapies (AIT) Ltd.
(the " Company ")
and
Racheli Vizman
I.D. 040785610
(the " Employee ")
WHEREAS, the Company and the Employee have entered into a Personal Employment Agreement dated September 09, 2012 (the " Employment Agreement "); Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Employment Agreement; and
WHEREAS the parties wish to amend the provisions of the Employment Agreement, as hereinafter provided.
NOW THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties hereto hereby declare and agree as follows:
| 1. | Effective as of February 1, 2013 (" Effective Date "): |
| a. | Section 6.1 of the Employment Agreement will be amended such that the Salary shall be in the amount of NIS 25,000 instead of the amount of NIS 22,000. |
| b. | Section 6.7.1 of the Employment Agreement shall be replaced in its entirety as follows: |
"Subject to the approval of the Company's Board of Directors (the "Board" ), the Employee shall be issued with options to purchase up to [424,719 Ordinary Shares of the Company, representing as of the date hereof3% of the issued and the outstanding share capital of the Company, under and subject to the terms and conditions of the Company's approved Share Option Plan (as may be amended from time to time) and the terms and conditions of the option agreement to be executed between the Company and the Employee in this respect (the “ Options ”). For the avoidance of doubt, the foregoing undertaking to grant the Options replaces and supersedes any previous undertaking of the Company to grant options to the Employee made prior to the Effective Date.
Addendum to Personal Employment Agreement – Salary Increase + Options – Racheli Vizman
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| c. | Section 6.7.4 of the Employment Agreement shall be replaced in its entirety as the follows: |
"Unless otherwise determined by the Board, the Options shall vest monthly over a vesting period of 24 (twenty four) months from the Effective Date (the "Vesting Period" ) so that 1/24 of the Options shall vest upon the end of each consecutive monthly period following the Effective Date (collectively, the "Monthly Vesting" ), provided that during the term of such Vesting Period, this Agreement remains in full force and the employee remains an employee by the Company on such date."
| 2. | All other provisions of the Employment Agreement not amended herein shall remain in full force and effect. |
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Addendum to Personal Employment Agreement – Salary Increase + Options – Racheli Vizman
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IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date first above written:
| /s/ Pini Ben Elazar | /s/ Racheli Vizman | ||
| Advanced Inhalation Therapies (AIT) Ltd. | Racheli Vizman | ||
| By: | Pini Ben Elazar | ||
| Title: | Chairman | ||
Addendum to Personal Employment Agreement – Salary Increase + Options – Racheli Vizman
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Exhibit 10.6
ADDENDUM #2 TO PERSONAL EMPLOYMENT AGREEMENT
Dated April 8, 2014
By and between
Advanced Inhalation Therapies (AIT) Ltd.
(the " Company ")
And
Racheli Vizman
I.D. 040785610
(the "Employee" )
WHEREAS, the Company and the Employee have entered into a Personal Employment Agreement Dated September 09, 2012, as amended on May 30, 2013 (the "Employment Agreement" ); Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Employment Agreement; and
WHEREAS the parties wish to amend the provisions of the Employment Agreement, as hereinafter provided.
NOW TEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties hereto hereby declare and agree as follows:
1. Effective as of 1 April, 2014 ( "Effective Date" )
| a. | Section 2.1 of the Employment Agreement shall be deleted in its entirety and shall be replaced with the following: |
"The Employee shall be employed by the Company on a full time basis. The Employee's scope of work shall be 100% of a full time position (the "Scope of Work" ). Employee Further undertakes to devote, in the Scope of Work, her entire business time, exclusively to the performance of her duties in the Company".
| b. | Section 6.1 of the Employment Agreement will be amended such that Salary shall be in the amount of NIS 33,333 instead of the amount of NIS 25,000. |
2. All other provisions of the Employment Agreement not amended herein shall remain in full force and effect.
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Addendum #2 to Personal Employment Agreement- Racheli Vizman
1
IN WITNESS WHEROF, the parties hereto have executed this Addendum as of the date first above written:
| /s/ Ari Raved |
/s/ Racheli Vizman |
|
| Advanced Inhalation Therapies (AIT) Ltd. | Racheli Vizman |
| By: |
Ari Raved |
|
| Title: | Director |
Addendum #2 to Personal Employment Agreement- Racheli Vizman
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Exhibit 10.7
ADDENDUM #3 TO PERSONAL EMPLOYMENT AGREEMENT
Dated July 12, 2015
By and between
Advanced Inhalation Therapies (AIT) Ltd.
(the " Company ")
and
Racheli Vizman
I.D. 040785610
(the " Employee ")
WHEREAS, the Company and the Employee have entered into a Personal Employment Agreement dated September 09, 2012, as amended on May 30, 2013 and as further amended on April 9, 2014 (the " Employment Agreement "); Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Employment Agreement; and
WHEREAS the parties wish to amend the provisions of the Employment Agreement, as hereinafter provided.
NOW THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties hereto hereby declare and agree as follows:
| 1. | Effective as of July 1 st , 2015 (" Effective Date "): |
| a. | Section 4.2 of the Employment Agreement will be amended such that the Notice Period shall be ninety (90) days instead of sixty (60) days. |
| b. | The following shall be added to the Employment Agreement to appear as Section 4.2A thereof: |
“Notwithstanding the foregoing, (i) in the event the Company elects to terminate Employee's employment (other than for Cause) during a period of six (6) month as of the date in which the Company consummated a Change of Control (as defined below) in the Company, the Company shall pay the Employee a compensation in an amount equal to six (6) month's Salary; and (ii) in the event the Employee elects to terminate her employment during a period of six (6) month as of the date of this Addendum, the Company shall pay the Employee a compensation in an amount equal to three (3) month's Salary.
For the purpose hereof the term " Change of Control " shall mean the acquisition (excluding pursuant to raising of funds by the Company), directly or indirectly, in one or more related transactions, by any person who is a not an affiliate of the Company, or group of such persons acting in concert, of (i) more than 50% of the then outstanding shares or voting rights of the Company, or (ii) all or substantially all of the assets of the Company.”
Addendum #3 to Personal Employment Agreement – Racheli Vizman
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| c. | Section 6.1 of the Employment Agreement will be amended such that the Salary shall be in the amount of NIS 37,000 instead of the amount of NIS 33,333. |
| d. | Section 6.4 of the Employment Agreement shall be deleted in its entirety and shall be replaced with the following: |
“6.4 The Employee shall be entitled to receive the following performance based bonuses (the " Bonuses "):
| i. | a one-time bonus in an amount equal to US$ 20,000 payable to Employee as of the date of this Addendum; |
| ii. | a one-time bonus in an amount equal to NIS 60,000 payable upon the commencement of a Phase IIB clinical trial by the Company; |
| iii. | an annual bonus in an amount equal to one (1) month's Salary will be paid to the Employee within 10 days from the end of each calendar year as of the date hereof; |
| iv. | a one-time bonus in an amount equal to US$ 15,000 payable once Company's bank account shall contain funds in excess of US$ 500,000, provided however , that in the event Employee is entitled to receive the bonus mentioned in sub-section (v) below, the one-time bonus payment in accordance with this sub-section (iv) shall not be payable to Employee; |
| v. | a one-time bonus in an amount equal to US$ 35,000 payable following consummation by the Company of an equity financing round in an amount of no less than US$ 3,000,000 and the actual receipt of such funds by the Company, provided however , that in the event Employee is entitled to receive the bonus mentioned in sub-section (iv) above, the one-time bonus payment in accordance with this sub-section (v) shall be reduced to US$ 20,000; and |
| vi. | a one-time bonus in an amount equal to US$ 50,000 payable upon consummation by the Company of an M&A Transaction (as defined below) in which the total amount of proceeds payable to the company and/or the Company's shareholders pursuant to consummation of such M&A Transaction shall exceed US$ 50,000,000. |
The term “ M&A Transaction ” shall mean any transaction or series or combination of related transactions whereby either of the following transactions is being consummated: (A) the sale of all (or substantially all) of the assets or shares of an entity of the Company’s, or (B) a merger with another entity, which constitutes a Change of Control.
For the avoidance of any doubt, the Bonuses shall not be deemed to be part of Employee's Salary, including without limitation, for purposes of any social benefits and calculation of severance payments, and shall be subject to withholding tax, social security payments ('Bituach Leumi') and such other withholding as may be required, from time to time, under applicable law.”
Addendum #3 to Personal Employment Agreement – Racheli Vizman
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| e. | Section 10.1 of the Employment Agreement shall be deleted in its entirety and shall be replaced with the following : |
“10.1 Company Car :
a. The Company shall make available to the Employee, during the term of Employee's employment hereunder and until the expiration of a two (2) month period as of termination thereof (the " Leasing Period "), an automobile of Class 5 (or equivalent) and in a cost per month of up to NIS 4,500 , and shall bear all fixed and current work-related expenses related to such automobile (but not parking fines and other traffic violations) as per the Company’s policy (the " Company Car "); such Company Car may be purchased or leased by the Company, at its sole discretion and according to the Company's policy.
b. The Company shall bear costs of gasoline of the Company Car.
c. Notwithstanding the foregoing, if any applicable law requires the deduction or withholding of any tax in connection with the Company Car, then then the sum payable to the Employee in connection with the Company Car shall be increased as necessary so that after such deduction or withholding has been made the Employee shall receive an amount equal to the amount she would have received had no such deduction or withholding been made.
d. Upon the earlier of (i) termination of Employee's employment for Cause; and (ii) expiration of the Leasing Period, the Employee shall forthwith return the Company Car with the keys and all licenses and other documentation related with the Company Car and all its accessories to the Company. The Employee shall not have any lien right in the Company Car or in any document or property related thereto.
e. The Employee’s liabilities and responsibility with respect to the use of the Company Car are set forth in Exhibit D and compliance therewith is a condition for the Employee to maintain the Company Car.”
| 2. | All other provisions of the Employment Agreement not amended herein shall remain in full force and effect. |
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Addendum #3 to Personal Employment Agreement – Racheli Vizman
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IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date first above written:
| /s/ Yossef Av-Gay | /s/ Racheli Vizman | |
| Advanced Inhalation Therapies (AIT) Ltd. | Racheli Vizman |
| By: | Yossef Av-Gay | |
| Title: | CSO |
Addendum #3 to Personal Employment Agreement – Racheli Vizman
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Exhibit D
Duties of the Employee in respect of the Company Car placed at Employee’s disposal
| 1. | The Employee warrants that Employee has held a valid driving license for at least two years and is competent to drive the car placed at Employee’s disposal by the Company. |
| 2. | The Employee and/or a person acting on Employee’s behalf and/or a member of Employee’s family may drive the Company Car, provided that such person is over the age of 24 and has held a valid driving license for the type of vehicle received by the Employee from the Company for a period of at least two years. A driver aged between 18 and 24 must obtain the prior written consent of the Company to drive the Company Car. |
| 3. | The Employee shall be responsible for all fines or expenses which the Company may be demanded to pay for traffic/parking offences involving the Company Car during the term of employment even if the demand only reaches the Company after cessation of the Employee’s employment. |
| 4. | The Employee shall not allow any third party whatsoever (except for other employees of the Company and/or persons acting on their own or on their behalf) to make any use whatsoever of the Company Car nor shall the Employee grant any third party in the custody of the Company Car or the rights therein or Employee’s rights under this Employment Agreement. |
| 5. | The Employee shall make reasonable use of the Company Car as required by law, shall carry out maintenance on time, shall keep the Company Car properly and to the best of Employee’s ability, shall refrain from causing damage to the Company Car, and shall treat the Company Car in the same manner as a careful owner would look after his/her own property. |
| 6. | The Employee shall obey the instructions of the car manufacturer as regards to the use and maintenance of the Company Car and, inter alia, shall comply with the owner’s instructions regarding the transfer of the Company Car to a garage specified by the Company for maintenance and repair. The Company shall give the Employee advance warning of the renewal date for the annual car license and the Employee shall update the Company on the car mileage for the purposes of current service of the Company Car. The Employee acknowledges the Company’s right to check the Company Car’s mileage with the gasoline companies whenever it deems fit. |
| 7. | The Employee shall abstain from causing damage to the car intentionally or by indifference, or recklessness. |
| 8. | The Employee shall not take passengers or freight for hire or monetary consideration. |
| 9. | The Employee shall not use the Company Car while under the influence of alcohol, medication, drugs or other substances likely to impair Employee’s ability to drive, temporarily or permanently. |
| 10. | The Employee shall not use the Company Car for unlawful purposes. |
| 11. | The Employee shall not leave the Company Car unlocked or with the key inside. |
| 12. | The Employee shall not use the Company Car in connection with any violent, political or labor strike related purposes. |
| 13. | The Employee shall not use the Company Car for towing or propelling any other vehicle or object and shall not use the Company Car for competition and/or racing and/or testing. |
Addendum #3 to Personal Employment Agreement – Racheli Vizman
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| 14. | The Employee shall not carry passengers or freight in excess of the number or quantity permitted by law or by the car insurance policy (compulsory and third party). The Employee shall use the Company Car solely for the purposes permitted under the said policy and shall do nothing that is likely to impair the validity and cover thereof. The Employee shall not use the Company Car outside of the State of Israel including those territories defined as Area A pursuant to the agreements between the State of Israel and the Palestinian Authority. |
| 15. | The Employee shall not transport any poisonous, dangerous and/or radioactive materials in the Company Car. |
| 16. | The Employee shall not use the Company Car on roads or areas, which are unpaved or unsuitable for vehicles. Furthermore, the Employee shall not use the Company Car in places where there are riots or disturbances or in circumstances in which the Company Car is likely to be damaged and Employee shall not take the Company Car into such places. |
| 17. | The Employee shall not, without the Company’s consent, make any change to, or change any part of or make any addition to the Company Car or any part thereof, or drill any holes therein or install any appliances therein. Employee shall likewise not paint or mark or use the Company Car in a manner likely to damage the car or any apart thereof and Employee shall not hang any signs or notices thereon. |
| 18. |
The Employee shall give the Company immediate notice of any defect, damage
or disrepair of or to the Company Car of any kind and howsoever caused and shall act in respect thereof in accordance with the directives of the Company. |
| 19. | The Employee shall give the Company immediate notice of any accident in which the Company Car shall be involved and shall give the Company full particulars thereof. The Employee or the driver involved in the accident shall fill in an accident report form without delay in such form as the Company shall require and shall sign and furnish the same to the Company even if no damage has been caused to the Company Car. Failure by the Employee to furnish such signed report within 24 hours of the accident shall disqualify the Employee from obtaining a substitute vehicle. |
| 20. | The Employee and/or any person driving on Employee’s behalf shall not make any admission, waiver or financial offer in connection with an accident to any third party and shall not assume any responsibility whatsoever in Employee’s or their or the Company’s name. This is subject however to giving full and truthful evidence in an official investigation instigated by law. |
| 21. | The Employee and/or any person driving on Employee’s behalf who is involved in an accident shall note the particulars of any other driver involved in the accident and of the other vehicle as well as insurance particulars and witnesses, if any. |
| 22. | The Employee and/or person driving the Company Car on Employee’s behalf (at the time of the accident) shall give every assistance, furnish full particulars and give all evidence required by the Company to enable it to deal with the accident and/or the damage and/or legal proceedings insofar as such are initiated in connection with the accident. |
| 23. | Any damage caused by a blow to the underside of the car otherwise than by an accident and damage to another part of the Company Car by such a blow as well as any damage caused to the Company Car resulting from want of repair will be the sole responsibility of and for the account of the Employee and Employee shall reimburse the Company for the cost of repair of such damage. |
| 24. | The Employee shall give the Company immediate notice of the theft of the Company Car should it be stolen and shall report the theft to the police. |
Addendum #3 to Personal Employment Agreement – Racheli Vizman
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| 25. | The Company shall bear no responsibility whatsoever for any effects, appliances or instruments left in the vehicle by the Employee or a person on Employee’s behalf at any time including servicing, repair, car-washing etc. nor shall the Company be liable for the entirety or regularity of such things. |
| 26. | The Employee and all persons using the Company Car shall comply fully with the provisions of this Agreement and the insurance policies (compulsory and third party). Should the Employee or persons on Employee’s behalf fail so to comply, the Employee shall be liable to compensate the Company for all damage, loss and expense occasioned to the Company directly or indirectly by reason of such failure to comply. |
| 27. | The Employee shall return the Company Car to the Company immediately upon termination of Employee’s employment for any reason and Employee shall not postpone its return even if Employee has claims against the Company. The Employee hereby waives any right of lien on the Company Car, contractual or under any law. |
| 28. | In the event of theft of the car or total loss by reason of the Employee’s negligence or failure to comply with the terms of this Appendix, the Employee shall pay the Company an amount equivalent to double the amount defined as a contribution (deductible) under the Insurance Policy. |
Addendum #3 to Personal Employment Agreement – Racheli Vizman
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Exhibit 10.8
LICENSE AGREEMENT
BETWEEN:
THE UNIVERSITY OF BRITISH COLUMBIA , a corporation continued under the University Act of British Columbia with offices at #103-6190 Agronomy Road, Vancouver, British Columbia, V6T 1Z3
(“ UBC ”)
AND:
Advanced inhalation therapies , a corporation incorporated under the laws of Israel, with a registered office at 27th Aavat Zion St, Tel Aviv
(the “ Licensee ”)
WHEREAS:
A. UBC has been engaged in research during the course of which it has developed and/or acquired certain technology relating to anonymized data from an investigator-initiated Phase I clinical trial to investigate the safety of inhaled gaseous nitric oxide in healthy adults for potential use as a frontline treatment for pulmonary infections the “ Nitric Oxide Clinical Trial ”, which research was undertaken by Dr. Yossef Av-Gay and Dr. Chris Miller in the UBC Faculty of Medicine, Division of Infectious Diseases (the “ Investigators ”);
B. It is UBC’s objective to exploit its technology for the public benefit, and to generate further research in a manner consistent with its status as a non-profit, tax exempt educational institution; and
C. The Licensee and UBC have agreed to enter into this license agreement (the “ Agreement ”) on the terms and conditions set out below.
THE PARTIES AGREE AS FOLLOWS:
1.0 DEFINITIONS
1.1 In this Agreement:
| (a) | “ Basic Participant Data ”means the information collected by UBC from the clinical trial participants in the normal course of clinical trial enrolment; |
| (b) | “ Confidential Information ” means all information, regardless of its form: |
| (i) | disclosed by UBC to the Licensee and designated by UBC as confidential, whether orally or in writing, including without limitation all information and documents related to the Technology (including all derived analyses and conclusions) and the terms and conditions of this Agreement; or |
| (ii) | disclosed by the Licensee to UBC and which is clearly identified in writing as “Confidential”, |
except that “Confidential Information” does not include information:
| (iii) | possessed by the recipient (the “ Recipient ”) before receipt from the disclosing party (the “ Discloser ”), other than through prior disclosure by the Discloser, as evidenced by the Recipient’s business records; |
| (iv) | published or available to the general public otherwise than through a breach of this Agreement; |
| (v) | obtained by the Recipient from a third party with a valid right to disclose it, provided that the third party is not under a confidentiality obligation to the Discloser; or |
| (vi) | independently developed by employees, agents or consultants of the Recipient who had no knowledge of or access to the Discloser’s information as evidenced by the Recipient’s business records; |
| (c) | “ License Fee ” is defined in Article 3.4; |
| (d) | “ Objectionable Material ” is defined in Article 7.3; |
| (e) | “ Start Date ” means 1st November, 2011; |
| (f) | “ Technology ” means the anonymized data from the Nitric Oxide Clinical Trial as described in Schedule “ A ” and UBC’s Confidential Information; |
| (g) | “ Term ” is defined in Article 13.1; and |
| (h) | “ UBC Trade-marks ” means any mark, trade-mark, service mark, logo, insignia, seal, design, symbol or device used by UBC in any manner at all. |
2.0 PROPERTY RIGHTS IN & TO THE TECHNOLOGY AND TO INTELLECTUAL PROPERTY
2.1 The Licensee acknowledges and agrees that UBC owns all right, title and interest in and to the Technology.
2.2 The Licensee will, at the request of UBC, sign all documents as may be required to ensure that ownership of the Technology remains with UBC.
2.3 The Licensee will own all right, title and interest in any intellectual property or products generated by employees (or other service providers or consultants) of the Licensee based on its activities under the License from the Start Date (the “ Licensee Inventions ”). For greater clarity, the Licensee may apply for patents covering Licensee Inventions in its sole discretion, and at its sole cost, which will be registered in Licensee’s name as sole proprietary owner off such patents and with no rights to be granted to UBC on such Licensee Inventions. The Licensee will be free to use and sublicense such Licensee Inventions as in its sole discretion it sees fit, without further accounting to UBC.
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3.0 GRANT OF LICENSE
3.1 Subject to Article 3.3, UBC hereby grants to the Licensee a sole and exclusive worldwide, non-transferable, non-sublicensable license to (a) use the Technology as part of regulatory submissions that will advance the development of inhaled nitric oxide therapy for therapeutic uses, and (b) for use in patent applications on the terms and conditions set out in this Agreement.
3.2 UBC further grants to the Licensee a sole and exclusive license, with the right to sublicense to develop, have developed, register, market, have marketed, produce, have produced, distribute, have distributed, sell, have sold, offer for sale and import any product based on, but which do not incorporate, the Technology, on the terms and conditions set out in this Agreement (the licenses granted under Section 3.1 and Section 3.2 above shall, collectively, be referred to as the “ License ”).
3.3 The Licensee acknowledges and agrees that UBC may use the Technology without charge in any manner at all for research, scholarly publication, educational and all other non-commercial uses.
3.4 As a condition of UBC granting this License, the Licensee agrees to pay to UBC;
| (a) | A license fee of $40,000 (Canadian funds) (the “ License Fee ”). The License Fee will not be refunded to the Licensee (in whole or in part) under any circumstances. The License Fee will be paid in three instalments as follows; |
| (i) | $15,000 paid concurrently with the execution of this Agreement; |
| (ii) | $15,000 paid three months after the Start Date; and |
| (iii) | $10,000 paid six months after the Start Date; and |
| (b) | The Licensee will enter into a Collaborative Research Agreement with UBC for at least 2 years beginning no later than one year after the Start Date. The Collaborative Research Agreement will provide a minimum of $75,000 (Canadian funds) per year in funding for research relating to the use of nitric oxide for therapeutics. |
4.0 BASIC PARTICIPANT DATA
4.1 The Licensee acknowledges and agrees that UBC has a public duty to safeguard the sanctity of the Basic Participant Data and ensure that they are used in a manner as authorized by the participants’ informed consent and so as to serve the advancement of scientific research.
4.2 For greater clarity, the Technology licensed hereunder shall not include Basic Participant Data but shall only contain certain anonymized components of such Basic Participant Data together with results and analyses from the Nitric Oxide Clinical Trial.
4.3 The Basic Participant Data, including any backup archives, are and will remain the property of UBC.
4.4 The Licensee will not make any representation to third parties to the effect that it has any proprietary rights in the Basic Participant Data or otherwise act in any manner inconsistent with UBC’s ownership of and right to control the Basic Participant Data.
4.5 The Licensee will use its best efforts to cooperate with UBC in ensuring that all subject identification and information associated with the Basic Participant Data is removed.
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4.6 The Licensee will comply with all applicable privacy legislation and will not use the Technology which will in any way cause UBC to be in breach of the Freedom of Information and Personal Privacy Act and will use its best efforts to cooperate with UBC in the fulfilment of its duty to comply with such Act, or any other applicable laws.
5.0 DISCLAIMER OF WARRANTY
5.1 UBC makes no representations, conditions or warranties, either express or implied, regarding the Technology. Without limitation, UBC specifically disclaims any implied warranty, condition or representation that the Technology;
| (a) | corresponds with a particular description; |
| (b) | is of merchantable quality; |
| (c) | is fit for a particular purpose; or |
| (d) | is durable for a reasonable period of time. |
UBC is not liable for any loss, whether direct, consequential, incidental or special, which the Licensee or other third parties suffer arising from any defect, error or fault of the Technology, or its failure to perform, even if UBC is aware of the possibility of the defect, error, fault or failure. The Licensee acknowledges that it has been advised by UBC to undertake its own due diligence regarding the Technology.
5.2 Nothing in this Agreement:
| (a) | constitutes a warranty or representation by UBC as to title to the Technology or that anything made, used, sold or otherwise disposed of under the license granted in this Agreement will not infringe the patents, copyrights, trade-marks, industrial designs or other intellectual property rights of any third parties, or any patents, copyrights, trade-marks, industrial design or other intellectual property rights owned, in whole or in part, by UBC, or licensed by UBC to any third parties; |
| (b) | constitutes an express or implied warranty or representation by UBC that the Licensee has, or will have the freedom to operate or practice the Technology; or |
| (c) | imposes an obligation on UBC to bring, prosecute or defend actions or suits against third parties for infringement of patents, copyrights, trade-marks, industrial designs or other intellectual property or contractual rights. |
6.0 INDEMNITY & LIMITATION OF LIABILITY
6.1 The Licensee indemnifies, holds harmless and defends UBC, its Board of Governors, officers, employees, faculty, students, invitees and agents against any and all claims (including all associated legal fees and disbursements actually incurred) arising out of the exercise of any rights under this Agreement, including without limitation against any damages or losses, consequential or otherwise, arising in any manner at all from or out of the use of the Technology licensed under this Agreement by the Licensee.
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6.2 UBC’s total liability, whether under the express or implied terms of this Agreement, in tort (including negligence) or at common law, for any loss or damage suffered by the Licensee, whether direct, indirect or special, or any other similar damage that may arise or does arise from any breaches of this Agreement by UBC, its Board of Governors, officers, employees, faculty, students or agents, is limited to $10,000.
6.3 The Licensee acknowledges and agrees that UBC will not be liable for consequential or incidental damages arising from any breach or breaches of this Agreement.
6.4 Notwithstanding the termination or expiration of this Agreement, the rights and obligations in Article 6 will survive and continue to bind the Licensee and its successors and permitted assigns.
7.0 PUBLICATION & CONFIDENTIALITY
7.1 Each party will keep and use the other party’s Confidential Information in confidence and will not, without the other party’s prior written consent, disclose the other party’s Confidential Information to any person or entity, except to the party’s directors, officers, employees, faculty, students and professional advisors who require the Confidential Information to assist such party in performing its obligations under this Agreement. The Licensee will maintain an appropriate internal program limiting the distribution of UBC’s Confidential Information to only those officers, employees and professional advisors who require such Confidential Information in performing the Licensee’s obligations under this Agreement and who have signed appropriate non-disclosure agreements.
7.2 Any party required by judicial or administrative process to disclose the other party’s Confidential Information, will promptly notify the other party and allow it reasonable time to oppose the process before disclosing the Confidential Information.
7.3 UBC is not restricted from presenting at symposia, national or regional professional meetings, or from publishing in journals or other publications, accounts of its research relating to the Technology , provided that with respect to the Confidential Information only, the Licensee is provided with copies of the proposed disclosure at least 60 days before the presentation or publication date and does not, within 30 days after delivery of the proposed disclosure, give notice to UBC indicating that it objects to the proposed disclosure. Any objection to a proposed disclosure will specify the portions of the proposed disclosure considered objectionable (the “ Objectionable Material ”). On receiving notice from the Licensee that any proposed disclosure contains Objectionable Material, UBC will delay the proposed disclosure for 4 months from the date UBC delivered the proposed disclosure to the Licensee. After 4 months from the date UBC delivered the proposed disclosure to the Licensee, UBC is free to present and/or publish the proposed disclosure whether or not it contains Objectionable Material.
7.4 The Licensee and UBC agree that the terms and conditions of this Agreement are confidential, subject to disclosure requirements by applicable laws. Notwithstanding anything contained in Article 7, the Licensee and UBC agree that either party may identify the title of this Agreement, the parties to this Agreement and the names of the inventors of the Technology , and that UBC may also disclose to the Investigators the amount of all payments made to UBC by the Licensee under this Agreement.
7.5 Notwithstanding the termination or expiration of this Agreement, the rights and obligations in Article 7 survive and continue to bind the parties, their successors and permitted assigns.
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8.0 TRADE-MARKS
8.1 The Licensee will not use the UBC Trade-marks or make reference to UBC or its name in any advertising or publicity, without the prior written consent of UBC. Without limitation, the Licensee will not issue a press release regarding this Agreement or the Technology without first obtaining UBC’s written approval. If the Licensee is required by law to act in breach of this Article, the Licensee will provide UBC with sufficient prior notice to permit UBC to bring an application or other proceeding to contest the requirement.
9.0 INSURANCE
9.1 One (1) month before the initiation of a human clinical trial, the Licensee will notify UBC of the terms and amount of the product liability, clinical trials, public liability, and commercial general liability insurance and such other types of insurance which it has placed. This insurance will include UBC, its Board of Governors, faculty, officers, employees, students and agents as additional insureds under such insurance policies.
10.0 ASSIGNMENT
10.1 Subject to Article 10.2, the Licensee will not assign, transfer, mortgage, pledge, financially encumber, grant a security interest, permit a lien to be created, charge or otherwise dispose of any or all of the rights granted to it under this Agreement without the prior written consent of UBC.
10.2 The Licensee may assign this Agreement as part of a sale, transfer or merger of the Licensee’s entire business (or that part of Licensee’s business that exercises all rights granted under this Agreement), provided that before any such assignment, the following conditions must be met:
| (a) | the Licensee must give UBC thirty (30) days prior written notice of the assignment, including the intended assignee’s name and contact information; |
| (b) | the assignee must have the financial and technical ability to assume the obligations under this Agreement, and the assignee (and its principals) must be of good and reputable character; |
| (c) | the assignee must agree in writing with UBC to be bound by this Agreement; and |
| (d) | the Licensee will pay all reasonable legal expenses incurred by UBC regarding any consents and approval required from UBC. |
10.3 UBC will have the right to assign its rights, duties and obligations under this Agreement to a company of which it is the sole shareholder, or a society which it has incorporated or which has purposes which are consistent with the objectives of UBC. If UBC makes such an assignment, the Licensee will release and discharge UBC from all obligations or covenants, provided that the company or society, as the case may be, signs a written agreement which provides that the company or society assumes all obligations or covenants from UBC and that the Licensee retains all rights granted to the Licensee under this Agreement.
11.0 GOVERNING LAW
11.1 This Agreement is governed by, and will be construed in accordance with, the laws of British Columbia and the laws of Canada in force in that province, without regard to its conflict of law rules. All parties agree that by executing this Agreement they have attorned to the jurisdiction of the Supreme Court of British Columbia. The parties agree that the British Columbia Supreme Court has exclusive jurisdiction over this Agreement.
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12.0 NOTICES
12.1 All reports and notices or other documents that a party is required or may want to deliver to any other party will be delivered:
| (a) | in writing; and |
| (b) | either by personal delivery or by registered or certified mail at the address for the receiving party set out in Article 12.2 or as varied by any notice. |
Any notice personally delivered is deemed to have been received at the time of delivery. Any notice mailed in accordance with this Article 12.1 is deemed to have been received at the end of the fifth day after it is posted.
12.2 The address for delivery of notices and instructions for making payments to UBC are set out in the attached Schedule “ B ”. The address for delivery of notices to the Licensee is set out below:
| ADVANCED INHALATION TECHNOLOGIES |
|
Address:27th Aavat Zion, Tel Aviv, Israel
Telephone: +97236045662 or +972502323280 Fax: +97236045662 |
13.0 TERM
13.1 The term (the “ Term ”) of this Agreement starts on the Start Date and ends on:
| (a) | the day that is exactly 10 years later; or |
| (b) | the date on which the Collaborative Research Agreement terminates or expires, |
whichever is last to occur, unless terminated earlier under Article 14.
14.0 TERMINATION OF AGREEMENT
14.1 This Agreement automatically and immediately terminates without notice to the Licensee if any proceeding under the Bankruptcy and Insolvency Act of Canada, or any other statute of similar purpose, is started by or against the Licensee.
14.2 UBC may, at its option, immediately terminate this Agreement by giving notice to the Licensee if one or more of the following occurs:
| (a) | the Licensee becomes insolvent, as evidenced, for example (without limitation) by the appointment of a receiver, a receiver manager, the issuance of financial statements which according to GAAP would render the Licensee insolvent, the termination of a majority of the Licensee’s employees, the vacation of the Licensee’s chief place of business or the Licensee ceasing or threatening to cease carrying on business; |
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| (b) | any execution or other process of any court becomes enforceable against the Licensee, or if any similar process is levied on the rights under this Agreement or on any money due to UBC and is not released or satisfied by the Licensee within 30 days from the process becoming enforceable or being levied; |
| (c) | if the Licensee or any of its directors or officers have breached or otherwise failed to comply with any applicable securities laws, regulations or requirements which UBC deems in its sole discretion to be material; |
| (d) | any resolution is passed or order made or other steps taken for the winding up, liquidation or other termination of the existence of the Licensee; |
| (e) | the Technology becomes subject to any security interest, lien, charge or encumbrance in favour of any third party claiming through the Licensee; |
| (f) | if the Licensee breaches any of Articles 3.1, 8.0, 9.0 or 10.0; or |
14.3 Other than as set out in Articles 14.1 and 14.2, either party may terminate this Agreement for any breach which is not remedied after providing the following notice to the party in breach:
| (a) | 30 days notice in the case of any breach which can reasonably be remedied within 30 days of the delivery of such notice; or |
| (b) | if the breach cannot be remedied within 30 days and the breach is not remedied within such further period as may be reasonably necessary, or within 90 days after receipt of notice, whichever is sooner. |
14.4 If this Agreement is terminated under Article 14.1 to 14.3, the Licensee will make all outstanding payments to UBC and UBC may proceed to exercise any or all of the rights and remedies available under this Agreement or otherwise available by law or in equity, successively or concurrently, at the option of UBC. Within 5 days of the termination date, the Licensee will deliver to UBC all Technology in its possession or control and will have no further right of any nature at all in the Technology. If the Licensee has not delivered up the Technology within 5 days from the termination date, UBC may immediately and without notice enter the Licensee’s premises and take possession of the Technology. The Licensee will pay all charges or expenses incurred by UBC in the enforcement of its rights or remedies against the Licensee under this Article 14.4, including without limitation UBC’s legal fees and disbursements on an indemnity basis.
14.5 The Licensee will cease to use the Technology in any manner at all within 5 days from the termination date.
14.6 The Licensee will have the right to terminate this Agreement by providing prior written notice of ninety (90) days to UBC.
15.0 MISCELLANEOUS COVENANTS OF LICENSEE
15.1 The Licensee represents and warrants to UBC that the Licensee is a corporation duly organized, existing and in good standing under the laws of Israel and has the power, authority and capacity to enter into this Agreement and to carry out the transactions contemplated by this Agreement, all of which have been duly and validly authorized by all requisite corporate proceedings. UBC is aware that the Licensee is a start up company and that the Licensee will use commercially reasonable efforts to raise the necessary seed capital financing for the activities set out herein.
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15.2 The Licensee will comply with all laws, regulations and ordinances, whether Federal, State, Provincial, County, Municipal or otherwise, with respect to the Technology and this Agreement.
15.3 The Licensee will pay all taxes and any related interest or penalty designated in any manner at all and imposed as a result of the existence or operation of this Agreement, including without limitation tax which the Licensee is required to withhold or deduct from payments to UBC. The Licensee will provide to UBC evidence as may be required by Canadian authorities to establish that the tax has been paid. If UBC is required to collect a tax to be paid by the Licensee, the Licensee will pay the tax to UBC on demand.
15.4 The obligation of the Licensee to make all payments under this Agreement is absolute and unconditional and is not, except as expressly set out in this Agreement, affected by any circumstance, including without limitation any set-off, compensation, counterclaim, recoupment, defence or other right which the Licensee may have against UBC, or anyone else for any reason at all.
15.5 The Licensee will pay interest on all amounts due and owing to UBC under this Agreement but not paid by the Licensee on the due date, at the rate of 12.68% per annum, calculated annually not in advance. The interest accrues on the balance of unpaid amounts from time to time outstanding, from the date on which portions of the amounts become due and owing until payment in full.
15.6 The Licensee will complete and deliver to UBC on or before January 1 of each year during the Term, starting on January 1, 2012, an annual report in the form attached as Schedule “ C ” (or an amended form as reasonably required by UBC from time to time).
16.0 MANAGEMENT OF CONFLICTS OF INTEREST
16.1 The Licensee acknowledges that it is aware of UBC’s Conflict of Interest Policy #97, Patent and Licensing Policy #88 and Research Policy #87 (www.universitycounsel.ubc.ca/policies/policies.html), and that UBC may amend these policies or introduce new policies from time to time.
16.2 Subject to Article 16.3 the Licensee and UBC agree, that:
| (a) | the facilities and research programs of the Licensee will be conducted independently of all UBC facilities, faculty, students or staff, and in particular, independently of and from the Investigators and the laboratory facilities made available to the Investigators by reason of the Investigators’ employment at UBC; |
| (b) | no students, post-doctoral fellows or other UBC staff will participate or be involved in the Licensee’s research, projects or utilize its facilities; and |
| (c) | any disclosures of inventions made by the Investigators to the Licensee will be immediately forwarded by the Licensee to UBC. |
16.3 The Licensee and UBC may, from time to time, enter into written agreements to permit activities which would otherwise be prohibited by Article 16.2.
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17.0 GENERAL
17.1 Nothing contained in this Agreement is to be deemed or construed to create between the parties a partnership or joint venture. No party has the authority to act on behalf of any other party, or to commit any other party in any manner at all or cause any other party’s name to be used in any way not specifically authorized by this Agreement.
17.2 Subject to the limitations in this Agreement, this Agreement operates for the benefit of and is binding on the parties and their respective successors and permitted assigns.
17.3 No condoning, excusing or overlooking by any party of any default, breach or non-observance by any other party at any time or times regarding any terms of this Agreement operates as a waiver of that party’s rights under this Agreement. A waiver of any term, or right under, this Agreement will be in writing signed by the party entitled to the benefit of that term or right, and is effective only to the extent set out in the written waiver.
17.4 No exercise of a specific right or remedy by any party precludes it from or prejudices it in exercising another right or pursuing another remedy or maintaining an action to which it may otherwise be entitled either at law or in equity.
17.5 All terms which require performance by the parties after the expiry or termination of this Agreement, will remain in force despite this Agreement’s expiry or termination for any reason.
17.6 Part or all of any Article that is indefinite, invalid, illegal or otherwise voidable or unenforceable may be severed and the balance of this Agreement will continue in full force and effect.
17.7 The Licensee acknowledges that the law firm of Richards Buell Sutton LLP has acted solely for UBC in connection with this Agreement and that all other parties have been advised to seek independent legal advice.
17.8 This Agreement sets out the entire understanding between the parties and no changes are binding unless signed in writing by the parties to this Agreement.
17.9 Time is of the essence of this Agreement.
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17.10 Unless the contrary intention appears, the singular includes the plural and vice versa and words importing a gender include other genders.
SIGNED BY THE PARTIES AS AN AGREEMENT on the 1 st day of November, 2011 but effective as of the Start Date.
| SIGNED FOR AND ON BEHALF of | |
| THE UNIVERSITY OF BRITISH COLUMBIA | |
| by its authorized signatories: | |
| /s/ J.P. Heale | |
| Authorized Signatory | |
| Authorized Signatory |
| SIGNED FOR AND ON BEHALF of | |
| ADVANCED INHALATION TECHNOLOGIES | |
| by its authorized signatories: | |
| /s/ Amir Avniel | |
| Authorized Signatory | |
| Amir Avniel, Director | |
| Please print Name and Title of Signatory | |
| Authorized Signatory | |
| Please print Name and Title of Signatory |
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SCHEDULE “A”
DESCRIPTION OF “TECHNOLOGY”
| UBC File # | Investigators | Description |
| 10-086 |
Dr. Yossef Av-Gay Dr. Chris Miller |
CREB approval Phase I clinical trial protocol Health Canada Report Phase I clinical trial anonymized data |
The data will be strictly anonymized. The link between the data and any participant identifiers will be irreversibly severed so that no participant can subsequently be identified. Confidentiality will be maintained because each subject will be identified by an alphanumeric code. The data includes the following fields for each of the 10 clinical trial participants:
| 1. | Individual lD (anonymized random arbitrary ID number) |
| 2. | Gender |
| 3. | Age group |
| 4. | Lung Function Results |
| 5. | Blood Chemistry and Haematology results |
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SCHEDULE “B”
ADDRESS FOR NOTICES & PAYMENT INSTRUCTIONS
| 1. | The address for delivery of notices to UBC is: |
The Director
University – Industry Liaison Office
University of British Columbia
#103 – 6190 Agronomy Road
Vancouver, British Columbia
V6T 1Z3
Telephone:
Fax:
| 2. | Payment of all amounts due to UBC under the terms of this license may be made as follows: |
| a) | by cheque made payable to “The University of British Columbia” delivered to UBC at the above address; or |
| b) | by wire transfer in accordance with the instructions set out below: |
Note: Please ensure ALL of the information is provided for efficient receipt of wire payments:
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SCHEDULE “C”
UBC License Agreement Annual Report
The information to be completed below will constitute the annual report required under the UBC License Agreement. Any information or documents provided by the Licensee in this report will not be interpreted as affecting the express rights and obligations of the Licensee contained in the License Agreement.
| Date of Report: | __________________ | Person Preparing This Report: | ____________________ |
| Name of Licensee: | ______________ | UBC File Number: | ___________________________ |
| Jurisdiction of Corporation: | _________________ | Head Office Address: | ________________________ |
| Contact Person for Company | _________________________________________________________ |
| Licensed Technology: ____________________________________________________________________ |
| Telephone Number: | __________________ | E-mail Address: | ____________________________ |
| 1. | Please provide a brief report on the status of development of the UBC Technology. | ||
| 2. | Has the Licensee filed any patent applications relating to the UBC Technology? Please provide details, and attach copies of all relevant documents. | ||
| 3. | Is there any other information relating to this License that you think we should be aware of? Please summarize them below or contact us directly. | ||
| Prepared by | Date | Dd/mm/yy | Phone |
I _____________________ (print name), of _________________(title) hereby certify the foregoing information as true and correct.
| Signature | Date Signed |
Once completed, please submit this report to:
Managing Director
University – Industry Liaison Office
#103 – 6190 Agronomy Road,
Vancouver, BC
V6T 1Z3
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Exhibit 10.9
**CONFIDENTIAL PORTIONS HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”).**
NON-EXCLUSIVE PATENT LICENSE AGREEMENT
This NON-EXCLUSIVE PATENT LICENSE AGREEMENT (this “ Agreement ”) is made as of October 22, 2013 (the “ Effective Date ”) by and between Advanced Inhalation Therapies (AIT) Ltd., a company incorporated under the laws of the State of Israel (“ Licensee ”), and SensorMedics Corporation, a California corporation (“ CareFusion ”).
BACKGROUND
A. CareFusion and/or its Affiliates have certain ownership rights to the CareFusion Patents (defined below); and
B. Licensee wishes to receive a non-exclusive license to the CareFusion Patents on the terms and conditions set forth in this Agreement.
In consideration of the covenants, conditions, and undertakings hereinafter set forth, and intending to be legally bound hereby, it is agreed by and between the parties as follows:
1. DEFINITIONS.
1.1 “ Affiliate ” means a corporation, association or other entity that directly or indirectly Controls, is Controlled by, or is under common Control with, the party in question.
1.2 “ Agreement ” has the meaning set forth in the Preamble,
1.3 “ Agreement Term ” has the meaning set forth in Section 11.1.
1.4 “ CareFusion ” has the meaning set forth in the Preamble.
1.5 “CareFusion Indemnitees” has the meaning set forth in Section 9.2.
1.6 “ CareFusion Patents ” means the patents listed on the attached Exhibit A, and any continuations, divisionals, supplementary protection certificates, and renewals thereon, any patents issuing from such patent applications, and any reissues, reexaminations or foreign equivalents claiming priority to any of the foregoing.
1.7 “ Commercially Reasonable Efforts ” means the carrying out of obligations or tasks by a party in a sustained manner using good faith and diligent efforts, which efforts shall be consistent with the exercise of prudent scientific and business judgment in accordance with the efforts such party (or a similarly situated entity with sufficient resources to advance a program) devotes to products or research or development projects owned by it of similar scientific and commercial potential.
1.8 “ Confidential Information ” means (i) the terms and conditions of this Agreement, (ii) any proprietary or confidential information or material, including all trade secrets, in tangible form disclosed hereunder that is marked as “Confidential” or with some other statement conveying the same meaning at the time it is delivered to the receiving party, or (iii) proprietary or confidential information or material, including all trade secrets, disclosed orally hereunder; provided, however, that the above information shall not be deemed Confidential Information, to the extent the receiving party can establish by competent proof that such information:
1.8.1 was already known to the receiving party, other than under an obligation of confidentiality owed to the disclosing party or as a result of disclosure by the disclosing party, at the time of disclosure;
1.8.2 was generally available to the public or otherwise part of the public domain at the time of its disclosure hereunder to the receiving party;
1.8.3 becomes generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving party in breach of this Agreement;
1.8.4 is independently developed by the receiving party without reference to any Confidential Information disclosed by the disclosing party; or
1.8.5 is subsequently disclosed to the receiving party by a person other than the disclosing party without breach of any legal obligation to the disclosing party.
1.9 “ Control ” means:
1.9.1 as to an entity, Control means ownership, directly or through one or more other entities, of fifty percent (50%) (or such lesser percentage equal to a percentage that is equal to or greater than one percent (1%) less than the maximum percentage allowed to be owned by a foreign entity in a particular jurisdiction) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, of fifty percent (50%) (or such lesser percentage equal to a percentage that is equal to or greater than one percent (1%) less than the maximum percentage allowed to be owned by a foreign entity in a particular jurisdiction) or more of the equity interests in the case of any other type of legal entity, the status of a general partner in any partnership; provided that such entity shall be considered an Affiliate only for the time during which such Control exists; or
1.9.2 as to the prosecution of patent applications, the maintenance of patent rights (including determinations to abandon), and the enforcement and/or defense of patent rights, Control includes the authority to select legal counsel, solicit other expert advice and assistance, and to make decisions pertaining to the conduct of patent prosecution, interferences, patent issuance, maintenance, reissue, reexamination, patent enforcement or defense, as applicable.
1.10 “ Distributor ” means a third party who purchases Licensed Products from Licensee, directly or indirectly, and takes title to and builds a stock in Licensed Products in a country or region, and who builds a market and engages in sales of such Licensed Products, as the case may be, in such region directly for itself and not as a sales agent or representative of ,Licensee, including possibly obtaining necessary regulatory approvals to market and sell such goods, products or services hi the applicable country or region.
1.11 “ Effective Date ” has the meaning set forth in the preamble.
1.12 “ Enforcement Action ” means any action reasonably related to the enforcement and protection of the CareFusion Patents in any dispute, disagreement, complaint or proceeding which could affect the enforcement, validity, scope, ownership or licensing of the CareFusion Patents in any country or jurisdiction. Enforcement Actions shall include, without limitation, actions directed at third party infringement, interferences, post-grant oppositions, and inventorship disputes.
1.13 “ FDA ” means the United States Food and Drug Administration or any replacement or successor authority.
1.14 “ Field ” means the application of NO Gas for the treatment of diseases or conditions in humans (expressly excluding veterinary applications).
1.15 “ Indemnitee ” has the meaning set forth in Section 9.3.
1.16 “ Indemnitor ” has the meaning set forth in Section 9.3.
1.17 “ Intellectual Property ” means generally any and all right, title and interest in, arising from, or relating to inventions, ideas, know-how, works of authorship and confidential information, including copyrights, patents and patent applications (together with all divisionals, continuations, continuations-in-part, reissues, reexaminations, renewals, and extensions of the same), trade secrets, trade names, trademarks, service marks, any registrations or applications relating to any of the foregoing, and any other rights of a similar nature or character whether now existing or hereafter created, developed, arising or otherwise coming into being.
1.18 “ License ” has the meaning set forth in Section 2.1.
1.19 “ Licensed Product ” means any product, good or service (i) for which the sale, use or manufacture would, but for the license granted herein, infringe on a CareFusion Patent, or (ii) that utilizes a device or method of treatment with NO Gas described in the claims of a CareFusion Patent. For avoidance of doubt, Licensed Product shall include all the goods, components and services comprising NO Therapy (i.e., the NO Gas).
1.20 “ Licensee ” has the meaning set forth in the Preamble,
1.21 “ Licensee Indemnitees ” has the meaning set forth in Section 9.1.
1.22 “ Major Market Countries ” means the United States, Japan, England, Germany, France, Italy and Spain.
1.23 “ NDA ” means a new drug application, or abbreviated application, pursuant to Section 505 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 355, or any other equivalent application for FDA open-label marketing approval of a drug.
1.24 “ NDA Approval ” means approval of an NDA by the FDA.
1.25 “ Net Sales ” means the gross consideration received from the sale or transfer of a Licensed Product by Licensee, and its Affiliates and Sublicensees, on a worldwide basis, after deduction of the following expenses, provided and to the extent such expenses are actually incurred and documented and do not exceed reasonable and customary amounts in the market in which such sale occurred: (a) discounts and allowances to customers; (b) rebates paid to Distributors; (c) taxes; (d) freight; and (e) refunds and returns. Net Sales includes all consideration received in respect of any sale of an applicable product, good or service, whether such consideration is in cash, payment in kind, exchange or another form. For avoidance of doubt, Net Sales shall include any consideration based on all goods, components, and services comprising NO Therapy, including without limitation the NO Gas, NO Gas Delivery Device(s) and NO Gas Container. If, for example and without limiting the foregoing, Licensee receives payments based on sales by a Third Party of NO Gas for use with an NO Delivery Device or NO Gas Container, such payments shall be Net Sales.
1.26 “ NO Gas ” means nitric oxide gas.
1.27 “ NO Gas Container ” means a storage vessel for NO Gas.
1.28 “ NO Gas Delivery Device(s) ” means devices used for the delivery of NO Gas that contain Intellectual Property Licensed by CareFusion to Licensee.
1.29 “ NO Therapy ” means the use of NO Gas using a Licensed Product for a particular application within the Field.
1.30 “ Patent Term ” means the period commencing on the Effective Date and continuing until expiration of the last to expire CareFusion Patent.
1.31 “ Prime Rate ” means the base lending rate on corporate loans from commercial banks, as published from time to time in The Wall Street Journal,
1.32 “ Royalty ” has the meaning set forth in Section 4.3.1.
1.33 “ Royalty Term ” means, with respect to each Licensed Product, the period of time beginning on the first sale of a Licensed Product in a country following receipt of regulatory approval for the marketing and sale of such Licensed Product in such country and continuing on a country-by-country and product-by-product basis until the later of (1) the expiration of the Patent Term, or (ii) ten (10) years from the date of such sale of such Licensed Product in such country (other than any sale or transfer between Licensee and its Affiliates or Sublicensees).
1.34 “ sale ,” “ sell ,” or “ sold ” means the transfer, lease, conveyance, or distribution for consideration (which consideration includes cash, payment in kind, or other forms of value) of a good or a service to a third party, or the distribution to a third party (e.g., a supplier or Distributor) for sale by such third party of the applicable good or service to the marketplace, including hospitals or physicians.
1.35 “ Sublicensees ” has the meaning set forth in Section 2.2.
1.36 “ Sublicense Revenue ” means all cash payments, the fair market cash value of any equity consideration (less any amounts paid for such equity consideration), and forgivable loans (to the extent actually forgiven) received by Licensee or its Affiliates in consideration for and directly attributable to the grant of a sublicense under the CareFusion Patents, including any upfront payments, license maintenance fees, milestone payments or the like. Sublicense Revenue will not include: (a) bona fide, non-forgivable loans (and forgivable loans unless and until forgiven); or (b) running royalties based upon sales of a Licensed Product. Any payments received by Licensee from a Sublicensee for equity in Licensee shall be deemed to be Sublicense Revenue to the extent that the Sublicensee’s payments for such equity exceeds the fair market value of such equity on the date that the obligation to make such payments are received by Licensee arises.
2. LICENSE GRANTS TO LICENSEE.
2.1 Non-Exclusive Patent License to Licensee . Subject to the terms and conditions of this Agreement, CareFusion hereby grants to Licensee, and Licensee accepts, a non-exclusive, non-sublicensable (except in accordance with Section 2.2) license, under CareFusion’s interest in the CareFusion Patents, to develop, make, have made, use, have used, sell, offer for sale, have sold, and import Licensed Products throughout the world solely within the Field (the “ License ”).
2.2 Sublicenses .
2.2.1 Licensee is entitled to sublicense its rights under the License to a third party (each, a “ Sublicensee ”) solely to have Licensed Products developed or acquired by Licensee made, sold or distributed for or on behalf of licensee or its Affiliates, and further subject to the terms of this Section 2.2, unless otherwise expressly agreed in writing by CareFusion. Any such sublicense shall be on terms and conditions in compliance with and not inconsistent with the terms of this Agreement. No sublicense shall relieve Licensee of any of its obligations hereunder, and Licensee shall take all steps that may be reasonably necessary to enforce compliance by Sublicensees. Sublicensees shall not be permitted to further sublicense to any other entity(ies). In the event of a termination of this Agreement, each sublicense shall automatically terminate,
2.2.2 Licensee shall grant sublicenses only pursuant to written agreements, which will be subject to and subordinate to the terms and conditions of this Agreement. Licensee shall furnish CareFusion with a fully executed copy of any sublicense agreement, promptly after its execution.
2.2.3 Any act or omission by a Sublicensee that would have constituted a breach of this Agreement had it been an act or omission by Licensee shall constitute a breach of this Agreement by Licensee.
2.3 Reservation of Rights . CareFusion retains all rights to use, title and ownership under the CareFusion Patents except as expressly licensed under this Section 2. All rights not expressly granted herein are reserved by CareFusion, and no other licenses to the CareFusion Patents or any other intellectual property are granted herein, by implication, estoppel or otherwise.
3. AFFIRMATIVE OBLIGATIONS OF THE PARTIES,
3.1 Licensee Responsibilities . In connection with the license granted under this Agreement and Licensee’s responsibility to develop, market and sell Licensed Products, Licensee agrees (and shall cause its permitted Sublicensees to agree, as applicable to their sublicensed activities) to:
3.1.1 Determine regulatory pathways for NO Therapies to commercial markets within the Field;
3.1.2 Use Commercially Reasonable Efforts to obtain NDA Approval for NO Therapies within the Field;
3.1.3 Use Commercially Reasonable Efforts to obtain marketing clearance of at least one NO Therapy application for the Field and achieve the milestones set forth on Exhibit B within the timeframes therein;
3.1.4 Commercially Reasonable Efforts to fund and manage sales, marketing, distribution, advertising, and end-user service of, and sell, Licensed Products within the Field.
3.2 Diligence Reporting . Within sixty (60) days after the end of each calendar year (other than the calendar year ending December 31, 2013), Licensee shall furnish CareFusion with a written report summarizing its, its Affiliates’ and its Sublicensees’ efforts during the prior year to develop and commercialize Licensed Products. Each report must contain a sufficient level of detail for CareFusion to assess whether Licensee is in compliance with its obligations under Section 3.1 and a discussion of intended efforts for the then-current year. Licensee represents and warrants that each of such reports shall be accurate.
4. PAYMENTS.
4.1 Upfront Fees . Licensee shall pay to CareFusion one hundred fifty thousand dollars ($150,000) as follows: (a) fifty thousand dollars ($50,000) within three (3) days of the Effective Date; (b) fifty thousand dollars ($50,000) within three (3) months of the Effective Date; and (c) fifty thousand dollars ($50,000) within six (6) months of the Effective Date. Such payments shall be nonrefundable and non-creditable.
4.2 Annual Fee . During the Royalty Term, Licensee shall, on an annual basis, make a nonrefundable payment to CareFusion of fifty thousand dollars ($50,000), with the first such payment due on the first anniversary of the Effective Date. Each such annual fee payment under this Section 4.2 shall be creditable against any Royalty payments that become due during the twelve (12)-month period following the date of such payment.
4.3 Net Sales and Royalties .
4.3.1 Royalties . During the Royalty Term, Licensee shall pay to CareFusion a royalty equal to five percent (5%) of Net Sales (“ Royalty ”) by Licensee, by its Affiliates, and any of its Sublicensees (but excluding sales by third party Distributors, or sales to Licensee by contract manufacturers who manufacture NO Gas Containers or NO Gas Delivery Devices solely for the benefit of Licensee).
4.3.2 Acknowledgment Regarding Sublicensees . CareFusion acknowledges that it is not entitled to receive any additional Royalties from Licensee with respect to Net Sales by a Sublicensee, other than the Royalty set forth in Section 4.3.1.
4.4 Sublicense Revenue . In the event Licensee or an Affiliate of Licensee sublicenses under Section 2.2, Licensee shall pay CareFusion **THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION.** of any Sublicense Revenues resulting from sublicense agreements executed by Licensee.
5. PAYMENTS; BOOKS AND RECORDS.
5.1 Royalty Reports and Payments . After the first sale of any Licensed Product, Licensee shall deliver written reports to CareFusion for each calendar quarter within forty-five (45) days after the end of such quarter, stating in each such report, separately for Licensee, its Affiliates and applicable Sublicensees, the number and description of each Licensed Product, by country, the gross revenues in respect thereof, the calculations and itemizations of all permitted deductions to arrive at Net Sales, and the calculation of Royalties due thereon. Concurrent with the delivery of the report required pursuant to this Section 5.1, Licensee shall pay to CareFusion all Royalties that have accrued hereunder as of the close of the prior calendar quarter that is covered by such report.
5.2 Payment Method . All payments due under this Agreement shall be made by check or by bank wire transfer in immediately available funds to a bank account designated by CareFusion. All payments hereunder shall be made in U.S. dollars. If the due date of any payment is a Saturday, Sunday or national holiday, such payment may be paid on the following business day.
5.3 Late Payment Penalties . Interest shall accrue on any late payment owed to CareFusion hereunder not made on the date such payment is due, including late payments or underpayments of Royalties at an interest rate equal to the lesser of **THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION.** or the highest rate permissible by law, with such interest accruing from the date the payment was originally due, and any late payment pursuant to this Section shall be credited first to interest and then to any outstanding fees. This Section shall in no way limit any other rights and remedies available to CareFusion, whether arising under this Agreement or at law or in equity.
5.4 Currency Conversions . If any currency conversion shall be required in connection with the calculation of royalties hereunder, such conversion shall be made using the selling exchange late for conversion of the foreign currency into U.S. Dollars, quoted for current transactions reported in The Wall Street Journal for the second to last business day of the month prior to the month in which CareFusion received such payment.
5.5 Records; Inspection . Licensee shall keep, and shall cause its Affiliates and Sublicensees to keep, complete, true and accurate books of account and records for the purpose of determining the royalty amounts payable under this Agreement. Such books and records shall be kept at Licensee’s, or at the applicable Affiliate’s or Sublicensee’s, principal place of business, for at least five (5) years following the end of the quarterly period to which they pertain. Licensee agrees that the books and records of Licensee, and its Affiliates and Sublicensees, shall be open for inspection by CareFusion during such five (5)-year period by, at CareFusion’s option, either CareFusion or a public accounting firm for whom the party to be inspected has no reasonable objection, for the purpose of verifying Royalty statements or any other payment obligations hereunder. Such inspections may be made no more than once each calendar year, at reasonable times and on reasonable notice. Inspections conducted under this Section 5.5 shall be at CareFusion’s expense; provided, however, if a variation or error producing an increase exceeding **THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION.**of the amount owed for any period covered by the inspection is established in the course of any such inspection, then all reasonable costs relating to the inspection for such period and any unpaid amounts that are discovered shall be paid promptly by Licensee to CareFusion, together with interest thereon from the date such payments were originally due at the lesser of **THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION.** or the highest rate permissible by law, and any payment pursuant to this Section 5.5 shall be credited first to interest and then to any outstanding principal amount.
5.6 Tax Matters . All royalty amounts and other payments required to be paid pursuant to this Agreement shall be paid without deduction therefrom for withholding for or on account of any sales tax, use tax, value-added tax or other tax or governmental charge, Any amounts required under the applicable laws to be withheld by Licensee will be the sole responsibility of Licensee and all amounts owing from Licensee to CareFusion for license fees and royalties shall be grossed up to account for any withholding taxes.
6. INTELLECTUAL PROPERTY.
6.1 Patent Prosecution & Maintenance . Patent prosecution and maintenance of the CareFusion Patents shall he Controlled by CareFusion. Licensee shall be responsible for all costs and fees in respect thereof; provided, however, that in the event CareFusion has other third party licensees of any CareFusion Patents, Licensee shall only be responsible for a prorated portion of the costs and fees for each such CareFusion Patent based on the total number of licensees of CareFusion for such CareFusion Patent. Licensee shall pay to CareFusion such amounts within thirty (30) days of invoice therefor.
6.2 Infringement Defense . If a third party alleges that the making, using, selling, importing, or exporting of a Licensed Product infringes such third party’s patents, Licensee shall notify CareFusion of the allegations and, if requested by CareFusion, consult and confer with CareFusion regarding the defense thereof. Licensee agrees that it shall not, without CareFusion’s express prior written consent in each instance, settle or compromise any action (or pursue any defense or other theory) in a manner that would invalidate, modify, or limit the scope of any CareFusion Patent or any claim thereunder, or that would require any specific performance outside the Field. In addition, at CareFusion’s request, Licensee agrees not to oppose any decision by CareFusion (and shall cooperate reasonably in support of such decision) to retain counsel for CareFusion, at CareFusion’s sole expense, and enter an appearance in such action in defense or enforcement of the CareFusion Patents.
6.3 Enforcement of Patent Rights . CareFusion shall Control any and all Enforcement Actions, including the decision whether to undertake such Enforcement Action.
6.4 Marking . Licensee shall, and shall cause its Affiliates and Sublicensees to, mark all Licensed Products sold in such a manner as to conform with the patent laws and practice of the country to which such products are shipped or in which such products are sold for purposes of ensuring maximum enforceability of CareFusion Patents in such country.
7. REPRESENTATIONS AND WARRANTIES; DISCLAIMERS.
7.1 Representations and Warranties .
7.1.1 By CareFusion . CareFusion warrants and represents to Licensee that it has the corporate authority to enter into this Agreement.
7.1.2 By Licensee . Licensee warrants and represents to CareFusion that (i) it has the corporate authority to enter into this Agreement, and (ii) as of the Effective Date and to the actual present knowledge (but without having undertaken any investigation) of Licensee, there are no existing or threatened actions, suits or claims pending against it with respect to its right to enter into and perform its obligations under this Agreement.
7.2 Disclaimer of Warranties . Except as expressly provided in Section 7.1.1, the CareFusion Patents (and related Confidential Information disclosed hereunder) are licensed or provided to Licensee “AS IS” and CareFusion expressly disclaims any further representations and warranties, including any express or implied warranties of merchantability, non-infringement, or fitness for a particular purpose, or any warranty that any patent or patent application licensed hereunder shall be valid or enforceable. Licensee acknowledges that it is not relying on any representations, warranties or covenants other than those set forth in Section 7.1.1, and these disclaimers represent a reasonable allocation of risk between the parties in respect of the consideration paid hereunder, and are intended to apply even if the Licensed Products, or this Agreement fails of its essential purpose. Licensee also acknowledges that CareFusion does not represent or warrant as to the scope of any CareFusion Patents, that the exploitation of CareFusion Patents will be successful, or that any exploitation of CareFusion Patents will not infringe upon any other intellectual property owned or controlled by CareFusion.
8. CONFIDENTIALITY.
8.1 Confidential Information . Except as expressly provided in this Agreement, the parties agree that, for the Agreement Term and thereafter, the receiving party shall keep completely confidential and shall not publish or otherwise disclose (except for disclosures permitted under Section 8.2) and shall not use for any purpose except for the purposes contemplated by this Agreement any Confidential Information furnished to it by the disclosing party hereto pursuant to this Agreement. Without, limitation upon any provision of this Agreement, each of the parties shall be responsible for the observance by its employees of the confidentiality obligations set forth in this Section 8 and this Agreement, generally.
8.2 Permitted Disclosures . Except as otherwise limited by this Agreement, each party hereto may disclose the other party’s Confidential Information: (a) as for the terms and conditions of this Agreement, to its advisors, financial investors (including prospective investors) and other similarly situated third parties on a need to know basis, if such permitted recipients agree in writing to be bound by the terms of this Section 8, or (b) to the extent such disclosure is reasonably necessary in connection with (i) filing or prosecuting patent applications, prosecuting or defending litigation, complying with applicable governmental regulations or otherwise submitting information to tax or other governmental authorities, or (ii) making a permitted sublicense or otherwise exercising its rights hereunder, provided that if a party is required to make any such disclosure of another party’s Confidential Information, other than pursuant to a confidentiality agreement, it shall give reasonable advance notice to the latter party of such disclosure and, save to the extent inappropriate in the case of patent applications, shall cooperate with the original disclosing party in any effort by the original disclosing party to secure a protective order blocking the disclosure of, or otherwise affording confidential treatment to, such Confidential Information.
9. INDEMNIFICATION & INSURANCE.
9.1 Indemnification of Licensee . CareFusion shall indemnify and hold Licensee and its directors, officers, employees, agents, consultants and counsel, and the successors and permitted assigns of the foregoing (the “ Licensee Indemnitees ”) harmless from and against any and all liabilities, damages, losses, costs or expenses (including reasonable attorneys’ and professional fees and other expenses of litigation and arbitration) resulting from a claim, suit or proceeding brought by a third party against a Licensee Indemnitee, arising from or occurring as a result of a breach of CareFusion’s representations and warranties set forth in Section 7.1.1.
9.2 Indemnification of CareFusion . Licensee shall indemnify and hold CareFusion and its respective directors, officers, employees, agents, consultants, and counsel, and the successors and permitted assigns of the foregoing (the “ CareFusion Indemnitees ”) harmless from and against any and all liabilities, damages, losses,, costs or expenses (including reasonable attorneys’ and professional fees and other expenses of litigation and arbitration) resulting from a claim, suit or proceeding brought by a third party against a CareFusion Indemnitee, arising from or occurring as a result of (i) any practice by Licensee of the licenses granted herein, (ii) the development, manufacture, use, importation, marketing, sale and commercialization by Licensee, its Affiliates or any Sublicensee of any Licensed Product, or any other good, product, or service provided by Licensee or its Affiliates, whether covered by the CareFusion Patents or otherwise (including manufacturer’s defect or product liability claims), except, in each case, to the extent caused by the willful misconduct of CareFusion, or (iii) a breach by Licensee of its representations and warranties set forth in Section 7.1.2.
9.3 Procedure . A party (the “ Indemnitee ”) that intends to claim indemnification under this Section 9 shall promptly notify the other party (the “ Indemnitor ”) of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have the right to participate in, and, to the extent the Indemnitor so desires, to assume sole Control of the defense thereof with counsel mutually satisfactory to the parties, including the right to settle the action on behalf of the Indemnitee on any terms the Indemnitor deems desirable in the exercise of its sole discretion, except that the Indemnitor shall not, without the Indemnitee’s prior written consent, settle any such claim if such settlement contains a stipulation to or admission or acknowledgment of any liability or wrongdoing on the part of the Indemnitee or imposes any obligation on the Indemnitee other than a monetary obligation, and only to the extent the Indemnitor assumes directly, and in full, such obligation and is able to fulfill such obligation. The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any such action shall not affect or limit Indemnitor’s duty to defend such action but shall relieve Indemnitor of liability to the Indemnitee solely to the extent the Indemnitor is materially prejudiced by the delay. At the Indemnitor’s request and expense, the Indemnitee shall cooperate fully with the Indemnitor and its legal representatives in the investigation and defense of any action, claim or liability covered by this indemnification and provide full information with respect thereto. Subject to the Indemnitee’s fulfillment of its obligations under this Section 9.3, the Indemnitor shall pay any damages, costs or other amounts awarded against the Indemnitee (or payable by the Indemnitee pursuant to a settlement agreement entered into by the Indemnitor) in connection with such claim.
9.4 Insurance .
9.4.1 Coverage . Licensee will procure and maintain during the Agreement Term comprehensive liability insurance, including commercial liability, product liability and workers’ compensation, having coverage not less than one million dollars ($1,000,000) per occurrence (or higher if consistent with industry standards) and three million dollars ($3,000,000) in the aggregate, with a reputable and financially secure insurance carrier. This insurance will be written to cover claims incurred, discovered, manifested, or made during or after the expiration or termination of this Agreement.
9.4.2 Certificate . Within forty-five (45) days of mutual execution of this Agreement, Licensee will provide CareFusion with a Certificate of Insurance evidencing primary coverage and requiring thirty (30) days prior written notice of cancellation or material change to CareFusion. Licensee will advise CareFusion, in writing, that it maintains excess liability coverage over primary insurance for at least the minimum limits set forth above.
9.4.3 Continued Coverage . If Licensee’s insurance is written on a claims-made basis, as opposed to an occurrence basis, Licensee will purchase the coverage necessary to ensure continued and uninterrupted coverage of all claims, including those made ‘after the policy expires or is terminated.
10. LIMITATION OF LIABILITY.
Except in respect of a breach of Section 8, or obligations arising under Section 9, in no event shall either party be liable under this Agreement to the other party for any incidental, consequential, indirect or exemplary damages, including damages from loss of profits or opportunities, even if advised of the possibility of such damages. Notwithstanding any fault, negligence, strict liability or other theory of liability of either party or of its officers, directors, employees or agents under or in connection with this Agreement, in no event shall the amount of damages payable by one party to the other party exceed the total amount paid by Licensee to CareFusion in the two year period immediately preceding the action, event or circumstance giving rise to liability hereunder, except with respect to a breach of Section 2, a breach of a payment obligation arising under Section 4 or Section 5.5, or obligations arising under Sections 8 or 9, for all of which no such limitation on the amount of damages is imposed.
11. TERM AND TERMINATION.
11.1 Agreement Term . Subject to the remainder of this Section 11, the term of this Agreement shall commence on the Effective Date and shall continue until the expiration of the last to expire Royalty Term for all countries and Licensed Products (the “ Agreement Term ”).
11.2 Termination for Cause . Either party may, upon written notice to the other party, terminate this Agreement in its entirety or, at the option of the party providing notice of termination, may terminate any license granted hereunder, if the other party has breached this Agreement and failed to cure such breach within sixty (60) days after receiving written notice thereof from the party seeking to terminate. For avoidance of doubt, termination pursuant to this Section 11.2 shall be effective if the party seeking to terminate provides notice of breach and states that this Agreement or applicable license shall terminate immediately and without further notice thereof, unless the party in breach cures such breach within the sixty (60) day cure period.
11.3 Termination for Insolvency . If voluntary or involuntary proceedings by or against a party are instituted in bankruptcy under any insolvency law, or a receiver or custodian is appointed for such party, or proceedings are instituted by or against such party for corporate reorganization or the dissolution of such party, which proceedings, if involuntary, shall not have been dismissed within sixty (60) days after the date of filing, or if such party makes an assignment for the benefit of creditors, or substantially all of the assets of such party are seized or attached and not released within sixty (60) days thereafter, the other party may immediately terminate this Agreement upon notice to the other party, and all licenses granted to such party hereunder effective upon notice of such termination.
11.4 Termination if Licensee Challenges CareFusion Patents . If Licensee or any of licensee Affiliates, directly or indirectly, (i) initiates or requests an interference or opposition proceeding with respect to any CareFusion Patent, or (ii) makes, files or maintains any claim, demand, lawsuit or cause of action to challenge the validity or enforceability of any CareFusion Patent, CareFusion shall have the right to terminate this Agreement immediately upon written notice to Licensee.
11.5 Termination for Failure to Meet Diligence Milestones . If Licensee fails to reach any milestone set forth on Exhibit B within the timeframe set forth therein, CareFusion may terminate this Agreement upon thirty (30) days prior written notice.
11.6 Accrued Obligations . Termination of this Agreement or any license granted hereunder for any reason shall not release any party hereto from any obligation which, at the time of such termination, has already accrued to the other party or which is attributable to a period prior to such termination or the performance of which was due prior to such termination, nor shall it preclude either party from pursuing any rights and remedies it may have hereunder and at law and in equity which accrued or are based upon any event occurring prior to or continuing after such termination.
11.7 Effect of Termination . Upon any termination of this Agreement or any license granted hereunder, the terminated party promptly shall cease any use, including for evaluation, research or commercial exploitation, under such license and shall, upon request of the terminating party, promptly destroy all materials derived therefrom (i.e., the use, manufacture, sale or import or export of which is covered by a claim under the terminated license) and all other Confidential Information received from the terminating party related to the terminated license. Upon any termination of this Agreement, all sublicenses under the Licenses shall automatically terminate. The terminated party shall certify in writing its compliance with a request to destroy any materials. Termination of this Agreement shalt not limit any of the parties’ rights under this Agreement at law, or in equity. In the event of termination of this Agreement during the Royalty Term for any Licensed Product in any country, and without granting or implying any rights to Licensee or limiting any rights or remedies of CareFusion, the payment obligations under Section 4 shall survive with respect to such Licensed Product and country for the remainder of the Royalty Term.
11.8 Survival . Sections 1, 2.3, 4, 5, 7.2, 8, 9, 10, 11.6, 11.7, 11.8 and 12 survive the expiration or termination of this Agreement.
12. MISCELLANEOUS.
12.1 Governing Law and Venue . This Agreement and any dispute arising from the performance or breach hereof shall be governed by and construed in accordance with the internal laws of the State of California without regard to its rules governing conflicts of law. The sole jurisdiction and venue for actions related to the subject matter of this Agreement shall be the federal and state courts located in San Diego County, California. Both parties hereby consent to the jurisdiction of such courts and agree that process may be served in the manner provided herein for giving notices or otherwise as allowed by California state or United States federal law.
12.2 Waiver . Neither party may waive or release any of its rights or interests in this Agreement except in a writing signed by both parties. The failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition.
12.3 Amendment . This Agreement may be modified or amended only pursuant to a writing executed by both parties.
12.4 Publicity . Licensee shall not use CareFusion’s, or any of its affiliates’, names, or refer to it or any of them directly or indirectly in any papers, articles, advertisements, marketing materials, sales presentations or press releases, without the prior written approval of CareFusion.
12.5 Assignment . Except as otherwise provided herein, this Agreement and the licenses granted herein shall not be assignable or transferable by Licensee, including to any Affiliate of Licensee, without the prior written consent of CareFusion, which shall not be unreasonably withheld, conditioned or delayed. Licensee is entitled to assign this Agreement and the License, in whole but not in part, and CareFusion hereby consents to such assignment, upon a merger, consolidation or reorganization of Licensee, or upon a sale or other transfer of more than fifty percent (50%) of the voting securities of Licensee (or such lesser number as is sufficient to transfer the authority to elect a majority of the board of directors of Licensee). Any assignment of this Agreement by Licensee shall be null and void unless the assignee agrees in advance in writing to be bound by the terms of this Agreement as if it were an original signatory hereto. For purposes of this Agreement, any change in Control of Licensee shall be deemed an assignment, and accordingly, the agreement must be assigned to the “assignee” thereof. CareFusion may assign this Agreement, and any of the Intellectual Property licensed to Licensee in this Agreement, to any person or entity at its discretion. The terms and conditions of this Agreement shall be binding on and inure to the benefit of the permitted successors and assigns of the parties.
12.6 Notices . All notices, requests and other communications hereunder shall be in writing and shall be personally delivered or sent by international express delivery service, registered or certified mail, return receipt requested, postage prepaid, in each case to the respective address specified below, or such other address as may be specified in writing to the other parties hereto:
| Licensee: |
Advanced Inhalation Therapies (AIT) Ltd. 2 Derech Meir Weisgal Rehovot, 7632605 Israel Attn: Chief Operations Officer |
|
| CareFusion: |
SensorMedics Corporation 22745 Savi Ranch Parkway Yorba Linda, CA 92887 Attn: General Manager |
|
| with a copy to: |
CareFusion Corporation 3750 Torrey View Court San Diego, CA 91230 Attn: General Counsel |
Except for a notice of a change of address, which shall be effective only upon receipt thereof, all such notices, requests, demands, waivers and communications properly addressed shall be effective: (i) if sent by U.S. mail, three (3) business days after deposit in the U.S. mail or air mail, postage prepaid; (ii) if sent by Federal Express or other overnight delivery service, one (1) business day after delivery to such service; (iii) if sent by personal courier, upon receipt; and (iv) if sent by facsimile (if the receiving machine confirms receipt through answerback and the sending machine prints a paper copy of the answerback message), or email (if the receiving device confirms both receipt and that the recipient has opened the email, and the sending device receives a confirmation of such delivery and opening of the email) upon receipt.
12.7 Force Majeure . Neither party shall be liable to the other for failure or delay in the performance of any of its obligations under this Agreement (other than obligations to pay money) for the time and to the extent such failure or delay is caused by earthquake, riot, civil commotion, war, hostilities between nations, governmental law, order or regulation, embargo, action by the government or any agency thereof, act of God, act of terrorism, storm, fire, accident, labor dispute or strike, sabotage, explosion or other similar or different contingencies, in each case, beyond the commercially reasonable control of such party. The party affected by Force Majeure shall provide the other party with full particulars thereof as soon as it becomes aware of the same (including its best estimate of the likely extent and duration of the interference with its activities), and shall use commercially reasonable endeavors to overcome the difficulties created thereby and to resume performance of its obligations as soon as practicable, If the performance of any obligation under this Agreement is delayed owing to a force majeure for any continuous period of more than six (6) months, the parties hereto shall consult with respect to an equitable solution, including the possible termination of this Agreement.
12.8 Independent Contractors . Nothing contained in this Agreement is intended implicitly, or is to be construed, to constitute Licensee or CareFusion as partners or joint venturers in the legal sense. No party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of any other party or to bind any other party to any contract, agreement or undertaking with any third party.
12.9 Advice of Counsel . Licensee and CareFusion have each consulted counsel of their choice regarding this Agreement, and each acknowledges and agrees that this Agreement shall not be deemed to have been drafted by one party or another and shall be construed accordingly.
12.10 Other Obligations . Except as expressly provided in this Agreement or as separately agreed upon in writing between Licensee and CareFusion, each party shall bear its own costs incurred in connection with the implementation of the obligations under this Agreement.
12.11 Severability . If any provisions of this Agreement are determined to be invalid or unenforceable by an arbitrator or court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect without said provision. The parties shall in good faith negotiate a substitute clause for any provision declared invalid or unenforceable, which shall most nearly approximate the intent of the parties in entering this Agreement; provided, if the parties are unable to agree on such a substitute clause and the deletion of the provision held invalid or unenforceable would produce material adverse financial consequences for one party, such party shall have the right to terminate this Agreement with one hundred eighty (180) days prior notice.
12.12 Further Assurances . At any time or from time to time on and after the date of this Agreement, either party shall at the request of the other party (i) deliver to the requesting party such records, data or other documents consistent with the provisions of this Agreement, (ii) execute, and deliver or cause to be delivered, all such consents, documents or further instruments of assignment, transfer or license, and (iii) take or cause to be taken all such actions, as the requesting party may reasonably deem necessary or desirable in order for the requesting party to obtain the full benefits of this Agreement and the transactions contemplated hereby.
12.13 Approvals . Licensee shall be responsible, at its expense, for obtaining any approvals from the governmental entities which may be required under applicable law for the commercial exploitation of NO Therapy.
12.14 Entire Agreement . This Agreement together with the Exhibits hereto constitutes the entire agreement with respect to the subject matter hereof, and supersedes all prior or contemporaneous understandings or agreements, whether written or oral, between Licensee and CareFusion with respect to such subject matter.
12.15 Headings . The headings to the Sections hereof are not a part of this Agreement, but are included for convenience of reference only and shall not affect its meaning or interpretation.
12.16 Construction . Whenever examples are used in this Agreement with the words “including,” “for example,” “e.g.,” “such as,” “etc.” or any derivation of such words, such examples are intended to be illustrative and not limiting.
12.17 Counterparts . This Agreement may be executed in two counterparts and by facsimile, each of which shall be deemed an original and which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized representatives effective as of the Effective Date.
| SENSORMEDICS CORPORATION | ADVANCED INHALATION THERAPIES (AIT) LTD. | |||
| By: | /s/ Kevin Ketzel | By: | /s/ Racheli Vizman | |
| Name: | Kevin Ketzel | Name: | Racheli Vizman | |
| Its: | General Manager | Its: | COO | |
Exhibit 10.10
OPTION AGREEMENT
THIS Option Agreement is entered into this 31 st day of August, 2015 by Advanced Inhalation Therapies (AIT) Ltd. , a company duly incorporated under the laws of the State of Israel (the “ Company ”) and Pulmonox Technologies Corporation, a company duly incorporated under the laws of the Province of Alberta, Canada (the “ Seller ”); each of the Company and the Seller may be referred to as a “ Party ” and jointly as the “ Parties ”.
WHEREAS Seller is the owner of rights and title in the Acquired IP (as defined below), and the Company is interested in evaluating the purchase of all such rights and title from Seller who is interested in selling such rights and title;
WHEREAS for the purposes of facilitating the purchase of the Acquired IP, Seller is willing to grant the Company a certain Option (as defined below) to purchase all of Seller’s rights and title to the Acquired IP;
WHEREAS for the purposes of further facilitating such possible purchase, during the time between the grant of the Option and its exercise or expiration, Seller is willing to grant the Company a temporary license to use the Acquired IP during such period, as further detailed in this Agreement;
WHEREAS the Company and the Seller wish to lay down the terms of the grant of the Option, the temporary license and of the subsequent sale of the Acquired IP upon exercise of the Option.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
| 1. | Definitions |
In this Agreement, the following terms shall have the following meaning ascribed to them, unless the context requires otherwise:
| 1.1. | " Acquired IP " means all of Seller's Intellectual Property as of the Effective Date and as of the Closing (as defined below), including without limitations, the patents, patent applications and know-how identified as such in Schedule 1.1 attached hereto. |
| 1.2. | “ Affiliate ” means, with respect to any party hereto, any person, organization or entity directly or indirectly controlling, controlled by or under common control with, such party. For purposes of this definition only, “control” of another person, organization or entity shall mean the ability, directly or indirectly, to direct the activities of the relevant entity, and shall include, without limitation (i) ownership or direct or indirect control of fifty percent (50%) or more of the outstanding voting stock or other ownership interest of the other organization or entity, or (ii) direct or indirect possession, of the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the organization or other entity. |
| 1.3. | " Approved Product " means each of the First Approved Product, the Second Approved Product and/or the Third Approved Product that include revenues paid to the Company for nitric oxide gas for approved medical indications. For the avoidance of any doubt, Approved Product includes nitric oxide and may include the use of a proprietary delivery device. For example, if the First Approved Product is for chronic obstructive pulmonary disease (“COPD”), this First Approved Product will include nitric oxide drug product and any devices necessary to deliver nitric oxide for treatment of COPD. |
| 1.4. | “ Combination Product ” means a product which comprises an Approved Product and any additional products which do not qualify as Approved Products. |
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| 1.5. | " Closing " shall mean the consummation of the acquisition of the Acquired IP by the Company from the Seller in accordance with the provisions hereof. |
| 1.6. | " Documents " means all files, documents, data, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, budgets, forecasts, ledgers, journals, title policies, lists, regulatory filings, operating data and plans, technical documentation (production files, design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), research materials, quality assurance and test procedures, user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web pages, etc.), complete manufacturing files in connection with the Acquired Products and other similar materials, all to the extent related to the Acquired IP, in each case whether in tangible or electronic form |
| 1.7. | " Effective Date " means the date of this Agreement. |
| 1.8. | " Encumbrances " means any charge, lien, attachment, pledge, encumbrance, debt, security interest, mortgage, right of way, easement, servitude, claim, right to acquire or similar restriction, including any restriction on use, transfer, exercise of any other attribute of ownership over or in the relevant property, or any third party rights. |
| 1.9. | "Governmental Body" means any court, administrative agency or commission or other federal, national, provincial, state, local, foreign or other governmental authority, instrumentality, agency or commission. |
| 1.10. | " Inhaled Nitric Oxide " means any and all technology related to using gaseous Nitric Oxide for therapeutics or prevention of disease in animals and humans |
| 1.11. | " Intellectual Property "means all patents, or patent applications and any patent issued therefrom, any divisional, continuation or continuation-in-part application, or application for a patent of addition or another application claiming priority, directly or indirectly, from said patents and patent application, and patents issued therefrom, and any extensions of term, patent term adjustments, supplementary patent certificates and the like of any of the foregoing; registered and unregistered designs; registered and unregistered trade marks; copyrights; design rights; rights in and to databases; know-how; trade secrets; purchasing information; results of development activities, whether in confidential information or otherwise; information of a commercial nature; any materials, results, devices, production files, procedures, protocols, formulae, computer programs, software, source code, algorithms, file structure and any other information or data regardless of form or type, including but not limited to that of a scientific, technical nature experimental data, test data, designs, specifications, processes, manufacturing data, production files, techniques, inventions, drawings, vendor lists, photographs, films, reports, manuals, technical writings, sound recordings, pictorial representations, and other documentation or other representations, graphical or otherwise; and any other information related to development, discoveries, concepts and ideas, whether or not patentable or otherwise subject to proprietary rights or legal protection; on magnetic tape, computer memory, or in any other form, any or all subsisting or issued anywhere in the world. |
| 1.12. | " Legal Requirements " means any applicable federal, national, state, local, municipal, foreign, international, multinational or other constitution, law, ordinance, code, regulation, rule, order, judgment, decree, statute or treaty. |
| 1.13. | “ Net Sales means the gross consideration received from the sale or transfer of an Approved Product by the Company or its Affiliates, on a worldwide basis, after deduction of the following expenses, provided and to the extent such expenses are actually incurred and documented and do not exceed reasonable and customary amounts in the market in which such sale occurred: (a) discounts and allowances to customers; (b) rebates paid to Distributors; (c) taxes; (d) freight; and (e) refunds and returns. Net Sales includes all consideration received in respect of any sale of an applicable product, good or service, whether such consideration is in cash, payment in kind, exchange or another form. |
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Notwithstanding the above, for the purposes of this definition, the transfer of an Approved Product by the Company or one of its Affiliates to another Affiliate of the Company is not a sale; in such case, Net Sales will be determined based on the gross invoice amount of the Approved Product first sold by the Affiliate to independent third-parties, less the deductions permitted herein.
In addition, the Net Sales shall be furthermore adjusted and reduced in the event that a Approved Product is sold as part of a Combination Product as set forth in Section 2.4 hereto.
| 1.14. | " Permits " means any licenses, permits, consents, registrations, approvals, permissions, certificates, applications or other authorizations. |
| 1.15. | " Proceeding " means any claim, demand, action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation. |
| 1.16. | " Product " means any Inhaled Nitric Oxide product, good or service sold by the Company. |
| 1.17. | " Transaction Documents " means this Agreement and all agreements, documents, instruments and certificates ancillary to or contemplated by this Agreement. |
| 2. | The Option; Transfer of Acquired IP |
| 2.1. | Seller hereby grants the Company, effective as of the Effective Date, an exclusive option to purchase all of the Seller's rights, title and interest in and to the Acquired IP (the " Option "). The grant of the Option is conditioned upon Company paying Seller the sum of US$25,000 in cash within 10 days from the Effective Date (the " Option Consideration "). |
| 2.2. | The Option shall be exercisable by a written notice given by the Company to Seller to that effect not later than within six (6) months as of the Effective Date (the " Exercise Notice " and the " Option Period ", respectively). |
| 2.3. | Subject to the exercise of the Option by the Company, in consideration for the acquisition by the Company of the Acquired IP from the Seller: |
| 2.3.1. | The Company shall pay Seller the sum of US$500,000 in cash (the " Purchase Price ") within 3 business days from the Closing Date; |
| 2.3.2. | The Company shall issue to Seller within 3 business days from the Closing Date warrants to purchase up to such amount of Ordinary Shares (also known as Common Shares) of the Company, in such number equal to: (A) US$1,000,000; divided by (B) 80% of the price per share of each Ordinary Share of the Company determined for the purposes of the Company's initial public offering (the " Exercise Price " and the " Warrant ", respectively). The Warrant shall be exercisable, in whole or in part, until the seventh anniversary as of the date of grant of the Warrant, for cash and at Exercise Price, all in accordance with and subject to the terms and conditions of the Warrant attached as Schedule 2.3.2 hereto. In the event that the Company shall not undergo an initial public offering within one (1) year as of the Closing Date, the Parties hereto shall bona fide renegotiate the terms of the Warrant. Seller acknowledges that, if required by the underwriter, any shares issued to it in connection with the exercise of the Warrant as part of the Company's initial public offering, will be subject to a standard lock-up period not to exceed six months. |
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| 2.3.3. | The Company shall make the following one-time development milestone payments to Seller, upon achievement of each relevant milestones (each, a “ Development Milestone ”) (the “ Development Milestone Payments ”): |
| (a) | Obtainment by the Company of its first FDA approval for an Approved Product (" First Approved Product ") - $1,500,000; |
| (b) | Obtainment by the Company of its second FDA approval for an Approved Product (" Second Approved Product ") - $1,500,000; |
| (c) | Obtainment by the Company of its third FDA approval for an Approved Product (" Third Approved Product ") - $1,500,000; |
| 2.3.4. | The Company shall make the following one-time sales milestone payments to Seller, upon achievement of each relevant milestones (each, a “ Sales Milestone ”) (the “ Sales Milestone Payments ”): |
| (a) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$20,000,000 worldwide, per all First Approved Product - US$1,500,000. |
| (b) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$75,000,000 worldwide, per all First Approved Product - US$3,000,000. |
| (c) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$125,000,000 worldwide, per all First Approved Product - US$3,000,000. |
| (d) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$500,000,000 worldwide, per all First Approved Product - US$20,000,000. |
| (e) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$20,000,000 worldwide, per all Second Approved Product - US$1,500,000. |
| (f) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$75,000,000 worldwide, per all Second Approved Product - US$3,000,000. |
| (g) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$125,000,000 worldwide, per all Second Approved Product - US$3,000,000. |
| (h) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$500,000,000 worldwide, per all Second Approved Product - US$20,000,000. |
| (i) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$20,000,000 worldwide, per all Third Approved Product - US$1,500,000. |
| (j) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$75,000,000 worldwide, per all Third Approved Product - US$3,000,000. |
| (k) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$125,000,000 worldwide, per all Third Approved Product - US$3,000,000. |
| (l) | The achievement by the Company of cumulative aggregate Net Sales exceeding US$500,000,000 worldwide, per all Third Approved Product - US$20,000,000. |
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For the avoidance of any doubt, (i) Seller shall be entitled to receive each of the Sales Milestone Payments only one-time with respect to the achievement of each Sales Milestone achieved by the Company; (ii) with respect to each of the First, Second and Third Approved Product, Seller may be entitled to receive up to an aggregate amount of US$27,500,000 in total on account of the Sales Milestone Payments for each such Approved Product.
For clarification purposes only, for example :
(A) in the event that the Company reaches an aggregate Net Sales of US$30,000,000 with respect to the First Approved Product, Seller shall be entitled to receive a one-time payment of US$1,500,000, thereafter if the Company reaches an additional aggregate Net Sales of US$45,000,000 with respect to the First Approved Product, Seller shall be entitled to receive an additional one-time payment of US$3,000,000.
(B) in the event that the Company reaches an aggregate Net Sales of US$80,000,000 with respect to the First Approved Product, Seller shall be entitled to receive a one-time payment of US$1,500,000 (for achieving the US$20,000,000 milestone) and a one-time payment of US$3,000,000 (for achieving the US$75,000,000 milestone).
| 2.4. | Notwithstanding the foregoing, in the event that any Approved Product is sold in a form of a Combination Product, then the parties shall, together, determine in good faith the proportion of such Combination Product to be attributed to the Approved Product, it being agreed that absent such mutual agreement as to the proportion of such Combination Product to be attributed to the Approved Product, the parties shall mutually appoint an independent expert to determine such proportion. Net Sales from such Combination Product for the purposes of determining Sales Milestone Payments thereon shall be determined by multiplying the actual Net Sales of such Combination Product by such mutually agreed or expert-determined proportion, and the Company shall make Sales Milestone Payments to Seller accordingly. For example purposes only, in the event that the Net Sales derived by the Company from the sale of a certain Combination Product which is comprised from the First Approved Product and additional other products are at a certain point US$1,000,000, and the mutually agreed or expert-determined proportion is 4/5, the Net Sales attributed to the First Approved Product on account of the sales of such Combination Product, shall be US$800,000. |
| 2.5. | Company's obligation to make the payments set forth under Sections 2.3.3 and 2.3.4 above may be assigned by the Company, subject to a written notice to Seller, to any third party licensing or acquiring the Acquired IP from the Company, provided that such third party shall undertake in writing to become bound by the applicable provisions hereof. Each such agreement shall include language pursuant to which the permitted assignee or licensee commits to make reasonable commercial efforts to commercialize the Acquired IP. |
| 2.6. | Immediately upon exercise of the Option by the Company, at its sole discretion and at any time during the Option period, Seller shall be deemed to have sold, assigned, and transferred to the Company all of Seller's rights, title and interest in and to the Acquired IP, free and clear of any and all Encumbrances other than 2.5 above. |
| 2.7. | Following the exercise of the Option, Seller undertakes to take all actions, provisions and undertakings necessary to effectuate such sale, assignment and transfer and to assist the Company in any such effort including, without limitation, any registration of the assignment in any territory as will be required, at Company’s cost and expense. In addition, at Company’s request, Seller shall promptly deliver to the Company true and complete files or copies of files relating to the issuance, prosecution, maintenance, enforcement and defense to all Acquired IP in its possession, and shall thereafter promptly forward to the Company any additional information, documents or notices it receives in connection with the Acquired IP. |
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| 2.8. | Seller hereby grants the Company, during the Option Period and to the extent that the Option was exercised by the Company in accordance with the provisions hereof, for an additional period of six (6) month as of the end of the Option Period, an option to purchase all of Seller's tangible assets, including inventory, machinery, equipment, tools, supplies and other tangible property related to, or used in connection with the Acquired IP (the " Tangible Assets "), including without limitation the Tangible Assets listed under Schedule 2.8 attached hereto, for such consideration to be agreed upon between the parties. |
| 2.9. | Value Added Tax will be added to any payment under this Agreement pursuant to applicable law, if applicable according to any applicable law, in which event payment by the Company shall be made, by wire transfer to a bank account designated by the Seller to the Company in writing, subject to and against appropriate tax invoice issued by Seller. |
| 2.10. | The Company shall be entitled to deduct and withhold from any payment made pursuant to this Agreement such amounts required to be deducted and withheld with respect to the making of any such payment under any applicable law (the " Withholding Amount "), unless the Company is provided with an exemption from such withholding Tax or certificate of reduced withholding in respect of each such payment at least 3 Business Days prior to the applicable payment date (a " Withholding Tax Exemption "). Upon the request of Seller, the Company shall reasonably assist Seller in obtaining an applicable Withholding Tax Exemption at Seller's cost. Any Withholding Amount so withheld by the Company shall be remitted to the applicable Governmental Authorities and shall be treated for all purposes of this Agreement as having been paid to the Seller. |
| 2.11. | Seller will bear any taxes which according to applicable law should be borne by a seller in connection with the sale of the Acquired IP and the transactions contemplated hereunder. Without derogating from the foregoing, no Party will have any liability whatsoever for any taxes of any kind or nature, to be borne by the other Party pursuant to applicable law, whether due, arising or payable prior, at or following the Closing Date. |
| 3. | Use of IP |
| 3.1. | For due consideration hereby acknowledged and for purpose of facilitating the contemplated purchase of the Acquired IP, Seller hereby grants the Company with a temporary exclusive license to use the Acquired IP for preclinical and clinical development purposes during the License Term as defined in Section 3.2 below (the " License "), subject to the provision of Section 2. |
| 3.2. | The term of the License (the “License Term”) shall commence as of the Effective Date and end until the earlier of the following: (a) exercise of the Option; (b) expiry of the Option Period without execution of the Option; or (c) termination of this Agreement without execution of the Option in accordance with the provisions of Section 9 below. |
| 3.3. | At the expense of the Company the Seller undertakes to make any document, provision and undertaking to effectuate the License and assist the Company in any such effort including, without limitation, any license registration in any territory as will be required. |
| 4. | Representations and Warranties |
Except as set forth in a disclosure schedule delivered by Seller to the Company dated as of the date hereof (the “ Disclosure Schedule ”) (the Disclosure Schedule will be arranged in sections corresponding to the sections contained in this Section 5 and exceptions and disclosures set forth in any section of the Disclosure Schedule will apply to any other section of the Disclosure Schedule to the extent the relevance to such other section or sections is reasonably apparent), Seller hereby represents and warrants to the Company as of the date hereof and as of the Closing Date:
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| 4.1. | Constitution and Compliance |
| 4.1.1. | Seller is duly incorporated and validly existing under the laws of the Province of Alberta, Canada, in good standing and with power and authority to carry on its business as currently conducted and as currently proposed to be conducted and to own, lease, and operate its properties. Seller has at all times carried on its business and affairs related to the Acquired IP in all material respects in accordance with its organizational documents and all applicable Legal Requirements, and has not breached or violated, and is not in breach or violation, of its organizational documents or applicable Legal Requirements in a manner which may materially and adversely affect Seller in connection with the Acquired IP. |
| 4.1.2. | Seller has made available to the Company or to the Company’s legal advisor true, accurate and complete copies of its organizational documents, as amended, as of the date of this Agreement. |
| 4.2. | Authority to Transact |
| 4.2.1. | Seller has all requisite corporate power and authority to execute and deliver the Transaction Documents, and to carry out and perform its obligations under the Transaction Documents and to consummate the transactions contemplated thereby. |
| 4.2.2. | (i) all corporate action on the part of Seller, necessary for the authorization and execution of the Transaction Documents by Seller, and the performance of all of Seller’s obligations under the Transaction Documents, have been taken, and no other corporate proceeding on the part of the Seller is necessary to authorize this Agreement and the transactions contemplated hereby; and (ii) this Agreement and the Transaction Documents constitutes, valid and legally binding obligations of Seller, enforceable against the Seller in accordance with their terms, except as such enforceability may be limited by effect of (a) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights and (b) general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity. |
| 4.3. | Execution of Agreement |
Neither the execution and delivery by Seller of the Transaction Documents nor the consummation by Seller of the transactions contemplated thereby, will:
| 4.3.1. | Violate any provisions of Seller’s organizational documents or any contract, agreement, indenture, mortgage, instrument, note, bond, lease, license, arrangement, or undertaking of any nature, written or oral, of Seller, or cause the acceleration, termination or modification of any contract, agreement, indenture, mortgage, instrument, note, bond, lease, license, arrangement, or undertaking of any nature, written or oral, of Seller, in each case, related to the Acquired IP. |
| 4.3.2. | Require the consent, Permit or agreement of any Governmental Body, entity or any other third party. |
| 4.3.3. | Result in any violation of, or conflict with, or constitute a default under any term of, or result in the creation or enforcement of, any Encumbrances upon any of the properties or assets of Seller used in connection with the Acquired IP. |
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| 4.3.4. | Cause Seller to lose any interest in or the benefit of any asset, right, license or privilege considered as Acquired IP it presently owns or enjoys. |
| 4.3.5. | Result in any breach or violation by Seller of any provisions of any Legal Requirements applicable to the Seller or by which any of its assets or properties is bound or subject. |
| 4.4. | Title to Assets |
| 4.4.1. | Seller owns and has good and valid title to all of the Acquired IP, free and clear of any and all Encumbrances other than those disclosed by Seller to Company as of the effective date of the execution of this agreement. |
| 4.4.2. | No other person or entity has any legal or equitable interest whatsoever in any of the Acquired IP, other than those disclosed by Seller to Company as of the effective date of the execution of this agreement. |
| 4.5. | Compliance with Legal Requirements; Governmental Authorizations |
| 4.5.1. | Seller has at all times acted with best efforts with respect to the Acquired IP in compliance with each Legal Requirement that is or was applicable to it, in all applicable jurisdictions relevant for Seller and to the Acquired IP. |
| 4.5.2. | No event has occurred or circumstance exists that may (with or without notice or lapse of time): (i) to Seller's knowledge, constitute or result in a violation by Seller of, or a failure on the part of Seller to comply with, any Legal Requirement with respect to any of the Acquired IP; or (ii) could reasonably be expected to give rise to any obligation on the part of Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any nature in connection with any Legal Requirement with respect to the Acquired IP. |
| 4.5.3. | Seller has not received, at any time, any written notice or other communication from any Governmental Body or any other person or entity regarding: (i) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement with respect to any of the Acquired IP; or (ii) any actual, alleged, possible or potential obligation on the part of Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any nature in connection with any Legal Requirement with respect to the Acquired IP, and to Seller's knowledge, there is no factual or legal basis for such. |
| 4.5.4. | There is no action or Proceeding pending or, to the knowledge of the Seller, threatened and no notice has been received by the Seller that has resulted in or, could reasonably be expected to result in, suspension, non-renewal, termination or cancellation of, with respect to, any such Permit. |
| 4.6. | Litigation |
There is no Proceeding brought, conducted or heard by or before, or otherwise involving, any Governmental Body or any arbitrator or arbitration panel of any kind, at law or in equity (including actions or Proceedings seeking injunctive relief), pending or, to the knowledge of Seller, threatened, against, or involving Seller or any properties, assets or rights of Seller, to the extent consisting part of the Acquired IP, and Seller is not subject to any continuing order of, consent decree, settlement agreement, or other similar written agreement with, or to the knowledge of Seller, continuing investigation by, any Governmental Body, or any judgment, order, writ, injunction, decree, or award of any Governmental Body or arbitrator to the extent related thereto nor is it a party thereto.
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| 4.7. | Intellectual Property |
| 4.7.1. | Schedule 4.7.1 contains a true and complete description as of the date of this Agreement and as of the Closing Date of: |
| (a) | All registered copyrights, registered patents, patent applications, registered trademarks, registered service marks, and registered trade names owned by Seller. |
| (b) | The jurisdictions in which any applications for patents or registration of any Acquired IP has been made, including the respective application numbers and dates. |
| (c) | The jurisdictions in which the Acquired IP has been registered, including the respective patent or registration numbers and dates. |
| (d) | All parties to whom Seller has delivered any copies of the source code constituting part of the AcquiredIP during the past three (3) years, whether pursuant to an escrow arrangement or otherwise, or parties (other than Employees) who have the right to receive such source code. |
| (e) | All current products, constituting part of the Acquired IP made commercially available by Seller or currently under development by Seller, are as described in Schedule 4.7.1(e) (" Acquired Products "). |
| (f) | Seller is the sole and exclusive owner of all of the Acquired IP. Seller has sole, full and clear title to all of such items of the AcquiredIP, free and clear of any Encumbrances, and upon Closing, the Company will possess sole, full and clear title to all of such items of the Acquired IP, free and clear of any Encumbrances, without the need to obtain any third party or Governmental Body consent or approval, except as may be required under Legal Requirements applicable to the Company in connection with Company's activity. The Acquired IP constitutes all of the Seller Intellectual Property. The Seller has taken all reasonable steps to protect its rights in all of the AcquiredIP, including making all filings and paying all fees required by any Governmental Body with respect to registered Acquired IP. |
| 4.7.2. | All granted and issued patents and all registered mask works and copyright registrations constituting part of the Acquired IP are valid and subsisting. Without limiting the generality of the foregoing, and in connection with such Intellectual Property: |
| (a) | Seller has not engaged in patent misuse or any fraud in connection with any registered patents. |
| 4.7.3. | Seller has the right to use, sell, license, assign, transfer, convey or dispose of the Acquired IP. |
| 4.7.4. | Seller has taken all necessary and appropriate steps to protect and preserve the confidentiality of the Acquired IP. |
|
IP Acquisition Option Agreement – AIT - Pulmonox |
9 |
| 4.7.5. | Seller has secured valid written assignments or licenses, from all employees and consultants of Seller who contributed to the creation or development of the Acquired IP. To Seller's knowledge, Seller does not make use, nor has it made any use, of any invention or other creation of any employees or consultants thereof, made by such employee or consultant prior to their employment or engagement by Seller and with respect to which Seller has not secured a right to use such invention or creation from such employee or consultant. |
| 4.7.6. | As of the date of this Agreement and as of the Closing, no person has asserted or threatened to assert any claims with respect to the Acquired IP or any part thereof: (i) contesting the right of Seller to use, exercise, sell, license, transfer or dispose of any of the Acquired IP; (ii) challenging the ownership, validity or enforceability of any of the Acquired IP; or (iii) alleging any claim of infringement, violation, or misappropriation of the Acquired IP. None of the Acquired IP is subject to any outstanding order, judgment or decree restricting in any manner the licensing, assignment, transfer or conveyance thereof by Seller in a manner which may interfere with the provisions hereof. |
| 4.7.7. | To Seller's knowledge, there has not been and as of the date of this Agreement and as of the Closing Date, there is no unauthorized use, infringement, violation or misappropriation of any of the Acquired IP by any third party. Seller has not brought any actions or lawsuits, or asserted any claims alleging (i) infringement, violation or misappropriation of any of the Acquired IP; or (ii) breach of any license, sublicense or other agreement authorizing another party to use the Acquired IP. |
| 4.7.8. | Neither the execution, delivery or performance of the Transaction Documents, nor the consummation of the transactions contemplated thereby, will, with or without notice or lapse of time, result in or give any other person or entity the right or option to cause or declare: (i) a loss of, or Encumbrance on, any Acquired IP; (ii) a breach of any contract or agreement relating to the Acquired IP to which Seller is a party or by which it is bound; (iii) the release, disclosure or delivery of any of the Acquired IP by or to any escrow agent or other person or entity; or (iv) the grant, assignment or transfer to any third party of any license or other right or interest under, to or in any of the Acquired IP. |
| 4.7.9. | Seller has made available to the Company or the Company’s legal advisor accurate, full and complete copies of the following Documents relating to the Acquired IP and the Acquired Products: |
| (a) | Any patent clearance for any Acquired Product. |
| (b) | Any non-infringement or invalidity opinions related to third party patents drafted as a result of an Acquired Product clearance or third party patent assertion. |
| (c) | Any letter, notification or correspondence to Seller from any third party or from Seller to any third party regarding infringement of the Acquired IP. |
| 4.7.10. | Seller has not provided or disclosed the source code of any software used or embedded in the Acquired IP or the Acquired Products to any person or entity other than their respective employees and authorized consultants and contractors. No contract or agreement grants any third party any exclusive rights, whether or not limited in time or territory, with respect to any of the Acquired Products or the Acquired IP. The Seller has no liability with respect to, or is required to pay, any royalties, commissions, or similar payments to any person or entity in connection with any sale, distribution, license or development of the Acquired Products or Acquired IP. |
|
IP Acquisition Option Agreement – AIT - Pulmonox |
10 |
| 4.8. | Brokers and Finders |
Seller has no Liability or obligation to pay any fees, commissions or similar payments to any broker, finder or agent in connection with the transactions contemplated hereunder.
| 4.9. | Due Diligence Materials. |
Seller has provided to the Company or its representatives, all documents held by Seller of the character and type requested by the Company in connection with its "due diligence" investigation of the Seller and there are no documents in the possession of the Seller or any of its respective agents or representatives of a character or type described in such requests which have not been so provided to the Company or its representatives.
| 4.10. | Full Disclosure |
The representations and warranties made by Seller in this Agreement, when read together in their entirety, do not contain as of the date of this Agreement and as of the Closing Date any untrue statement of a material fact, or omit as of the date of this Agreement to state a material fact necessary to make the statements contained herein not misleading, in light of the circumstances under which they were made.
| 5. | Prosecution and Maintenance of Patent Rights |
| 5.1. | During the Option Period, Seller shall (i) at the written request of the Company, prepare, file, prosecute and maintain patent applications and patents covered by the Acquired IP in any country, if available, at the Company’s cost, (ii) shall take action to actively maintain (i.e., maintenance and annuity fees paid) and prosecute all of the Acquired IP, (iii) shall not neglect nor allow abandonment on any of the Acquired IP, (iv) regularly notify the Company of the status of all pending applications and existing applications and patents constituting part of the Acquired IP, (v) immediately share with the Company all correspondence regarding any of the Acquired IP, all for a maximum of $20,000 USD. |
| 5.2. | During the Option Period, Seller shall not prepare, file, prosecute, abandon or maintain patent applications and patents covered by the Acquired IP in any country, unless such action is made (i) in full cooperation with the Company, and (ii) subject to the Company’s prior written consent, which shall not be unreasonable withheld. |
| 5.3. | Seller and any of its assignees and/or licensees shall not make any priority claims based on any Acquired IP, without the Company’s prior written consent. |
| 6. | Restrictive Covenants of Seller |
| 6.1. | Confidentiality . |
During the Option Period and for seven (7) years thereafter, to the extent that the Option was exercised by the Company in accordance with the terms hereof, Seller shall not, directly or indirectly, and shall cause its respective directors, officers, employees, agents and representatives, directly or indirectly, and shall cause their respective directors, officers, employees, agents and representatives not to (i) disclose; or (ii) use for its own benefit, or for the benefit of any other person or entity, any trade secret, data or information, whether written, oral or in other form, including without limitation, technology, copyrights, know how, trade secrets, intellectual property, whether registered or not, designs, formulae, methods, experimental works or specifications, discoveries, samples, processes, techniques, developments, production, marketing and sale methods, business plans, prices and pricing methods, customer lists, supplier information, or any similar information, to the extent relating to the Acquired IP (including operations, activities, technology, plans, products or financial affairs) (the " Confidential Information "), without limitation of time; unless such Confidential Information is or becomes part of the public domain without the fault of Seller and except as required by applicable law. Seller acknowledges that the Company is in the process of preparing for an initial public offering of its shares to the public and accordingly may be required by securities laws and / or the U.S. Securities and Exchange Commission (the “SEC”) to file this Agreement, and further consents to the filing of the Agreement, if so required in the Company’s discretion. In the event that the filing of this Agreement is so required, the Parties shall agree in good faith what parts of the Agreement the Company should request the SEC to be kept confidential in light of the confidential information included in such parts on the one hand and the type of information the SEC agrees to redact from agreements such as the Agreement on the other hand.
|
IP Acquisition Option Agreement – AIT - Pulmonox |
11 |
| 6.2. | Non-Compete . |
During the Option Period and thereafter, provided that the Option was exercised by the Company in accordance with the terms hereof, for an additional period of four (4) years as of the Closing Date, Seller or any person or entity acting on its behalf shall not (except as provided in this Agreement, Schedule 6.2 , or any other Transaction Document):
| 6.2.1. | Engage (whether as an owner, operator, manager, employee, officer, director, consultant, advisor, representative or otherwise), directly or indirectly anywhere in the world (including each and every county thereof as if individually named herein) in any business in competition with the Company; provided that ownership of less than 5% of the outstanding stock of any publicly-traded corporation shall not be deemed to be engaging solely by reason thereof in any of its business and shall not be a violation of the provisions hereof. |
| 6.2.2. | Contact, encourage or solicit any consultant, independent contractor, agent, lessor, licensor, supplier, investigator, distributor, reseller, or other business associate who is employed or engaged by the Company (other than by a general solicitation directed to the public at large through the mailing or other means of distribution of a letter, pamphlet, handbill, circular or other written or printed media), to terminate or modify his, her or its respective employment, engagement or business relationship therewith; |
| 6.2.3. | Contact, encourage or solicit any employee, who is employed or engaged by the Company (other than by a general solicitation directed to the public at large through the mailing or other means of distribution of a letter, pamphlet, handbill, circular or other written or printed media) to terminate, modify or cease to provide any services to the Company, or otherwise to be engaged by Seller or provide it any services; and |
| 6.2.4. | Contact, encourage, or solicit any customer of the Company to terminate or modify such customer’s business relationship with the Company. |
| 6.3. | Exclusivity . |
From the date hereof and until the earlier of termination or expiration hereof and the Closing Date, Seller and its respective officers, directors, employees, agents or other representatives acting on its behalf, shall not consummate any transaction involving the sale, transfer, license, pledge or other disposition, as the case may be, of any assets comprising of the Acquired IP of the Seller (a " Restricted Transaction "), or negotiate or encourage or solicit any offers for, respond to any unsolicited offers for, or conduct any negotiations with any other person, in respect of any Restricted Transaction.
|
IP Acquisition Option Agreement – AIT - Pulmonox |
12 |
| 7. | Indemnification |
The Company shall indemnify and hold Seller and its directors, officers, employees, agents, consultants and counsel ("Seller Indemnitees") harmless from and against any and all liabilities, damages, losses, costs or expenses (including reasonable attorneys’ and professional fees and other expenses of litigation and arbitration) resulting from a claim, suit or proceeding brought by a third party against a Seller Indemnitee, arising from or occurring as a result of (i) any practice by the Company of the licenses granted or Acquired IP herein, (ii) the development, manufacture, use, importation, marketing, sale and commercialization by the Company, its Subsidiaries or any Sublicensee of any Product, except, in each case, to the extent caused by the willful misconduct, and or gross negligence, and or violation of law of the Seller.
| 8. | Closing |
Within 7 business days following the Exercise Notice date or at such other time and date as may be agreed by Seller and the Company in writing (the " Closing Date "), the Closing shall take place and the Seller shall transfer to the Company appropriate assignment forms required in order to give effect to the sale and assignment of the Acquire IP to the Company, in such forms reasonably satisfactory to the Company;
| 9. | Term and Termination |
| 9.1. | This Agreement shall commence upon the date hereof and shall remain in effect unless and until (i) the expiration of the Option Period, to the extent the Company did not exercise the Option until such date; or (ii) terminated in accordance with the terms of this Section 8 or as otherwise specifically set forth in this Agreement. |
| 9.2. | The Company shall have the right to terminate this Agremeent at any time prior to the exercise of the Option, upon a written notice to the Seller. |
| 9.3. | The failure by either party to comply with any of the obligations contained in this Agreement shall entitle the non-breaching party to give notice to have the default cured. If such default is not cured within ten (10) days after the receipt of such notice, or diligent steps are not taken to cure or if by its nature such default could not be cured within ten (10) days, the notifying party shall be entitled, without prejudice to any of its other rights conferred on it by this Agreement, and in addition to any other remedies that may be available to it by law, pursuant to this Agreement or otherwise, to terminate this Agreement. |
| 9.4. | The provisions under which this Agreement may be terminated shall be in addition to any and all other legal remedies which either party may have for the enforcement of any and all terms hereof, and do not in any way limit any other legal remedy such party may have, except as specifically specified hereunder. Termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of any party prior to such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve any party from obligations which are expressly indicated to survive termination or expiration of this Agreement. All obligations which are not expressly indicated to survive termination or expiration of this Agreement shall terminate upon the termination or expiration of this Agreement. |
| 9.5. | In the event that the Company fails to comply with any of its financial obligations hereunder, and provided that Seller have sent the Company a written notice to that effect, stating the circumstances of such incompliance, and the Company did not cure such incompliance within 90 days from the of receipt by it of such notice or the Company rejected the veracity of the content of such notice, then, the Parties shall submit the said dispute to the New York International Arbitration Centre in New York, USA, pursuant to its rules and regulations. |
|
IP Acquisition Option Agreement – AIT - Pulmonox |
13 |
| 10. | Miscellaneous |
| 10.1. | Non-Transferability . |
Unless otherwise agreed in writing, during the Option Period neither party shall assign, sub-license, pledge, lien or otherwise dispose of or transfer any right under this Agreement.
| 10.2. | Agreement Binding On Successors . |
This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.
| 10.3. | Relationship of the Parties . |
This Agreement shall not be construed to make any party hereto the agent, partner, joint venture or legal representative of the other for any purpose whatsoever. Neither party hereto is granted any express or implied right or authority to assume or create any obligation or responsibility on behalf of or in the name of the other party, except as herein otherwise expressly provided.
| 10.4. | Governing Law and Jurisdiction . |
This Agreement shall be governed by the Laws of the State of Delaware, without regard to its rules of private international Law, and each party irrevocably submits to the non-exclusive jurisdiction of the State of New York.
| 10.5. | Entire Agreement . |
This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof, and cancels and supersedes all prior negotiations, understandings and agreements relating to the subject matter hereof.
| 10.6. | Amendments in Writing . |
This Agreement may not be amended except pursuant to a written instrument signed by each of the parties.
| 10.7. | Notices . |
All notices or other communications hereunder shall be in writing and shall be given in person, by registered mail (registered international air mail if mailed internationally), by an overnight courier service which obtains a receipt to evidence delivery, or by facsimile or e-mail transmission (provided that written confirmation of receipt is provided) with a copy by mail, addressed as set forth below:
| If to the Company: | Advanced Inhalation Therapies (AIT) Ltd. |
| 2 Derech Meir Weisgal, | |
| Rehovot 7632605, Israel | |
| Attention: Amir Avniel |
| With a copy to (which shall not constitute notice): | Oded Har-Even |
| Attorney at Law | |
| Sullivan & Worcester LLP | |
| ZAG/S&W 1633 Broadway, New York, NY 10019, USA |
|
IP Acquisition Option Agreement – AIT - Pulmonox |
14 |
| If to Seller: | Pulmonox Technologies Corporation. |
| #102, 10835 - 120 Street | |
| Edmonton, Alberta, Canada | |
| T5H 3P9 | |
| Attention: Doug Hole |
| With a copy to (which shall not constitute notice): | Hugh MacNaught |
| 2738 Saint Andrews Ave. | |
| North Vancouver, BC, V7N 1Z3, Canada |
or such other address as any Party may designate to the other in accordance with the aforesaid procedure. All communications delivered in person or by courier service shall be deemed to have been given upon delivery, those given by facsimile or e-mail transmission shall be deemed given on the Business Day following transmission with confirmed answer back, and all notices and other communications sent by registered mail (or air mail if the posting is international) shall be deemed given ten (10) days after posting.
| 10.8. | Expenses . |
As between the Parties, each Party shall be responsible for the fees and expenses (including legal, accountants’ and financial advisors’ fees and expenses) incurred by it in connection with the preparation, negotiation, execution and delivery of this Agreement and any document required to be executed by any of such agreements, and otherwise in connection with the consummation of the transaction contemplated hereby.
| 10.9. | Delays or Omissions; Waiver . |
The rights of a Party may be waived by such Party only in writing and specifically; the conduct of any one of the Parties shall not be deemed a waiver of any of its rights pursuant to this Agreement or as a waiver or consent on its part as to any breach or failure to meet any of the terms of this Agreement or as an amendment hereto. A waiver by a Party in respect of a breach by the other Party of its obligations shall not be construed as a justification or excuse for a further breach of its obligations.
No delay or omission to exercise any right, power, or remedy accruing to any Party upon any breach or default by the other under this Agreement shall impair any such right or remedy nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein or in any similar breach or default thereafter occurring.
| 10.10. | Counterparts . |
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. A signed Agreement received by a Party via facsimile or electronic mail will be deemed an original, and binding upon the Party which signed it.
| 10.11. | No Third-Party Beneficiaries . |
Except as otherwise set forth herein, nothing in this Agreement shall create or confer upon any Person, other than the Parties or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities.
The Parties to this Agreement have caused this Agreement to be executed and delivered as of the date above first written.
|
IP Acquisition Option Agreement – AIT - Pulmonox |
15 |
SELLER:
| /s/ Doug Hole |
PULMONOX TECHNOLOGIES CORPORATION
By: Doug Hole
Title: Chairman
COMPANY:
| /s/ Amir Avniel |
ADVANCED INHALATION THERAPIES (AIT) LTD.
By: Amir Avniel
Title: Chief Executive Officer
|
IP Acquisition Option Agreement – AIT - Pulmonox |
16 |
|
ADVANCED INHALATION THERAPIES LIMITED
|
PULMONOX TECHNOLOGIES CORPORATION
|
|
_______________________________________
(signature)
|
_______________________________________
(signature)
|
|
Name:
______________________________________
|
Name:
______________________________________
|
|
Title:
______________________________________
|
Title:
______________________________________
|
|
Date:
December 31, 2016
______________________________________
|
Date:
December 31, 2016
______________________________________
|
|
(a)
|
Business Expenses
. AIT shall reimburse Lisi for his reasonable travel and other business expenses incurred in providing services under this Agreement, provided that Lisi submits documentation of such expenses in a form acceptable to AIT.
|
|
(b)
|
One-time Bonus
. Within 30 days from the completion of the IPO, AIT shall make a one time payment to Lisi of $150,000.
|
|
ADVANCED INHALATION THERAPIES (AIT) LTD.
|
||
|
By:
|
Amir Avniel
|
|
|
Title:
|
Chief Executive Officer
|
|
|
Steven Lisi
|
||
| 1. |
Advanced Inhalation Therapies (AIT) Ltd., an Israeli corporation
|
|
Page
|
|
|
2-3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7 - 19
|
|
Nine months ended
September 30,
|
||||||||
|
2016
|
2015
|
|||||||
|
Unaudited
|
||||||||
|
Operating expenses:
|
||||||||
|
Research and development expenses
|
$
|
573
|
$
|
1,433
|
||||
|
General and administrative expenses
|
523
|
495
|
||||||
|
Costs related to aborted IPO
|
621
|
-
|
||||||
|
Operating loss
|
1,717
|
1,928
|
||||||
|
Financial expense, net
|
990
|
713
|
||||||
|
Revaluation of warrants to purchase Convertible Preferred A Shares
|
-
|
152
|
||||||
|
Loss before taxes on income
|
2,707
|
2,793
|
||||||
|
Tax on income
|
39
|
117
|
||||||
|
Net comprehensive loss
|
2,746
|
2,910
|
||||||
|
Net basic and diluted loss per share
|
1.99
|
2.11
|
||||||
|
Weighted average number of Ordinary Shares used in computing basic and diluted net loss per share
|
1,448,750
|
1,448,363
|
||||||
|
Ordinary shares
|
Preferred A shares
|
Additional paid-in
|
Deficit
|
Total shareholders'
|
||||||||||||||||||||||||
|
Number
|
Amount
|
Number
|
Amount
|
capital
|
accumulated
|
Deficiency
|
||||||||||||||||||||||
|
Balance as of January 1, 2015
|
1,448,363
|
$
|
29
|
525,051
|
$
|
11
|
$
|
2,890
|
$
|
(6,371
|
)
|
$
|
(3,441
|
)
|
||||||||||||||
|
Conversion of warrants into Convertible Preferred A Shares at $2.457 per share, net of issuance costs
|
-
|
-
|
234,035
|
5
|
3,408
|
-
|
3,413
|
|||||||||||||||||||||
|
Stock-based compensation related to options granted to employees and non-employees
|
-
|
-
|
-
|
-
|
429
|
-
|
429
|
|||||||||||||||||||||
|
Stock-based compensation related to RSU's granted to director
|
-
|
-
|
-
|
-
|
18
|
-
|
18
|
|||||||||||||||||||||
|
Beneficial conversion feature in respect to Convertible Notes
|
-
|
-
|
-
|
-
|
1,239
|
-
|
1,239
|
|||||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
(3,482
|
)
|
(3,482
|
)
|
|||||||||||||||||||
|
Balance as of December 31, 2015
|
1,448,363
|
29
|
759,086
|
16
|
7,984
|
(9,853
|
)
|
(1,824
|
)
|
|||||||||||||||||||
|
Modification of Consultants' warrants to purchase Ordinary Shares
|
-
|
-
|
-
|
-
|
94
|
-
|
94
|
|||||||||||||||||||||
|
Stock-based compensation related to options granted to employees and non-employees
|
-
|
-
|
-
|
-
|
254
|
-
|
254
|
|||||||||||||||||||||
|
Stock-based compensation related to RSU's granted to Board of Directors' member
|
-
|
-
|
-
|
-
|
22
|
-
|
22
|
|||||||||||||||||||||
|
Issuance of Ordinary shares
|
3,927
|
*) -
|
|
-
|
-
|
-
|
-
|
*) -
|
|
|||||||||||||||||||
|
Beneficial conversion feature in respect to Convertible Notes
|
-
|
-
|
-
|
-
|
177
|
-
|
177
|
|||||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
(2,746
|
)
|
(2,746
|
)
|
|||||||||||||||||||
|
Balance as of September 30, 2016 (unaudited)
|
1,452,290
|
$
|
29
|
759,086
|
$
|
16
|
$
|
8,531
|
$
|
(12,599
|
)
|
$
|
(4,023
|
)
|
||||||||||||||
|
Nine months ended
September 30,
|
||||||||
|
2016
|
2015
|
|||||||
|
Unaudited
|
||||||||
|
Cash flows from operating activities
|
||||||||
|
Net loss
|
$
|
(2,746
|
)
|
$
|
(2,894
|
)
|
||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
|
Depreciation
|
20
|
19
|
||||||
|
Capital loss in respect to property and equipment
|
4
|
-
|
||||||
|
Stock-based compensation and RSU's
|
370
|
302
|
||||||
|
Amortization of beneficial conversion feature and debts issuance costs in the Convertible Notes
|
776
|
526
|
||||||
|
Revaluation of warrants to purchase Convertible Preferred A Shares
|
-
|
152
|
||||||
|
Imputed interest on Convertible Notes, loans from related parties and line of credit
|
215
|
145
|
||||||
|
Change in:
|
||||||||
|
Receivables and prepaid expenses
|
-
|
23
|
||||||
|
Trade payables
|
342
|
16
|
||||||
|
Other accounts payable
|
252
|
181
|
||||||
|
Deferred IPO costs that was aborted
|
352
|
-
|
||||||
|
Net cash used in operating activities
|
(415
|
)
|
(1,530
|
)
|
||||
|
Cash flows from investing activities
|
||||||||
|
Selling of property and equipment
|
3
|
-
|
||||||
|
Purchase of property and equipment
|
-
|
(6
|
)
|
|||||
|
Net cash (used in) provided by investing activities
|
3
|
(6
|
)
|
|||||
|
Cash flows from financing activities
|
||||||||
|
Proceeds from loan from related party
|
70
|
-
|
||||||
|
Proceeds from issuance of Convertible Note, net of issuance costs
|
184
|
1,069
|
||||||
|
Proceeds from line of credit
|
467
|
-
|
||||||
|
Maturity of line of credit
|
(418
|
)
|
-
|
|||||
|
Proceeds from conversion of warrants into Convertible Preferred A Shares, net of issuance costs
|
-
|
540
|
||||||
|
Deferred IPO costs that were paid
|
-
|
(45
|
)
|
|||||
|
Net cash provided by financing activities
|
303
|
1,564
|
||||||
|
Increase (decrease) in cash and cash equivalents
|
(109
|
)
|
28
|
|||||
|
Cash and cash equivalents at the beginning of the period
|
129
|
161
|
||||||
|
Cash and cash equivalents at the end of the period
|
$
|
20
|
$
|
189
|
||||
| Supplemental disclosure of non‑cash financing activities: | ||||||||
|
Conversion of warrants into Convertible Preferred A Shares
|
$
|
-
|
$
|
2,873
|
||||
| NOTE 1:- |
GENERAL
|
| a. |
Advanced Inhalation Therapies (AIT) Ltd. (the "Company") was incorporated in Israel on May 1, 2011 and commenced its operation in May, 2012. The Company is an emerging Israeli drug development company focusing on the development and commercialization of nitric oxide formulations for the treatment of respiratory infections and diseases. The AIT pipeline includes therapies against respiratory infections in acute and chronic diseases such as: bronchiolitis (RSV), cystic fibrosis (CF), pneumonia, and asthma
.
|
| b. |
On August 29, 2014, the Company established a wholly-owned subsidiary, Advanced Inhalation Therapies (AIT) Inc. ("Inc.") in USA which its principal business activity is to provide executive management and administrative support functions to the Company.
|
| c. |
Since its inception, the Company has devoted substantially most of its effort to business planning, research and development. The Company has incurred losses and has accumulated negative cash flow from operating activities amounted to $2,746 and $415 during the nine months period ended September 30, 2016, respectively, and has an accumulated deficit of $12,599 as of September 30, 2016. These conditions raise substantial doubts about the Company's ability to continue as a going concern. The Company's ability to continue to operate is dependent upon raising additional funds to finance its activities. There are no assurances, however, that the Company will be successful in obtaining an adequate level of financing needed for the long-term development and commercialization of its products.
|
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES
|
| NOTE 3:- |
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
| NOTE 4:- |
LINE OF CREDIT
|
| NOTE 5:- |
CONVERTIBLE NOTES
|
| NOTE 5:- |
CONVERTIBLE NOTES (Cont.)
|
|
September 30,
2016
|
December 31,
2015
|
|||||||
|
Unaudited
|
||||||||
|
Opening balance
|
$
|
1,552
|
$
|
568
|
||||
|
Receipt of Convertible Notes
|
184
|
1,277
|
||||||
|
BCF in respect of Convertible Notes
|
(177
|
)
|
(1,239
|
)
|
||||
|
Amortization of BCF
|
764
|
759
|
||||||
|
Capitalization of debts issuance costs
|
-
|
(38
|
)
|
|||||
|
Amortization of debts issuance costs
|
12
|
9
|
||||||
|
Imputed interest
|
212
|
216
|
||||||
|
$
|
2,547
|
$
|
1,552
|
|||||
| a. |
The Company is engaged in an operating lease agreement for its office facilities. Future minimum non-cancelable rental payments under the operating lease are $14 for the year ending December 31, 2016. Rent expenses for the nine months periods ended September 30, 2016 and 2015 amounted to $10 and $13, respectively.
|
| b. |
On October 22, 2013, the Company entered into certain patent license agreement with a third party pursuant to which the Company shall pay to the third party a non-refundable upfront fee amounted to $150 and is obligated to pay the third party 5% royalties of the licensed product revenues, but at least $50 per annum at the royalty period. As of September 30, 2016, the Company did not record any revenues and therefore no royalties were paid or accrued.
|
| c. |
On April 8, 2014, the Company signed a finder fee agreement pursuant to which among others the Company will grant to the finder fee of 6% of the Company's conversion shares to be actually issued to certain lenders upon actual conversion of the lender's Convertible Notes as described in Note 5.
|
| d. |
On March 4, 2015, the Company entered into an agreement with certain gas supplier pursuant to which the supplier will receive exclusivity on the US market in exchange for gas supply for clinical studies for Bronchiolitis.
|
| e. |
On August 3, 2015 ("Effective Date"), the Company entered into agreement with certain individual to serve as the Company's chairman of the Board of Directors pursuant to which, among others, the Company will pay as compensation and benefits upon consummation of Initial Public Offering ("IPO") (i) an annual retainer of $75 to be paid on equal installments and (ii) 3,955,000 restricted shares of the Company with vesting schedule of 50% if such shares to be vested after 6 month anniversary of the completion of an IPO and the remaining 50% of such shares after 18 month anniversary of the completion of an IPO. Upon closing change of control transaction, as defined in the agreement, the unvested options shall be accelerated and vested immediately.
|
| f. |
In August 2015, the Company entered into an Option Agreement ("Agreement") with a third party whereby the Company acquired for $25 the option to purchase certain intellectual property assets and rights ("Option"). According to the Agreement, the option is exercisable for a period of six months starting August 2015 (which was extended in 2016 for a period which is ended December 2016). Upon exercise of the option, the Company will be obligated to pay an exercise price of $500 and will be required to make certain one-time development and sales milestone payments to the third party starting from the date when the Company will receive regulatory approval for the commercial sale of its first product candidate.
|
| g. |
The Company entered into employment agreements with certain employees and service agreements with certain vendors pursuant to which in the event that the Company succeeds in achieving and consummating an IPO until the year ended December 31, 2016 the Company will pay a one-time bonus as IPO success payment. As of September 30, 2016, the Company's contingent commitment in such regard amounted to $318.
|
| h. |
On June 24, 2016 ("Effective Date"), the Company entered into agreement with certain individual to serve as the Company's member of the Board of Directors pursuant to which, among the others, the Company will pay as compensation and benefits upon consummation of IPO (i) an annual retainer of $40 to be paid on equal installments; (ii) one-time bonus amounted to $150 with 30 days from completion of an IPO and (iii) restricted shares equal to 3% of all issued and outstanding fully diluted shares of the Company after the completion of an IPO (including any green shoe or similar) with vesting schedule of 33.33% of such shares to be vested immediately upon the completion of an IPO, 33.33% of such shares to be vested after 6 month anniversary of the completion of an IPO and the remaining 33.33% of such shares after 12 month anniversary of the completion of an IPO. Upon closing change of control transaction, as defined in the agreement, the unvested options shall be accelerated and vested immediately.
|
| NOTE 7:- |
SHAREHOLDERS' DEFICIENCY
|
| a. |
Share capital:
|
| 1. |
Ordinary Shares
|
| 2. |
Convertible Preferred A Shares:
|
| NOTE 7:- |
SHAREHOLDERS' DEFICIENCY (Cont.)
|
| b. |
On October 28, 2016, the Company's Board of Directors and the shareholders approved a reverse share split of all outstanding Ordinary Shares of the Company, by way of issuance and distribution of bonus shares without a change in nominal value of the Company's outstanding shares at a ratio of approximately 8.03 for 1.
|
| c. |
Issuances of Convertible Preferred A Shares:
|
| 1. |
In January 2015, one of the Company's shareholders exercised 101,754 warrants to 101,754 Convertible Preferred A Shares for a total consideration of $250 which reflects an exercise price of $2.457. Consequently, the Company issued additional 4,070 Convertible Preferred A Shares at par value on the issuance date to consultant in respect to exercise of 4,070 warrants.
|
| 2. |
In August, 2015, the Company's shareholders exercised 118,035 warrants to 118,035 Convertible Preferred A Shares for a total consideration of $290 which reflects an exercise price of $2.457. Consequently, the Company issued additional 4,070 Convertible Preferred A Shares at par value on the issuance date to consultant in respect to exercise of 4,070 warrants.
|
| d. |
As of December 31, 2015, the Company planned to have its securities listed on the OTCQB for the purpose of raising capital to finance its operations. Thus, during the year ended December 31, 2015, the Company incurred direct and incremental costs related to the IPO, including among others, accounting, consulting, legal and printing fees of $352, which were capitalized as a non-current asset. As of December 31, 2015, $146 out of the aforementioned amount was paid.
|
| NOTE 7:- |
SHAREHOLDERS' DEFICIENCY (Cont.)
|
| e. |
Stock options granted to employees:
|
|
Nine months period ended
September 30, 2016,
|
||||||||||||
|
Number of
options
|
Weighted average
exercise price
|
Weighted average
remaining
contractual life
|
||||||||||
|
Options outstanding at beginning of period
|
146,
622
|
$
|
3.38
|
8.92
|
||||||||
|
Granted
|
-
|
-
|
-
|
|||||||||
|
Options outstanding at end of period
|
146,
622
|
3.38
|
8.
17
|
|||||||||
|
Options vested and expected to period
|
146,
622
|
3.38
|
8.
17
|
|||||||||
|
Options exercisable at end of period
|
84,122
|
$
|
2.03
|
7.
62
|
||||||||
| NOTE 7:- |
SHAREHOLDERS' DEFICIENCY (Cont.)
|
| f. |
Options granted to non-employees:
|
|
Grant date
|
Number of options
|
Exercise
price
|
Expiration date
|
||||||
|
September 8, 2013
|
17,080
|
$
|
4.01
|
September 8, 2023
|
|||||
|
September 8, 2013
|
2,340
|
$
|
*) -
|
|
September 8, 2023
|
||||
|
December 29, 2013
|
3,511
|
$
|
4.01
|
December 29, 2023
|
|||||
|
April 8, 2014
|
9,158
|
$
|
*) -
|
|
April 8, 2024
|
||||
|
July 24, 2014
|
2,492
|
$
|
5.46
|
July 24, 2024
|
|||||
|
March 1, 2015
|
57,779
|
$
|
5.46
|
March 1, 2025
|
|||||
|
October 20, 2015
|
12,456
|
$
|
*) -
|
October 20, 2025
|
|||||
|
December 1, 2015
|
11,210
|
$
|
5.46
|
December 1, 2025
|
|||||
| April 2, 2016 |
14,476
|
$
|
5.46
|
April 2, 2026
|
|||||
|
130,502
|
|||||||||
| *) |
Represents an amount lower than $ 0.01.
|
| g. |
Stock-based compensation:
|
|
Nine months ended
September 30,
|
||||||||
|
2016
|
2015
|
|||||||
|
Unaudited
|
||||||||
|
Research and development
|
$
|
190
|
$
|
268
|
||||
|
General and administrative expenses
|
64
|
24
|
||||||
|
$
|
254
|
$
|
292
|
|||||
| NOTE 7:- |
SHAREHOLDERS' DEFICIENCY (Cont.)
|
| h. |
On August 31, 2015, the Company's Board of Directors approved grant of 11,
781 RSU's
to one of the Board of Directors' members with a vesting schedule of three years from September 3, 2015. During the nine months periods ended September 30, 2016 and 2015, expenses amounted to $22 and $9, respectively, have been recognized in the general and administrative expenses.
|
| i. |
Warrants' modification:
|
| NOTE 8:- |
RELATED PARTY BALANCES AND TRANSACTIONS
|
|
September 30,
|
December 31,
|
|||||||
|
2016
|
2015
|
|||||||
|
Unaudited
|
||||||||
|
Convertible Notes (e)
|
$
|
858
|
$
|
586
|
||||
|
Other accounts payable (b), (c), (f)
|
$
|
73
|
$
|
17
|
||||
|
Loan from related party (a) (g)
|
$
|
99
|
$
|
29
|
||||
| NOTE 8:- |
RELATED PARTY BALANCES AND TRANSACTIONS (Cont.)
|
| a. |
On April 9, 2012, the Company signed a loan agreement with one of its shareholders for a total amount of $27. The loan bears an interest of 3% per annum and is payable on the earlier of December 31, 2015 or in two installments of $20 and $7. On November 2012, an amount of $20 was repaid by the Company.
|
| b. |
On September 9, 2012, the Company signed an agreement (which was amended at November 8, 2012) with a consultant, who is also one of the Company's shareholders. According to the agreement and amendment, the consultant will serve as the Company's Chief Medical Officer for a consideration of approximately $3 per month. For the nine months periods ended September 30, 2016 and 2015, the company recorded expenses in the amount of $37 and $10, respectively.
|
| c. |
On December 15, 2012, the Company signed an agreement with a consultant, who is also one of the Company's shareholders. According to the agreement and amendment, the consultant will serve as the Company's Chief Scientific Officer based on hourly rate. For the nine months periods ended September 30, 2016 and 2015, the Company recorded expenses in the amounts of $23 and $72, respectively.
|
| d. |
On November 26, 2012, the Company signed an agreement with a consultant, who is also a related party of the Company. According to the agreement, the Company will receive legal and notary services from the consultant. For the nine months period ended September 30, 2015, the Company recorded expenses in the amounts of $37.
|
| e. |
Commencing December 2013, the Company signed a certain convertible note agreements of which consideration of $858 and $586 were with related parties as of September 30, 2016 and December 31, 2015, respectively (see also Note 5 for further details). The Convertible notes bear an interest rate of 8% per annum compounded annually. For the nine months periods ended September 30, 2016 and 2015, the Company recorded finance expenses in the amounts of $49 and $35, respectively.
|
| NOTE 8:- |
RELATED PARTY BALANCES AND TRANSACTIONS (Cont.)
|
| f. |
On October 1, 2014, the Company signed an agreement with a consultant, who is also one of the Company's shareholders. According to the agreement, the consultant will serve as the Company's Chief Executive Officer based on monthly rate. For the nine months periods ended September 30, 2016 and 2015, the Company recorded expenses in the amount of $182 and $159, respectively.
|
| g. |
In September 2016, the Company entered into loan agreement with existing shareholders pursuant to which the Company received amount of $70 ("Loan") which bears an interest rate of 16% per annum and shall be fully repaid in 12 months from the date it was funded. In case that full payment of the Loan at any time within 90 days of the funding, a minimum interest rate of 4% of the Loan shall be paid along with the Loan principal. For the nine months period ended September 30, 2016, the Company recorded expenses in the amounts of $1.
|
| h. |
In November 2016, the Company's Chief Executive Officer which is also one of the Company's shareholders has waived all his requirements for certain debts of the Company to him in total amount of $99 (see also Note 11e).
|
|
NOTE 9:-
|
FINANCIAL EXPENSE, NET
|
|
Nine months ended
September 30,
|
||||||||
|
2016
|
2015
|
|||||||
|
Unaudited
|
||||||||
|
Financial expenses, net:
|
||||||||
|
Bank charges and other
|
$
|
6
|
$
|
5
|
||||
|
Imputed interest expense
in respect to Convertible Notes
|
212
|
153
|
||||||
|
Foreign currency translation adjustments, net
|
(4
|
)
|
23
|
|||||
|
Amortization of debt issuance costs
|
12
|
5
|
||||||
|
Amortization of BCF in respect to Convertible Notes
|
764
|
527
|
||||||
|
$
|
990
|
$
|
713
|
|||||
| NOTE 10:- |
BASIC AND DILUTED NET LOSS PER SHARE
|
|
Nine months ended
September 30,
|
||||||||
|
2016
|
2015
|
|||||||
|
Unaudited
|
||||||||
|
Net comprehensive loss
|
$
|
(2,746
|
)
|
$
|
(2,910
|
)
|
||
|
Convertible Preferred A Shares accumulated dividend
|
(131
|
)
|
(140
|
)
|
||||
|
Net loss attributable to Ordinary shares
|
$
|
(2,877
|
)
|
$
|
(3,050
|
)
|
||
|
Shares used in computing net loss per share of Ordinary shares, basic and diluted
|
1,448,750
|
1,448,363
|
||||||
|
Net loss per share of Ordinary share, basic and diluted
|
(1.99
|
)
|
(2.11
|
)
|
||||
| (*) |
The net loss used for the computation of basic and diluted net loss per share include the compounded dividend of eight percent per annum which shall be distributed to shareholders in case of distributable assets determined in the AOA under the liquidation preference right (See also Note 7a2)
|
| NOTE 11:- |
SUBSEQUENT EVENTS
|
| a. |
The Company evaluates events or transactions that occur after the balance sheet date but prior to the issuance of the consolidated interim financial statements to identify matters that require additional disclosure. For its consolidated financial statements as of September 30, 2016 and for the nine months period then ended, the Company evaluated subsequent events through
January 20, 2017
, the date that the consolidated financial statements were issued. Except as described below, the Company has concluded that no subsequent event has occurred that require disclosure.
|
| b. |
In October 2016, the Company entered into loan agreement with existing shareholders pursuant to which the Company received amount of $160 ("Loan"). The Loan bears an interest rate of 16% per annum. The term of the repayment of the Loan in full will be 12 months from the date it was funded. In case that full payment of the Loan at any time within 90 days of the funding, a minimum interest rate of 4% of the Loan shall be paid along with the Loan principal.
|
| NOTE 11:- |
SUBSEQUENT EVENTS (Cont.)
|
| c. |
Subsequent to the balance sheet date, the convertible loans terms were changed such that immediately prior and subject to the consummation of the Company's IPO, the conversion discounted price will be amended such that it will be 60.5% of the price of the most senior shares of the Company upon mandatory conversion in the event of a "triggering event" (as defined in the agreement, e.g. initial public offering) and the Participation Rights which should have been granted will be forfeited.
|
| d. |
On October 28, 2016, the Company's Board of Directors and the shareholders approved a reverse share split of all outstanding Ordinary Shares of the Company, by way of issuance and distribution of bonus shares without a change in nominal value of the Company's outstanding shares at a ratio of approximately 8.03 for 1.
|
| e. |
In November 2016, the Company's Chief Executive Officer has waived certain obligations of the Company to him in total amount of $99.
|
|
f.
|
On
January 13, 2017
AITT, a Delaware corporation
,
and a wholly- owned subsidiary of AITT, Red Maple Ltd. (“Merger Sub”), and the Company closed the transaction that was the subject of an Agreement and Plan of Merger and Reorganization dated December 29, 2016, as amended by that Amendment No. 1 to the Merger Agreement dated January 12, 2017 (the “Merger Agreement”). The Merger Agreement provides for (i) the merger of Merger Sub with and into the Company (the “Israeli Merger”), and (ii) the exchange of the Company’s shareholders’ shares of the Company's Ordinary Shares for shares of AITT common stock along with the other conditions set forth in the Merger Agreement, culminating with the Company, as the surviving entity in the Israeli Merger, being a wholly-owned subsidiary of AITT (the “Merger”). The Israeli Merger was consummated on December 29, 2016 and the Merger closed on January 13, 2017. At the Closing of the Merger, all outstanding Series A Preferred Shares and convertible notes of the Company were converted into Ordinary shares of the Company.
|
| g. |
In December 2016 and January 2017, the Company entered into a securities purchase and registration rights agreement ("SPA") with certain investors. According to the SPA, the Company will sell Units in the minimum aggregate amount of $10,000 and up to maximum aggregate amount of $25,000.
|
|
Page
|
|
|
2
|
|
|
3 - 4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
8 - 31
|
|
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
|
January 20, 2017
|
KOST FORER GABBAY & KASIERER
|
|
Tel-Aviv, Israel
|
A Member of EY Global
|
|
January 20
, 2017
|
||
|
Date of approval of the
|
Amir Avniel
|
|
|
financial statements
|
Chief Executive Officer
and Director
|
|
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Operating expenses:
|
||||||||
|
Research and development expenses
|
$
|
1,620
|
$
|
1,167
|
||||
|
General and administrative expenses
|
589
|
989
|
||||||
|
Operating loss
|
2,209
|
2,156
|
||||||
|
Financial expense, net
|
994
|
411
|
||||||
|
Revaluation of warrants to purchase Convertible Preferred A Shares
|
152
|
2,055
|
||||||
|
Loss before taxes on income
|
3,355
|
4,622
|
||||||
|
Tax on income
|
127
|
-
|
||||||
|
Net comprehensive loss
|
$
|
3,482
|
$
|
4,622
|
||||
|
Net basic and diluted loss per share
|
(2.53
|
)
|
(3.32
|
)
|
||||
|
Weighted average number of Ordinary Shares used in computing basic and diluted net loss per share
|
1,448,363
|
1,448,363
|
||||||
|
Ordinary shares
|
Preferred A shares
|
Additional paid-in
|
Deficit
|
Total shareholders'
|
||||||||||||||||||||||||
|
Number
|
Amount
|
Number
|
Amount
|
capital
|
accumulated
|
Deficiency
|
||||||||||||||||||||||
|
Balance as of January 1, 2014
|
1,448,363
|
$
|
29
|
446,293
|
$
|
9
|
$
|
891
|
$
|
(1,749
|
)
|
$
|
(820
|
)
|
||||||||||||||
|
Issuance of Series A Convertible Preferred Shares at $2.457 per share, net of issuance costs
|
-
|
-
|
78,758
|
2
|
107
|
-
|
109
|
|||||||||||||||||||||
|
Stock-based compensation related to options granted to non-employees and employees
|
-
|
-
|
-
|
-
|
241
|
-
|
241
|
|||||||||||||||||||||
|
Beneficial conversion feature in respect to Convertible Notes
|
-
|
-
|
-
|
-
|
1,651
|
-
|
1,651
|
|||||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
(4,622
|
)
|
(4,622
|
)
|
|||||||||||||||||||
|
Balance as of December 31, 2014
|
1,448,363
|
29
|
525,051
|
11
|
2,890
|
(6,371
|
)
|
(3,441
|
)
|
|||||||||||||||||||
|
Conversion of warrants into Convertible Preferred A Shares at $2.457 per share, net of issuance costs
|
-
|
-
|
234,035
|
5
|
3,408
|
-
|
3,413
|
|||||||||||||||||||||
|
Stock-based compensation related to options granted to employees and non-employees
|
-
|
-
|
-
|
-
|
429
|
-
|
429
|
|||||||||||||||||||||
|
Stock-based compensation related to RSU's granted to Board of Directors' member
|
-
|
-
|
-
|
-
|
18
|
-
|
18
|
|||||||||||||||||||||
|
Beneficial conversion feature in respect to Convertible Notes
|
-
|
-
|
-
|
-
|
1,239
|
-
|
1,239
|
|||||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
(3,482
|
)
|
(3,482
|
)
|
|||||||||||||||||||
|
Balance as of December 31, 2015
|
1,448,363
|
$
|
29
|
759,086
|
$
|
16
|
$
|
7,984
|
$
|
(9,853
|
)
|
$
|
(1,824
|
)
|
||||||||||||||
|
Year ended
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Cash flows from operating activities
|
||||||||
|
Net loss
|
$
|
(3,482
|
)
|
$
|
(4,622
|
)
|
||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
|
Depreciation
|
26
|
20
|
||||||
|
Stock-based compensation and RSU's
|
447
|
241
|
||||||
|
Amortization of beneficial conversion feature and debts issuance costs in Convertible Notes
|
768
|
290
|
||||||
|
Revaluation of warrants to purchase Convertible Preferred A Shares
|
152
|
2,055
|
||||||
|
Imputed interest on convertible notes and loans from related party
|
217
|
83
|
||||||
|
Decrease (increase) in other accounts receivable
|
38
|
(3
|
)
|
|||||
|
Increase in trade payables
|
10
|
45
|
||||||
|
Increase in other accounts payable
|
166
|
8
|
||||||
|
Net cash used in operating activities
|
(1,658
|
)
|
(1,883
|
)
|
||||
|
Cash flows from investing activities
|
||||||||
|
Purchase of property and equipment
|
(7
|
)
|
(18
|
)
|
||||
|
Net cash used in investing activities
|
(7
|
)
|
(18
|
)
|
||||
|
Cash flows from financing activities
|
||||||||
|
Proceeds from loan from related party
|
-
|
22
|
||||||
|
Proceeds from issuance of Convertible Note, net of issuance costs
|
1,239
|
1,830
|
||||||
|
Proceeds from issuance of Convertible Preferred A Shares, net of issuance costs
|
-
|
187
|
||||||
|
Proceeds from conversion of warrants into Convertible Preferred A Shares, net of issuance costs
|
540
|
-
|
||||||
|
Deferred IPO costs that were paid
|
(146
|
)
|
-
|
|||||
|
Net cash provided by financing activities
|
1,633
|
2,039
|
||||||
|
Increase (decrease) in cash and cash equivalents
|
(32
|
)
|
138
|
|||||
|
Cash and cash equivalents at the beginning of the year
|
161
|
23
|
||||||
|
Cash and cash equivalents at the end of the year
|
$
|
129
|
$
|
161
|
||||
|
Supplemental disclosure of non‑cash financing activities:
|
||||||||
|
Conversion of warrants into Convertible Preferred A Shares
|
$
|
2,873
|
$
|
-
|
||||
| NOTE 1:- |
GENERAL
|
| a. |
Advanced Inhalation Therapies (AIT) Ltd. (the "Company") was incorporated in Israel on May 1, 2011 and commenced its operation in May 2012. The Company is an emerging Israeli drug development Company focusing on the development and commercialization of nitric oxide formulations for the treatment of respiratory infections and diseases. The AIT pipeline includes therapies against respiratory infections in acute and chronic diseases such as: bronchiolitis (RSV), cystic fibrosis (CF), pneumonia, and asthma
.
|
| b. |
On August 29, 2014, the Company established a wholly-owned subsidiary, Advanced Inhalation Therapies (AIT) Inc. ("Inc.") in USA which its principal business activity is to provide executive management and administrative support functions to the Company.
|
| c. |
Since its inception, the Company has devoted substantially most of its effort to business planning, research and development. The Company has incurred losses and has accumulated negative cash flow from operating activities amounted to $3,482 and $1,658 during the year ended December 31, 2015, respectively, and has an accumulated deficit of $9,853 as of December 31, 2015. These conditions raise substantial doubts about the Company's ability to continue as a going concern. The Company's ability to continue to operate is dependent upon raising additional funds to finance its activities. There are no assurances, however, that the Company will be successful in obtaining an adequate level of financing needed for the long-term development and commercialization of its products.
|
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES
|
| a. |
Use of estimates:
|
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| b. |
Principles of consolidation:
|
| c. |
Financial statements in U.S. dollars in thousands:
|
| d. |
Cash equivalents:
|
|
e.
|
Restricted bank deposits:
|
| f. |
Long-term lease deposits:
|
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| g. |
Property and equipment, net:
|
|
%
|
||
|
Computers and electronic equipment
|
33
|
|
|
Office furniture and equipment
|
7-15
|
|
|
Clinical and medical equipment
|
15
|
|
|
Leasehold improvements
|
Over the shorter of the lease
term or useful economic life
|
| h. |
Impairment for long-lived assets:
|
| i. |
Severance pay:
|
| j. |
Income taxes:
|
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| k. |
Concentrations of credit risk:
|
| l. |
Legal and other contingencies:
|
| m. |
Research and development expenses:
|
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| n. |
Fair value of financial instruments:
|
|
Level 1
|
-
|
Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access.
|
|
Level 2
|
-
|
Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
|
|
Level 3
|
-
|
Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| o. |
Basic and diluted net loss per share:
|
| p. |
Warrants to purchase Convertible Preferred A Shares:
|
| q. |
Stock-based compensation:
|
| NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
2015
|
2014
|
|||||||
|
Dividend yield
|
0
|
%
|
0
|
%
|
||||
|
Expected volatility
|
88.9
|
%
|
93.1
|
%
|
||||
|
Risk-free interest
|
2.1%-3.5
|
%
|
1.04-1.84
|
%
|
||||
|
Expected life (years)
|
5.5-6.25
|
5.3-6
|
||||||
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| r. |
Impact of recently issued accounting standards:
|
| 1. |
In April 2015, the FASB Issued ASU 2015-03, "Interest-Imputation of Interest". ASU 2015-03 reduces the complexity of disclosing debt issuance costs and debt discount and premium on the balance sheet by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The effective date of ASU 2015-03 is for interim and annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The ASU 205-03 has been early adopted by the Company.
|
| 2. |
In February 2016, the FASB issued ASU 2016-02 - Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The ASU is expected to impact the Company's consolidated financial statements as we have certain operating lease arrangements. ASC 842 supersedes the previous leases standard, ASC 840 Leases. The standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption of this standard on its consolidated financial statements.
|
| 3. |
On March 30, 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting which affect all entities that issue share-based payment awards to their employees and involve multiple aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.
|
| NOTE 3:- |
OTHER ACCOUNTS RECEIVABLE
|
|
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Prepaid expenses
|
$
|
5
|
$
|
17
|
||||
|
Governments authorities
|
6
|
29
|
||||||
|
$
|
11
|
$
|
46
|
|||||
|
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Cost:
|
||||||||
|
Computers and electronic equipment
|
$
|
23
|
$
|
19
|
||||
|
Office furniture and equipment
|
10
|
10
|
||||||
|
Clinical and medical equipment
|
119
|
117
|
||||||
|
Leasehold improvement
|
3
|
2
|
||||||
|
155
|
148
|
|||||||
|
Accumulated depreciation:
|
||||||||
|
Computers and electronic equipment
|
12
|
4
|
||||||
|
Office furniture and equipment
|
1
|
1
|
||||||
|
Clinical and medical equipment
|
49
|
31
|
||||||
|
Leasehold improvement
|
*) -
|
|
*) -
|
|
||||
|
62
|
36
|
|||||||
|
Depreciated cost
|
$
|
93
|
$
|
112
|
||||
| *) |
Represents an amount lower than 1$.
|
| NOTE 5:- |
OTHER ACCOUNTS PAYABLE
|
|
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Employees and payroll accruals
|
$
|
64
|
$
|
59
|
||||
|
Income tax
|
127
|
-
|
||||||
|
Accrued expenses
|
525
|
285
|
||||||
|
$
|
716
|
$
|
344
|
|||||
| NOTE 6:- |
CONVERTIBLE NOTES
|
|
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Opening balance
|
$
|
568
|
$
|
13
|
||||
|
Receipt of Convertible Notes
|
1,277
|
1,830
|
||||||
|
BCF in respect of Convertible Notes
|
(1,239
|
)
|
(1,651
|
)
|
||||
|
Amortization of BCF
|
759
|
290
|
||||||
|
Capitalization of debts issuance costs
|
(38
|
)
|
-
|
|||||
|
Amortization of debts issuance costs
|
9
|
-
|
||||||
|
Imputed interest
|
216
|
86
|
||||||
|
$
|
1,552
|
$
|
568
|
|||||
| NOTE 6:- |
CONVERTIBLE NOTES (Cont.)
|
| NOTE 7:- |
WARRANTS TO PURCHASE CONVERTIBLE PREFERRED A SHARES
|
| (1) |
Risk free interest rate based on yield rates of non-index linked U.S. Federal Reserve treasury bonds.
|
| NOTE 7:- |
WARRANTS TO PURCHASE CONVERTIBLE PREFERRED A SHARES (Cont.)
|
| (2) |
Expected volatility was calculated based on actual historical share price movements of companies in the same industry over a term that is equivalent to the expected term of the option.
|
| (3) |
Expected life was based on the contractual term of the warrants.
|
| (4) |
Expected dividend yield was based on the fact that the Company has not paid dividends to its shareholders in the past and does not expect to pay dividends to its shareholders in the future.
|
|
Fair value
of Warrants to purchase Convertible Preferred A Shares
|
||||
|
Balance at January 1, 2014
|
$
|
588
|
||
|
Fair value of warrants issued to finder fee (see also Note 10c1)
|
78
|
|||
|
Revaluation of warrants' fair value
|
2,055
|
|||
|
Balance at December 31, 2014
|
2,721
|
|||
|
Revaluation of warrants' fair value upon conversion
|
152
|
|||
|
Conversion of warrants into Convertible Preferred A Shares (see also Notes 10c2 and 10c3)
|
(2,873
|
)
|
||
|
Balance at December 31, 2015
|
$
|
-
|
||
| NOTE 8:- |
TAXES ON INCOME
|
| a. |
Tax rates applicable to the Company:
|
| 1. |
Taxable income of the Company is subject to the Israeli corporate tax at the rates of 26.5% in 2014 and 2015.
|
| 2. |
On January 5, 2016, the Israeli Parliament officially published the Law for the Amendment of the Israeli Tax Ordinance (Amendment 216), that reduces the standard corporate income tax rate from 26.5% to 25%.
|
| NOTE 8:- |
TAXES ON INCOME (Cont.)
|
| b. |
Non-Israeli subsidiary, AIT Inc.:
|
| c. |
Income taxes on non-Israeli subsidiaries:
|
|
d.
|
Net operating losses carry forward:
|
|
e.
|
Deferred income taxes:
|
|
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Deferred tax assets:
|
||||||||
|
Operating loss carry forward
|
$
|
1,098
|
$
|
747
|
||||
|
Reserves and allowances
|
8
|
6
|
||||||
|
Research and development
|
318
|
254
|
||||||
|
Net deferred tax asset before valuation allowance
|
1,424
|
1,007
|
||||||
|
Valuation allowance
|
(1,424
|
)
|
(1,007
|
)
|
||||
|
Net deferred tax asset
|
$
|
-
|
$
|
-
|
||||
| NOTE 8:- |
TAXES ON INCOME (Cont.)
|
| f. |
Taxes on income for the year ended December 31, 2015 are comprised from taxes incurred as a result of the implementation of the cost plus service agreement between the Company and Inc.
|
| g. |
Loss (income) before taxes on income consists of the following:
|
|
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Domestic
|
$
|
3,453
|
$
|
4,622
|
||||
|
Foreign
|
(98
|
)
|
-
|
|||||
|
$
|
3,355
|
$
|
4,622
|
|||||
| h. |
The main reconciling item between the statutory tax rate of the Company and the effective tax rate is the recognition of valuation allowances in respect to deferred taxes relating to accumulated net operating losses carried forward due to the uncertainty of the realization of such deferred taxes.
|
| i. |
Accounting for uncertainty in income taxes:
|
|
Year ended
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Balance at beginning of year
|
$
|
-
|
$
|
-
|
||||
|
Additions for current year's tax position
|
127
|
-
|
||||||
|
Balance at the end of year
|
$
|
127
|
$
|
-
|
||||
| a. |
The Company is engaged in an operating lease agreement for its office facilities. Future minimum non-cancelable rental payments under the operating lease are $14 for the year ending December 31, 2016. Rent expenses for the years ended December 31, 2015 and 2014 amounted to $18 and $22, respectively.
|
| b. |
On October 22, 2013, the Company entered into certain patent license agreement with a third party pursuant to which the Company
paid
to the third party a non-refundable upfront fee amounted to $150 and is obligated to pay the third party 5% royalties of the licensed product revenues, but at least $50 per annum at the royalty period. As of December 31, 2015, the Company did not record any revenues and therefore no royalties were paid or accrued.
|
| c. |
On April 8, 2014, the Company signed a finder fee agreement pursuant to which among others the Company will grant to the finder fee of 6% of the Company's conversion shares to be actually issued to certain lenders upon actual conversion of the lender's Convertible Notes as described in Note 6.
|
| d. |
On March 4, 2015, the Company entered into an agreement with certain gas supplier pursuant to which the supplier will receive exclusivity on the US market in exchange for gas supply for clinical studies for Bronchiolitis.
|
| e. |
On August 3, 2015 ("Effective Date"), the Company entered into agreement with certain individual to serve as the Company's chairman of the Board of Directors pursuant to which, among others, the Company will pay as compensation and benefits upon consummation of Initial Public Offering ("IPO") (i) an annual retainer of $75 to be paid on equal installments and (ii) 492,624 restricted shares of the Company with vesting schedule of 50% if such shares to be vested after 6 month anniversary of the completion of an IPO and the remaining 50% of such shares after 18 month anniversary of the completion of an IPO. Upon closing change of control transaction, as defined in the agreement, the unvested options shall be accelerated and vested immediately.
|
| f. |
In August 2015, the Company entered into an Option Agreement ("Agreement") with a third party whereby the Company acquired for $25 the
Option
to purchase certain intellectual property assets and rights ("Option"). According to the Agreement, the
Option
is exercisable for a period of six months starting August 2015 (which was extended in 2016 for a period which is ended
January 2017
). Upon exercise of the
Option
, the Company will be obligated to pay an exercise price of $500 and will be required to make certain one-time development and sales milestone payments to the third party starting from the date when the Company will receive regulatory approval for the commercial sale of its first product candidate.
|
| g. |
The Company entered into employment agreements with certain employees and service agreements with certain vendors pursuant to which the Company will pay a one-time payment in the event the Company succeeds in achieving and consummating an IPO and/or financing round. As of December 31, 2015, the Company's contingent commitment in such regard amounted to approximately $318.
|
| NOTE 10:- |
SHAREHOLDERS' DEFICIENCY
|
| a. |
Share capital:
|
| 1. |
Ordinary Shares
|
| 2. |
Convertible Preferred A Shares:
|
| NOTE 10:- |
SHAREHOLDERS' DEFICIENCY (Cont.)
|
| b. |
On October 28, 2016, the Company's Board of Directors and the shareholders approved a reverse share split of all outstanding Ordinary Shares of the Company, by way of issuance and distribution of bonus shares without a change in nominal value of the Company's outstanding shares at a ratio of approximately 8.03 for 1.
|
| c. |
Issuances of Convertible Preferred A Shares:
|
| 1. |
In April 2014, as a part of the second installment to the Share Purchase Agreement ("SPA") dated November 2012, the Company issued 76,316 Convertible Preferred A Shares at a price per share of $2,457 for a total consideration of $187. In addition, the Company issued to consultant in respect to services provided as part of the SPA (i) 2,442 Convertible Preferred A Shares at par value on the issuance date (fair value of approximately $38 based on the Preferred A Share value as of the issuance date), and (ii) warrants to purchase up to 8,140 of the Company's Convertible Preferred A Shares (fair value of approximately $78 based on the Preferred A Share Warrants value as of the issuance date).
|
| 2. |
In January 2015, one of the Company's shareholders exercised 101,754 warrants to 101,754 Convertible Preferred A Shares for a total consideration of $250 which reflects an exercise price of $2.457. Consequently, the Company issued additional 4,070 Convertible Preferred A Shares at par value on the issuance date to consultant in respect to exercise of 4,070 warrants.
|
| NOTE 10:- |
SHAREHOLDERS' DEFICIENCY (Cont.)
|
| 3. |
In August, 2015, the Company's shareholders exercised 118,035 warrants to 118,035 Convertible Preferred A Shares for a total consideration of $290 which reflects an exercise price of $2.457. Consequently, the Company issued additional 4,070 Convertible Preferred A Shares at par value on the issuance date to consultant in respect to exercise of 4,070 warrants.
|
| d. |
During the year ended December 31, 2015, the Company incurred direct and incremental costs related to the IPO, including among others, accounting, consulting, legal and printing fees of $352, which were capitalized as a non-current asset. As of December 31, 2015, $146 out of the aforementioned amount was paid.
|
| e. |
Stock options granted to employees:
|
|
Year ended
December 31, 2015
|
||||||||||||
|
Number of options
|
Weighted average exercise price
|
Weighted average remaining contractual life
|
||||||||||
|
Options outstanding at beginning of year
|
68,859
|
$
|
1.20
|
8.84
|
||||||||
|
Granted
|
90,688
|
5.46
|
9.67
|
|||||||||
|
Forfeited
|
(12,941
|
)
|
5.46
|
8.36
|
||||||||
|
Options outstanding at end of year
|
146,606
|
3.38
|
8.92
|
|||||||||
|
Options vested and expected to be vested
|
146,606
|
3.38
|
8.92
|
|||||||||
|
Options exercisable at end of year
|
61,636
|
$
|
0.73
|
7.91
|
||||||||
| NOTE 10:- |
SHAREHOLDERS' DEFICIENCY (Cont.)
|
|
Grant date
|
Number of options
|
Exercise
price
|
Expiration date
|
||||||
|
September 8, 2013
|
17,080
|
$
|
4.01
|
September 8, 2023
|
|||||
|
September 8, 2013
|
2,340
|
$
|
* ) -
|
September 8, 2023
|
|||||
|
December 29, 2013
|
3,511
|
$
|
4.01
|
December 29, 2023
|
|||||
|
April 8, 2014
|
9,158
|
$ |
* ) -
|
April 8, 2024 | |||||
|
July 24, 2014
|
2,492
|
$ |
5.46
|
July 24, 2024 | |||||
|
March 1, 2015
|
57,779
|
$ |
5.46
|
March 1, 2025 | |||||
|
October 20, 2015
|
12,456
|
$
|
* ) -
|
October 20, 2025
|
|||||
|
December 1, 2015
|
11,210
|
$
|
5.46
|
December 1, 2025
|
|||||
| 116,026 | |||||||||
| *) |
Represents an amount lower than $1.
|
| g. |
Stock-based compensation expenses:
|
|
Year ended
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Research and development expenses
|
$
|
331
|
$
|
185
|
||||
|
General and administrative expenses
|
98
|
56
|
||||||
|
$
|
429
|
$
|
241
|
|||||
| NOTE 10:- |
SHAREHOLDERS' DEFICIENCY (Cont.)
|
| h. |
On August 31, 2015, the Company's Board of Directors approved grant of 11,
781 RSU's
to one of the Board of Directors' members with a vesting schedule of three years from September 3, 2015. During the year ended December 31, 2015, expenses amounted to $18 have been recognized in the general and administrative expenses.
|
| NOTE 11:- |
RELATED PARTIES BALANCES AND TRANSACTIONS
|
|
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Convertible Notes (e)
|
$
|
586
|
$
|
280
|
||||
|
Other accounts payable (b), (c), (f)
|
$
|
17
|
$
|
21
|
||||
|
Loan from related party (a)
|
$
|
29
|
$
|
28
|
||||
| a. |
On April 9, 2012, the Company signed a loan agreement with one of its shareholders for a total amount of $27. The loan bears an interest of 3% per annum and is payable on the earlier of December 31, 2015 or in two installments of $20 and $7. On November 2012, an amount of $20 was repaid by the Company.
|
| b. |
On September 9, 2012, the Company signed an agreement (which was amended at November 8, 2012) with a consultant, who is also one of the Company's shareholders. According to the agreement and amendment, the consultant will serve as the Company's Chief Medical Officer for a consideration of approximately $3 per month. For the years ended December 31, 2015 and 2014, the company recorded expenses in the amount of $56 and $43, respectively.
|
| NOTE 11:- |
RELATED PARTIES BALANCES AND TRANSACTIONS (Cont.)
|
| c. |
On December 15, 2012, the Company signed an agreement with a consultant, who is also one of the Company's shareholders. According to the agreement and amendment, the consultant will serve as the Company's Chief Scientific Officer based on hourly rate. For the years ended December 31, 2015 and 2014, the company recorded expenses in the amount of $20 and $60.
|
| d. |
On November 26, 2012, the Company signed an agreement with a consultant, who is also a related party of the Company. According to the agreement, the Company will receive legal and notary services from the consultant. For the years ended December 31, 2015 and 2014, the Company recorded expenses in the amounts of $15 and $51, respectively.
|
| e. |
Commencing December 2013, the Company signed a certain convertible note agreements of which consideration of $586 and $280 were with related parties as of December 31, 2015 and 2014 respectively (see also Note 6 for further details). The Convertible notes bear an interest rate of 8% per annum compounded annually. For the years ended December 31, 2015 and 2014, the Company recorded finance expenses in the amounts of $50 and $91, respectively.
|
| f. |
On October 1, 2014, the Company signed an agreement with a consultant, who is also one of the Company's shareholders. According to the agreement, the consultant will serve as the Company's Chief Executive Officer based on monthly rate. For the years ended December 31, 2015 and 2014, the Company recorded expenses in the amount of $212 and $45, respectively.
|
| NOTE 12:- |
FINANCIAL EXPENSES, NET
|
|
Year ended
December 31,
|
||||||||
|
2015
|
2014
|
|||||||
|
Financial expenses, net:
|
||||||||
|
Bank charges and other
|
$
|
5
|
$
|
5
|
||||
|
Imputed interest expense
in respect to Convertible Notes
|
216
|
86
|
||||||
|
Foreign currency translation adjustments, net
|
5
|
30
|
||||||
|
Amortization of debt issuance costs
|
9
|
-
|
||||||
|
Amortization of BCF in respect to Convertible Notes
|
759
|
290
|
||||||
|
$
|
994
|
$
|
411
|
|||||
| NOTE 13:- |
BASIC AND DILUTED NET LOSS PER SHARE
|
|
Year ended
December 31
|
||||||||
|
2015
|
2014
|
|||||||
|
Net comprehensive income
|
$
|
(3,482
|
)
|
$
|
(4,622
|
)
|
||
|
Convertible Preferred A Shares accumulated dividend (*)
|
(182
|
)
|
(185
|
)
|
||||
|
Net loss attributable to Ordinary shares as reported
|
$
|
(3,664
|
)
|
$
|
(4,807
|
)
|
||
|
Shares used in computing net loss per share of Ordinary shares, basic and diluted
|
1,448,363
|
1,448,363
|
||||||
|
Net loss per share of Ordinary share, basic and diluted
|
(2.53
|
)
|
(3.32
|
)
|
||||
| (*) |
The net loss used for the computation of basic and diluted net loss per share include the compounded dividend of eight percent per annum which shall be distributed to shareholders in case of distributable assets determined in the AOA under the liquidation preference right (See also Note 10a2)
|
| NOTE 14:- |
SUBSEQUENT EVENTS
|
| a. |
The Company evaluates events or transactions that occur after the balance sheet date but prior to the issuance of the consolidated financial statements to identify matters that require additional disclosure. For its annual consolidated financial statements as of December 31, 2015 and for the year then ended, the Company evaluated subsequent events through
January 20, 2017
, the date that the consolidated financial statements were issued. Except as described below, the Company has concluded that no subsequent event has occurred that require disclosure.
|
| b. |
In January 2016, the Company entered into an agreement for line of a renewable credit amounted to $51 from a commercial bank for a period of one month with imputed interest in rate of 4.4%. As of the signature date of these consolidated financial statements, the aforesaid line of credit is still outstanding.
|
| c. |
In January 2016, the Company's Board of Directors approved the extension of the exercise period of 85,474 warrants that have been issued to strategic adviser to purchase 85,474 Ordinary Shares of the Company with an exercise price of $8.19 from October 3, 2016 to December 31, 2017 or until the fifth anniversary from October 3, 2013 if event of IPO was occurred until December 31, 2016. Such extension will be accounted pursuant to ASC 718 as a modification.
|
| NOTE 14:- |
SUBSEQUENT EVENTS (Cont.)
|
| d. |
On June 24, 2016 ("Effective Date"), the Company entered into agreement with certain individual to serve as the Company's member of the Board of Directors pursuant to which, among the others, the Company will pay as compensation and benefits upon consummation of Initial Public Offering ("IPO") (i) an annual retainer of $40 to be paid on equal installments; (ii) one-time bonus amounted to $150 with 30 days from completion of an IPO and (iii) restricted shares equal to 3% of all issued and outstanding fully diluted shares of the Company after the completion of an IPO (including any green shoe or similar) with vesting schedule of 33.33% of such shares to be vested immediately upon the completion of an IPO, 33.33% of such shares to be vested after 6 month anniversary of the completion of an IPO and the remaining 33.33% of such shares after 12 month anniversary of the completion of an IPO. Upon closing change of control transaction, as defined in the agreement, the unvested options shall be accelerated and vested immediately.
|
| e. |
In September and October 2016, the Company entered into loan agreement with existing shareholders pursuant to which the Company received amount of $230 ("Loan"). The Loan bears an interest rate of 16% per annum. The term of the repayment of the Loan in full will be 12 months from the date it was funded. In case that full payment of the Loan at any time within 90 days of the funding, a minimum interest rate of 4% of the Loan shall be paid along with the Loan principal.
|
| f. |
Subsequent to the balance sheet date, the convertible loans terms were changed such that immediately prior and subject to the consummation of the Company's IPO, the conversion discounted price will be amended such that it will be 60.5% of the price of the most senior shares of the Company upon mandatory conversion in the event of a "triggering event" (as defined in the agreement, e.g. initial public offering) and the Participation Rights which should have been granted will be forfeited.
|
| g. |
Subsequent to December 31, 2015, the Company received additional proceeds amounted to $184 from issuance of Convertible Notes at the same terms and privileges of the Convertible Notes as mentioned in Note 6. The related BCF of these additional Convertible Notes amounted to $180.
|
| h. |
On October 28, 2016, the Company's Board of Directors and the shareholders approved a reverse share split of all outstanding Ordinary Shares of the Company, by way of issuance and distribution of bonus shares without a change in nominal value of the Company's outstanding shares at a ratio of approximately 8.03 for 1.
|
| NOTE 14:- |
SUBSEQUENT EVENTS (Cont.)
|
| i. |
In November 2016, the Company's Chief Executive Officer has waived certain obligations of the Company to him in total amount of $99.
|
| j. |
On
January 13, 2017
AITT, a Delaware corporation
,
and a wholly- owned subsidiary of AITT, Red Maple Ltd. (“Merger Sub”), and the Company closed the transaction that was the subject of an Agreement and Plan of Merger and Reorganization dated December 29, 2016, as amended by that Amendment No. 1 to the Merger Agreement dated January 12, 2017 (the “Merger Agreement”). The Merger Agreement provides for (i) the merger of Merger Sub with and into the Company (the “Israeli Merger”), and (ii) the exchange of the Company’s shareholders’ shares of the Company's Ordinary Shares for shares of AITT common stock along with the other conditions set forth in the Merger Agreement, culminating with the Company, as the surviving entity in the Israeli Merger, being a wholly-owned subsidiary of AITT (the “Merger”). The Israeli Merger was consummated on December 29, 2016 and the Merger closed on January 13, 2017. At the Closing of the Merger, all outstanding Series A Preferred Shares and convertible notes of the Company were converted into Ordinary shares of the Company.
|
| k. |
In December 2016 and January 2017, the Company entered into a securities purchase and registration rights agreement ("SPA") with certain investors. According to the SPA, the Company will sell Units in the minimum aggregate amount of $10,000 and up to maximum aggregate amount of $25,000.
|
|
Historical
AITT Inc.
30-Sep-16
|
Historical
AIT Ltd.
30-Sep-16
|
Pro forma
Adjustments
|
Note
|
Pro forma
Consolidated
|
|||||||||||||||
|
Operating expenses:
|
|||||||||||||||||||
|
Research and development expenses
|
$
|
-
|
$
|
573
|
$
|
-
|
$
|
573
|
|||||||||||
|
General and administrative expenses
|
29
|
523
|
-
|
552
|
|||||||||||||||
|
Costs related to aborted IPO
|
-
|
621
|
-
|
621
|
|||||||||||||||
|
Operating loss
|
29
|
1,717
|
-
|
1,746
|
|||||||||||||||
|
Financial expense, net
|
1
|
990
|
1,312
|
B
|
2,303
|
||||||||||||||
|
Loss before taxes on income
|
30
|
2,707
|
1,312
|
4,049
|
|||||||||||||||
|
Tax on income
|
-
|
39
|
-
|
39
|
|||||||||||||||
|
Net comprehensive loss
|
$
|
30
|
$
|
2,746
|
$
|
1,312
|
$
|
4,088
|
|||||||||||
|
Net basic and diluted loss per share
|
$
|
0.29
|
$
|
0.77
|
|||||||||||||||
|
Weighted average number of Ordinary Shares used in computing basic and diluted net loss per share
|
103,200
|
5,311,479
|
|||||||||||||||||
|
|
A.
|
Reflect the issuance of 1,701,616 units, each unit is sold at a price per unit of $6.00 and consists of one ordinary share, NIS 0.01 par value per share, and one warrant, for gross consideration of approximately $10,210 thousand.
Direct and incremental issuance costs amounted to approximately $180 thousand which was offset from the additional paid in capital.
|
|
|
B.
|
Upon closing of the Merger, the outstanding convertible notes have been converted into 1,397,068 Ordinary Shares, NIS 0.01 par value per share, of AIT. Following such conversion, the remaining beneficial conversion feature and issuance debt costs in respect to the convertible notes amounted to $1,294 and $18 thousand, respectively, were amortized immediately through financial expenses.
|
|
|
C.
|
Upon closing of the Merger, the outstanding 759,086 Preferred A Shares have been converted into 759,086 Ordinary Shares, NIS 0.01 par value per share, of AIT.
|
|
|
D.
|
According to the agreement and plan of merger and reorganization, AIT is required to make a cash payment to AITT in total amount of $320 thousand (the "Cash Purchase Price") in order to assume all of its existing obligations which amounted to $37 at the Merger Date and to repurchase 90,000 shares of its common stock at a price per share of $0.2667 (on a post-reverse stock split basis as mentioned below). It was agreed between the parties that the excess of Cash Purchase Price beyond the existing obligations will be distributed to the former stockholders of AITT as a dividend (representing a price of $2.5 per share cash dividend to 103,200 outstanding shares of AITT's common stock after effect of 100-to-one reverse stock split) and to redeem certain of its shares of common stock held by AITT's principal stockholder.
|